Exhibit 10.3 

 

Execution version

 

  EQUITY PURCHASE AGREEMENT   by and between   ARC PROPERTIES OPERATING
PARTNERSHIP, L.P.   and   RCS CAPITAL CORPORATION     DATED AS OF SEPTEMBER 30,
2014

 

 

 

  

TABLE OF CONTENTS

 

  Page     ARTICLE I   PURCHASE AND SALE       Section 1.1 Purchase and Sale 1  
    Section 1.2 Consideration 1       Section 1.3 Purchase Price Allocation 3  
    Section 1.4 Closings 3       Section 1.5 First Closing Deliveries 3      
Section 1.6 Second Closing Deliveries 4       Section 1.7 Deferred Payment 5    
  Section 1.8 Withholding Rights 5       Section 1.9 Adjustment to Stock
Consideration 5       ARTICLE II   WORKING CAPITAL ADJUSTMENT       Section 2.1
Working Capital Adjustment 6       ARTICLE III   REPRESENTATIONS AND WARRANTIES
OF SELLER       Section 3.1 Corporate Organization 7       Section 3.2
Capitalization 8       Section 3.3 Authority; No Violation 8       Section 3.4
Consents and Approvals 9       Section 3.5 Financial Statements 9       Section
3.6 Broker’s Fees 9       Section 3.7 Absence of Certain Changes or Events 9    
  Section 3.8 Legal Proceedings 10       Section 3.9 Taxes and Tax Returns 10  
    Section 3.10 Employee Benefits 12       Section 3.11 Compliance with Law;
Permits 13

 

 

 

  

Section 3.12 Certain Contracts 13       Section 3.13 Undisclosed Liabilities 13
      Section 3.14 Environmental Liability 13       Section 3.15 Real Property
14       Section 3.16 Internal Controls 14       Section 3.17 Insurance 14      
Section 3.18 Intellectual Property 14       Section 3.19 Investment Company Act
of 1940 15       Section 3.20 No Resale 15       Section 3.21 Broker Regulatory
Matters 15       Section 3.22 No Material Adverse Effect 16       Section 3.23
No Other Seller Representations or Warranties 16       ARTICLE IV  
REPRESENTATIONS AND WARRANTIES OF BUYER       Section 4.1 Organization and
Qualification 17       Section 4.2 Capital Structure 17       Section 4.3
Authority; No Violation 17       Section 4.4 Consents and Approvals 18      
Section 4.5 Non-Cash Consideration 18       Section 4.6 SEC Filings; Financial
Statements; Internal Controls; Sarbanes-Oxley Compliance 18       Section 4.7
Legal Proceedings 19       Section 4.8 Compliance with Law 19       Section 4.9
No Material Adverse Effect 19       Section 4.10 Sufficient Funds 19      
Section 4.11 Undisclosed Liabilities 19       Section 4.12 No Other
Representations and Warranties 19       ARTICLE V   COVENANTS RELATING TO
CONDUCT OF BUSINESS       Section 5.1 Conduct of Business Prior to the Second
Closing 19       Section 5.2 Seller Forbearances 20

 

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Section 5.3 Buyer Forbearances 22       ARTICLE VI   CERTAIN COVENANTS OF THE
PARTIES       Section 6.1 Regulatory Matters 22       Section 6.2 Access to
Information; Confidentiality 23       Section 6.3 Financial Statements 24      
Section 6.4 Legal Conditions 24       Section 6.5 Employee Matters 24      
Section 6.6 Additional Agreements 25       Section 6.7 Advice of Changes 25    
  Section 6.8 General Release of Claims 26       Section 6.9 Tax Matters 26    
  Section 6.10 Certain Pre-Closing Transactions 29       Section 6.11 Change of
Name 29       Section 6.12 Subsidiary Advisory Agreement 29       Section 6.13
Reaffirmation of Advisory Agreement 29       Section 6.14 No Negotiation 30    
  Section 6.15 Wrong Pockets 30       Section 6.16 Intercompany Obligations 30  
    Section 6.17 Property Disposition Fees 30       Section 6.18 Property
Management Agreements 30       ARTICLE VII   CONDITIONS PRECEDENT       Section
7.1 Conditions to Each Party’s Obligations – First Closing 31       Section 7.2
Conditions to Obligations of Buyer – First Closing 31       Section 7.3
Conditions to Obligations of Seller – First Closing 31       Section 7.4
Conditions to Each Party’s Obligations – Second Closing 32       Section 7.5
Conditions to Obligations of Buyer – Second Closing 32       Section 7.6
Conditions to Obligations of Seller – Second Closing 33

 

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ARTICLE VIII   SURVIVAL; INDEMNIFICATION       Section 8.1 Survival 33      
Section 8.2 Indemnification 34       Section 8.3 Calculation of Damages 36      
Section 8.4 Exclusivity 36       ARTICLE IX   TERMINATION AND AMENDMENT      
Section 9.1 Termination 36       Section 9.2 Effect of Termination 37      
ARTICLE X   GENERAL PROVISIONS       Section 10.1 Expenses 37       Section 10.2
Notices 37       Section 10.3 Definitions 38       Section 10.4 Interpretation
44       Section 10.5 Counterparts 44       Section 10.6 Entire Agreement 44    
  Section 10.7 Governing Law; Jurisdiction 45       Section 10.8 Publicity 45  
    Section 10.9 Assignment; Third Party Beneficiaries 45       Section 10.10
Specific Performance 45       Section 10.11 Amendment; Waiver 45

 

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Annex A – Calculation of Contingent Consideration       Exhibit A – Form of
Buyer Note Exhibit B-1 – Form of Interim Sub-Advisory Agreement with respect to
CCPT IV Exhibit B-2 – Form of Interim Sub-Advisory Agreement with respect to
CCPT V Exhibit B-3 – Form of Interim Sub-Advisory Agreement with respect to CCIT
Exhibit B-4 – Form of Interim Sub-Advisory Agreement with respect to CCIT II
Exhibit B-5 – Form of Interim Sub-Advisory Agreement with respect to INAV
Exhibit C-1 – Form of Wholesaling Agreement with respect to CCIT II Exhibit C-2
– Form of Wholesaling Agreement with respect to INAV Exhibit C-3 – Form of
Wholesaling Agreement with respect to CCIT Exhibit C-4 – Form of Wholesaling
Agreement with respect to CCPT IV Exhibit C-5 – Form of Wholesaling Agreement
with respect to CCPT V Exhibit D – Form of Employee Leasing Agreement Exhibit E
– Form of Side Letter Exhibit F – Form of CCP Assignment and Assumption
Agreement Exhibit G – Form of Investment Allocation Agreement Exhibit H – Form
of Services Agreement Exhibit I – Form of Non-Competition and Exclusivity
Agreement Exhibit J – Form of Registration Rights Agreement Exhibit K-1 – Form
of Sub-Advisory Agreement with respect to CCPT IV Exhibit K-2 – Form of
Sub-Advisory Agreement with respect to CCPT V Exhibit K-3 – Form of Sub-Advisory
Agreement with respect to CCIT Exhibit K-4 – Form of Sub-Advisory Agreement with
respect to CCIT II Exhibit K-5 – Form of Sub-Advisory Agreement with respect to
INAV

 

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INDEX OF DEFINED TERMS

 

2015 Buyer VWAP Amount Section 1.2(d) 2015 Excess Stock Amount Section 1.2(d)
2015 Stock Threshold Section 1.2(d)(ii)(x) Actual EBITDA Annex A Section 1.1(a)
Acquired Companies Recitals Acquired Companies’ Indebtedness Section 10.3
Acquired Company Benefit Plans Section 10.3 Acquired Company Qualified Plans
Section 3.10(c) Acquired Interests Section 1.1 Acquisition Transaction Section
6.14 Action Section 3.8(a) Adjustment Amount Section 2.1(e) Affiliate Section
10.3 Agreement Preamble Allocation Statement Section 1.3 Ancillary Agreements
Section 10.3 Assumed Benefit Plan Section 6.5(a) Audited Financial Statements
Section 3.5 Auditor Section 10.3 Breach Section 8.2(a) Broker Section 3.1(d)
Broker Sale Section 10.3 Business Recitals Business Day Section 10.3 Business
Employees Section 6.5(c) Business Information Section 6.2(b) Buyer Preamble
Buyer Benefit Plan Section 10.3 Buyer Class A Stock Section 1.2(d)(ii) Buyer
Class B Stock Section 4.2(a) Buyer Disclosure Letter Article IV Buyer
Indemnified Party Section 8.2(a) Buyer Note Section 1.2(b) Buyer Preferred Stock
Section 4.2(a) Buyer SEC Documents Section 4.6(a) Buyer Shares Section
1.2(d)(ii)(x) Buyer Tax Indemnified Parties Section 6.9(a) Cole Sale Annex A
Section 1.1(b) CCA Recitals CCC Section 10.3 CCP Recitals Change in Control
Annex A Section 1.1(c) CHC Section 10.3 CHC Employment Agreement Section 10.3
Claim Section 8.2(f) Closing Consideration Section 1.2(d) CMA Section 7.4(b)
Code Section 10.3 Company IP Section 3.18(a) Company Material Contracts Section
10.3 Company Permits Section 3.11(b) Company Regulatory Agreement Section 3.8(b)
Confidentiality Agreement Section 6.2(b) Contingent Consideration Section 1.2(e)

 

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Contracts Section 3.3(b) Damages Section 8.2(a) Deferred Consideration Section
1.2(d) Designated Employees Section 6.5(b) Designated FF&E Section 10.3
Designated Formation Funds Section 6.12 Determination Section 10.3 Determination
Date Section 2.1(d) Earn-Out Auditor Annex A Section 1.1(d) Earn-Out- Buyer VWAP
Annex A Section 1.1(b)(ii) Earn-Out Excess Stock Amount Annex A Section
1.1(b)(ii) Earn-Out Multiple Annex A Section 1.1(e) Earn-Out Payment Annex A
Section 1.2(a) Earn-Out Stock Threshold Annex A Section 1.1(b)(ii) EFA Section
3.1(c) Equity Interests Section 10.3 ERISA Section 10.3 ERISA Affiliate Section
10.3 Estimated Closing Net Working Capital Section 10.3 Estimated Closing Net
Working Capital Overage Section 10.3 Estimated Closing Net Working Capital
Shortage Section 10.3 Estimated Closing Statement Section 2.1(a) Excess EBITDA
Annex A Section 1.1(f) Final Closing Net Working Capital Section 10.3 Final
Closing Net Working Capital Overage Section 10.3 Final Closing Net Working
Capital Shortage Section 10.3 Final Closing Statement Section 2.1(b) Final
Contingent Consideration Statement Annex A Section 1.3(c) Final Earn-Out Payment
Statement Annex A Section 1.3(e) Final Special Earn-Out Payment Annex A Section
1.7(b)(4) Financial Statements Section 3.5 FINRA Section 10.3 First Closing
Section 1.4(a) First Closing Date Section 1.4(a) Form BD Section 3.21(b)
Formation Fund Advisory Agreement Section 6.12 Formation Fund Sub-Advisory
Agreement Section 6.12 GAAP Section 10.3 Governing Documents Section 10.3
Governmental Entity Section 3.4 Gross Income Section 10.3 HSR Act Section 3.4
Incumbent Directors Annex A Section 1.1(c)(iv) Indebtedness Section 10.3
Indemnified Party Section 10.3 Indemnifying Party Section 8.2(c) Initial Closing
Consideration Section 1.2(a) Initial Contingent Consideration Statement Section
Annex A Section 1.3(a) Intellectual Property Section 10.3 IRS Section 10.3
Knowledge Section 10.3 Law Section 3.11(a) Laws Section 3.11(a) Liens Section
3.2(b) Material Adverse Effect on Buyer Section 10.3 Material Adverse Effect on
Seller Section 10.3

 

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Material Subsidiaries Section 3.1(c) MTN Section 10.3 MTN Employment Agreement
Section 10.3 Multiemployer Plan Section 10.3 NASD Section 10.3 Net Working
Capital Section 10.3 Notice of Claim Section 8.2(f) Notice of Contingent
Consideration Statement Disagreement Annex A Section 1.3(b) NYSE Section 10.3
Orders Section 3.8(a) Outside Date Section 9.1(c) Parties Preamble Party
Preamble Performance Period Annex A Section 1.1(g) Permitted Changes Section
6.12 Permitted Liens Section 10.3 Person Section 10.3 Post-Closing Period
Section 10.3 Pre-Closing Period Section 10.3 Pre-Closing Tax Return Section
6.9(d)(i) Premises Section 10.3 Proposed Contingent Consideration Statement
Adjustments Annex A Section 1.3(b) Registration Rights Agreement Section
1.6(a)(vii) Released Persons Section 6.8 Releasing Persons Section 6.8 Requisite
Approvals Section 7.1(a) Restructuring Transactions Section 6.10 Retained
Employees Section 10.3 SEC Section 10.3 Second Closing Section 1.4(a) Second
Closing Cash Consideration Section 1.2(c) Second Closing Date Section 1.4(a)
Securities Act Section 10.3 Seller Preamble Seller Disclosure Letter Article III
Seller GP Recitals Seller GP/Cole Merger Agreement Section 10.3 Seller
Indemnified Party Section 8.2(b) Seller Tax Indemnified Parties Section 6.9(b)
Special Earn-Out Event Annex A Section 1.1(h) Special Earn-Out Notice Annex A
Section 1.7(a) Special Earn-Out Payment Annex A Section 1.1(i) Special Earn-Out
Payment Calculation Annex A Section 1.7(b)(2) Special Earn-Out Statement Annex A
Section 1.7(b)(1) Special Earn-Out Trigger Date Annex A Section 1.7(a) Straddle
Period Section 10.3 Straddle Period Tax Return Section 6.9(d)(ii) Subsidiary
Section 10.3 Target EBITDA Annex A Section 1.1(j) Target Net Working Capital
Section 10.3 Tax Section 10.3 Tax Claim Section 10.3 Tax Proceeding Section 10.3
Tax Return Section 10.3 Tax Sharing Agreement Section 10.3 Taxes Section 10.3

 

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Taxing Authority Section 10.3 Test Date Annex A Section 1.1(k) Third Party Claim
Section 8.2(g) Transfer Taxes Section 6.9(i) Unaudited Financial Statements
Section 3.5 Unresolved Contingent Consideration Statement Adjustments Annex A
Section 1.3(d)

  

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EQUITY PURCHASE AGREEMENT

 

EQUITY PURCHASE AGREEMENT, dated as of September 30, 2014 (as it may be amended
or supplemented, this “Agreement”), by and between ARC Properties Operating
Partnership, L.P., a Delaware limited partnership (“Seller”), and RCS Capital
Corporation, a Delaware corporation (“Buyer”). Each of Seller and Buyer may be
referred to herein as a “party” and collectively as the “parties.”

 

WITNESSETH:

 

WHEREAS, through the Acquired Companies (as defined below) and their respective
Subsidiaries, Seller is engaged in the private capital management business,
including the broker-dealer, wholesale distribution, non-traded REIT sponsorship
and advisory businesses (referred to herein, together with all related
intellectual property and all other related assets and properties, as the
“Business”);

 

WHEREAS, Seller and Buyer wish to effect a strategic transaction pursuant to
which, on the terms and subject to the conditions set forth in this Agreement,
Seller will sell to Buyer, and Buyer will purchase from Seller, all of the
outstanding Equity Interests held by Seller in each of Cole Capital Partners,
LLC, an Arizona limited liability company (“CCP”), and Cole Capital Advisors,
Inc., an Arizona corporation (“CCA” and, together with CCP, the “Acquired
Companies”), such that, immediately following the consummation of the
transaction, Buyer, through the Acquired Companies and their respective
Subsidiaries, will be engaged in the Business;

 

WHEREAS, the Board of Directors of American Realty Capital Properties, Inc., a
Maryland corporation and the general partner of Seller (“Seller GP”), has (a)
determined that this Agreement and the transactions contemplated hereby are
advisable and in the best interests of Seller, and (b) approved this Agreement
and the transactions contemplated hereby; and

 

WHEREAS, the Board of Directors of Buyer has (a) determined that this Agreement
and the transactions contemplated hereby are advisable and in the best interests
of Buyer, and (b) approved this Agreement and the transactions contemplated
hereby.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:

 

Article I

 

PURCHASE AND SALE

 

Section 1.1           Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, at the Second Closing, Seller shall sell, assign,
transfer, convey and deliver to Buyer, and Buyer shall purchase and acquire from
Seller, free and clear of all Liens, all of the outstanding Equity Interests in
each of the Acquired Companies (the “Acquired Interests”).

 

Section 1.2           Consideration. Upon the terms and subject to the
conditions of this Agreement, in consideration for the purchase of the Acquired
Interests pursuant to Section 1.1:

 

(a)          at the First Closing, Buyer shall pay or cause to be paid to Seller
or its designee cash in an amount equal to $10 million (the “Initial Closing
Consideration”).

 

(b)          at the Second Closing, Buyer shall deliver or cause to be delivered
to Seller, an unsecured note of Buyer in an aggregate principal amount of $300
million in the form attached hereto as Exhibit A (the “Buyer Note”).

 

(c)          at the Second Closing, Buyer shall pay or cause to be paid to
Seller cash in an amount equal to $65 million (the “Second Closing Cash
Consideration”).

 

 

 

 

(d)          if the Second Closing has occurred, then, on April 1, 2015, Buyer
shall deliver or cause to be delivered to Seller the following aggregate
consideration (the “Deferred Consideration” and together with the Buyer Note and
the Second Closing Cash Consideration, the “Closing Consideration”):

 

(i)          cash in an amount equal to $125 million, plus, if applicable, an
amount equal to the 2015 Excess Stock Amount; and

 

(ii)         as determined by Buyer in its sole discretion, either:

 

(x) 8,397,857 validly issued, fully paid and non-assessable shares (the “Buyer
Shares”) of Class A common stock, par value $0.001, of Buyer (the “Buyer Class A
Stock”), provided, however, if such number of shares is greater than a number
representing nineteen and nine tenths percent (19.9%) of the shares of Buyer
Class A Stock outstanding as of March 31, 2015 (such number, the “2015 Stock
Threshold”), then such number of Buyer Shares to be delivered pursuant to this
Section 1.2(d)(ii)(x) shall be reduced to the 2015 Stock Threshold; or

 

(y) cash in the amount equal to $200 million.

 

For purposes hereof, (i) “2015 Excess Stock Amount” shall mean the number of
shares of Buyer Class A Stock in excess of the 2015 Stock Threshold that would
have been issued under Section 1.2(d)(ii)(x) but for the proviso thereto,
multiplied by the 2015 Buyer VWAP, and (ii) the “2015 Buyer VWAP” shall mean the
intraday volume weighted average price of one share of Buyer Class A Stock, as
reported by Bloomberg, LP, over the ten (10) trading days ending on the trading
day immediately preceding April 1, 2015.

 

(e)          if the Second Closing has occurred, then, subject to Section
1.2(f), following the Second Closing, and as additional consideration for the
Acquired Interests, Buyer shall pay or cause to be paid an earn-out payment or
special earn-out payment, if any, in accordance with the terms and conditions
set forth in Annex A hereto (the “Contingent Consideration”). The Contingent
Consideration, if any, will be paid in cash and/or shares of Buyer Class A Stock
in accordance with Annex A hereto.

 

(f)          Notwithstanding anything to the contrary herein, if, at the time
Seller is entitled to receive the Deferred Consideration pursuant to Section
1.2(d), the sum of (i) the Gross Income that would be recognized by Seller
attributable to the receipt of such Deferred Consideration in the tax year (such
Gross Income determined based on the fair market value of the Buyer Shares at
the time of their issuance), plus (ii) any other Gross Income that is reasonably
expected to be recognized by Seller in the same tax year and that would not
qualify as Gross Income under Section 856(c)(3) of the Code (the “Nonqualifying
Income”), is reasonably expected to exceed 22.5% of the total Gross Income to be
recognized by Seller in such tax year (the “Nonqualifying Income Limitation”),
the amount of Deferred Consideration that exceeds the amount of Deferred
Consideration Seller could receive pursuant to Section 1.2(d) and not exceed the
Nonqualifying Income Limitation shall be deferred (the “Deferred Nonqualifying
Consideration”) and Seller shall not be entitled to receive such Deferred
Nonqualifying Consideration until the subsequent tax year. If the receipt of the
Deferred Nonqualifying Consideration by Seller in such subsequent tax year would
reasonably cause Seller to violate the Nonqualifying Income Limitation if
applied to such subsequent tax year, the principles of the prior sentence shall
be applied to the Deferred Nonqualifying Consideration in order to further defer
the receipt by Seller of a sufficient amount of the Deferred Nonqualifying
Consideration to subsequent tax years. The Deferred Nonqualifying Consideration
payable pursuant to the prior two sentences shall be paid by Buyer to Seller
within 5 days after the beginning of the tax year to which such Deferred
Nonqualifying Consideration has been deferred. The Buyer shall not redeem,
except as otherwise permitted under the Buyer Note, and Seller shall not
transfer all or a portion of the Buyer Note in any tax year to the extent the
Gross Income that would be recognized by Seller from such redemption or transfer
if included in the Nonqualifying Income for such tax year, would cause the total
Gross Income to be recognized by Seller in such tax year to exceed the
Nonqualifying Income Limitation. The calculations required by this paragraph
shall be reasonably determined by Seller in consultation with its external tax
accountants. Seller shall notify and provide to Buyer in writing, no later than
5 days prior to the date of a scheduled payment of Deferred Consideration, a
copy of such calculations and such notification shall set forth the amount, if
any, of such Deferred Consideration that is Deferred Nonqualifying Consideration
to be paid in a subsequent taxable year. Buyer shall have no liability to
Seller, and shall be held harmless by Seller, in the event that the calculations
prepared by Seller are erroneous.

 

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Section 1.3           Purchase Price Allocation. Buyer and Seller agree that the
Closing Consideration and the Contingent Consideration, if any, shall be
allocated among the assets of CCP, the stock of CCA and the Non-Competition and
Exclusivity Agreement in accordance with Section 1060 of the Code (the
“Allocation Statement”). Buyer and Seller shall cooperate to determine the
Allocation Statement within 30 days following the date on which the Final
Closing Statement has been determined in accordance with Section 2.1(b), subject
to adjustment in the event of a payment of Contingent Consideration occurring
after such determination. If the parties are unable to reach an agreement
regarding the allocation, any disagreements shall be resolved by the Auditor and
the determination by the Auditor shall be final and binding on the parties. The
fees and expenses of the Auditor shall be shared equally by Seller and Buyer.
The parties will report, act and file Tax Returns (including IRS Form 8594) in
all respects and for all Tax purposes consistent with the Allocation Statement,
and the parties and their respective Affiliates will not take any position
inconsistent with the Allocation Statement for tax, accounting or financial
reporting purposes, unless required to do so by applicable Law.

 

Section 1.4           Closings. Upon the terms and subject to the conditions set
forth in this Agreement:

 

(a)          the closing (i) of the transactions contemplated by Section 1.5 of
this Agreement, (the “First Closing”) shall take place at the offices of Weil,
Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York, 10153, on the date
no later than three (3) Business Days after the date on which the last of the
closing conditions set forth in Section 7.1, Section 7.2 and Section 7.3 shall
have been satisfied or validly waived (subject to applicable Law) (other than
those conditions that by their nature are to be satisfied (or validly waived) at
the First Closing, but subject to such satisfaction or valid waiver), unless
such time or date is extended by mutual agreement of the parties (the “First
Closing Date”), and (ii) of the transactions contemplated by Section 1.6 of this
Agreement (the “Second Closing”) shall take place at the offices of Weil,
Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York, 10153, on the date
no later than three (3) Business Days after the date on which the last of the
closing conditions set forth in Section 7.4, Section 7.5 and 7.6 shall have been
satisfied or validly waived (subject to applicable Law) (other than those
conditions that by their nature are to be satisfied (or validly waived) at the
Second Closing, but subject to such satisfaction or valid waiver), unless such
time or date is extended by mutual agreement of the parties (the “Second Closing
Date”);

 

Section 1.5           First Closing Deliveries.

 

(a)          Buyer Deliveries to Seller. At the First Closing, Buyer shall
deliver, or cause to be delivered, to Seller the following:

 

(i)          the Initial Closing Consideration, by wire transfer of immediately
available funds to an account designated by Seller at least one Business Day
prior to the First Closing Date;

 

(ii)         the Interim Sub-Advisory Agreements in the forms attached hereto as
Exhibits B-1 through B-5 executed by the respective parties thereto;

 

(iii)        the Wholesaling Agreements in the forms attached hereto as Exhibits
C-1 through C-5 executed by the respective parties thereto;

 

(iv)        the Employee Leasing Agreement in the form attached hereto as
Exhibit D executed by the respective parties thereto; and

 

(v)         the Side Letter in the form attached hereto as Exhibit E executed by
the respective parties thereto.

 

(b)          Seller Deliveries to Buyer. At the First Closing, Seller shall
deliver, or cause to be delivered, to Buyer the following:

 

(i)          the Interim Sub-Advisory Agreements in the forms attached hereto as
Exhibits B-1 through B-5 executed by the respective parties thereto;

 

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(ii)         the Wholesaling Agreements in the forms attached hereto as Exhibits
C-1 through C-5 executed by the respective parties thereto;

 

(iii)        the Employee Leasing Agreement in the form attached hereto as
Exhibit D executed by the respective parties thereto; and

 

(iv)        the Side Letter in the form attached hereto as Exhibit E executed by
the respective parties thereto.

 

Section 1.6           Second Closing Deliveries.

 

(a)          At the Second Closing, Buyer shall deliver, or cause to be
delivered, to Seller the following:

 

(i)          the Second Closing Cash Consideration.

 

(ii)         the Buyer Note;

 

(iii)        the CCP Assignment and Assumption Agreement in the form attached
hereto as Exhibit F, executed by the parties thereto;

 

(iv)        the Investment Allocation Agreement in the form attached hereto as
Exhibit G executed by the parties thereto;

 

(v)         the Services Agreement in the form attached hereto as Exhibit H
executed by the parties thereto;

 

(vi)        the Non-Competition and Exclusivity Agreement in the form attached
hereto as Exhibit I executed by the parties thereto; and

 

(vii)       the Registration Rights Agreement in the form attached hereto as
Exhibit J executed by the parties thereto (the “Registration Rights Agreement”).

 

(b)          At the Second Closing, Seller shall deliver, or cause to be
delivered, to Buyer the following:

 

(i)          the CCP Assignment and Assumption Agreement in the form attached
hereto as Exhibit F, executed by the parties thereto;

 

(ii)         stock certificates representing the capital stock of CCA, together
with stock powers duly executed in blank in form and substance reasonably
satisfactory to Seller and Buyer and with all required stock transfer tax stamps
affixed;

 

(iii)        the resignations, effective as of the Second Closing (and otherwise
in form and substance reasonably satisfactory to Seller and Buyer), of each of
the directors and/or managers of each of the Acquired Companies and their
respective Subsidiaries, except for such persons as shall have been designated
by Buyer to Seller in writing prior to the First Closing Date;

 

(iv)        the Investment Allocation Agreement in the form attached hereto as
Exhibit G executed by the parties thereto;

 

(v)         the Sub-Advisory Agreements in the forms attached hereto as Exhibits
K-1 through K-5 executed by the respective parties thereto;

 

(vi)        the Services Agreement in the form attached hereto as Exhibit H
executed by the parties thereto;

 

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(vii)       an instrument terminating the Agreement, dated January 8, 2014, by
and among AR Capital, LLC, Nicholas Schorsch and Seller GP executed by the
respective parties and in form and substance satisfactory to Seller and Buyer;

 

(viii)      the Non-Competition and Exclusivity Agreement, substantially in the
form attached hereto as Exhibit I, executed by each of the parties set forth in
such Exhibit;

 

(ix)         an instrument or instruments in form and substance satisfactory to
Buyer and Seller assigning to Buyer, to the extent permissible, (A) the
non-competition provisions applicable to CHC contained in the Seller GP/Cole
Merger Agreement and the CHC Employment Agreement, and (B) the non-competition
provisions applicable to MTN contained in the MTN Employment Agreement;

 

(x)          the Registration Rights Agreement executed by the parties thereto;
and

 

(xi)         such other documents and instruments, including the organizational
documents of the Acquired Companies, as may be reasonably requested by Buyer to
effect or evidence the purchase of the Acquired Interests and the other
transactions contemplated by this Agreement, in form and substance reasonably
satisfactory to Buyer.

 

Section 1.7           Deferred Payment. If the Second Closing has occurred,
then, on April 1, 2015, Buyer shall deliver or cause to be delivered to Seller
the Deferred Payment. If the Deferred Payment includes any Buyer Shares, then,
on April 1, 2015, the Buyer shall cause to be made a book entry statement from
Buyer’s transfer agent reflecting the issuance of such Buyer Shares to Seller.

 

Section 1.8           Withholding Rights. Buyer shall be entitled to deduct and
withhold from any cash or other consideration required to be delivered pursuant
to this Agreement such amounts as Buyer is required to deduct and withhold under
the U.S. Internal Revenue Code of 1986, as amended (the “Code”), or any
provision of state, local or foreign Tax law, with respect to the making of such
payment. To the extent the amounts are so withheld by Buyer and paid over to the
appropriate Taxing Authority, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the Person in respect of which
such withholding was made.

 

Section 1.9           Adjustment to Stock Consideration. Notwithstanding any
other provision of this Agreement, in the event of a dividend (whether cash or
otherwise), stock split, reverse stock split, extraordinary dividend,
recapitalization, reclassification, reorganization, merger, consolidation,
spin-off, combination, exchange of shares or rights offering to purchase shares
of Buyer, or other similar corporate event or transaction that affects the Buyer
Shares (a “Corporate Event”), then, without any further corporate action on the
part of Buyer or Seller (A) in the event that the Corporate Event entitles the
holders of Buyer Class A Stock to receive (either directly or upon subsequent
liquidation) stock, securities or assets (including cash) with respect to shares
of Buyer Class A Stock, then upon delivery of the Buyer Shares to Seller
pursuant to this Agreement, Buyer shall also deliver to Seller such stock,
securities or assets (including cash) Seller would have been entitled to receive
as a holder of Buyer Class A Stock if the Buyer Shares had been issued to Seller
as of the Second Closing Date and (B) in the event that the Corporate Event
entitles the holders of Buyer Class A Stock to receive (either directly or upon
subsequent liquidation) stock, securities or assets (including cash) in exchange
for Buyer Class A Stock, then at the time delivery of the Buyer Shares to Seller
pursuant to this Agreement would otherwise occur, Buyer (or any successor entity
resulting from such Corporate Event) shall deliver to Seller, in lieu of the
Buyer Shares to be delivered to Seller pursuant to this Agreement, such stock,
securities or assets (including cash) Seller would have been entitled to receive
as a holder of Buyer Class A Stock if the Buyer Shares had been issued to Seller
as of the Second Closing Date.

 

5

 

 

Article II

 

WORKING CAPITAL ADJUSTMENT

 

Section 2.1           Working Capital Adjustment. 

 

(a)          No less than three (3) Business Days prior to the Second Closing
Date, Seller shall prepare and deliver to Buyer a written closing statement (the
“Estimated Closing Statement”) of the Estimated Closing Net Working Capital,
including the resulting Estimated Closing Net Working Capital Overage (if any)
or Estimated Closing Net Working Capital Shortage (if any), which Estimated
Closing Statement shall be prepared in good faith in accordance with GAAP
applied on a basis consistent with Seller’s accounting principles, policies and
methodologies used in connection with the preparation of the Financial
Statements.

 

(b)          No more than forty-five (45) days after the Second Closing Date,
Buyer shall prepare and deliver to Seller a written statement (the “Final
Closing Statement”), as of the Second Closing Date, of the Final Closing Net
Working Capital, including the resulting Final Closing Net Working Capital
Overage (if any) or Final Closing Net Working Capital Shortage (if any), and
including a reasonably detailed breakdown of the various amounts of each
component of Net Working Capital, which Final Closing Statement shall be
prepared in good faith in accordance with GAAP applied on a basis consistent
with Seller’s accounting principles, policies and methodologies used in
connection with the preparation of the Financial Statements.

 

(c)          No less than five (5) Business Days following the date hereof,
Seller shall prepare and deliver to Buyer an illustrative example of the Final
Closing Statement (including calculations of Net Working Capital), calculated as
if the Second Closing Date were June 30, 2014.

 

(d)          If Seller disagrees with the calculation of any amounts on the
Final Closing Statement, Seller shall, within thirty (30) days after receipt of
the Final Closing Statement, notify Buyer of such disagreement in writing,
setting forth in detail the particulars of such disagreement. Buyer will provide
Seller with reasonable access upon reasonable notice to any of Buyer’s records
and relevant employees not otherwise available to Seller as a result of the
transactions contemplated hereby, to the extent reasonably related to Seller’s
review of the Final Closing Statement. If Seller does not provide such notice of
disagreement within the thirty (30)-day period, Seller shall be deemed to have
accepted the Final Closing Statement and the calculation of all amounts set
forth thereon, which shall be final, binding and conclusive for purposes of this
Agreement and not subject to any further recourse by Seller or its Affiliates.
If any such notice of disagreement is timely provided, Seller and Buyer shall
use reasonable best efforts for a period of five (5) Business Days (or such
longer period as they may mutually agree) to resolve any disagreements with
respect to the calculation of any and all amounts set forth on the Final Closing
Statement. If, at the end of such period, Seller and Buyer are unable to fully
resolve the disagreements, the Auditor shall resolve any remaining
disagreements. The Auditor shall be instructed to (i) consider only such matters
as to which there is a disagreement, (ii) determine, as promptly as practicable,
whether the disputed amounts set forth on the Final Closing Statement were
prepared in accordance with the standards set forth in this Agreement, and (iii)
deliver, as promptly as practicable, to Seller and Buyer its determination in
writing. The resolution for each disputed item contained in the Auditor’s
determination shall be made subject to the definitions and principles set forth
in this Agreement, and shall be consistent with either the position of Seller or
Buyer. Seller and Buyer shall bear their own expenses in the preparation and
review of the Estimated Closing Statement and Final Closing Statement. The fees
and expenses of the Auditor shall be allocated between Seller on the one hand,
and Buyer, on the other hand, in inverse proportion as they may prevail on the
matters resolved by the Auditor, which proportionate allocation shall be
calculated on an aggregate basis based on the relative dollar values of the
amounts in dispute and shall be determined by the Auditor at the time the
determination of such firm is rendered on the merits of the matters submitted.
The determination of the Auditor shall be final, binding and conclusive for
purposes of this Agreement and not subject to any further recourse by Seller,
Buyer or their respective Affiliates. Any dispute with respect to the Final
Closing Statement will not affect any undisputed amounts in the Final Closing
Statement. For purposes of this Agreement, the date on which the amounts set
forth on the Final Closing Statement are finally determined in accordance with
this Section 2.1(d) shall be the “Determination Date.”

 

6

 

 

(e)          Promptly after the Determination Date, the Closing Consideration
shall be adjusted by an amount (the “Adjustment Amount”) equal to the sum of (i)
the Final Closing Net Working Capital Overage (if any) minus (ii) the Final
Closing Net Working Capital Shortage (if any). The Adjustment Amount may be a
positive or negative number. If the Adjustment Amount is a positive number, then
the Closing Consideration shall be increased by the absolute value of the
Adjustment Amount and Buyer shall pay to Seller an amount in cash equal to the
Adjustment Amount, together with interest thereon from and including the Second
Closing Date through and including the date immediately prior to the payment
date at a rate of 1.7% per annum, such payment to be made by wire transfer of
immediately available funds to an account designated by Seller no later than
five (5) Business Days after the Determination Date. If the Adjustment Amount is
a negative number, then the Closing Consideration shall be decreased by the
absolute value of the Adjustment Amount, and Seller shall pay to Buyer an amount
in cash equal to such absolute value, together with interest thereon from and
including the Second Closing Date through and including the date immediately
prior to the payment date at a rate of 1.7% per annum, such payment to be made
by wire transfer of immediately available funds to an account designated by
Buyer no later than five (5) Business Days after the Determination Date.

 

Article III

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Except (i) as disclosed in the forms, statements and reports of Seller publicly
available, filed with, or furnished (on a publicly available basis) to, as
applicable, the SEC on or after February 7, 2014 and prior to the date of this
Agreement (excluding any risk factor disclosures contained in such documents
under the heading “Risk Factors” and any disclosure of risks or other matters
included in any “forward-looking statements” disclaimer or other statements that
are cautionary, predictive or forward-looking in nature, which in no event shall
be deemed to be an exception to, or disclosure for purposes of, any
representation or warranty set forth in this Article III), or (ii) as
specifically disclosed in a correspondingly numbered section of the disclosure
letter (the “Seller Disclosure Letter”) delivered by Seller to Buyer prior to
the execution of this Agreement (it being acknowledged and agreed that
disclosure of any item in any section or subsection of the Seller Disclosure
Letter shall be deemed disclosed with respect to any other section or subsection
of this Agreement to the extent the applicability of such disclosure is
reasonably apparent on its face), Seller hereby represents and warrants to Buyer
as follows:

 

Section 3.1           Corporate Organization.

 

(a)          Seller is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware. Each Acquired
Company is a corporation or limited liability company duly incorporated or
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each Acquired Company has all
requisite corporate or limited liability company power and authority to own or
lease all of its properties and assets and to carry on its Business as it is now
being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the Business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except for failures to be so licensed
or qualified, as the case may be, that would not, individually or in the
aggregate, be material to the Acquired Companies and their respective
Subsidiaries taken as a whole.

 

(b)          Each Acquired Company’s Subsidiary (i) is duly organized and
validly existing under the laws of its jurisdiction of organization, (ii) is
duly qualified to do business and in good standing in all jurisdictions (whether
federal, state, local or foreign) where its ownership or leasing of property or
the conduct of its Business requires it to be so qualified and (iii) has all
requisite corporate or limited liability company power and authority to own or
lease its properties and assets and to carry on its business as now conducted,
except for failures to be so qualified or in good standing or have such
requisite powers, as the case may be, that would not, individually or in the
aggregate, be material to the Acquired Companies and their respective
Subsidiaries taken as a whole.

 

(c)          Other than each Acquired Company’s Subsidiaries, the Acquired
Companies do not hold any interests, either directly or indirectly, in any other
entities. The following constitute the only material Subsidiaries of the
Acquired Companies: Cole Growth Opportunity Fund I, GP LLC, Equity Fund
Advisors, Inc. (“EFA”), Cole Corporate Income Advisors II, LLC, Cole REIT
Advisors, LLC, Cole REIT Advisors II, LLC, Cole REIT Advisors

 

7

 

 

IV, LLC, Cole Corporate Income Advisors, LLC, Cole Real Estate Income Strategy
(Daily NAV) Advisors, LLC, Cole Capital Corporation, Cole Corporate Income
Advisors III, LLC, Cole REIT Advisors V, LLC, Cole REIT Advisors VI, LLC , CCSN
III, LLC and CCSN IV, LLC (the “Material Subsidiaries”).

 

(d)          Section 3.1(d) of the Seller Disclosure Letter sets forth the name
of each Acquired Company or Subsidiary of an Acquired Company which is a
broker-dealer registered with the SEC and a member of FINRA (each, a “Broker”).

 

Section 3.2           Capitalization.

 

(a)          All of the authorized, issued and outstanding Equity Interests of
each of the Acquired Companies are owned beneficially of record by Seller. As of
the date of this Agreement, none of the Equity Interests of any Acquired Company
or any of its Subsidiaries were held in such Acquired Company’s or Subsidiary’s
treasury. As of the date of this Agreement, no Equity Interests of any Acquired
Company or any of its Subsidiaries were reserved for issuance. All of the issued
and outstanding Equity Interests of each Acquired Company have been duly
authorized and validly issued and, as applicable, are fully paid, nonassessable,
free and clear of all Liens (other than Permitted Liens), and not subject to
preemptive rights. Except pursuant to this Agreement, the Acquired Companies do
not have and are not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any Equity Interests of any Acquired Company or any securities
representing the right to purchase or otherwise receive any such Equity
Interests. Neither the Acquired Companies nor any of their respective
Subsidiaries have issued or awarded, or authorized the issuance or award of any,
and there are currently no outstanding, options or other equity-based awards
under the Acquired Company Benefit Plans or otherwise for the purchase or
issuance of any Equity Interests of any Acquired Company. There are no
outstanding bonds, debentures, notes or other Indebtedness of any Acquired
Company or any Subsidiary of an Acquired Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matter on which holders of Equity Interests in any Acquired Company or such
Subsidiary may vote.

 

(b)          All of the issued and outstanding shares of capital stock or other
Equity Interests of each Subsidiary of an Acquired Company are owned by such
Acquired Company, directly or indirectly, free and clear of any liens, claims,
mortgages, encumbrances, pledges, security interests, equities or charges of any
kind (other than liens for property Taxes not yet due and payable, collectively,
“Liens”), other than Permitted Liens (which shall be released in full at or
prior to the Second Closing) and all of such shares or Equity Interests are duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights. No such Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
other Equity Interest of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or any other
Equity Interest of such Subsidiary. No Subsidiary of any Acquired Company owns
any Equity Interests in any Acquired Company.

 

Section 3.3           Authority; No Violation.

 

(a)          Seller has full limited partnership power and authority to execute
and deliver this Agreement and each Ancillary Agreement to which it is a party
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and each Ancillary Agreement to which
Seller is a party and the consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by the Board of Directors of
Seller GP, as the general partner of Seller. No other limited partnership
proceedings on the part of Seller are necessary to approve this Agreement or
such Ancillary Agreements or to consummate the transactions contemplated hereby
and thereby. This Agreement and such Ancillary Agreements have been duly and
validly executed and delivered by Seller and (assuming due authorization,
execution and delivery by the other parties thereto) constitute valid and
binding obligations of Seller, enforceable against Seller in accordance with
their respective terms (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors
generally and the availability of equitable remedies).

 

(b)          Neither the execution and delivery by Seller of this Agreement or
any Ancillary Agreement to which it is a party nor the consummation by Seller of
the transactions contemplated hereby and thereby, nor compliance by Seller with
any of the terms or provisions this Agreement or any such Ancillary Agreement,
will (i)

 

8

 

 

violate any provision of the Governing Documents of Seller or any of the
Acquired Companies or their respective Subsidiaries or (ii) assuming that the
consents, approvals and filings referred to in Section 3.4 are duly obtained
and/or made, (A) violate any statute, code, ordinance, rule, regulation or Order
applicable to the Acquired Companies, any of their respective Subsidiaries or
any of their respective properties or assets or (B) violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the properties or assets of the
Acquired Companies or any of their respective Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument (collectively, “Contracts”)
to which any Acquired Company or any of its Subsidiaries is a party, or by which
they or any of their respective properties or assets may be bound or affected,
except for such violations, conflicts, breaches or defaults with respect to
clause (ii)(B) that are not reasonably likely to have, either individually or in
the aggregate, a Material Adverse Effect on Seller.

 

Section 3.4           Consents and Approvals. Except for (i) any notices or
filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the “HSR Act”), (ii) such notices and applications with FINRA that are
required under FINRA and NASD rules, (iii) such filings and approvals as are
required to be made or obtained under applicable securities or “blue sky” laws
in connection with the issuance of the Buyer Shares pursuant to this Agreement
and (iv) such filings, consents and approvals set forth in Section 3.4 of the
Seller Disclosure Letter, no material consents or approvals of or filings or
registrations with any court, administrative agency or commission or other
governmental authority or instrumentality or applicable self-regulatory
organization (each a “Governmental Entity”) are necessary in connection with (A)
the execution and delivery by Seller of this Agreement or any Ancillary
Agreement to which it is a party and (B) the consummation by Seller of the
transactions contemplated by this Agreement or such Ancillary Agreements.

 

Section 3.5           Financial Statements. Seller has previously made available
to Buyer true and complete copies of (a) the audited consolidated balance sheets
of CCA and its Subsidiaries as of December 31, 2010 and December 31, 2011, and
the related consolidated statements of operations for the years then ended (the
“Audited Financial Statements”), (b) the unaudited summary balance sheets of CCP
as of December 31, 2010, December 31, 2011 and December 31, 2012 and the related
summary income statements for the years then ended, (c) the unaudited
consolidated summary balance sheet of CCA as of November 30, 2012, and the
related consolidated summary income statement for the period then ended, and (d)
the unaudited summary balance sheet of CCC as of December 31, 2013 and the notes
thereto (the items set forth in clauses (b), (c) and (d) of this Section 3.5 the
“Unaudited Financial Statements” and, together with the Audited Financial
Statements, the “Financial Statements”). Except as described in the notes
thereto and, in the case of the Unaudited Financial Statements, the absence of
notes, and normal adjustments (which, in the aggregate, are not and will not be
material), the Financial Statements have been prepared in accordance with GAAP
consistently applied and fairly present, in all material respects, the financial
condition and results of operations of the Acquired Companies and their
respective Subsidiaries as of the dates thereof or for the periods then ended,
as applicable.

 

Section 3.6           Broker’s Fees. Neither Seller nor any Acquired Company or
its Subsidiaries, nor any of their respective officers or directors has employed
any broker, investment banker or finder or incurred any liability for any
broker’s fees, commissions or finder’s fees or other similar fees or commissions
in connection with the transactions contemplated by this Agreement, other than
Moelis & Company LLC (the fees and expenses in respect of which shall be paid by
Seller.

 

Section 3.7           Absence of Certain Changes or Events. Since February 7,
2014, the Acquired Companies and their respective Subsidiaries have conducted
their respective businesses, in all material respects, only in the ordinary
course consistent with past practice, and there has not been:

 

(a)          any issuance or award of any equity awards or other equity-based
awards in respect of any Equity Interests of any Acquired Company or any of its
Subsidiaries to any director, officer or employee of such Acquired Company or
any of its Subsidiaries;

 

(b)          except as required by the terms of any of the Acquired Company
Benefit Plans or by applicable Law or in the ordinary course of business, (i)
any granting by Seller, any Acquired Company or any of its

 

9

 

 

Subsidiaries to any Business Employee of any increase in compensation, bonus or
other benefits, (ii) any granting by Seller, any Acquired Company or any of its
Subsidiaries to any Business Employee of any increase in severance or
termination pay, (iii) any entry by any Acquired Company or any of its
Subsidiaries into, or any amendment of, any employment, deferred compensation,
consulting, severance, termination or indemnification agreement with any
Business Employee, or (iv) any establishment, adoption, entry into, amendment or
modification of any Acquired Company Benefit Plan for the benefit of any
Business Employee;

 

(c)          any change in any material respect in accounting methods,
principles or practices by any Acquired Company or any of its Subsidiaries
affecting its assets, liabilities or business, other than changes after the date
hereof to the extent required by a change in GAAP or regulatory accounting
principles;

 

(d)          any material Tax election or change in or revocation of any
material Tax election, amendment to any material Tax return, closing agreement
with respect to Taxes, or settlement or compromise of any material income Tax
liability by any Acquired Company or any of its Subsidiaries;

 

(e)          any material change in its investment or risk management or other
similar policies; or

 

(f)          any agreement or commitment (contingent or otherwise) to do any of
the foregoing.

 

Section 3.8           Legal Proceedings.

 

(a)          There are no (i) actions, claims, suits, arbitrations,
investigations or proceedings (each, an “Action”) pending (or, to the Knowledge
of Seller, threatened) against or affecting any Acquired Company or any of its
Subsidiaries, or any of their respective properties, at law or in equity, or
(ii) orders, judgments, injunctions, awards, stipulations, decrees or writs
handed down, adopted or imposed by, including any consent decree, settlement
agreement or similar written agreement with, any Governmental Entity
(collectively, “Orders”) against any Acquired Company or any of its
Subsidiaries, in each case of clause (i) or (ii), which would, individually or
in the aggregate, be material to the Acquired Companies and their respective
Subsidiaries taken as a whole.

 

(b)          Neither the Acquired Companies nor any of their respective
Subsidiaries is subject to any cease-and-desist or other Order or enforcement
action issued by, or is a party to any written agreement, consent agreement or
memorandum of understanding with, or is party to any commitment letter or
similar undertaking to, or is subject to any Order or directive by, or has been
since February 7, 2014, a recipient of any supervisory letter from, or has been
ordered to pay any material civil money penalty by, or since February 7, 2014,
has adopted any policies, procedures or board resolutions at the request or
suggestion of any Governmental Entity, in each case that currently restricts in
any material respect the conduct of its business (each, whether or not set forth
in the Seller Disclosure Letter, a “Company Regulatory Agreement”), nor has any
Acquired Company or any of its Subsidiaries received written notice since
February 7, 2014, by any Governmental Entity that it is considering issuing,
initiating, ordering or requesting any such Company Regulatory Agreement.

 

Section 3.9           Taxes and Tax Returns.

 

(a)          all income, franchise and other material Tax Returns required by
Law to be filed by the Acquired Companies and their Subsidiaries have been
timely filed with the appropriate Taxing Authority when due (taking into account
extensions validly obtained), all such Tax Returns were true, correct and
complete in all material respects, and all material amounts of Taxes payable by
the Acquired Companies and their Subsidiaries that were due and payable prior to
the Second Closing Date (whether or not shown on a return) have been paid within
the required time periods, other than those (i) currently payable without
penalty or interest or (ii) being contested in good faith by appropriate
proceedings which have not been finally determined, and have been adequately
reserved against in accordance with GAAP on Seller’s or Seller GP’s most recent
consolidated financial statements.

 

(b)          no written claim has been made by a Taxing Authority in a
jurisdiction in which any of the Acquired Companies or any of their Subsidiaries
do not file Tax Returns that such entity is or may be subject to Tax in that
jurisdiction.

 

10

 

 

(c)          all material amounts of Taxes that the Acquired Companies and their
Subsidiaries are or have been required by Law to withhold or collect for payment
to a Taxing Authority on behalf of another Person, regardless of the
characterization by the Acquired Companies and their Subsidiaries or the payee
of the payments giving rise to such requirement or the characterization of the
status of the payee as an employee, independent contractor, member or otherwise
of the Acquired Companies or any of their Subsidiaries, have been duly withheld
or collected, and have been paid to the proper Taxing Authority within the time
prescribed by applicable Law.

 

(d)          the Acquired Companies and their Subsidiaries do not have in effect
any waiver or extension of any statute of limitations, or any closing agreement
or similar agreement with any Taxing Authority, with respect to Taxes.

 

(e)          there are no claims pending or, to the Knowledge of Seller,
threatened against the Acquired Companies or any of their Subsidiaries for past
due Taxes.

 

(f)          no audits, examinations, investigations or other proceedings in
respect of any Tax or Tax matter of the Acquired Companies or any of their
Subsidiaries are pending, or have been threatened in writing.

 

(g)          Seller, the Acquired Companies and their Subsidiaries have not
participated in and have no liability or obligation with respect to any “listed
transaction” within the meaning of Section 6707A(c)(2) of the Code and Treasury
Regulations Section 1.6011-4(b)(2).

 

(h)          there are no liens for Taxes upon the assets of the Acquired
Companies or any of their Subsidiaries other than in respect of any Tax
liability not yet due and payable.

 

(i)          the Acquired Companies and their Subsidiaries are not a party to
and are not bound by any Tax Sharing Agreement. The Acquired Companies and their
Subsidiaries have never been a member of an affiliated group filing a
consolidated U.S. federal income Tax Return other than the group the parent of
which is CCA and neither the Acquired Companies nor any of their Subsidiaries
have assumed liability for the Taxes of any Person as a transferee or successor,
by contract or otherwise, other than customary Tax indemnification or other
arrangements contained in a commercial agreement entered into in the ordinary
course of business the primary purpose of which does not relate to Taxes.

 

(j)          no Acquired Company nor any of its Subsidiaries has (i) deferred
the payment of Taxes by the use of the cash, installment or a long-term contract
method of accounting or (ii) been required to make an adjustment under Section
481 of the Code (or any corresponding or similar provisions of state, local or
foreign Law) because of a change of method of accounting.

 

(k)          no Acquired Company nor any of its Subsidiaries will be required to
include amounts in income, or exclude items of deduction, after the Second
Closing Date as a result of (i) any intercompany transaction or excess loss
account described in the Treasury Regulations promulgated pursuant to Section
1502 of the Code (or any corresponding or similar provision of state, local or
foreign Law) arising or occurring on or prior to the Second Closing, (ii) any
agreement with a Governmental Authority entered into prior to the Second Closing
or (iii) the receipt of prepaid amounts by the Acquired Companies or any of
their Subsidiaries prior to the Second Closing.

 

(l)          Seller is not a “foreign person” within the meaning of Treasury
Regulations Section 1.1445-2.

 

(m)        no election has ever been made to treat CCP or its Subsidiaries as
associations taxable as corporations for U.S. federal income tax purposes and
each is and has been properly treated as a disregarded entity as defined in
Treasury Regulations Section 301.7701-3(b)(ii) since all of the equity of CCP
was acquired by Seller.

 

(n)         none of the Acquired Companies or their Subsidiaries have
constituted either a “distributing corporation” or a “controlled corporation”
(within the meaning of Section 355(a) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code in the two years
prior to the date of this Agreement.

 

11

 

 

(o)          no written power of attorney that has been granted by Seller, the
Acquired Companies or their Subsidiaries currently is in force with respect to
any matter relating to Taxes of the Acquired Companies and their Subsidiaries
that would continue in effect after the Second Closing.

 

Section 3.10         Employee Benefits.

 

(a)          Section 3.10(a) of the Seller Disclosure Letter includes a complete
list of all material Acquired Company Benefit Plans.

 

(b)          All material contributions required to be made to any Acquired
Company Benefit Plan on behalf of the Business Employees by applicable law or
regulation or by any plan document or other contractual undertaking, and all
premiums due or payable on behalf of the Business Employees with respect to
insurance policies funding any Acquired Company Benefit Plan, for any period
through the date hereof have been timely made or paid in full or, to the extent
not required to be made or paid on or before the date hereof, have been fully
reflected on the financial statements to the extent required by GAAP.

 

(c)          With respect to each Acquired Company Benefit Plan as applicable to
the Business Employees, (i) such Acquired Company Benefit Plan complies in form
in all material respects with all provisions of ERISA, the Code and all other
applicable laws and regulations applicable to such Acquired Company Benefit
Plan, (ii) such Acquired Company Benefit Plan has been administered in all
material respects in accordance with its terms and (iii) each Acquired Company
Benefit Plan that is intended to be a “qualified plan within the meaning of
Section 401(a) of the Code (“Acquired Company Qualified Plans”) has been issued
a favorable determination letter by the IRS that has not been revoked or is
entitled to rely on a favorable opinion issued by the IRS, and, to the Knowledge
of Seller, there are no existing circumstances and no events have occurred that
would reasonably be expected to adversely affect the qualified status of any
Acquired Company Qualified Plan. None of Seller, the Acquired Companies, their
Subsidiaries and their ERISA Affiliates nor, to the Knowledge of Seller, any
other Person, including any fiduciary, has engaged in any non-exempt “prohibited
transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA),
which would reasonably be expected to subject any of Assumed Benefit Plan, any
Acquired Company or any of its Subsidiaries or any person that any Acquired
Company or any of its Subsidiaries has an obligation to indemnify, to any
material Tax or penalty imposed under Section 4975 of the Code or Section 502 of
ERISA. No Acquired Company Benefit Plan is subject to Title IV or Section 302 of
ERISA or Section 412 of the Code.

 

(d)          (i) No Acquired Company Benefit Plan is a Multiemployer Plan or a
plan that has two (2) or more contributing sponsors at least two of whom are not
under common control, within the meaning of Section 4063 of ERISA.

 

(e)          Except as set forth on Section 3.10(e) of the Seller Disclosure
Letter, neither the execution nor the delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will by itself
(i) result in any material payment or benefit becoming due or payable, or
required to be provided, to any Business Employee, (ii) materially increase the
amount or value of any benefit or compensation otherwise payable or required to
be provided to any Business Employee, (iii) result in the acceleration of the
time of payment, vesting or funding of any such benefit or compensation to any
Business Employees or (iv) result in any material amount failing to be
deductible by reason of Section 280G of the Code with respect to any Business
Employee.

 

(f)          No labor organization or group of employees of any Acquired Company
or any of its Subsidiaries has made a pending demand for recognition or
certification with respect to any Business Employee, and there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or, to the Knowledge of Seller,
threatened to be brought or filed, with the National Labor Relations Board or
any other labor relations tribunal or authority with respect to any Business
Employee. Each Acquired Company and its Subsidiaries is in material compliance
with all applicable Laws respecting employment and employment practices,
immigration, terms and conditions of employment, wages and hours and
occupational safety and health with respect to the Business Employees.

 

12

 

 

Section 3.11         Compliance with Law; Permits.

 

(a)          Except for such matters as would not, individually or in the
aggregate, be material to the Acquired Companies and their respective
Subsidiaries taken as a whole, each Acquired Company and each of its
Subsidiaries is, and since the later of February 7, 2014 and its respective date
of formation or organization has been, in compliance with and is not in default
under or in violation of any applicable federal, state, local or foreign or
provincial law, statute, ordinance, rule, regulation, judgment, order,
injunction, decree, award or agency requirement of or undertaking to or
agreement with any Governmental Entity (collectively, “Laws” and each, a “Law”).

 

(b)          The Acquired Companies and their respective Subsidiaries are in
possession of all material franchises, tariffs, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Acquired
Companies and their respective Subsidiaries, including each Broker, to own,
lease and operate their properties and assets and to carry on their businesses
as they are now being conducted (the “Company Permits”). All the Company Permits
are in full force and effect, except for any failure to be in full force and
effect that would not be material to the Acquired Companies and their respective
Subsidiaries, taken as a whole. The Acquired Companies and their respective
Subsidiaries are not, and since February 7, 2014 have not been, in material
violation or breach of, or material default under, any Company Permit.

 

Section 3.12         Certain Contracts.

 

(a)          Except for any advisory agreements, selling agreements or
employment agreements, neither the Acquired Companies nor any of their
respective Subsidiaries is a party to or bound by: (i) any non-competition
Contract which purports to limit or restrict in any material respect the manner
in which, or the localities in which, the business of any Acquired Company or
its Subsidiaries is conducted, (ii) any material Contract, not otherwise
terminable on sixty (60) or fewer days’ notice, providing for any payments that
are conditioned, in whole or in part, on, or any Contract that is terminable
upon or otherwise prohibits, a change of control of any Acquired Company or any
of its respective Subsidiaries, (iii) any Contract which would reasonably be
expected to materially delay the consummation of the transactions contemplated
by this Agreement or (iv) any Contract not made in the ordinary course of
business that would require any payment or series of payments in an amount
greater than $500,000 per year or in any year.

 

(b)          Each Company Material Contract is valid and binding on the Acquired
Company party thereto (or, to the extent a Subsidiary of an Acquired Company is
a party, such Subsidiary) and, to the Knowledge of Seller, any other party
thereto and is in full force and effect. Neither the Acquired Companies nor any
of their respective Subsidiaries is in material breach or default under any
Company Material Contract. As of the date hereof, neither Seller, any Acquired
Company nor any Subsidiary of any Acquired Company has received written notice
of any material violation or default under any Company Material Contract by any
other party thereto.

 

Section 3.13         Undisclosed Liabilities.

 

Except for (i) those liabilities that are reflected or reserved against in the
Financial Statements (including any notes thereto), (ii) liabilities incurred in
connection with this Agreement and the transactions contemplated hereby and
(iii) liabilities incurred in the ordinary course of business consistent with
past practice since December 31, 2013, neither the Acquired Companies nor any of
their respective Subsidiaries has incurred any liability of any nature that
would be required under GAAP to be set forth on the financial statements of the
Acquired Companies. There is no Acquired Companies’ Indebtedness.

 

Section 3.14         Environmental Liability.

 

There are no legal, administrative, arbitral or other proceedings, claims,
actions, causes of action, private environmental investigations or remediation
activities or governmental investigations of any nature seeking to impose, or
that are reasonably likely to result in the imposition, on the Acquired
Companies or any of their respective Subsidiaries of any liability or obligation
arising under common law or under any local, state or federal environmental
statute, regulation or ordinance pending or threatened against any such Person,
except as would not

 

13

 

 

be reasonably likely to be, individually or in the aggregate, material to the
Acquired Companies and their respective Subsidiaries taken as a whole. Neither
the Acquired Companies nor any of their respective Subsidiaries are subject to
any agreement, order, judgment, decree, letter or memorandum by or with any
Governmental Entity or third party imposing any liability or obligation with
respect to the foregoing that is reasonably likely to be, individually or in the
aggregate, material to the Acquired Companies and their respective Subsidiaries
taken as a whole.

 

Section 3.15         Real Property.

 

(a)          None of the Acquired Companies or their respective Subsidiaries
owns any real property.

 

(b)          To the Knowledge of Seller, none of the Acquired Companies or their
respective Subsidiaries is party to any leases pursuant to which any Acquired
Company or any of its Subsidiaries leases any real property as a tenant.

 

(c)          To the Knowledge of Seller, the Acquired Companies and their
respective Subsidiaries are not parties to any leases pursuant to which any
Acquired Company or any of its Subsidiaries leases any material real property to
a third party.

 

Section 3.16         Internal Controls.

 

(a)          None of the Acquired Companies’ or their respective Subsidiaries’
records, systems, controls, data or information are recorded, stored,
maintained, operated or otherwise wholly or partly dependent on or held by any
means (including any electronic, mechanical or photographic process, whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of such Acquired
Company or Subsidiary or their respective accountants except as would not,
individually or in the aggregate, reasonably be expected to result in a
materially adverse effect on the system of internal accounting controls
described in the next sentence. The Acquired Companies and their respective
Subsidiaries have devised and maintain a system of internal accounting controls
sufficient to provide reasonable assurances regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes.

 

(b)          Since February 7, 2014, (i) through the date hereof, neither the
Acquired Companies nor any of their respective Subsidiaries has received or
otherwise had or obtained knowledge of any material complaint, allegation,
assertion or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods of the Acquired
Companies or any of their respective Subsidiaries or their respective internal
accounting controls, including any material complaint, allegation, assertion or
claim that any Acquired Company or any of its Subsidiaries has engaged in
questionable accounting or auditing practices, and (ii) no attorney representing
any Acquired Company or any of its Subsidiaries, whether or not employed by any
Acquired Company or any of its Subsidiaries, has reported evidence of a material
violation of securities laws, breach of fiduciary duty or similar violation by
any Acquired Company, any of its Subsidiaries or any of their respective
officers, directors, managers, employees or agents to the Board of Directors (or
equivalent governing body) of Seller or Seller GP or any committee thereof or to
any director, manager or officer of any Acquired Company or any of its
Subsidiaries.

 

Section 3.17         Insurance. Each Acquired Company and its Subsidiaries is
insured with reputable insurers against such risks and in such amounts as
management of Seller reasonably has determined to be prudent in accordance with
industry practices.

 

Section 3.18         Intellectual Property.

 

(a)          The Acquired Companies or their respective Subsidiaries own all of
the intellectual property set forth in Section 3.18(a) of the Seller Disclosure
Letter (the “Company IP”). The Company IP, together with any Intellectual
Property properly and validly licensed to the Acquired Companies of their
Subsidiaries, constitute all of the Intellectual Property necessary to conduct
the Business in all material respects as currently conducted on the date hereof.

 

14

 

 

(b)          None of the Intellectual Property owned by any of the Acquired
Companies or their respective Subsidiaries infringes or, to the Knowledge of
Seller, is alleged to infringe any Intellectual Property rights of any third
party in any material respect. The conduct of the Business as it is currently
conducted does not infringe, misappropriate or otherwise violate the
Intellectual Property rights of any third party. The Acquired Companies and
their Subsidiaries are taking all actions that are reasonably necessary to
maintain and protect each material item of Intellectual Property that they own.
To the Knowledge of Seller, no Person is misappropriating, infringing or
otherwise violating any Intellectual Property of the Acquired Companies or their
respective Subsidiaries.

 

Section 3.19         Investment Company Act of 1940. Neither Acquired Companies
nor any of their respective Subsidiaries are, or at the First Closing will be,
required to be registered under the Investment Act of 1940, as amended.

 

Section 3.20         No Resale. Seller is an “accredited investor” within the
meaning of Regulation D under the Securities Act, and is acquiring the Buyer
Shares for its own benefit and account, for investment only, and not with a view
to, or for resale in connection with, a public offering or distribution thereof.
Seller acknowledges that (except as contemplated in the Registration Rights
Agreement) (a) the Buyer Shares have not been and will not be registered under
the Securities Act or the securities laws of any other jurisdiction and will be
issued in reliance upon federal and state exemptions for transactions not
involving a public offering, (b) the Buyer Shares cannot be disposed of unless
they are subsequently registered or otherwise pursuant to an exemption from
registration under the Securities Act and the securities laws of any applicable
Jurisdiction, and (c) any certificate or book-entry statement representing the
Buyer Shares will bear a restrictive legend to the effect set forth in the
forgoing clauses (a) and (b).

 

Section 3.21         Broker Regulatory Matters.

 

(a)          Each Broker (i) is, and at all times has been, duly registered,
licensed or qualified as a broker-dealer under the Exchange Act and in each
jurisdiction where the conduct of its business requires such registration,
licensing or qualification, (ii) is, and at all times has been, in compliance in
all material respects with all applicable Laws requiring any such registration,
licensing or qualification and (iii) is not subject to any liability or
disability by reason of the failure to be so registered, licensed or qualified.

 

(b)          The Uniform Application for Broker-Dealer Registration on Form BD
of each Broker on file with the SEC, reflecting all amendments thereof that are
in effect as of the date of this Agreement (the “Form BD”), and all FOCUS
reports, amendments and updates for the period ended June 30, 2014, filed by
such Broker with the SEC, are in compliance in all material respects with the
applicable requirements of the Exchange Act and the rules thereunder.

 

(c)          Each Broker is a member in good standing of FINRA, the Securities
Industry Protection Corp. and each other Governmental Entity where the conduct
of its business requires membership or association.

 

(d)          Each Broker (i) has established, maintains and enforces written
compliance, supervisory and control policies and procedures in compliance, with
applicable Laws, including FINRA Rules 3010 and 3012 and Section 15(g) of the
Exchange Act, and (ii) has been and remains in compliance in all material
respects with such policies and procedures.

 

(e)          Each of Broker’s officers, employees and independent contractors
who is required to be registered, licensed or qualified with any Governmental
Entity as a registered principal or registered representative is duly and
properly registered, licensed or qualified as such, and has been so registered,
licensed or qualified at all times while in the employ or under contract with
such Broker, and such licenses are in full force and effect, or are in the
process of being registered as such within the time periods required by
applicable Law, except as the failure to be so registered would not, or would
not reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect on Seller.

 

(f)          No Broker, nor any of its directors, managers, officers, employees,
registered representatives or “associated persons” (as defined in the Exchange
Act) is the subject of any material disciplinary proceedings or

 

15

 

 

orders of any Governmental Entity arising under applicable Laws which would be
required to be disclosed on Form BD or Forms U-4 or U-5 that are not so
disclosed on such Form BD or Forms U-4 or U-5, and no such disciplinary
proceeding or order is pending against any Broker or, to the Knowledge of
Seller, threatened against any Broker or pending or threatened against the other
Persons referred to above. Except as disclosed on the Form BD or Forms U-4 or
U-5, no Broker nor any of its directors, managers, officers, employees,
registered representatives or associated persons (i) has been permanently
enjoined by any order from engaging or continuing any conduct or practice in
connection with any activity or in connection with the purchase or sale of any
security, or (ii) is or has been ineligible to serve as a broker-dealer or an
associated person of a broker dealer under Section 15(b) of the Exchange Act
(including being subject to any “statutory disqualification”, as defined in
Section 3(a)(39) of the Exchange Act).

 

(g)          Each Broker has timely made or given all filings, applications,
notices and amendments with or to each Governmental Entity that regulates such
Broker or its business, and all such filings, applications, notices and
amendments are accurate, complete and up-to-date in all material respects. Each
Broker has received all consents, orders, authorizations, permissions,
registrations, licenses, approvals, qualifications, designations and
declarations necessary in order for it to conduct its business in all material
respects as currently conducted.

 

(h)          To the Knowledge of the Seller, there are no material customer
complaints, individually or in the aggregate, including those reportable to
FINRA pursuant to FINRA Rule 4530 or on any Form U-4, which were made from
December 31, 2010 through February 7, 2014 against any Broker or any of its
representatives. There are no material customer complaints, individually or in
the aggregate, including those reportable to FINRA pursuant to FINRA Rule 4530
or on any Form U-4, which have been made since February 7, 2014 against any
Broker or any of its representatives. As of the date of this Agreement, no
material customer complaints, individually or in the aggregate, reportable
pursuant to FINRA Rule 4530 or on Form U-4, are pending or, to the Knowledge of
Seller, threatened.

 

(i)          Each Broker (i) is in compliance with all applicable regulatory net
capital requirements, and no distribution of cash is required to be made by any
Broker that will or would result in such Broker not being in compliance with
such applicable regulatory net capital requirements, and (ii) is in compliance
in all material respects with all applicable regulatory requirements for the
protection of customer funds and securities. No Broker has made any withdrawals
from any reserve bank account it is required to maintain pursuant to Rule
15c3-3(e) of the SEC, except as permitted by Rule 15c3-3(g) of the SEC.

 

Section 3.22         No Material Adverse Effect. Since February 7, 2014, there
has not been a Material Adverse Effect on Seller.

 

Section 3.23         No Other Seller Representations or Warranties. Except for
the representations and warranties made by Seller in this Article III, neither
Seller nor any of its Affiliates has made any representation or warranty,
expressed or implied, with respect to Seller, the Acquired Companies or their
Subsidiaries, businesses, operations, assets, liabilities, financial condition,
results of operations, future operating or financial results, estimates,
projections, forecasts, plans or prospects (including the reasonableness of the
assumptions underlying such estimates, projections, forecasts, plans or
prospects) or the accuracy or completeness of any information regarding Seller,
the Acquired Companies or their respective Subsidiaries or any other matter.

 

Article IV

 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Except (a) as specifically disclosed in a correspondingly numbered section of
the disclosure letter (the “Buyer Disclosure Letter”) delivered by Buyer to
Seller prior to the execution of this Agreement (it being acknowledged and
agreed that disclosure of any item in any section or subsection of the Buyer
Disclosure Letter shall be deemed disclosed with respect to any section or
subsection of this Agreement to the extent the applicability of such disclosure
is reasonably apparent on its face) or (b) as disclosed in the forms, statements
and reports of Buyer publicly available, filed with, or furnished (on a publicly
available basis) to, as applicable, the SEC on or after February 28, 2014 and
prior to the date of this Agreement (excluding any risk factor disclosures
contained in such documents under the heading “Risk Factors” and any disclosure
of risks or other matters included in any “forward-

 

16

 

 

looking statements” disclaimer or other statements that are cautionary,
predictive or forward-looking in nature, which in no event shall be deemed to be
an exception to, or disclosure for purposes of, any representation or warranty
set forth in this Article IV), Buyer, hereby represents and warrants to Seller
as follows:

 

Section 4.1           Organization and Qualification. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite organizational power and authority and
any necessary governmental authorization to own, lease and, to the extent
applicable, operate its properties and to carry on its business as it is now
being conducted. Buyer is duly qualified or licensed to do business, and is in
good standing, in each jurisdiction where the character of the properties owned,
operated or leased by it or the nature of its business makes such qualification,
licensing or good standing necessary, except for failures to be so licensed,
qualified or in good standing, as the case may be, that would not, individually
or in the aggregate, be material to Buyer and its Subsidiaries, taken as a
whole.

 

Section 4.2           Capital Structure

 

(a)          The authorized capital stock of Buyer consists of (i) 100,000,000
shares of Buyer Class A Stock, (ii) 10,000,000 shares of Class B common stock,
$0.001 par value (the “Buyer Class B Stock”) and (iii) 100,000,000 shares of
preferred stock, $0.001 par value (the “Buyer Preferred Stock”). As of the close
of business on August 14, 2014, (A) 65,272,174 shares of Buyer Class A Stock
were issued and outstanding, (B) one share of Buyer Class B Stock was issued and
outstanding, and (C) 14,657,980 shares of Buyer Preferred Stock were issued and
outstanding.

 

(b)          Except as set forth in Section 4.2(b) of the Buyer Disclosure
Letter or pursuant to this Agreement, Buyer does not have and is not bound by
any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of any capital stock of Buyer or any other equity securities of Buyer or any
securities representing the right to purchase or otherwise receive any shares of
capital stock of Buyer or any other equity securities of Buyer. Buyer has not
issued or awarded, or authorized the issuance or award of, any options,
restricted stock or other equity-based awards under any Buyer Benefit Plan or
otherwise, and there are no options, restricted stock or other equity-based
awards issued by Buyer or any Subsidiary of Buyer currently outstanding under
the Buyer Benefit Plans or otherwise. All issued and outstanding shares of the
capital stock of Buyer are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. There are no outstanding bonds,
debentures, notes or other Indebtedness of Buyer having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matter on which holders of shares of Buyer capital stock may vote.

 

Section 4.3           Authority; No Violation.

 

(a)          Buyer has full corporate power and authority to execute and deliver
this Agreement and each Ancillary Agreement to which it is party and to
consummate the transactions contemplated hereby and thereby (including the
issuance of the Buyer Note and the Buyer Shares). The execution and delivery by
Buyer of this Agreement and each Ancillary Agreement to which it is party and
the consummation by Buyer of the transactions contemplated hereby and thereby
(including the issuance of the Buyer Note and the Buyer Shares) have been duly
and validly authorized by the Board of Directors of Buyer. No other corporate
proceedings on the part of Buyer are necessary to approve this Agreement or any
Ancillary Agreement to which Buyer is party or to consummate the transactions
contemplated hereby and thereby (including the issuance of the Buyer Note and
the Buyer Shares). This Agreement and each Ancillary Agreement to which Buyer is
party have been duly and validly executed and delivered by Buyer and (assuming
due authorization, execution and delivery by each other party thereto)
constitute valid and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms (except as may be limited by bankruptcy,
insolvency, moratorium, reorganization or similar Laws affecting the rights of
creditors generally and the availability of equitable remedies).

 

(b)          Neither the execution and delivery by Buyer of this Agreement or
any Ancillary Agreement to which Buyer is a party, nor the consummation by Buyer
of the transactions contemplated hereby and thereby (including the issuance of
the Buyer Note and the Buyer Shares), nor compliance by Buyer with any of the
terms or provisions of this Agreement or any Ancillary Agreement to which Buyer
is a party, will (i) violate (A) any provision of the Governing Documents of
Buyer or any of its Subsidiaries or (ii) assuming that the consents,

 

17

 

 

approvals and filings referred to in Section 4.4 are duly obtained and/or made,
(A) violate any statute, code, ordinance, rule, regulation or Order applicable
to Buyer or its Subsidiaries or any of their respective properties or assets or
(B) violate, conflict with, result in a breach of any provision of or the loss
of any benefit under, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any Lien upon any of the
properties or assets of Buyer or any of its Subsidiaries under, any of the
terms, conditions or provisions of any Contracts to which Buyer or any of its
Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected, except for such violations, conflicts,
breaches or defaults with respect to clause (ii)(B) that are not reasonably
likely to have, either individually or in the aggregate, a Material Adverse
Effect on Buyer.

 

Section 4.4           Consents and Approvals. Except for (i) any notices or
filings under the HSR Act, (ii) such notices and applications with FINRA that
are required under FINRA and NASD rules, (iii) such filings and approvals as are
required to be made or obtained under any applicable securities or “blue sky”
laws in connection with the issuance of the Buyer Shares pursuant to this
Agreement, (iv) the filing of a listing application with the NYSE with respect
to the Buyer Shares to be issued pursuant to this Agreement and approval of such
issuance by the NYSE, subject to official notice of issuance and (v) such
filings, consents and approvals set forth in Section 4.4 of the Buyer Disclosure
Letter, no material consents or approvals of or filings or registrations with
any Governmental Entity are necessary in connection with (A) the execution and
delivery by Buyer of this Agreement or any Ancillary Agreement to which Buyer is
party and (B) the consummation by Buyer of the transactions contemplated by this
Agreement or such Ancillary Agreement (including the issuance of the Buyer Note
and the Buyer Shares).

 

Section 4.5           Non-Cash Consideration. The Buyer Shares, if and when
issued pursuant to this Agreement, shall be validly issued, fully paid,
non-assessable and free and clear of any Liens and shall not have been issued in
violation of any preemptive rights. The Buyer Note when delivered to Seller
shall be valid and binding.

 

Section 4.6           SEC Filings; Financial Statements; Internal Controls;
Sarbanes-Oxley Compliance.

 

(a)          Buyer has timely filed with or furnished to, as applicable, the SEC
all registration statements, prospectuses, reports, schedules, forms, statements
and other documents required to be filed or furnished by it with the SEC since
June 6, 2013 and prior to the date of this Agreement (the “Buyer SEC
Documents”). As of their respective filing dates (or, if amended or superseded
by a subsequent filing, as of the date of the last such amendment or superseding
filing prior to the date hereof), each of the Buyer SEC Documents complied as to
form in all material respects with the applicable requirements of the Securities
Act and the Exchange Act, and the rules and regulations of the SEC thereunder
applicable to such Buyer SEC Documents. None of the Buyer SEC Documents,
including any financial statements, schedules or exhibits included or
incorporated by reference therein at the time they were filed (or, if amended or
superseded by a subsequent filing, as of the date of the last such amendment or
superseding filing prior to the date hereof), contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

(b)          Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Buyer SEC Documents (i) was
prepared in accordance in all material respects with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto and, in the case of unaudited interim financial statements, as
may be permitted by the SEC for Quarterly Reports on Form 10-Q), and (ii) fairly
presented in all material respects the consolidated financial position of Buyer
and its consolidated subsidiaries at the respective dates thereof and the
consolidated results of Buyer’s operations and cash flows for the periods
indicated therein, in each case in accordance with GAAP, subject, in the case of
unaudited interim financial statements, to normal and year-end audit adjustments
as permitted by GAAP and the applicable rules and regulations of the SEC.

 

(c)          Buyer has established and maintains a system of “internal controls
over financial reporting” (as defined in Rules 13a-15(f) and 15d-15(f) of the
Exchange Act) that is sufficient to provide reasonable assurance

 

18

 

 

regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP.

 

(d)          Buyer has established and maintains a system of “disclosure
controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the
Exchange Act) designed to provide reasonable assurance that all material
information relating to Buyer and its subsidiaries required to be disclosed by
Buyer in the reports that it files or furnishes under the Exchange Act is made
known to the chief executive officer and chief financial officer of Buyer.

 

(e)          Buyer does not have outstanding (nor has it arranged or modified)
any “extensions of credit” (within the meaning of Section 402 of the
Sarbanes-Oxley Act of 2002) to its directors or executive officers (as defined
in Rule 3b-7 under the Exchange Act).

 

Section 4.7           Legal Proceedings. There are no Actions pending (or, to
the Knowledge of Buyer, threatened) against or affecting Buyer or any of its
Subsidiaries, or any of their respective properties, at law or in equity, or
(ii) Orders against Buyer or any of its Subsidiaries, in each case of clause (i)
or (ii), which would, individually or in the aggregate, be material to Buyer and
its Subsidiaries taken as a whole.

 

Section 4.8           Compliance with Law. Except for such matters as would not,
individually or in the aggregate, be material to Buyer and its Subsidiaries
taken as a whole, each of Buyer and its Subsidiaries is, and since the later of
June 6, 2013 and its respective date of formation or organization has been, in
compliance with and is not in default under or in violation of any applicable
Law.

 

Section 4.9           No Material Adverse Effect. Since December 31, 2013, there
has not been a Material Adverse Effect on Buyer.

 

Section 4.10         Sufficient Funds. Buyer has sufficient funds to pay the
cash portion of the Closing Consideration and to perform the other obligations
contemplated by this Agreement to be performed by Buyer at or prior to the First
Closing and the Second Closing, respectively.

 

Section 4.11         Undisclosed Liabilities. Except for (i) those liabilities
that are reflected or reserved against on the consolidated balance sheet of
Buyer as of December 31, 2013 (including any notes thereto), included in the
Buyer SEC Documents, (ii) liabilities incurred in connection with this Agreement
and the transactions contemplated hereby and (iii) liabilities incurred in the
ordinary course of business consistent with past practice since December 31,
2013, neither Buyer nor any of its Subsidiaries has incurred any liability of
any nature that would be required under GAAP to be set forth on the financial
statements of Buyer, and that would be reasonably likely to be, in the
aggregate, material to Buyer and its Subsidiaries taken as a whole.

 

Section 4.12         No Other Representations and Warranties. Except for the
representations or warranties expressly set forth in this Article IV, neither
Buyer nor any of its Affiliates has made any representation or warranty,
expressed or implied, with respect to Buyer, its Subsidiaries, or their
respective businesses, operations, assets, liabilities, financial condition,
results of operations, future operating or financial results, estimates,
projections, forecasts, plans or prospects (including the reasonableness of the
assumptions underlying such estimates, projections, forecasts, plans or
prospects) or the accuracy or completeness of any information regarding Buyer or
its Subsidiaries.

 

Article V

COVENANTS RELATING TO CONDUCT OF BUSINESS

 

Section 5.1           Conduct of Business Prior to the Second Closing. During
the period from the date of this Agreement to the Second Closing, except as set
forth in Section 5.2 of the Seller Disclosure Letter, as otherwise agreed to in
writing by Buyer (which agreement shall not be unreasonably withheld,
conditioned or delayed), or as expressly contemplated or permitted by this
Agreement, Seller shall (i) cause the Business to be conducted in the ordinary
course in all material respects and in a manner consistent with past practice,
(ii) use its commercially reasonable efforts to (A) maintain the Business’
assets and properties in their current condition (normal wear and

 

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tear excepted), (B) preserve intact in all material respects the Business’
current business organization, goodwill, ongoing businesses and significant
relationships with third parties, (C) keep available the services of the
Business’ key officers and (D) maintain all of the Business’ material insurance
policies.

 

Section 5.2           Seller Forbearances. During the period from the date of
this Agreement to the Second Closing, except as set forth in Section 5.2 of the
Seller Disclosure Letter or as expressly contemplated or permitted by this
Agreement (including pursuant to Section 6.10, Section 6.16, Section 6.17 and
Section 6.18), Seller shall not permit the Acquired Companies or any of their
respective Subsidiaries to, without the prior written consent of Buyer, which
shall not be unreasonably withheld, conditioned or delayed:

 

(a)          (i) other than (x) dividends and other distributions, in each case
of cash and cash equivalents, by an Acquired Company or Subsidiary of an
Acquired Company to the extent such dividends or distributions would not cause a
violation of Rule 15c3-1 of the SEC, (y) dividends and other distributions by a
direct or indirect Subsidiary of an Acquired Company to an Acquired Company or
any direct or indirect wholly owned Subsidiary of an Acquired Company and (z)
the distribution of those assets contemplated by the Restructuring Transaction,
declare, set aside or pay any dividends on, make any other distributions in
respect of, or enter into any agreement with respect to the voting of, any of
its Equity Interests, (ii) split, combine or reclassify any of its Equity
Interests or issue or authorize the issuance of any other securities in respect
of, in lieu of, or in substitution for, its Equity Interests or (iii) purchase,
redeem or otherwise acquire any Equity Interests of any Acquired Company or any
of its Subsidiaries;

 

(b)          issue, deliver, sell, pledge or otherwise encumber or subject to
any Lien any of its Equity Interests;

 

(c)          amend any Governing Documents of any Acquired Company or any of its
Subsidiaries;

 

(d)          acquire or agree to acquire by merging or consolidating with, or by
purchasing any assets or any equity securities of, or by any other manner, any
business or any Person, or otherwise acquire or agree to acquire any assets or
Equity Interests except in the ordinary course of business consistent with past
practice;

 

(e)          sell, lease, license, mortgage or otherwise encumber or subject to
any Lien, or otherwise dispose of any of its properties or assets (including any
Company IP), other than in the ordinary course of business consistent with past
practice, and provided any such Liens are not material, individually or in the
aggregate;

 

(f)          incur any Indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise become responsible for
the obligations of any Person (other than an Acquired Company or any wholly
owned Subsidiary thereof), or make any loans, advances or capital contributions
to, or investments in, any Person other than its wholly owned Subsidiaries or as
a result of ordinary advances and reimbursements to employees;

 

(g)          change in any material respect its accounting methods (or
underlying assumptions), principles or practices affecting its assets,
liabilities or business, including any reserving, renewal or residual method,
practice or policy, in each case, in effect on the date hereof, except as
required by changes in GAAP or regulatory accounting principles;

 

(h)          enter into any new line of business or change in any material
respect its operating, asset liability, investment or risk management or other
similar policies;

 

(i)          except investments by an Acquired Company or any of its respective
Subsidiaries in an Acquired Company or any of its respective Subsidiaries, make
any investment in excess of $1,000,000 in the aggregate, whether by purchase of
Equity Interests, contributions to capital, property transfers, or entering into
binding agreements with respect to any such investment;

 

(j)          make, change or revoke any material Tax election, change an annual
Tax accounting period, adopt or change any material Tax accounting method, file
any material amended Tax Return, enter into any closing

 

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agreement, settle any material Tax claim or assessment or surrender any right to
claim a refund of a material amount of Taxes;

 

(k)          terminate or waive any material provision of any material Contract
other than normal renewals of Contracts without materially adverse changes,
additions or deletions of terms, or enter into or renew any agreement or
contract or other binding obligation of the Acquired Companies or any of their
respective Subsidiaries containing (i) any restriction on the ability of any
Acquired Company or its Subsidiaries, or, after the Second Closing, Buyer or its
Subsidiaries, to conduct the Business as it is presently being conducted or
currently contemplated to be conducted or (ii) any restriction on any Acquired
Company or its Subsidiaries, or, after the Second Closing, Buyer or its
Subsidiaries, in engaging in any type of business;

 

(l)          incur any capital expenditures in excess of $500,000 individually
or $1,000,000 in the aggregate or enter into any agreement obligating any
Acquired Company or any of its Subsidiaries to spend more than $500,000
individually or $1,000,000 in the aggregate;

 

(m)          except as required by agreements or instruments in effect on the
date hereof, alter in any material respect, or enter into any commitment to
alter in any material respect, any material interest in any corporation,
association, joint venture, partnership or business entity in which any Acquired
Company or any of its Subsidiaries directly or indirectly holds any Equity
Interest on the date hereof, other than any Subsidiary of any Acquired Company;

 

(n)          Except to the extent required by applicable Laws or the terms of
any Acquired Company Benefit Plan as in effect on the date hereof and subject to
the terms of the Employee Leasing Agreement, (i) except in the ordinary course
of business consistent with past practice for any Business Employee whose
annualized cash compensation for the 12 months prior to the date hereof does not
exceed $750,000, grant or pay to any Business Employee any (A) material increase
in severance or termination pay or (B) increase in compensation or benefits,
(ii) make any discretionary contributions or payments to any trust or other
funding vehicle on behalf of any Business Employee, (iii) accelerate the payment
or vesting of any payment or benefit provided or to be provided to any Business
Employee, (iv) enter into, adopt, amend or modify any Assumed Benefit Plan
(other than amendments to Assumed Benefit Plans in the ordinary course of
business consistent with past practice that do not materially increase the cost
of maintaining or providing benefits under such Assumed Benefit Plan), any plan,
policy, or arrangement that would be an Assumed Company Benefit Plan if it were
in effect on the date hereof, or (v) establish, adopt or enter into any
collective bargaining agreement on behalf of any Business Employee;

 

(o)          agree or consent to any material agreement or material
modifications of any existing agreements with any Governmental Entity in respect
of the operations of its business, except as required by Law;

 

(p)          pay, discharge, settle or compromise any claim, action, litigation,
arbitration, suit, investigation or proceeding, other than any such payment,
discharge, settlement or compromise in the ordinary course of business
consistent with past practice that involves money damages in an amount not in
excess of $700,000 individually or $3,000,000 in the aggregate that is paid
prior to the Second Closing; provided, that in no event shall any Acquired
Company be permitted to settle any stockholder litigation against any Acquired
Company, its Subsidiaries and/or their respective officers and directors
relating to this Agreement and the transactions contemplated hereby without the
prior written consent of Buyer;

 

(q)          let lapse, abandon or cancel any material registered Company IP
owned by any Acquired Company or any of its Subsidiaries;

 

(r)          take any action that would materially impede or delay the ability
of the parties to obtain any necessary approvals of any Governmental Entity
required for the transactions contemplated hereby; or

 

(s)          agree to take, make any commitment to take, or cause its board of
directors (or equivalent governing body) to adopt any resolutions in support of,
any of the actions prohibited by this Section 5.2.

 

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Section 5.3           Buyer Forbearances. During the period from the date of
this Agreement to the Second Closing, except as expressly contemplated or
permitted by this Agreement, Buyer shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Seller, which shall not be
unreasonably withheld, conditioned or delayed:

 

(a)          amend, repeal or otherwise modify any provision of the Governing
Documents of Buyer (other than to adopt any amendment or other modification to
any provision that would not be adverse to Seller or those that would not impede
Buyer’s ability to consummate the transactions contemplated hereby);

 

(b)          make any material investment either by purchase of Equity
Interests, contributions to capital, property transfers or purchase of any
property or assets of any other Person, in any case to the extent such action
would be reasonably expected to prevent, or materially impede or delay, the
consummation of the transactions contemplated by this Agreement;

 

(c)          take any action that would reasonably be expected to prohibit or
materially delay the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements (including the issuance of the Buyer Note
and the Buyer Shares); or

 

(d)          agree to take, make any commitment to take, or cause its Board of
Directors to adopt any resolutions in support of, any of the actions prohibited
by this Section 5.3.

 

Article VI

CERTAIN COVENANTS OF THE PARTIES

 

Section 6.1           Regulatory Matters.

 

(a)          Buyer shall use its reasonable best efforts to take, or cause to be
taken, all actions, and do or cause to be done all things, necessary, proper or
advisable on its part under applicable Laws and rules and policies of the NYSE
to enable the listing of the Buyer Shares on the NYSE effective upon the First
Closing.

 

(b)          Seller, on the one hand, and Buyer, on the other hand, shall
cooperate with each other and use their respective reasonable best efforts to
(i) promptly prepare and file (or cause to be filed) all necessary documentation
to effect all applications, notices, petitions and filings to obtain as promptly
as practicable all permits, consents, approvals, clearances and authorizations
of all third parties and Governmental Entities that are necessary or advisable
to consummate the transactions contemplated by this Agreement, (ii) use
reasonable best efforts to cause the expiration or termination of any applicable
waiting periods, or receipt of required authorizations, as applicable, under the
HSR Act, (iii) supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and
(iv) comply with the terms and conditions of all such permits, consents,
approvals, clearances and authorizations of all such Governmental Entities.
Seller shall use its reasonable best efforts (and Buyer shall cooperate with
Seller) to promptly (and in any event within five (5) Business Days after the
date of this Agreement) prepare and file (or cause to be filed) any notice or
application with FINRA as required under applicable FINRA and NASD rules. Each
party shall have the right to review in advance, and, to the extent practicable,
each party will consult the other party on, in each case subject to applicable
Laws relating to the exchange of information, all the information relating to
such party and any of its Subsidiaries, which appear in any filing made with, or
written materials submitted to, any third party or any Governmental Entity in
connection with the transactions contemplated by this Agreement. In exercising
the foregoing right, each of the parties shall act reasonably and as promptly as
practicable. The parties shall consult with each other with respect to the
obtaining of all permits, consents, approvals, clearances and authorizations of
all third parties and Governmental Entities necessary or advisable to consummate
the transactions contemplated by this Agreement and each party will keep the
party apprised of the status of matters relating to completion of the
transactions contemplated by this Agreement, including promptly furnishing the
other with copies of notices or other communications received by such party or
any of its Subsidiaries, from any third party and/or any Governmental Entity
with respect to such transactions; provided, however, that nothing in this
Agreement shall be deemed to require any party to take any action, or commit to
take any action, or agree to any condition or restriction, in connection with
obtaining the foregoing

 

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permits, consents, approvals, clearances and authorizations of third parties or
Governmental Entities, that would reasonably be expected to have a Material
Adverse Effect (measured on a scale relative to such party and its Subsidiaries,
taken as a whole) on such party.

 

(c)          Subject to the proviso contained in Section 6.1(b), if any
administrative or judicial action or proceeding, including any proceeding by a
private party, is instituted (or threatened to be instituted) challenging any
transaction contemplated by this Agreement, each party shall cooperate in all
respects with the other party and shall use its reasonable best efforts to
contest and resist any such action or proceeding and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent, that is in effect and that prohibits,
prevents or restricts consummation of the transactions contemplated by this
Agreement. Notwithstanding the foregoing or any other provision of this
Agreement, nothing in this Section 6.1 shall limit a party’s right to terminate
this Agreement pursuant to Section 9.1(b) or Section 9.1(c) so long as such
party has, prior to such termination, complied with its obligations under this
Section 6.1.

 

(d)          Each party shall give prompt notice to the other party of any
Action commenced or, to such party’s actual knowledge, threatened against,
relating to or involving such party or any of its Subsidiaries or other Persons
directly or indirectly controlled by it or any director or manager of any of the
foregoing, which relates to this Agreement or the transactions contemplated by
this Agreement. Each party shall give the other party the opportunity to
reasonably participate in the defense and settlement of any such Action and no
such settlement shall be agreed to without each party’s prior written consent.

 

(e)          Each party shall, upon reasonable request, furnish to the other
party all information concerning itself, its Subsidiaries, directors, officers
and stockholders and such other matters as may be reasonably necessary or
advisable in connection with any statement, filing, notice or application made
by or on behalf of such other party or any of their respective Subsidiaries to
the NYSE or any Governmental Entity in connection with the transactions
contemplated by this Agreement.

 

(f)          Each party shall promptly advise the other party upon receiving any
communication from any Governmental Entity the consent or approval of which is
required for consummation of the transactions contemplated by this Agreement
that causes such party to believe that there is a reasonable likelihood that any
Requisite Approval will not be obtained or that the receipt of any such approval
may be materially delayed, and, to the extent permitted by applicable Law, shall
promptly provide the other party with a copy of such communication.

 

Section 6.2           Access to Information; Confidentiality.

 

(a)          Upon reasonable notice and subject to applicable Laws relating to
the exchange of information, each party shall, and shall cause its Subsidiaries
to, afford to the officers, employees, accountants, counsel and other
representatives of the other party, reasonable access, during normal business
hours during the period from the date of this Agreement to the Second Closing,
to all of such party’s properties, books, contracts, commitments and records,
and, during such period, each of the parties shall, and shall cause its
Subsidiaries to, make available to the other party all other information
concerning such party’s business, properties and personnel as the other party
may reasonably request. None of the parties and their Subsidiaries shall be
required to provide access to or to disclose information where such access or
disclosure would jeopardize the attorney-client privilege of such party or its
Subsidiaries or contravene any Law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement. The parties shall make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding sentence apply.

 

(b)          All information and materials provided pursuant to or in connection
with this Agreement shall be subject to the provisions of the Confidentiality
Agreement, entered into between Seller GP and Buyer on September 3, 2014 (the
“Confidentiality Agreement”). From and after the Second Closing, Seller shall,
and shall cause its Affiliates and representatives to, keep confidential and not
use for any purpose all nonpublic information regarding the Business or any of
the Acquired Companies or their respective Subsidiaries of which Seller or such
Affiliates or representatives may be aware (“Business Information”), subject
only to the exceptions to the confidentiality and non-use obligations of Seller
and such Affiliate and representatives in the Confidentiality Agreement, as
applied mutatis mutandis to Seller and such Affiliates and representatives with
respect to Business Information.

 

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Section 6.3           Financial Statements. Seller shall deliver to Buyer prior
to the Second Closing (i) true and complete copies of combined audited balance
sheets for the Acquired Companies and their respective Subsidiaries as of
December 31, 2012 and 2013 and the related combined statements of operations,
statements of stockholder’s equity and statements of cash flows for the years
then ended and (ii) the unaudited combined balance sheets of the Acquired
Companies and their respective Subsidiaries as of the most recent quarter
required to be filed in reports with the SEC, and the related combined
statements of operations, statements of stockholder’s equity and statements of
cash flows for the quarter then ended. These audited financial statements and
interim financial statements shall be prepared in accordance with GAAP
consistently applied and fairly present, in all material respects, the combined
financial condition, results of operations, stockholder’s equity and cash flows
of the Acquired Companies and their respective Subsidiaries as of the applicable
dates or for the applicable periods, in such form as may be required for filing
with the SEC. In addition, promptly following Buyer’s request, Seller shall
furnish to Buyer such other financial statements as may be required to be
included in Seller’s filings with the SEC.

 

Section 6.4           Legal Conditions. Subject to Section 6.1(b), each of the
parties shall, and shall cause its Subsidiaries to, use their reasonable best
efforts (i) to take, or cause to be taken, all actions necessary, proper or
advisable to comply promptly with all legal requirements that may be imposed on
such party or its Subsidiaries with respect to the transactions contemplated by
this Agreement and, subject to the conditions set forth in Article VII, to
consummate such transactions, and (ii) to obtain (and to cooperate with the
other parties to obtain) any material consent, authorization, order or approval
of, or any exemption by, any Governmental Entity and any other third party that
is required to be obtained by such party or any of its Subsidiaries in
connection with the transactions contemplated by this Agreement.

 

Section 6.5           Employee Matters.

 

(a)          Immediately prior to the Second Closing, Seller shall (i) cause the
Retained Employees to be employed by Seller or an Affiliate of Seller other than
any Acquired Company or Subsidiary of an Acquired Company and (ii) cause the
Acquired Companies or their Subsidiaries to, terminate or assign and transfer to
an Affiliate of Seller other than any Acquired Company or Subsidiary of an
Acquired Company each Acquired Company Benefit Plan and all assets thereof,
other than any Acquired Company Benefit Plan listed on Section 6.5(a) of the
Seller Disclosure Letter (each such listed plan an “Assumed Benefit Plan”).

 

(b)          On or following the First Closing, Buyer shall, or shall cause one
if its Affiliates to, make an offer of employment to each of the employees
listed in Section 6.5(b) of the Seller Disclosure Letter (the “Designated
Employees”), which employment, with respect to each Designated Employee, shall
be effective upon such Designated Employee’s acceptance of such offer (or
another date prior to the Second Closing as designated by Buyer). Seller shall
reasonably cooperate with Buyer and any such Designated Employee that accepts
such offer of employment with regard to the termination of such Designated
Employee’s employment with an Acquired Company or any Subsidiary of an Acquired
Company. In the event that this Agreement terminates prior to the consummation
of the Second Closing, (i) any such offers of employment that have not been
accepted by a Designated Employee, or under which a Designated Employee has not
yet commenced employment with Buyer, shall be revoked and rescinded, and upon
such revocation and rescission, such offers shall have no further force or
effect; and (ii) Buyer shall cause the employment of any Designated Employee
hired and employed by Buyer or one of its Affiliates to be terminated effective
upon the termination of this Agreement, and Seller shall cause the Acquired
Company or Subsidiary of an Acquired Company that previously employed such
Designated Employee to offer employment to such Designated Employee upon the
same terms as applied to such Designated Employee prior to the First Closing.

 

(c)          From and after the Second Closing, any individual who remains
employed with an Acquired Company or any Subsidiary of an Acquired Company as of
the Second Closing, and from and after the date a Designated Employee begins
employment with Buyer or one of its Affiliates with respect to those Designated
Employees to whom an offer was made in accordance with Section 6.5(b) and
accepted (such employees collectively, the “Business Employees”) will
participate and be covered or be offered participation and coverage, as
applicable, under the applicable Buyer Benefit Plans; provided, that continued
participation and coverage following the Second Closing under any Assumed
Benefit Plan as in effect immediately prior to the Second Closing shall be
deemed to satisfy the obligations under this sentence.

 

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(d)          Buyer shall cause each Buyer Benefit Plan in which Business
Employees are eligible to participate to take into account for purposes of
eligibility, vesting and benefit accruals under the Buyer Benefit Plans (other
than benefit accruals under any of Buyer’s tax-qualified and non-qualified
defined benefit pension plans) the service of such Business Employees with the
Acquired Companies and their Subsidiaries (and any predecessor entities) to the
same extent as such service was credited for such purpose by the Acquired
Companies and their Subsidiaries under a comparable Acquired Company Benefit
Plan; provided, however, that such service shall not be recognized to the extent
that such recognition would result in a duplication of benefits with respect to
the same period of service or with respect to newly implemented plans for which
prior service is not taken into account or with respect to plans for which
participation, service and/or benefit accrual is frozen. Nothing herein shall
limit the ability of Buyer to amend or terminate any of the Assumed Benefit
Plans or Buyer Benefit Plans in accordance with their terms at any time.

 

(e)          At and following the Second Closing, Buyer will honor the accrued
and vested obligations of the Acquired Companies and their Subsidiaries as of
the Second Closing under the provisions of the Assumed Benefit Plans, provided,
that this provision shall not prevent Buyer from amending, suspending or
terminating any such plans or agreements to the extent permitted by the
respective terms of such plans or agreements. Nothing contained in this
Agreement shall constitute or be deemed to be an amendment to any Acquired
Company Benefit Plan (including any Assumed Benefit Plan), Buyer Benefit Plan or
any other compensation or benefit plan, program or arrangement of Buyer, Seller,
the Acquired Companies and their respective Subsidiaries.

 

(f)          If Business Employees become eligible to participate in a medical,
dental or other health care insurance plan of Buyer, Buyer shall cause each such
plan to (i) waive any preexisting condition limitations to the extent such
conditions are covered under the applicable medical, health or dental plans of
Buyer, (ii) honor under such plans any deductible, co-payment and out-of-pocket
expenses incurred by such employees and their beneficiaries during the portion
of the calendar year prior to such participation and (iii) waive any waiting
period limitation or evidence of insurability requirement which would otherwise
be applicable to such employee on or after the Second Closing for the year in
which the Second Closing or participation in such medical, dental or other
health care insurance plan of Buyer, as applicable, occurs, in each case to the
extent such employee had satisfied any similar limitation or requirement under
an analogous medical, dental or other health care insurance plan of Seller, the
Acquired Companies and their respective Subsidiaries prior to the Second Closing
for the year in which the Second Closing or participation in such medical,
dental or health care insurance plan of Buyer, as applicable, occurs.

 

(g)          To the extent any employee of an Acquired Company or a Subsidiary
of an Acquired Company (including any Designated Employee), other than a
Retained Employee, does not become a Business Employee, Buyer shall be solely
responsible for, and Seller shall have no responsibility, liability or
obligation for, any and all cash severance amounts payable to such employees in
connection with their termination of employment from an Acquired Company or
Affiliate of an Acquired Company, as applicable, other than amounts payable with
respect to the termination or accelerated vesting of any equity-related rights
(i.e., restricted stock) held by such employees as of the date of termination.

 

(h)          Without limiting the generality of Section 10.9, this Section 6.5
shall be binding upon and inure solely to the benefit of each party to this
Agreement, and nothing in this Section 6.5, express or implied, is intended to
confer upon any other Person, including any current or former director, officer
or employee the Acquired Companies and their respective Subsidiaries, any rights
or remedies of any nature whatsoever under or by reason of this Section 6.5.

 

Section 6.6           Additional Agreements. In case at any time after the
Second Closing any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest Buyer with full title to all properties,
assets, rights, approvals, immunities and franchises of any of the Acquired
Companies or their respective Subsidiaries, the proper officers and directors of
each party and its Subsidiaries shall take all such necessary action as may be
reasonably requested by, and at the sole expense of, Buyer.

 

Section 6.7           Advice of Changes. Each party shall promptly advise the
other parties of any change or event (i) having or reasonably likely to have a
Material Adverse Effect on Seller or Material Adverse Effect on Buyer, as the
case may be, or (ii) that it believes would or would be reasonably likely to
cause or constitute a material breach of any of such party’s representations,
warranties or covenants contained in this Agreement;

 

25

 

 

provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties (or remedies with respect
thereto) or the conditions to the obligations of the parties under this
Agreement; provided, further, that a failure to comply with this Section 6.7
shall not constitute (i) the failure of any condition set forth in Article VII
to be satisfied unless the underlying Material Adverse Effect on Seller or
Material Adverse Effect on Buyer, as applicable, or material breach would
independently result in the failure of a condition set forth in Article VII to
be satisfied or (ii) a breach of covenant or agreement pursuant to Section
8.2(a)(y) or Section 8.2(b)(y).

 

Section 6.8           General Release of Claims. Effective as of the Second
Closing, Seller, on behalf of itself and its Affiliates (other than the Acquired
Companies and their respective Subsidiaries) (collectively, the “Releasing
Persons”), hereby irrevocably releases and forever discharges each of the
Acquired Companies and their respective Subsidiaries (for the benefit of Buyer
and its respective Subsidiaries (including the Acquired Companies) and their
respective parents, subsidiaries, Affiliates, divisions and predecessors and
their respective past and present directors, managers, officers, employees and
agents, and each of their respective successors, heirs, assigns, executors and
administrators (collectively, the “Released Persons”)) of and from all manner of
action and actions, cause and causes of action, suits, rights, debts, dues, sums
of money, accounts, bonds, bills, covenants, contracts, controversies,
omissions, promises, variances, trespasses, losses, judgments, executions,
claims and demands whatsoever, in Law or in equity that any of the Releasing
Persons ever had, now has or which it hereafter can, shall or may have, against
the Released Persons, whether known or unknown, suspected or unsuspected,
matured or unmatured, fixed or contingent, for, upon or by reason of any matter
or cause arising at any time prior to the Second Closing, other than as provided
in or contemplated by this Agreement or any Ancillary Agreement (it being
expressly understood and agreed that there shall be no release or waiver with
respect to any of the matters set forth in Section 10.1).

 

Section 6.9           Tax Matters.

 

(a)          Tax Indemnification by Seller. From and after the Second Closing,
Seller shall pay or cause to be paid, and shall indemnify Buyer and each of its
Affiliates (including the Acquired Companies and their Subsidiaries after the
Closing Date) (collectively, the “Buyer Tax Indemnified Parties”) and hold each
Buyer Tax Indemnified Party harmless from and against: (A) any Taxes imposed on
the Acquired Companies or any of their Subsidiaries for any Pre-Closing Period;
(B) any Taxes of Seller or any of its affiliates (other than the Acquired
Companies or any of their Subsidiaries) for which any of the Acquired Companies
or any of their Subsidiaries is liable under Treasury Regulation Section
1.1502-6 (or under any similar provision of state, local or foreign Law); (C)
any and all Taxes of any Person imposed on an Acquired Company or its
Subsidiaries as a result of any Tax Sharing Agreement or Tax allocation
agreement, arrangement, or understanding entered into by such Acquired Company
or its Subsidiaries prior to the Second Closing; (D) any Taxes resulting from
any transfer of assets or employees or restructuring in anticipation of or in
connection with the transactions contemplated by this Agreement (including the
Restructuring Transactions contemplated by Section 6.10); (E) any Taxes arising
out of or relating to any breach or inaccuracy of any representation or warranty
contained in Section 3.9(m); (F) any Taxes arising out of or relating to any
breach of any covenant or agreement of Seller contained in this Agreement; (G)
any Transfer Taxes for which Seller is responsible under Section 6.9(i); and
(H) any costs and expenses, including reasonable legal fees and expenses
attributable to any item described in clauses (A) to (G) in each case except to
the extent a liability or reserve for such Taxes was reflected in the
calculation of the Final Acquired Companies’ Indebtedness or the Final Closing
Net Working Capital.

 

(b)          Tax Indemnification by Buyer. From and after the Second Closing,
Buyer shall pay or cause to be paid, and shall indemnify Seller and its
Affiliates (collectively, the “Seller Tax Indemnified Parties”) and hold each
Seller Tax Indemnified Party harmless from and against: (A) any Taxes imposed on
the Acquired Companies or any of their Subsidiaries for any Post-Closing Period;
(B) any Taxes arising out of or relating to any breach of any covenant or
agreement of Buyer contained in this Agreement; (C) any Transfer Taxes for which
Buyer is responsible under Section 6.9(i); and (D) any costs and expenses,
including reasonable legal fees and expenses attributable to any item described
in clauses (A) to (C); provided, however, that Buyer shall not be required to
pay or cause to be paid, or to indemnify or hold harmless the Seller Tax
Indemnified Parties from and against any Taxes for which Seller is responsible
pursuant to Section 6.9(a).

 

(c)          Straddle Periods. To the extent permitted or required by applicable
Law, the taxable year of each Acquired Company and its Subsidiaries that
includes the Second Closing Date shall be treated as closing on (and

 

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including) the Second Closing Date. To the extent not so permitted or required
by applicable Law, for purposes of this Agreement, in the case of any Straddle
Period, (i) Taxes of an Acquired Company and its Subsidiaries imposed on a
periodic basis and not based on income, or any transaction or event (such as
real or personal property Taxes) allocable to the Pre-Closing Period shall be
equal to the amount of such Taxes for the entire Straddle Period multiplied by a
fraction, the numerator of which is the number of calendar days during the
Straddle Period that are in the Pre-Closing Period and the denominator of which
is the number of calendar days in the entire Straddle Period, and (ii) in the
case of all other Taxes of an Acquired Company and its Subsidiaries allocable to
the Pre-Closing Period, such Taxes shall be computed as if such taxable period
ended as of the end of the day on the Second Closing Date; provided that
exemptions, allowances or deductions that are calculated on an annual basis
(including, but not limited to, depreciation and amortization deductions) shall
be allocated between the period ending on the Second Closing Date and the period
beginning after the Second Closing Date in proportion to the number of days in
each period.

 

(d)          Tax Returns.

 

(i)          Seller shall prepare or shall cause to be prepared any Tax Return
that is required to be filed by or with respect to an Acquired Company or its
Subsidiaries for any taxable period that ends on or before the Second Closing
Date (a “Pre-Closing Tax Return”). Seller shall (x) prepare such Pre-Closing Tax
Returns in a manner consistent with the past Tax accounting practices, methods,
elections and conventions of the relevant entity and in compliance with
applicable Laws, and (y) deliver to Buyer for its review and comment a copy of
any such Pre-Closing Tax Return required to be filed after the Second Closing at
least thirty (30) days prior to the due date thereof (taking into account any
extensions) and Seller shall reflect on such Pre-Closing Tax Returns all
reasonable comments received from Buyer not later than fifteen (15) days before
the due date thereof (taking into account any extensions). Seller shall timely
file or cause to be timely filed any Pre-Closing Tax Return that is required to
be filed (taking into account any extensions) on or before the Second Closing
Date. Seller shall deliver, or cause to be delivered, to Buyer all Pre-Closing
Tax Returns that are required to be filed after the Second Closing Date at least
five (5) days prior to the due date for filing such Tax Returns (taking into
account any extensions), together with payment by Seller of the amount of any
Taxes shown as due thereon (other than to the extent a liability or reserve for
such Taxes was reflected in the calculation of the Final Acquired Companies’
Indebtedness or the Final Closing Net Working Capital), and Buyer shall timely
file or cause to be timely filed such Tax Returns.

 

(ii)         Buyer shall prepare and timely file or cause to be prepared and
timely filed all Tax Returns and in compliance with applicable Laws with respect
to an Acquired Company or its Subsidiaries for any Straddle Period. In the case
of any such Tax Return for a Straddle Period (a “Straddle Period Tax Return”),
such Tax Returns shall be prepared in a manner consistent with past practice of
the Acquired Companies and Buyer shall deliver to Seller for its review and
comment a copy of such Straddle Period Tax Returns at least thirty (30) days
prior to the due date thereof (taking into account any extensions) and Buyer
shall reflect on such Tax Returns all reasonable comments received from Seller
not later than fifteen (15) days before the due date thereof (taking into
account any extensions) to the extent such comments relate to the Pre-Closing
Period. Seller shall pay to Buyer at least five (5) days prior to the due date
for filing such Straddle Period Tax Returns (taking into account any extensions)
the amount of any Taxes shown as due thereon allocable (as determined under
Section 6.9(c)) to the Pre-Closing Period (other than to the extent a liability
or reserve for such Taxes was reflected in the calculation of the Final Acquired
Companies’ Indebtedness or the Final Closing Net Working Capital).

 

(e)          Tax Contests.

 

(i)          If any Taxing Authority asserts a Tax Claim, then the party to this
Agreement first receiving notice of such Tax Claim promptly shall provide
written notice thereof to the other party to this Agreement; provided, however,
that the failure of such party to give such prompt notice shall not relieve the
other party of any of its obligations under this Section 6.9, except to the
extent that the other party is actually prejudiced by such failure. Such notice
shall specify in reasonable detail the basis for such Tax Claim and shall
include a copy of the relevant portion of any correspondence received from the
Taxing Authority.

 

(ii)         In the case of a Tax Proceeding of or with respect to an Acquired
Company or its Subsidiaries for any taxable period ending on or before the
Second Closing Date, Seller shall have the right to control such Tax Proceeding;
provided, however, that Seller shall (x) keep Buyer reasonably informed with
respect

 

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to such Tax Proceeding, (y) consult Buyer before taking any significant action
in connection with such Tax Proceeding, and (z) to the extent that a settlement
or compromise of such Tax Proceeding could reasonably be expected to have an
adverse effect on Buyer or any of its Subsidiaries (including the Acquired
Companies or any of their Subsidiaries), not settle or compromise such Tax
Proceeding without the prior written consent of Buyer, which consent shall not
be unreasonably withheld.

 

(iii)        In the case of a Tax Proceeding of or with respect to an Acquired
Company or its Subsidiaries for any Straddle Period, Buyer shall have the right
to control such Tax Proceeding; provided, however, that Buyer shall (x) keep
Seller reasonably informed with respect to such Tax Proceeding, (y) consult
Seller before taking any significant action in connection with such Tax
Proceeding, and (z) to the extent that a settlement or compromise of such Tax
Proceeding could reasonably be expected to have an adverse effect on Seller or
any of its Subsidiaries, not settle or compromise such Tax Proceeding without
the prior written consent of Seller, which consent shall not be unreasonably
withheld.

 

(iv)        Buyer shall have the exclusive right to control any Tax Proceeding
other than any Tax Proceeding described in Section 6.9(e)(ii) and Section
6.9(e)(iii).

 

(f)          Cooperation and Exchange of Information.

 

(i)          Each party to this Agreement shall, and shall cause its Affiliates
to, provide to the other party to this Agreement such cooperation, documentation
and information as either of them reasonably may request in (i) filing any Tax
Return, amended Tax Return or claim for refund, (ii) determining a liability for
Taxes or an indemnity obligation under this Section 6.9 or a right to refund of
Taxes, or (iii) conducting any Tax Proceeding. Such cooperation and information
shall include providing necessary powers of attorney, copies of all relevant
portions of relevant Tax Returns, together with all relevant portions of
relevant accompanying schedules and relevant work papers, relevant documents
relating to rulings or other determinations by Taxing Authorities and relevant
records concerning the ownership and Tax basis of property and other
information, which any such party may possess. Each party shall make its
employees reasonably available on a mutually convenient basis at its cost to
provide an explanation of any documents or information so provided.

 

(ii)         Each party shall retain all Tax Returns, schedules and work papers,
and all material records and other documents relating to Tax matters, of the
relevant entities for their respective Tax periods ending on or prior to the
Second Closing Date until the later of (x) the expiration of the statute of
limitations for the Tax periods to which the Tax Returns and other documents
relate, or (y) eight (8) years following the due date (without extension) for
such Tax Returns. Thereafter, the party holding such Tax Returns or other
documents may dispose of them after offering the other party reasonable notice
and opportunity to take possession of such Tax Returns and other documents at
such other party’s own expense.

 

(g)          After the Second Closing, all refunds received by Buyer or any of
its affiliates (including the Acquired Companies and their Subsidiaries) for
Taxes of an Acquired Company or any of its Subsidiaries for any Pre-Closing
Period (other than (i) any refund of Taxes attributable to, or resulting from, a
carry back of any item of loss, deduction, credit or other similar item arising
in a Post-Closing Period or, in the case of a refund of Taxes for a Straddle
Period, the use of the prorated amount of any such item that arises in a
Post-Closing Period and (ii) any refund reflected as an asset in the Final
Closing Net Working Capital) shall be for the account of Seller and shall be
paid by Buyer to Seller, net of expenses and net of any Taxes imposed on or
resulting from the receipt of such refund. The amount of any other refund of
Taxes shall be for the account of Buyer. To the extent that a refund that gives
rise to a payment to Seller hereunder is subsequently disallowed or otherwise
reduced, Seller shall pay to Buyer the amount of such disallowed or reduced
refund.

 

(h)          Tax Treatment of Payments. Except to the extent otherwise required
pursuant to a Determination, Seller, Buyer, the Acquired Companies and their
respective Subsidiaries and their respective Affiliates shall treat any and all
payments under this Section 6.9, Section 1.2(e), Section 2.1(e), and Article
VIII as an adjustment to the consideration for income Tax purposes.

 

(i)          Transfer Taxes. Notwithstanding anything to the contrary in this
Agreement, each of Seller and Buyer shall pay and be responsible for fifty
percent (50%) of any sales, use, transfer, documentary, stamp, value

 

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added or similar Taxes and related fees imposed on or payable with respect to
the transactions contemplated hereby (“Transfer Taxes”). Such Transfer Taxes
shall be paid by the party responsible under applicable Law to pay such Transfer
Taxes (with the other party indemnifying the party that is legally responsible
to pay the Tax, its share of such Tax at least three (3) days before the Tax
payment due date). Both parties shall, and shall cause their respective
Affiliates to, cooperate in the execution of the Tax Returns and other filings
relating to such Transfer Taxes.

 

(j)          Timing of Payments. Any indemnity payment required to be made
pursuant to this Section 6.9 shall be made within ten (10) days after the
indemnified party makes written demand upon the indemnifying party, but in no
case earlier than five (5) days prior to the date on which the relevant Taxes or
other amounts are required to be paid to the applicable Taxing Authority.

 

(k)          Notwithstanding anything to the contrary in this Agreement,
indemnification with respect to Taxes and the procedures relating thereto shall
be governed exclusively by this Section 6.9, Section 8.3 and Section 8.4, and
the provisions of Article VIII (other than Section 8.3 and Section 8.4) shall
not apply. The covenants and agreements in this Section 6.9 and the
representations and warranties contained in Section 3.9(m) shall survive the
Second Closing until the date that is six (6) months after the expiration of the
applicable statute of limitations; provided, however, that any claim for
indemnity made by a party hereto on or prior to such date shall survive until
such claim is finally resolved. The representations and warranties contained in
Section 3.9 (other than in Section 3.9(m)) shall not survive, and shall
terminate at, the Second Closing.

 

Section 6.10         Certain Pre-Closing Transactions. Prior to the Second
Closing, Seller shall complete each of the following transactions (collectively,
the “Restructuring Transactions”), in each case pursuant to documentation in
form and substance satisfactory to Seller and Buyer:

 

(a)          distribute or cause the distribution of all of the Equity Interests
of CREI Advisors, LLC to Seller or an Affiliate of Seller (other than any
Acquired Company or Subsidiary of any Acquired Company); and

 

(b)          cause the Designated FF&E to be transferred to an Acquired Company
or a Subsidiary of an Acquired Company.

 

Section 6.11         Change of Name. Effective upon the Second Closing, Seller
shall, and shall cause its Affiliates to, cease all use of the name “Cole” and
any derivative thereof for marketing, promotion or sales purposes to customers
or the general public, except (solely with respect to the general public) for a
transition period not to exceed forty-five (45) days immediately following the
Second Closing Date.

 

Section 6.12         Subsidiary Advisory Agreement. Seller agrees that, after
the Second Closing, it or one of its Affiliates will enter into a sub-advisory
agreement with the advisor of each of Cole Credit Property Trust VI, Inc., a
Maryland corporation, and Cole Office & Industrial REIT (CCIT III), Inc., a
Maryland corporation, each of which as of the date of this Agreement has not
been formed (the “Designated Formation Funds”), as promptly as practicable after
the formation of each such Designated Formation Fund (the “Formation Fund
Sub-Advisory Agreement”). Seller and Buyer agree that the advisory agreement to
be entered into with each of the Designated Formation Funds (the “Formation Fund
Advisory Agreement”) will be materially in the same form as the advisory
agreement for the prior Designated Fund in such series, subject only to such
changes as may be required by Governmental Entities, as do not materially
adversely affect Seller or as are agreed to by Seller and Buyer (the “Permitted
Changes”), and that the Formation Fund Sub-Advisory Agreement (other than to
reflect the fee schedule set forth in Section 6.12 of the Seller Disclosure
Letter) will be substantially in the same form as the Formation Fund Advisory
Agreement, with such changes as are necessary to conform to the Permitted
Changes or as are agreed to by Seller and Buyer. Except for the Designated Funds
and the Designated Formation Funds, neither Seller nor any of its Affiliates
will serve as sub-advisor to any fund sponsored by Buyer, unless Seller and
Buyer otherwise agree.

 

Section 6.13         Reaffirmation of Advisory Agreement. On or before the
Second Closing, Seller shall use, and shall cause its applicable Affiliates to
use, commercially reasonable best efforts to assist Buyer and the Acquired
Companies in reaffirming or renewing, or causing to be reaffirmed or renewed,
any advisory contract, investment management contract, property management
contract, dealer manager agreement, soliciting dealer agreement and any similar
agreement which relates to the Business.

 

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Section 6.14         No Negotiation. During the period commencing on the date
hereof and ending on the earlier of the Second Closing Date or the date on which
this Agreement is terminated pursuant to Article IX, Seller shall not, shall not
authorize or permit any of its Affiliates to, and shall instruct its
representatives not to: (a) solicit or knowingly encourage the initiation or
submission of any expression of interest, inquiry, proposal or offer from any
Person (other than Buyer or its Affiliates or representatives) relating to a
possible Acquisition Transaction; (b) participate in any discussions or
negotiations or enter into any agreement, understanding or arrangement with, or
provide any non-public information to, any Person (other than Buyer or its
Affiliates or representatives) relating to or in connection with a possible
Acquisition Transaction; (c) entertain or accept any proposal or offer from any
Person (other than Buyer or its Affiliates or representatives) relating to a
possible Acquisition Transaction; or (d) consummate any Acquisition Transaction.
For purposes of this Agreement, “Acquisition Transaction” means any transaction
or series of related transactions involving: (i) the sale, license, encumbrance
or other disposition of all or any material portion of the business or assets of
any Acquired Company or any of its Subsidiaries; (ii) the issuance, pledge,
transfer, acquisition or other disposition of all or any material portion of the
Equity Interests of any Acquired Company or any of its Subsidiaries; or (iii)
any merger, consolidation, business combination, share exchange, stock or asset
purchase, reorganization or similar transaction involving a change of control of
any Acquired Company or any of its Subsidiaries.

 

Section 6.15         Wrong Pockets. If, after the Second Closing, (i) Seller
reasonably determines that any asset, property or subsidiary that should not
have been transferred pursuant to this Agreement or any of the Ancillary
Agreements has been transferred to Buyer or is held by an Acquired Company or
(ii) Buyer reasonably determines that any asset, property or subsidiary that
should have been transferred pursuant to this Agreement or any of the Ancillary
Agreements has not been transferred to Buyer or is not held by an Acquired
Company, Buyer and Seller shall consult with one another in good faith and
reasonably cooperate to determine if such asset, property or subsidiary is held
by the wrong party and, if so determined, to effect the transfer of such asset,
property or subsidiary to the appropriate party or its designee as soon as
practicable and for no consideration.

 

Section 6.16         Intercompany Obligations. Seller shall use reasonable
efforts to take, or cause to be taken, such action and make, or cause to be
made, such payments as may be necessary so that, as of the Second Closing Date,
there shall be no intercompany obligations (other than pursuant to this
Agreement and the Ancillary Agreements) between any of the Acquired Companies or
their respective Subsidiaries, on the one hand, and Seller or any of its
Affiliates (other than the Acquired Companies and their respective
Subsidiaries), on the other hand. Except for this Agreement and the Ancillary
Agreements, all intercompany arrangements and Contracts, whether written or
oral, between any Acquired Company or their respective Subsidiaries, on the one
hand, and Seller or any of its Affiliates (other than the Acquired Companies and
their respective Subsidiaries), on the other hand, shall terminate and be of no
further force and effect after the Second Closing. The parties hereto agree that
this Section 6.16 does not apply to intercompany accounts or obligations owing
to and from, or any arrangements or contracts, among any of the Acquired
Companies and/or their respective Subsidiaries.

 

Section 6.17         Property Disposition Fees. Prior to the Second Closing, EFA
will assign its right to receive any disposition fees payable by, and
reimbursement of expenses from, the applicable Ancillary Programs with respect
to the sale or disposition of any of the properties set forth on Section 6.17 of
the Seller Disclosure Letter.

 

Section 6.18         Property Management Agreements. Prior to the Second
Closing, Seller shall cause EFA to enter into property management agreements
with Cole Realty Advisors, LLC relating to the payment of property management
fees from the properties owned by the Ancillary Programs in accordance with the
terms set forth on Section 6.18 of the Seller Disclosure Letter; provided,
however, that such property management agreements shall only be entered into to
the extent they are not already in effect.

 

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Article VII

CONDITIONS PRECEDENT

 

Section 7.1           Conditions to Each Party’s Obligations – First Closing.
The respective obligations of the parties to effect the First Closing shall be
subject to the satisfaction at or prior to the First Closing of the following
conditions:

 

(a)          Required Approvals. (i) Any applicable waiting period under the HSR
Act shall have expired or been earlier terminated, (ii) all of the Buyer Shares
issuable pursuant to this Agreement shall have been approved for listing on the
NYSE, subject to official notice of issuance and (iii) any other approvals set
forth in Section 3.4 and Section 4.4 required to be obtained for the
consummation, as of the First Closing, of the transactions contemplated by this
Agreement (other than, in the case of this clause (iii), any approvals the
failure of which to obtain would not have, or would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on Seller
or a Material Adverse Effect on Buyer), shall have been obtained (all such
approvals and the expiration or termination of all such waiting periods are
referred to herein as the “Requisite Approvals”).

 

(b)          No Injunctions or Restraints; Illegality. No Order (whether
temporary, preliminary or permanent) issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the transactions contemplated by this Agreement shall be in effect. No
statute, rule, regulation or Order shall have been enacted, entered, promulgated
or enforced by any Governmental Entity that prohibits or makes illegal
consummation of the transactions contemplated by this Agreement. There shall be
no pending Action by any Governmental Entity with respect to this Agreement or
the transactions contemplated hereby.

 

Section 7.2           Conditions to Obligations of Buyer – First Closing. The
obligations of Buyer to effect the First Closing are also subject to the
satisfaction, or waiver by Buyer, at or prior to the First Closing, of the
following conditions:

 

(a)          Representations and Warranties. The representations and warranties
of Seller set forth in this Agreement shall be true and correct as of the date
of this Agreement and as of the First Closing as though made on and as of the
First Closing (except that representations and warranties that by their terms
speak specifically as of the date of this Agreement or another date shall be
true and correct as of such date); provided, however, that no representation or
warranty of Seller (other than the representations and warranties contained in
Section 3.1(a) (first sentence only), Section 3.1(b) (with respect to material
Subsidiaries of the Acquired Companies only), Section 3.2, Section 3.3(a) and
Section 3.5, which shall be true and correct in all material respects), shall be
deemed untrue or incorrect for purposes hereunder as a consequence of the
existence of any fact, event or circumstance inconsistent with such
representation or warranty, unless such fact, event or circumstance,
individually or taken together with all other facts, events or circumstances
inconsistent with any representation or warranty of Seller, has had or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Seller, disregarding for these purposes any qualification or
exception for, or reference to, materiality in any such representation or
warranty, including the use of the terms “material,” “materially,” “in all
material respects,” “Material Adverse Effect” or similar terms or phrases in any
such representation or warranty, other than, in each case, in Section 3.5,
Section 3.7(a), Section 3.10(a), Section 3.12(a), and Section 3.13; and Buyer
shall have received a certificate signed on behalf of Seller by the Chief
Executive Officer or the Chief Financial Officer of Seller to the foregoing
effect.

 

(b)          Performance of Obligations of Seller. Seller shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the First Closing; and Buyer shall have received a
certificate signed on behalf of Seller by the Chief Executive Officer or the
Chief Financial Officer of Seller to such effect.

 

(c)          Other Deliveries. Seller shall have made the other deliveries set
forth in Section 1.5(b).

 

Section 7.3           Conditions to Obligations of Seller – First Closing. The
obligation of Seller to effect the First Closing is also subject to the
satisfaction, or waiver by Seller, at or prior to the First Closing, of the
following conditions:

 

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(a)          Representations and Warranties. The representations and warranties
of Buyer set forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the First Closing as though made on and as of the First
Closing (except that representations and warranties that by their terms speak
specifically as of the date of this Agreement or another date shall be true and
correct as of such date); provided, however, that no representation or warranty
of Buyer (other than the representations and warranties in Section 4.1 (first
sentence only), Section 4.2, and Section 4.3(a) which shall be true and correct
in all material respects) shall be deemed untrue or incorrect for purposes
hereunder as a consequence of the existence of any fact, event or circumstance
inconsistent with such representation or warranty, unless such fact, event or
circumstance, individually or taken together with all other facts, events or
circumstances inconsistent with any representation or warranty of Buyer, has had
or would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Buyer, disregarding for these purposes any
qualification or exception for, or reference to, materiality in any such
representation or warranty, including the use of the terms “material,”
“materially,” “in all material respects,” “Material Adverse Effect” or similar
terms or phrases in any such representation or warranty; and Seller shall have
received a certificate signed on behalf of Buyer by an authorized officer of
Buyer to the foregoing effect.

 

(b)          Performance of Obligations of Buyer. Buyer shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the First Closing; and Seller shall have received a
certificate signed on behalf of Buyer by an authorized officer of Buyer to such
effect.

 

(c)          Other Deliveries. Buyer shall have made the other deliveries set
forth in Section 1.5(a).

 

Section 7.4           Conditions to Each Party’s Obligations – Second Closing.
The respective obligations of the parties to effect the Second Closing shall be
subject to the satisfaction at or prior to the Second Closing of the following
conditions:

 

(a)          No Injunctions or Restraints; Illegality. No Order (whether
temporary, preliminary or permanent) issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the transactions contemplated by this Agreement shall be in effect. No
statute, rule, regulation or Order shall have been enacted, entered, promulgated
or enforced by any Governmental Entity that prohibits or makes illegal
consummation of the transactions contemplated by this Agreement. There shall be
no pending Action by any Governmental Entity with respect to this Agreement or
the transactions contemplated hereby.

 

(b)          FINRA Approval. Each of: (i) thirty-one (31) days shall have
elapsed following submission to FINRA of the initial Continuing Membership
Application of each Broker (the “CMA”) and FINRA shall not have rejected the CMA
as incomplete during such period; (ii) each Broker shall have notified FINRA
that the parties to this Agreement intend to consummate the Broker Sale without
written approval from FINRA; and (iii) FINRA shall not have advised any Broker
that it will impose material operating conditions on the Broker if the Second
Closing occurs prior to obtaining FINRA’s approval of the CMA.

 

Section 7.5           Conditions to Obligations of Buyer – Second Closing. The
obligations of Buyer to effect the Second Closing are also subject to the
satisfaction, or waiver by Buyer, at or prior to the Second Closing, of the
following conditions:

 

(a)          Representations and Warranties. The representations and warranties
of Seller set forth in this Agreement shall be true and correct as of the date
of this Agreement and as of the Second Closing as though made on and as of the
Second Closing (except that representations and warranties that by their terms
speak specifically as of the date of this Agreement or another date shall be
true and correct as of such date); provided, however, that no representation or
warranty of Seller (other than the representations and warranties contained in
Section 3.1(a) (first sentence only), Section 3.1(b) (with respect to material
Subsidiaries of the Acquired Companies only), Section 3.2, Section 3.3(a) and
Section 3.5, which shall be true and correct in all material respects), shall be
deemed untrue or incorrect for purposes hereunder as a consequence of the
existence of any fact, event or circumstance inconsistent with such
representation or warranty, unless such fact, event or circumstance,
individually or taken together with all other facts, events or circumstances
inconsistent with any representation or warranty of Seller, has had or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Seller, disregarding for these purposes any qualification or
exception for, or reference to, materiality in any such representation or
warranty, including the use of the terms “material,” “materially,” “in all
material respects,” “Material Adverse

 

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Effect” or similar terms or phrases in any such representation or warranty,
other than, in each case, in Section 3.5, Section 3.7(a), Section 3.10(a),
Section 3.12(a) and Section 3.13; and Buyer shall have received a certificate
signed on behalf of Seller by the Chief Executive Officer or the Chief Financial
Officer of Seller to the foregoing effect.

 

(b)          Performance of Obligations of Seller. Seller shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Second Closing; and Buyer shall have received
a certificate signed on behalf of Seller by the Chief Executive Officer or the
Chief Financial Officer of Seller to such effect.

 

(c)          Restructuring Transactions. Each of the Restructuring Transactions
shall have been completed.

 

(d)          Other Deliveries. Seller shall have made the other deliveries set
forth in Section 1.6(b).

 

(e)          FIRPTA Certificate. Seller shall have delivered to Buyer a duly
executed certification that Seller is not a foreign person within the meaning of
Section 1445 of the Code, substantially in the form of the sample certification
set forth in Treasury Regulation Section 1.1445-2(b)(2)(iv)(A).

 

Section 7.6           Conditions to Obligations of Seller – Second Closing. The
obligations of Seller to effect the Second Closing are also subject to the
satisfaction, or waiver by Buyer, at or prior to the Second Closing, of the
following conditions:

 

(a)          Representations and Warranties. The representations and warranties
of Buyer set forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Second Closing as though made on and as of the
Second Closing (except that representations and warranties that by their terms
speak specifically as of the date of this Agreement or another date shall be
true and correct as of such date); provided, however, that no representation or
warranty of Buyer (other than the representations and warranties contained in
Section 4.1 (first sentence only), Section 4.2, and Section 4.3(a), which shall
be true and correct in all material respects), shall be deemed untrue or
incorrect for purposes hereunder as a consequence of the existence of any fact,
event or circumstance inconsistent with such representation or warranty, unless
such fact, event or circumstance, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
of Buyer, has had or would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Buyer, disregarding for these
purposes any qualification or exception for, or reference to, materiality in any
such representation or warranty, including the use of the terms “material,”
“materially,” “in all material respects,” “Material Adverse Effect” or similar
terms or phrases in any such representation or warranty; and Seller shall have
received a certificate signed on behalf of Buyer by the Chief Executive Officer
or the Chief Financial Officer of Buyer to the foregoing effect.

 

(b)          Performance of Obligations of Buyer. Buyer shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Second Closing; and Seller shall have received a
certificate signed on behalf of Buyer by the Chief Executive Officer or the
Chief Financial Officer of Buyer to such effect.

 

(c)          Restructuring Transactions. Each of the Restructuring Transactions
shall have been completed.

 

(d)          Other Deliveries. Buyer shall have made the other deliveries set
forth in Section 1.6(a).

 

Article VIII

SURVIVAL; INDEMNIFICATION

 

Section 8.1           Survival. The representations and warranties of the
parties contained in this Agreement shall survive the Second Closing until March
31, 2016; provided that (i) the representations and warranties of Seller
contained in Section 3.1, Section 3.2 and Section 3.3(a) and the representations
and warranties of Buyer contained in Section 4.2, Section 4.3(a) and Section 4.5
shall survive indefinitely and (ii) the representations and warranties contained
in Section 3.9 (Taxes and Tax Returns) shall survive in the manner set forth in
Section 6.9(k). The

 

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covenants and agreements of the parties hereto shall remain in full force and
effect in accordance with their terms (or, if no survival period is specified
herein, such covenants and agreements shall survive until fully performed or
fulfilled). Notwithstanding the foregoing, if notice of a breach of any
representation, warranty, covenant or agreement has been given prior to the
expiration of the applicable representation, warranty, covenant or agreement,
the ability of a party to initiate an Action with respect to such breach shall
survive until any such Action relating thereto has been fully and finally
resolved.

 

Section 8.2           Indemnification.

 

(a)          From and after the Second Closing, Seller shall indemnify, defend
and hold harmless Buyer and its Affiliates (including the Acquired Companies and
their respective Subsidiaries), and its and their respective officers, directors
and employees (any of the foregoing, a “Buyer Indemnified Party”), against any
and all damages, losses, liabilities, claims, fines, deficiencies, payments
(including those arising out of any settlement, judgment or compromise relating
to any Action and expenses (including interest and penalties due and payable
with respect thereto and reasonable expenses of investigation, preparation,
defense, avoidance or settlement of an Action and reasonable attorneys’ fees and
expenses in connection with any Action whether involving a third party claim or
a claim solely between the parties hereto) (“Damages”) incurred, asserted
against or suffered by any Buyer Indemnified Party, including in connection with
enforcing Seller’s obligations hereunder, resulting from or arising out of (x)
any inaccuracy in any representation or breach of warranty of Seller contained
in Article III (other than Section 3.9, which shall be governed by Section 6.9)
by virtue of its failure to be true and correct (A) on and as of the First
Closing Date with the same effect as though made on and as of the First Closing
Date (other than any such representation or warranty that speaks as of a
specific date or time other than the First Closing Date), (B) on and as of the
date of this Agreement (other than any such representation or warranty that
speaks as of a specific date or time other than the date of this Agreement) or
(C) on and as of the date or time when made, in the case of any representation
or warranty that speaks as of a specific date or time other than the date of
this Agreement or the First Closing Date; provided that, in the event of any
such breach or inaccuracy of any representation or warranty that includes any
limitation or qualification as to “materiality” (including the word “material”),
“Material Adverse Effect” or “Knowledge,” for purposes of determining the amount
of such Damages with respect to such breach or inaccuracy, no effect will be
given to such limitation or qualification contained therein (each such
inaccuracy in a representation or breach of warranty a “Breach”) or (y) breach
of covenant or agreement made or to be performed by Seller pursuant to this
Agreement on or prior to the Second Closing.

 

(b)          From and after the Second Closing, Buyer shall indemnify, defend
and hold harmless Seller and its Affiliates (other than the Acquired Companies
and their respective Subsidiaries), and its and their respective officers,
directors and employees (any of the foregoing, a “Seller Indemnified Party”),
against any and all Damages incurred, asserted against or suffered by any Seller
Indemnified Party, including in connection with enforcing Buyer’s obligations
hereunder, resulting from or arising out of (x) any inaccuracy in any
representation or breach of warranty of Buyer contained in Article IV by virtue
of its failure to be true and correct (A) on and as of the First Closing Date
with the same effect as though made on and as of the First Closing Date (other
than any such representation or warranty that speaks as of a specific date or
time other than the First Closing Date), (B) on and as of the date of this
Agreement (other than any such representation or warranty that speaks as of a
specific date or time other than the date of this Agreement) or (C) on and as of
the date or time when made, in the case of any representation or warranty that
speaks as of a specific date or time other than the date of this Agreement or
the First Closing Date; provided that, for purposes of determining the amount of
such Damages with respect to any Breach by Buyer, no effect will be given to any
limitation or qualification as to “materiality” (including the word “material”),
“Material Adverse Effect” or “Knowledge” contained in any related representation
or warranty or (y) breach of covenant or agreement made or to be performed by
Buyer pursuant to this Agreement on or prior to the Second Closing.

 

(c)          With respect to indemnification by Seller or Buyer (each being
referred in its capacity as the indemnifying party as, the “Indemnifying Party”)
for its Breaches pursuant to Section 8.2(a)(x) and Section 8.2(b)(x), as
applicable:

 

(i)          the Indemnifying Party shall not be liable unless the aggregate
amount of Damages with respect to all such Breaches exceeds $10 million, after
which the Indemnifying Party shall be liable for the amount of all Damages with
respect to its Breaches in excess of $10 million;

 

34

 

 

(ii)         the Indemnifying Party shall not be liable for any single claim or
series of related claims with respect to such Breaches which result in Damages
of $250,000 or less (and such claims shall not be aggregated for purposes of
aggregating Damages pursuant to clause Section 8.2(c)(i)); and

 

(iii)        the Indemnifying Party’s maximum aggregate liability for all such
Breaches shall not exceed $75 million;

 

provided, further, that the limitations on indemnifiable Damages set forth in
clauses (i), (ii) and (iii) above shall not apply with respect to the
representations and warranties of Seller set forth in Section 3.1, Section 3.2,
Section 3.3(a) and Section 3.6 or the representations and warranties of Buyer
set forth in Section 4.1, Section 4.2, Section 4.3(a) and Section 4.5.

 

(d)          Notwithstanding anything to the contrary in this Agreement, in no
event shall the Indemnifying Party be liable to an Indemnified Party for any
exemplary, punitive, special or consequential damages, including lost profits or
diminution of value or any loss of goodwill or possible business after the
Second Closing, except for any such damages to the extent paid to a third party,
including a Governmental Entity.

 

(e)          With respect to any claim brought by a Buyer Indemnified Party
against Seller under this Agreement or otherwise relating to this Agreement,
Seller expressly waives any right of subrogation, contribution, advancement,
indemnification or other claim against any Acquired Company or any Subsidiary of
any Acquired Company with respect to any amounts owed by Seller pursuant to this
Agreement.

 

(f)          Seller or Buyer, as the case may be, agrees to give prompt notice
(a “Notice of Claim”) to the Indemnifying Party, in the event indemnity is
sought by a Buyer Indemnified Party or a Seller Indemnified Party, as the case
may be, under this Section 8.2, of the assertion of any claim, or the
commencement of any suit, action or proceeding in respect of which indemnity may
be sought under this Section 8.2 (each, a “Claim”) and will provide the
Indemnifying Party such information with respect thereto in the possession of
Seller or Buyer, as the case may be, that the Indemnifying Party may reasonably
request. The failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder, unless (and solely to the
extent) such failure shall have actually materially prejudiced the Indemnifying
Party’s defense of such Claim.

 

(g)          The Indemnifying Party shall be entitled to participate in the
defense of any claim asserted by a third party (each, a “Third Party Claim”)
and, subject to the limitations set forth in this Section 8.2, shall have
fifteen (15) days after the date on which Notice of Claim is given (or such
lesser number of days set forth in the Notice of Claim as may be required by
court proceedings in the event of a litigated matter) to notify the party giving
such Notice of Claim in writing of its election to control and appoint lead
counsel for such defense, in each case at its expense.

 

(h)          If the Indemnifying Party shall assume the control of the defense
of any Third Party Claim in accordance with the provisions of this Section 8.2,
the Indemnifying Party shall obtain the prior written consent of Seller or
Buyer, as the case may be, before entering into any settlement of such Third
Party Claim, if the settlement does not unconditionally release the Indemnified
Parties from all liabilities and obligations with respect to such Third Party
Claim, the settlement includes a statement or admission of fault, culpability or
failure to act by or on behalf of any Indemnified Party, or the settlement
imposes injunctive or other equitable relief against any Indemnified Party, and
any Indemnified Party shall be entitled to participate in the defense of such
Third Party Claim and to employ separate counsel of its choice for such purpose.
The fees and expenses of such separate counsel shall be paid by the Indemnified
Party; provided that in the event that the Indemnified Party determines in good
faith that representation by counsel to the Indemnifying Party of both such
Indemnifying Party and the Indemnified Party could reasonably be expected to
present such counsel with a conflict of interest, then the Indemnified Party may
employ separate counsel to represent or defend it in any such Action and the
Indemnifying Party shall pay the reasonable fees and expenses of such counsel;
provided, however, that the Indemnifying Party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
local counsel) at any time for all Indemnified Parties. If the Indemnifying
Party does not elect to defend such Third Party Claim or does not defend such
Third Party Claim in good faith, the Indemnified Party shall have the right in
addition to any other right or remedy it may have hereunder, at the Indemnifying
Party’s expense, to defend such Third Party Claim; provided,

 

35

 

 

however, that (i) the Indemnified Party’s defense of or participation in the
defense of any such Third Party Claim shall not in any way diminish or lessen
the obligations of the Indemnifying Party under the agreements of
indemnification set forth in this Article VIII, and (ii) the Indemnified Party
may not settle any such Third Party Claim without the consent of the
Indemnifying Party (which consent shall not be unreasonably withheld,
conditioned or delayed).

 

(i)          At the Indemnifying Party’s expense, each party shall cooperate,
and cause their respective Affiliates to cooperate, in the defense or
prosecution of any Third Party Claim and shall furnish or cause to be furnished
such records, information and testimony, and attend such conferences, discovery
proceedings, hearings, trials or appeals, as may be reasonably requested in
connection therewith.

 

(j)          At the Indemnifying Party’s expense, each Indemnified Party shall
use reasonable efforts to collect any amounts available under insurance
coverage, or from any other person alleged to be responsible, for any Damages
payable under this Section 8.2.

 

(k)          Except for Third Party Claims being defended in good faith, an
Indemnifying Party shall satisfy its obligations under this Article VIII in
respect of a claim for indemnification hereunder which is not contested by the
Indemnifying Party in good faith as promptly as practical but in any event no
later than thirty (30) days after the date on which the Notice of Claim in
respect thereof is given.

 

Section 8.3           Calculation of Damages. The amount of any Damages payable
under Section 6.9 and/or Section 8.2 by the Indemnifying Party shall be: (i) net
of any amounts actually previously recovered by the Indemnified Party under
applicable insurance policies in respect of the Damages giving rise to the right
of indemnification (net of any increase in premiums to be paid by the
Indemnified Party arising from the insurance carrier’s payment of such claim);
(ii) increased by any Tax cost actually incurred by the Indemnified Party
arising from the receipt or accrual of the indemnity payment; and (iii)
decreased by any cash Tax savings actually realized by the Indemnified Party
arising in the taxable year in which such Damages are incurred or, if later, at
the time the indemnity payment is made. If the Indemnified Party receives any
amounts in respect of the Damages giving rise to the right of indemnification
under applicable insurance policies subsequent to an indemnification payment in
respect of such Damages by the Indemnifying Party, then such Indemnified Party
shall, to the extent fully indemnified for the applicable Damages (after giving
effect to the following reimbursement obligation), promptly reimburse the
Indemnifying Party for any payment made or expense incurred by such Indemnifying
Party in connection with providing such indemnification payment up to the amount
so received by the Indemnified Party, net of any expenses incurred by such
Indemnified Party in collecting such amount (including any increase in premiums
arising from the payment by an insurance carrier of such amount).
Notwithstanding the foregoing, Seller shall not be required to pay Damages
pursuant to this Section 8.3 if, and solely to the extent, liability for such
Damages is reflected in the calculation of the Final Closing Net Working
Capital.

 

Section 8.4           Exclusivity. After the Second Closing, Section 6.9 and
this Article VIII shall provide the exclusive remedy for any claim by any
Indemnified Party based on a Breach by the Indemnifying Party, other than any
such claim based on fraud or willful breach of this Agreement and except as set
forth in Section 10.10.

 

Article IX

TERMINATION AND AMENDMENT

 

Section 9.1           Termination. This Agreement may be terminated at any time
prior to the Second Closing:

 

(a)          by mutual consent of Seller and Buyer in a written instrument;

 

(b)          by either Buyer or Seller if any Governmental Entity that must
grant a Requisite Approval has denied such approval and such denial has become
final and nonappealable or any Governmental Entity of competent jurisdiction
shall have issued a final and nonappealable Order permanently enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement, provided that the party seeking to terminate this

 

36

 

 

Agreement pursuant to this Section 9.1(b) shall have complied with its
obligations pursuant to Section 6.1 with respect to such denial or Order;

 

(c)          by either Buyer or Seller if the Second Closing shall not have
occurred on or before December 31, 2014 (the “Outside Date”) unless the failure
of the Closing to occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements of such party set forth in this Agreement; or

 

(d)          by either Buyer or Seller if there shall have been a breach of any
of the covenants or agreements or any of the representations or warranties set
forth in this Agreement on the part of Seller, in the case of a termination by
Buyer, or Buyer, in the case of a termination by Seller, which breach, either
individually or in the aggregate, would result in, if occurring or continuing on
the Second Closing Date, the failure of the conditions set forth in Section
7.2(a) or Section 7.2(b), in the case of a termination by Buyer, or the
conditions set forth in Section 7.3(a) or Section 7.3(b), in the case of a
termination by Seller, and which, if curable, is not cured within thirty (30)
days following written notice to the party committing such breach or which by
its nature or timing cannot be cured prior to the Outside Date.

 

Section 9.2           Effect of Termination. In the event of termination of this
Agreement by either Seller or Buyer as provided in Section 9.1 (or by Seller and
Buyer as provided in Section 9.1(a)), this Agreement shall forthwith become void
and have no effect, and none of the parties or any of their respective
Subsidiaries or any of the officers or directors of any of them shall have any
liability of any nature whatsoever under this Agreement, or in connection with
the transactions contemplated by this Agreement, except that (i) the first
sentence of Section 6.2(b), this Section 9.2 and Article X shall survive any
termination of this Agreement, and (ii) notwithstanding anything to the contrary
contained in this Agreement, no party shall be relieved or released from any
liabilities or damages arising out of its fraud or willful breach of any
provision of this Agreement.

 

Article X

GENERAL PROVISIONS

 

Section 10.1         Expenses. Except as set forth in Section 6.9(i), all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such cost or
expense, provided, however, that the parties shall share equally all
out-of-pocket fees and expenses related to any notices or filings under the HSR
Act and the submission of the CMA of the Broker to FINRA, in each case, other
than attorneys’ and accountants’ fees and expenses.

 

Section 10.2         Notices. All notices and other communications in connection
with this Agreement shall be in writing and shall be deemed given if delivered
personally, sent via facsimile (with confirmation), mailed by registered or
certified mail (return receipt requested) or delivered by an express courier
(with confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):

 

(a)if to Seller, to:

 

ARC Properties Operating Partnership, L.P. 

405 Park Ave, 15th floor 

New York, NY 10022 

Attention: Richard A. Silfen, General Counsel 

Facsimile: (215) 887-2585

  

37

 

 

with a copies to:

 

Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Phone: (212) 310-8000
Facsimile: (212) 310-8007
Attention: Michael J. Aiello, Esq.
                  Matthew J. Gilroy, Esq.

 

and

 

Proskauer Rose LLP 

Eleven Times Square 

New York, NY 10036-8299 

Phone: (212) 969-3025 

Facsimile: (212) 969-2900 

Attention: Peter Fass, Esq. 

   Steven L. Lichtenfeld, Esq.

  

if to Buyer, to:

 

RCS Capital Corporation 

405 Park Ave, 15th floor 

New York, NY 10022 

Attention: James A. Tanaka, General Counsel 

Facsimile: (212) 415-6567 

 

with a copies to:

 

Duane Morris LLP

30 South 17th Street
Philadelphia, PA 19103-4196
Phone: (215) 979-1206
Facsimile: (215) 405-2906
Attention: Darrick M. Mix, Esq.

   Chad J. Rubin, Esq.

 

and

 

Proskauer Rose LLP 

Eleven Times Square 

New York, NY 10036-8299 

Phone: (212) 969-3025 

Facsimile: (212) 969-2900 

Attention: Peter Fass, Esq. 

   Steven L. Lichtenfeld, Esq.

 

Section 10.3         Definitions. For purposes of this Agreement:

 

(a)          “Acquired Companies’ Indebtedness” means the Acquired Companies’
Indebtedness as it would be reflected on a combined balance sheet of the
Acquired Companies as of the opening of business on the First Closing Date
prepared in accordance with GAAP applied on a basis consistent with Seller’s
accounting principles, policies and methodologies used in connection with the
preparation of the Financial Statements. 

 

38

 

 

(b)          “Acquired Company Benefit Plan” means any employee benefit plan,
program, policy, practice, or other arrangement providing compensation or
benefits to any Business Employee or any beneficiary or dependent thereof that
is sponsored or maintained by an Acquired Company or any of its Subsidiaries or
to which an Acquired Company or any of its Subsidiaries contributes or is
obligated to contribute, on behalf of any Business Employee, including any
employee welfare benefit plan within the meaning of Section 3(1) of ERISA, any
employee pension benefit plan within the meaning of Section 3(2) of ERISA
(whether or not such plan is subject to ERISA) and any bonus, incentive,
performance, equity or stock or stock related, deferred compensation, vacation,
stock purchase, stock option, severance, employment, change of control,
supplemental unemployment benefit, vacation, sick or paid time off benefit, or
fringe benefit plan, arrangement, program or policy.

 

(c)          “Affiliate” means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person as of the date on which, or at any time during the period for which,
the determination of affiliation is being made. For purposes of this definition,
the term “control” (including the correlative meanings of the terms “controlled
by” and “under common control with”), as used with respect to any Person, means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of such Person, whether through the
ownership of voting securities or by contract or otherwise. For the avoidance of
doubt, neither Buyer nor any of its Subsidiaries shall be deemed to be
Affiliates of Seller or any of its Subsidiaries.

 

(d)          “Ancillary Agreements” means all documents, instruments and
certificates to be executed and delivered pursuant to this Agreement, including
an executed version of each form contract attached hereto as an Exhibit.

 

(e)          “Ancillary Programs” means the 1031 exchange, tenant in common and
Delaware statutory trust businesses that are managed by the Acquired Companies.

 

(f)          “Auditor” means an independent accounting firm of recognized
national standing selected by Buyer and Seller that has no existing material
relationship with either Seller or Buyer.

 

(g)          “Broker Sale” means the purchase and sale, upon the terms and
subject to the conditions of this Agreement, of the Acquired Interests in CCA.

 

(h)          “Business Day” means any day other than a Saturday, a Sunday or a
day on which banks in New York, New York are authorized or obligated by Law or
executive order to close.

 

(i)           “Buyer Benefit Plan” means any employee benefit plan, program,
policy, practice, or other arrangement providing compensation or benefits to any
employee of Buyer or any of its Affiliates or any beneficiary or dependent
thereof that is sponsored or maintained by Buyer or any of its Affiliates or to
which Buyer or any of its Affiliates contributes or is obligated to contribute,
on behalf of any employee of Buyer or any of its Affiliates or any beneficiary
or dependent thereof, including any employee welfare benefit plan within the
meaning of Section 3(1) of ERISA, any employee pension benefit plan within the
meaning of Section 3(2) of ERISA (whether or not such plan is subject to ERISA)
and any bonus, incentive, performance, equity or stock or stock related,
deferred compensation, vacation, stock purchase, stock option, severance,
employment, change of control, supplemental unemployment benefit, vacation, sick
or paid time off benefit, or fringe benefit plan, arrangement, program or
policy.

 

(j)          “CCC” means Cole Capital Corporation, an Arizona corporation.

 

(k)          “CHC” means Christopher H. Cole.

 

(l)           “CHC Employment Agreement” means, that certain Employment
Agreement, dated March 5, 2013, by and among Cole Credit Property Trust III,
Inc., Cole REIT III Operating Partnership, LP and CHC.

 

(m)          “Code” means the Internal Revenue Code of 1986, as amended.

 

39

 

 

(n)          “Company Material Contracts” means any Contract relating to the
incurring of Indebtedness by any Acquired Company or any of its Subsidiaries in
an amount in excess in the aggregate of $2,000,000, (ii) any non-competition
Contract, or any other agreement or obligation which purports to limit or
restrict in any material respect (A) the ability of any Acquired Company or its
Subsidiaries to solicit customers or employees or (B) the manner in which, or
the localities in which, all or any portion of the business of any Acquired
Company or its Subsidiaries or, following the consummation of the transactions
contemplated by this Agreement, Buyer or its Subsidiaries, is or would be
conducted, (iii) any Contract providing for any payments that are conditioned,
in whole or in part, on, or on any Contract that is terminable upon or otherwise
prohibits, a change of control of any Acquired Company or any of its respective
Subsidiaries, (iv) any collective bargaining agreement, (v) any joint venture or
partnership agreements, (vi) any Contract that grants any right of first refusal
or right of first offer or similar right or that limits or purports to limit the
ability of any Acquired Company or its Subsidiaries to own, operate, sell,
transfer, pledge or otherwise dispose of any assets or business, (vii) any
employment agreement with, or any agreement or arrangement that contains any
severance pay or post-employment liabilities or obligations to, any current or
former director, officer or employee of any Acquired Company or its
Subsidiaries, (viii) any Contract that contains a “most favored nation” clause
or similar term providing preferential pricing or treatment to a third party,
(ix) any Contract pursuant to which any Acquired Company or any of its
Subsidiaries manages or provides services with respect to any real properties or
entities other than (A) the real property of the Acquired Companies or any of
their respective Affiliates and (B) Contracts pursuant to which the Acquired
Companies and their respective Subsidiaries are not entitled to obtain any fees,
(x) any Contract requiring any Acquired Company or any of its Subsidiaries to
provide any funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in any third party other than any such Contracts for
real estate investments for Persons advised by any Acquired Company or any of
its Subsidiaries, (xi) any Contract not made in the ordinary course of business
which (A) is material to the Acquired Companies and their respective
Subsidiaries taken as a whole or (B) which would reasonably be expected to
materially delay the consummation of the transactions contemplated by this
Agreement and (xii) the Contracts entered into with the top seven (7) vendors
(measured by annualized spend) of the Business.

 

(o)          “Designated FF&E” means the furniture, fixtures and equipment
listed on Section 10.3(o) of the Seller Disclosure Letter.

 

(p)          “Determination” means a “determination” within the meaning of
Section 1313(a) of the Code or any similar provision of state, local or foreign
Law.

 

(q)          “Equity Interests” means (i) the shares of capital stock of a
corporation, (ii) the general or limited partnership interests of any
partnership, (iii) the membership or other ownership interest of any limited
liability company, (iv) the equity securities or other ownership interests of
any kind of any other legal entity, or (v) any security, instrument, binding
obligation or option, call, warrant or other right (whether or not immediately
exercisable) to acquire, convert into or otherwise receive any of the foregoing,
in any such case, whether owned or held beneficially, of record or legally.

 

(r)           “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended, and the regulations promulgated thereunder.

 

(s)          “ERISA Affiliate” means, with respect to any entity, trade or
business, any other entity, trade or business that is, or was at the relevant
time, a member of a group described in Section 414(b), (c), (m) or (o) of the
Code or Section 4001(b)(1) of ERISA that includes or included the first entity,
trade or business, or that is, or was at the relevant time, a member of the same
“controlled group” as the first entity, trade or business pursuant to Section
4001(a)(14) of ERISA.

 

(t)           “Estimated Closing Net Working Capital” means Seller’s good faith
estimate of the Net Working Capital of the Acquired Companies.

 

(u)          “Estimated Closing Net Working Capital Overage” means the amount,
if any, by which the Estimated Closing Net Working Capital exceeds the Target
Net Working Capital.

 

(v)         “Estimated Closing Net Working Capital Shortage” means the amount,
if any, by which the Estimated Closing Net Working Capital is less than the
Target Net Working Capital.

 

40

 

 

(w)          “Exchange Act” means the United States Securities Exchange Act of
1934, as amended and the rules and regulations thereunder.

 

(x)            “Final Closing Net Working Capital” means the Net Working Capital
of the Acquired Companies as set forth in the Final Closing Statement (as
adjusted pursuant to Section 2.1(d)).

 

(y)           “Final Closing Net Working Capital Overage” means the amount, if
any, by which the Final Closing Net Working Capital exceeds the Target Net
Working Capital.

 

(z)           “Final Closing Net Working Capital Shortage” means the amount, if
any, by which the Final Closing Net Working Capital is less than the Target Net
Working Capital.

 

(aa)         “FINRA” means the Financial Industry Regulatory Authority, Inc.

 

(bb)         “GAAP” means United States generally accepted accounting
principles.

 

(cc)         “Governing Documents” means, with respect to any Person: (i) if a
corporation, the articles, deed or certificate of incorporation and the bylaws;
(ii) if a general partnership, the partnership agreement and any statement of
partnership or other organizational documents; (iii) if a limited partnership,
the limited partnership agreement and the certificate of limited partnership or
other organizational documents; (iv) if a limited liability company, the
constitution deed, articles of organization, bylaws, and deeds of amendment of
bylaws, and operating agreement or other organizational documents; (v) if
another type of Person, any other charter, trust agreement or similar document
adopted or filled in connection with the creation, formation or organization of
such Person; (vi) all equityholders’ agreements, voting agreements, voting trust
agreements, joint venture agreements, registration rights agreements or other
agreements or documents relating to the organization, management or operation of
any Person or relating to the rights, duties and obligations of the
equityholders of any Person; and (vii) any amendment, supplement or restatement
of any of the foregoing.

 

(dd)        “Gross Income” means “gross income” as such term is used for
purposes of Section 856(c) of the Code.

 

(ee)         “Indebtedness” of a Person means, without duplication (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes and similar instruments and (iii)
all leases of such Person capitalized pursuant to GAAP.

 

(ff)          “Indemnified Party” means either a Buyer Indemnified Party or a
Seller Indemnified Party.

 

(gg)        “Intellectual Property” means all foreign and domestic intellectual
property including all (i) trademarks, service marks, brand names, Internet
domain names, logos, symbols, trade dress, fictitious names, trade names, and
other indicia of origin and all goodwill associated therewith and symbolized
thereby; (ii) patents and inventions and discoveries, whether patentable or not;
(iii) confidential information, proprietary information, trade secrets and
know-how, (including processes, schematics, business methods, formulae,
drawings, prototypes, models, designs, customer lists and supplier lists);
(iv) copyrights and works of authorship in any media (including computer
software programs, source code, databases and other complications of
information); (v) all applications and registrations for any of the foregoing;
and (vi) all extensions, modifications, renewals, divisions, continuations,
continuations-in-part, reissues, restorations and reversions related to any off
the foregoing.

 

(hh)        “IRS” means the United States Internal Revenue Service.

 

(ii)          “Knowledge” means (i) with respect to Seller, the actual knowledge
of the persons listed on Section 10.3(ii)(i) to the Seller Disclosure Letter and
(ii) with respect to Buyer, the knowledge, after reasonable inquiry, of the
persons listed on Section 10.3(ii)(ii) of the Buyer Disclosure Letter.

 

(jj)          “Material Adverse Effect on Buyer” means any event, circumstance,
change, effect, development, condition or occurrence (a) that has a material
adverse effect on the assets, liabilities, business, financial condition or

 

41

 

 

results of operations of Buyer and its Subsidiaries, taken as a whole, or (b)
that will, or would reasonably be expected to, prevent or materially impair the
ability of Buyer to consummate the transactions contemplated by this Agreement
before the Outside Date; provided, however, that for purposes of clause (a)
“Material Adverse Effect on Buyer” shall not include any event, circumstance,
change, effect, development, condition or occurrence to the extent arising out
of or resulting from (i) any failure of Buyer to meet any projections or
forecasts or any estimates of earnings, revenues or other metrics for any period
(provided that any event, circumstance, change, effect, development, condition
or occurrence giving rise to such failure may be taken into account in
determining whether there has been a Material Adverse Effect on Buyer), (ii) any
changes that affect the industries in which Buyer and its Subsidiaries operate
generally, (iii) any changes in the United States or global economy or capital,
financial or securities markets generally, including changes in interest or
exchange rates, (iv) any changes in the legal, regulatory or political
conditions in the United States or in any other country or region of the world,
(v) the commencement, escalation or worsening of a war or armed hostilities or
the occurrence of acts of terrorism or sabotage occurring after the date hereof,
(vi) the execution and delivery of this Agreement, or the public announcement of
the transactions contemplated hereby, (vii) the taking of any action expressly
required by, or the failure to take any action expressly prohibited by, this
Agreement, or the taking of any action at the written request or with the prior
written consent of Seller, (viii) earthquakes, hurricanes, floods or other
natural disasters, or (ix) changes in Law or GAAP (or the interpretation
thereof), which in the case of each of clauses (ii), (iii), (iv), (v) and (ix)
do not disproportionately affect Buyer and its Subsidiaries, taken as a whole,
relative to others in the industries in which Buyer and its Subsidiaries
operate, and in the case of clause (viii) do not disproportionately affect Buyer
and its Subsidiaries, taken as a whole, relative to others in the industries in
which Buyer and its Subsidiaries operate, in the geographic regions in which
Buyer and its Subsidiaries operate.

 

(kk)         “Material Adverse Effect on Seller” means any event, circumstance,
change, effect, development, condition or occurrence (a) that has a material
adverse effect on the assets, liabilities, business, financial condition or
results of operations of the Acquired Companies and their respective
Subsidiaries, taken as a whole, or (b) that will, or would reasonably be
expected to, prevent or materially impair the ability of Seller to consummate
the transactions contemplated by this Agreement before the Outside Date;
provided, however, that for purposes of clause (a), “Material Adverse Effect on
Seller” shall not include any event, circumstance, change, effect, development,
condition or occurrence to the extent arising out of or resulting from: (i) any
failure of the Acquired Companies to meet any internal or external projections
or forecasts or any estimates of earnings, revenues, or other metrics for any
period (provided that any event, circumstance, change, effect, development,
condition or occurrence giving rise to such failure may be taken into account in
determining whether there has been a Material Adverse Effect on Seller), (ii)
any changes that affect the industries in which the Acquired Companies and their
respective Subsidiaries operate generally, (iii) any changes in the United
States or global economy or capital, financial or securities markets generally,
including changes in interest or exchange rates, (iv) any changes in the legal,
regulatory or political conditions in the United States or in any other country
or region of the world, (v) the commencement, escalation or worsening of a war
or armed hostilities or the occurrence of acts of terrorism or sabotage
occurring after the date hereof, (vi) the execution and delivery of this
Agreement, or the public announcement of the transactions contemplated hereby,
(vii) the taking of any action expressly required by, or the failure to take any
action expressly prohibited by, this Agreement, or the taking of any action at
the written request or with the prior written consent of Buyer, (viii)
earthquakes, hurricanes, floods or other natural disasters, (ix) changes in Law
or GAAP (or the interpretation thereof), or (x) any loss of one or more agents,
producers, brokers, registered representatives or employees, which in the case
of each of clauses (ii), (iii), (iv), (v) and (ix) do not disproportionately
affect the Acquired Companies and their respective Subsidiaries, taken as a
whole, relative to others in the industries in which the Acquired Company and
their respective Subsidiaries operate, and in the case of clause (viii) do not
disproportionately affect the Acquired Companies and their respective
Subsidiaries, taken as a whole, relative to others in the industries in which
the Acquired Companies and their respective Subsidiaries operate, in the
geographic regions in which the Acquired Companies and their respective
Subsidiaries operate.

 

(ll)           “MTN” means Marc T. Nemer.

 

(mm)       “MTN Employment Agreement” means, that certain Employment Agreement,
dated March 5, 2013, by and among Cole Credit Property Trust III, Inc., Cole
REIT III Operating Partnership, L.P. and MTN.

 

(nn)         “Multiemployer Plan” means any “multiemployer plan” within the
meaning of Section 4001(a)(3) of ERISA.

 

42

 

 

(oo)        “NASD” means the National Association of Securities Dealers, Inc.

 

(pp)        “Net Working Capital” means (i) cash and cash equivalents plus (ii)
current assets minus (iii) current liabilities, each of (i), (ii) and (iii) as
they would be reflected on a combined balance sheet of the Acquired Companies as
of the opening of business on the Second Closing Date prepared in accordance
with GAAP applied on a basis consistent with Seller’s accounting principles,
policies and methodologies used in connection of the preparation of the
Financial Statements, provided, that current assets shall not include deferred
tax assets and current liabilities shall not include any Acquired Companies’
Indebtedness and any deferred tax liabilities; and provided, further, that
current assets shall not include any accrued expenses for which Seller is
entitled to reimbursement under any advisory or sub-advisory agreements.

 

(qq)        “NYSE” means the New York Stock Exchange, Inc.

 

(rr)          “Permitted Liens” means (i) any restriction on transfer arising
under or imposed by applicable securities Laws, (ii) Liens for Taxes or other
governmental charges not yet due and payable or the amount or validity of which
is being contested in good faith by appropriate proceedings by or on behalf of
any of the Acquired Companies and its Subsidiaries; (iii) mechanics’, carriers’,
workers’, repairers’, landlords’ and similar statutory Liens arising or incurred
in the ordinary course of business for amounts which are not delinquent, or the
amount or validity of which is being contested in good faith by appropriate
proceedings by or on behalf of the Company and its Subsidiaries; (iv) Liens
arising under worker’s compensation, unemployment insurance, social security,
retirement and similar legal requirements or applicable Law; (v) purchase money
Liens and Liens securing rental payments under capital lease arrangements; and
(vi) other Liens arising in the ordinary course of business or that are not
material.

 

(ss)         “Person” means an individual, a corporation, a general or limited
partnership, an association, a limited liability company, a Governmental Entity,
a trust or other entity or organization.

 

(tt)          “Post-Closing Period” any taxable period beginning after the
Second Closing Date, and, in the case of any Straddle Period, the portion of
such period beginning after the Second Closing Date.

 

(uu)        “Pre-Closing Period” means any taxable period ending on or prior to
the Second Closing Date and, in the case of any Straddle Period, the portion of
such period ending on and including the Second Closing Date.

 

(vv)        “Premises” means floors 1, 8 and 9 in that certain commercial office
building located at 2325 E. Camelback Road, Phoenix, Arizona 85106.

 

(ww)       “Retained Employees” means the employees of the Acquired Companies
and their Subsidiaries other than the Business Employees.

 

(xx)         “SEC” means the United States Securities and Exchange Commission.

 

(yy)        “Securities Act” means the United States Securities Act of 1933, as
amended and the rules and regulations thereunder.

 

(zz)         “Seller GP/Cole Merger Agreement” means, that certain Agreement and
Plan of Merger, dated as of October 22, 2013, by and among Seller GP, Clark
Acquisition, LLC and Cole Real Estate Investments, Inc.

 

(aaa)       “Straddle Period” means any taxable period that begins on or before
the Second Closing Date and ends after the Second Closing Date.

 

(bbb)      “Subsidiary” when used with respect to any Person, means any
corporation, partnership, limited liability company or other organization,
whether incorporated or unincorporated, a majority of the Equity Interests of
which are owned, directly or indirectly, by such Person.

 

43

 

 

(ccc)       “Target Net Working Capital” means the amount that is the greater
of: (x) $2,500,000 or (y) the average twelve-month trailing Net Working Capital
as of August 30, 2014, unless otherwise agreed in writing by the parties (such
agreement not to be unreasonably withheld).

 

(ddd)      “Tax” or “Taxes” means with respect to any Person (i) any and all
federal, state, local, foreign and other taxes, customs, duties, governmental
fees or other like assessments or charges, including any net income, alternative
or add-on minimum, gross income, estimated, gross receipts, sales, use, ad
valorem, value added, transfer, capital stock, franchise, profits, license,
registration, recording, documentary, intangibles, conveyance, gains,
withholding, payroll, employment, social security (or similar), unemployment,
disability, excise, severance, stamp, occupation, premium, property (real and
personal), environmental, windfall profits or other taxes of any kind imposed by
any Taxing Authority, together with any and all interest, penalties, additions
to tax and additional amounts imposed by any Taxing Authority responsible for
the imposition of any such tax (domestic or foreign) whether such tax is
disputed or not, and (ii) liability for the payment of any amounts of the type
described in clause (i) above relating to any other Person by contract, as a
transferee or successor to another Person, or under Treasury Regulations Section
1.1502-6 or any analogous provisions of state, local, foreign or other Tax Law.

 

(eee)       “Tax Claim” means any claim with respect to Taxes made by any Taxing
Authority that, if pursued successfully, would reasonably be expected to serve
as the basis for a claim for indemnification under Section 6.9.

 

(fff)         “Tax Proceeding” means any audit, examination, contest, litigation
or other proceeding with or against any Taxing Authority.

 

(ggg)      “Tax Return” means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof, supplied or required to
be supplied to a Taxing Authority.

 

(hhh)      “Tax Sharing Agreement” means any written agreement, indemnity or
other arrangement for the allocation or payment of Tax liabilities or payment
for Tax benefits between an Acquired Company or its Subsidiaries and any Person
(other than the indemnity provided pursuant to this Agreement or the Seller
GP/Cole Merger Agreement), other than customary Tax indemnification or other
arrangements contained in a commercial agreement entered into in the ordinary
course of business, the primary purpose of which does not relate to Taxes.

 

(iii)          “Taxing Authority” means any Governmental Entity responsible for
the administration or collection of Taxes.

 

Section 10.4         Interpretation. When a reference is made in this Agreement
to Articles, Sections, Exhibits or Schedules, such reference shall be to an
Article or Section of or Exhibit or Schedule to this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words “include,” “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation.” The Seller Disclosure Letter and the Buyer
Disclosure Letter, as well as all other schedules and all exhibits hereto, shall
be deemed part of this Agreement and included in any reference to this
Agreement.

 

Section 10.5         Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that each party need not
sign the same counterpart.

 

Section 10.6         Entire Agreement. This Agreement (including the documents
and the instruments referred to in this Agreement), together with the
Confidentiality Agreement, constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter of this Agreement, other than the
Confidentiality Agreement.

 

44

 

 

Section 10.7         Governing Law; Jurisdiction. This Agreement shall be
governed and construed in accordance with the internal laws of the State of
Delaware applicable to contracts made and wholly performed within such state,
without regard to any applicable conflicts of law principles. The parties hereto
agree that any suit, action or proceeding seeking to enforce any provision of,
or based on any matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby shall be brought in any federal or state
court located in the State of Delaware, and each of the parties hereby
irrevocably consents to the jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by law, any objection that
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding in any such court or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Process in
any such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court. Without
limiting the foregoing, each party agrees that service of process on such party
as provided in Section 10.2 shall be deemed effective service of process on such
party. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 10.8         Publicity. Neither Seller nor the Buyer shall, and neither
Seller nor Buyer shall permit any of its Affiliates to, issue or cause the
publication of any press release or other public announcement with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement without the prior consent (which consent shall not be
unreasonably withheld, conditioned or delayed) of (a) Buyer, in the case of a
proposed announcement or statement by Seller or its Affiliates, or (b) Seller,
in the case of a proposed announcement or statement by Buyer or its Affiliates;
provided, however, that any party may, without the prior consent of the other
parties (but after prior consultation with the other parties to the extent
practicable under the circumstances) issue or cause the publication of any press
release or other public announcement to the extent required by applicable Law or
by the rules and regulations of the NYSE, Nasdaq or any Governmental Entity to
which the relevant party is subject or submits.

 

Section 10.9         Assignment; Third Party Beneficiaries. Neither this
Agreement nor any of the rights, interests or obligations under this Agreement
shall be assigned by any of the parties (whether by operation of law or
otherwise, but except by intestate succession) without the prior written consent
of the other parties, except that Buyer may assign this Agreement or any of its
rights or obligations hereunder to one or more of its Subsidiaries, provided
that no such assignment shall relieve Buyer of any of its obligations hereunder.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by each of the parties and their respective
successors and permitted assigns. This Agreement (including the documents and
instruments referred to in this Agreement) is not intended to and does not
confer upon any person other than the parties hereto any rights or remedies
under this Agreement.

 

Section 10.10         Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to seek an injunction or injunctions to prevent breaches of this
Agreement or to enforce specifically the performance of the terms and provisions
hereof in any federal or state court located in the state of Delaware in
addition to any other remedy to which they are entitled at law or in equity. Any
requirements for the securing or posting of any bond with such remedy are hereby
waived.

 

Section 10.11         Amendment; Waiver. Subject to compliance with applicable
Law, the provisions of this Agreement may not be amended, modified or
supplemented without the prior written consent of each of the parties. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties. At any time prior to the Second Closing, the parties
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other party, (ii) waive any
inaccuracies in the representations and warranties of another party contained in
this Agreement and (iii) waive compliance with any of the agreements of the
other party or conditions contained in this Agreement. Any agreement on the part
of a party to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.

 

[Remainder of Page Intentionally Left Blank]

 

45

 

 

IN WITNESS WHEREOF, each of Seller and Buyer has caused this Agreement to be
executed by its respective officers thereunto duly authorized as of the date
first above written.

 

  ARC PROPERTIES OPERATING
PARTNERSHIP, L.P.       \By: /s/ David S. Kay     Name: David S. Kay     Title:
President

 

[Signature Page to Equity Purchase Agreement]

 

 

  BUYER       \By: /s/ Edward M. Weil, Jr.     Name: Edward M. Weil, Jr.    
Title: CEO

 

[Signature Page to Equity Purchase Agreement]

 

  

Annex A

 

Calculation of Contingent Consideration

 

The Contingent Consideration contemplated in Section 1.2(e) of the Agreement
shall be payable pursuant to the terms of this Annex A. Capitalized terms used
and not defined in this Annex A shall have the meaning ascribed to them in the
Agreement.

 

Section 1.1           Definitions.

 

(a)          “Actual EBITDA” means, for the fiscal year ending December 31,
2015, combined earnings before interest, tax, depreciation and amortization of
the Acquired Companies, calculated in accordance with GAAP applied on a basis
consistent with Seller’s accounting principles, policies and methodologies used
in connection with the preparation of the Financial Statements, for the fiscal
year ending December 31, 2015. In calculating Actual EBITDA, allocation of
shared expenses to the Acquired Companies shall be made in a fair and equitable
matter.

 

(b)          “Cole Sale” means any transaction or series of related transactions
resulting in the sale, transfer or other disposition of all or substantially all
of the Business or the assets of the Acquired Companies and their respective
Subsidiaries, taken as a whole, to any Person, other than Buyer or any of its
Subsidiaries or Affiliates, whether effected through a transfer of assets or
equity interests, a merger, a reorganization, a consolidation or any other
similar transaction or series of related transactions, provided that, for the
avoidance of doubt, a transfer of personnel of the Business shall not be deemed
a Cole Sale.

 

(c)          “Change in Control” shall be deemed to have occurred if any of the
following occurs:

 

(i)          any Person or “group” other than the holder of Class B Common Stock
as of the date hereof, any of its members, and/or any of their Affiliates, is or
becomes the “beneficial owner,” directly or indirectly, of securities of Buyer
representing 50% or more of (i) the combined voting power of all the outstanding
securities of Buyer or (ii) the economic interest of all the outstanding equity
securities of Buyer, voting or otherwise; or

 

(ii)         Buyer or any of its Subsidiaries consolidates with, or mergers with
or into, another Person or “group” other than the holder of Class B Common Stock
as of the date hereof, any of its members and/or any of their Affiliates, (ii)
Buyer sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of Buyer’s and/or its Subsidiaries’ assets to another Person
or “group” other than the holder of Class B Common Stock as of the date hereof,
any of its members and/or any of their Affiliates, or (iii) any Person other
than the holder of Class B Common Stock as of the date hereof, any of its
members and/or any of their Affiliates consolidates with, or a merges with or
into, Buyer or any of its Subsidiaries, in each case, other than pursuant to a
transaction in which (x) the Persons that “beneficially owned,” directly or
indirectly, securities of Buyer, immediately prior to such transaction
“beneficially own,” directly or indirectly, immediately after giving effect to
such transaction outstanding securities of the continuing or surviving or
transferee Person (or any parent thereof) representing 50% or more of the
combined voting power of all the outstanding securities of such Person and (y)
the Persons that “beneficially owned,” directly or indirectly, equity securities
of Buyer, immediately prior to such transaction “beneficially own,” directly or
indirectly, immediately after giving effect to such transaction outstanding
equity securities of the continuing or surviving or transferee Person (or any
parent thereof) representing 50% or more of the economic interest of all the
outstanding equity securities of such Person; or

 

(iii)        a transaction, or series of related transactions, in which the
holder of Class B Common Stock as of the date hereof or any of its members,
and/or any of their Affiliates ceases to “beneficial own,” directly or
indirectly, securities representing 50% or more of the combined voting power of
all the outstanding securities of Buyer; or

 

(iv)        at any time prior to the Maturity Date, a majority of the members of
the Board of Directors of Buyer cease for any reason (other than due to death,
disability or compliance with any policy adopted by the Board of Directors of
Buyer regarding mandatory retirement age) to be Incumbent Directors (for the
purposes

 

46

 

 

hereof, the term “Incumbent Directors” shall mean (i) any of Nicholas S.
Schorsch, Mark Auerbach, Jeffrey J. Brown, Peter M. Budko, William M. Kahane, C.
Thomas McMillen, Michael Weil and Doug Wood and (ii) any director whose
election, or nomination for election by Buyer’s stockholders, was approved by a
vote of at least a majority of the then Incumbent Directors);

 

provided, however, that the exercise by the Buyer of its right to repurchase the
issued and outstanding share of the Buyer Class B Stock shall not constitute, or
be deemed to give rise to, a Change in Control.

 

(d)          “Earn-Out Auditor” means an independent accounting firm of
recognized national standing selected by Buyer and reasonably acceptable to
Seller.

 

(e)          “Earn-Out Multiple” means 7.40 times (7.40x).

 

(f)          “Excess EBITDA” means the amount (expressed in U.S. dollars), if
any, by which Actual EBITDA exceeds Target EBITDA.

 

(g)          “Performance Period” means the calendar year commencing on
January 1, 2015 and ending on December 31, 2015.

 

(h)          “Special Earn-Out Event” means any of the following occurring prior
to the Test Date:

 

(i)          a Change in Control of Buyer (or entry into a definitive agreement
by Buyer or any of its Subsidiaries providing for such a Change of Control); or

 

(ii)         a Cole Sale.

 

(i)          “Special Earn-Out Payment” means a payment (i) in cash or (ii) in
cash and shares of Buyer Class A Stock, in lieu of the Earn-Out Payment,
determined in the same manner as the Earn-Out Payment, except that for the
portion of calendar year 2015 (if any) after the occurrence of the Special
Earn-Out Trigger Date, instead of Actual EBITDA, a projection of such Actual
EBITDA (and of each component thereof), determined as provided in Section 1.7(b)
of this Annex A, shall be used; provided, however, that in no event shall the
Special Earn-Out Payment be less than $50 million.

 

(j)          “Target EBITDA” means $75.0 million.

 

(k)          “Test Date” means December 31, 2015.

 

Section 1.2           Contingent Consideration.

 

(a)          Promptly (and in any event within two (2) Business Days) following
a Final Earn-Out Payment Statement being deemed final and binding pursuant to
Section 1.3(e) of this Annex A, Buyer shall pay to Seller (by wire transfer of
immediately available funds to an account designated in writing by Seller) an
amount (not to exceed $130 million) in cash equal to one-half (1/2) of the
product of (i) Excess EBITDA, multiplied by (ii) the Earn-Out Multiple (such
amount, the “Earn-Out Payment”). For illustration purposes only, (A) if Actual
EBITDA was $100 million, then the Earn-Out Payment would be $92.5 million
(representing one-half of the product of (i) $25 million, multiplied by (ii)
7.40), and (B) if Actual EBITDA was $200 million, then the Earn-Out Payment
would be $130 million because the Earn-Out Payment is capped at $130 million.

 

(b)          Notwithstanding the foregoing, and so long as shares of Buyer Class
A Stock are listed on a national securities exchange, Buyer may, as determined
by Buyer in its sole discretion, pay to Seller the Earn-Out Payment as follows,
and such payment, if elected, shall be made promptly (and in any event within
two (2) Business Days) following the Final Earn-Out Payment Statement referred
to in Section 1.2(a) of this Annex A being deemed final and binding:

 

47

 

 

(i)          an amount in cash (by wire transfer of immediately available funds
to an account designated in writing by Seller) equal to one-half (1/2) of the
Earn-Out Payment; and

 

(ii)         in satisfaction of the other one-half (1/2) of the Earn-Out
Payment, the issuance by Buyer to Seller of such number of validly issued, fully
paid and non-assessable shares of the Buyer Class A Stock determined by dividing
(x) fifty percent (50%) of the Earn-Out Payment by (y) the intraday volume
weighted average price of one share of Buyer Class A Stock, as reported by
Bloomberg, LP, over the ten (10) trading days ending on the trading day
immediately preceding the date on which the Final Earn-Out Payment Statement is
deemed final (the “Earn-Out Buyer VWAP”); provided, however, if the foregoing
number of shares, together with the Buyer Shares, is greater than a number
representing nineteen and nine tenths percent (19.9%) of the shares of Buyer
Class A Stock outstanding as of such date (such number, the “Earn-Out Stock
Threshold”), then the number of shares of Buyer Class A Stock to be delivered
pursuant to this Section 1.2(b)(ii) of this Annex A shall be reduced to the
Earn-Out Stock Threshold and, in such event, Buyer shall pay to Seller the
Earn-Out Excess Stock Amount in cash (by wire transfer of immediately available
funds to an account designated in writing by Seller). For purposes hereof,
“Earn-Out Excess Stock Amount” shall mean the number of shares of Buyer Class A
Stock in excess of the Earn-Out Stock Threshold that would have been issued
under the preceding sentence but for the proviso thereto, multiplied by the
Earn-Out Buyer VWAP.

 

Section 1.3           Contingent Consideration Statements.

 

(a)          Buyer shall engage the Earn-Out Auditor for the purposes of
determining the Earn-Out Payment. Within thirty (30) days following the Test
Date, Buyer shall prepare and deliver to Seller a written statement that sets
forth in reasonable detail its calculation of Actual EBITDA, and the components
thereof, and the Earn-Out Payment (such statement, an “Initial Contingent
Consideration Statement”), along with reasonable support documentation for such
calculations.

 

(b)          Seller shall review the Initial Contingent Consideration Statement
during the thirty (30) day period commencing on the date that Buyer delivers
such Initial Contingent Consideration Statement. Buyer shall give Seller
reasonable access to Buyer’s records, personnel and the Earn-Out Auditor for
purposes of such review. In the event Seller disagrees with such Initial
Contingent Consideration Statement, Seller may, prior to the end of such thirty
(30)-day period, deliver a written notice to Buyer (a “Notice of Contingent
Consideration Statement Disagreement”) setting out Seller’s objections and
specifying in reasonable detail the adjustments that, in Seller’s opinion,
should be made to such Initial Contingent Consideration Statement (collectively,
the “Proposed Contingent Consideration Statement Adjustments”). In the event a
Notice of Contingent Consideration Statement Disagreement is delivered in
accordance with the terms of this Annex A, Seller and Buyer shall seek in good
faith to resolve within ten (10) days any differences in relation to the
Proposed Contingent Consideration Statement Adjustments and to reach agreement
in writing on whether to address, and if so, how to address, each such Proposed
Contingent Consideration Statement Adjustment.

 

(c)          If Seller is satisfied with the applicable Initial Contingent
Consideration Statement (either as originally submitted or after adjustments are
agreed upon by Seller and Buyer in accordance with Section 1.3(b) of this Annex
A) or Seller fails to deliver a Notice of Contingent Consideration Statement
Disagreement with respect to such Initial Contingent Consideration Statement
within the thirty (30) day period specified in Section 1.3(b) of this Annex A),
then such Initial Contingent Consideration Statement (incorporating, if
applicable, any agreed adjustments) shall be deemed final and constitute the
applicable “Final Contingent Consideration Statement” for purposes of the
Agreement.

 

(d)          If any of the Proposed Contingent Consideration Statement
Adjustments are not resolved or otherwise agreed to (or deemed agreed to) in
accordance with Section 1.3(b) or Section 1.3(c) of this Annex A (the
“Unresolved Contingent Consideration Statement Adjustments”) within ten (10)
days after Buyer’s receipt of a Notice of Contingent Consideration Statement
Disagreement, then the Unresolved Contingent Consideration Statement Adjustments
may be submitted for resolution at the request of Buyer or Seller to the Auditor
as set forth in Section 2.1(d) of the Agreement, mutatis mutandis (provided that
in the event that the Auditor is the same as the Earn-Out Auditor, Buyer and
Seller shall select a different independent accounting firm of recognized
national standing).

 

48

 

 

(e)          When (A) pursuant to Section 1.3(b) or Section 1.3(c) of this Annex
A, the Initial Contingent Consideration Statement is deemed to constitute the
Final Contingent Consideration Statement for purposes of the Agreement, (B)
Seller and Buyer reach agreement in writing with respect to the Initial
Contingent Consideration Statement or (C) the Initial Contingent Consideration
Statement is finally determined in accordance with the procedures set forth in
Section 1.3(b) of this Annex A, the Initial Contingent Consideration Statement
as so agreed (or deemed agreed) or determined shall be the applicable “Final
Earn-Out Payment Statement” for purposes of the Agreement and shall be final and
binding on the parties and shall be used for determination of the Earn-Out
Payment, if any.

 

Section 1.4           Certain Changes to the Business; Remedies.

 

(a)          In the event of any transaction, other than a Cole Sale, resulting
in the sale or other disposition or transfer of any portion of the Business or
the assets of the Acquired Companies or any of their respective Subsidiaries to
any Person other than Buyer or any of its Subsidiaries, whether effected through
a transfer of assets or equity interests, a merger, a reorganization, a
consolidation or any other transaction (for the avoidance of doubt, not to
include any transfer of personnel of the Business), Buyer and Seller shall work
in good faith to agree upon an equitable adjustment to the manner in which
Actual EBITDA (or any component thereof) shall be calculated such that Seller
shall have substantially the same ability to receive the Earn-Out Payment that
Seller had prior to such transaction. If Buyer and Seller are unable to agree on
such adjustments, they will jointly refer the matter to a financial advisor of
recognized national standing to provide such adjustments. Seller and Buyer will
use their respective reasonable best efforts to cause such financial advisor to
submit its adjustments within thirty (30) calendar days of its engagement for
these purposes. The adjustments determined by such financial advisor shall be
deemed final and binding on the parties. The fees and expenses of such financial
advisor shall be allocated between Seller on the one hand, and Buyer, on the
other hand in inverse proportion as they may prevail on the matters resolved by
such financial advisor, which proportionate allocation shall be calculated on an
aggregate basis based on the relative dollar values of the amounts in dispute
and shall be determined by such financial advisor at the time the determination
of such firm is rendered on the merits of the matters submitted.

 

(b)          Notwithstanding anything to the contrary in this Annex A or the
Agreement, (i) the sole and exclusive liability and responsibility of Buyer and
its Affiliates for any breach of Section 1.2(b) of the Agreement and the terms
contained in this Annex A, and the sole and exclusive remedy of Seller with
respect to any of the foregoing, shall be the payment of the Contingent
Consideration, subject to an adjustment to such Contingent Consideration, taking
into account the Actual EBITDA (and the components thereof) that would have
resulted had such breach not occurred and other adjustments to the calculation
of the Contingent Consideration to be mutually agreed by Buyer and Seller, and
(ii) upon payment of the Contingent Consideration as so adjusted, any and all
obligations of the parties under this Section 1.4 shall thereafter terminate and
cease to have any further force or effect. In the event that Buyer and Seller
are not able to mutually agree to adjustments to the Contingent Consideration
within ten (10) Business Days after the party alleging such breach has given
notice of alleged breach to Buyer (in the event of a breach alleged by Seller)
or to Seller (in the event of a breach alleged by Buyer), then such adjustments
shall be submitted for resolution at the request of the party alleging such
breach to the Auditor as set forth in Section 2.1(d) of the Agreement, mutatis
mutandis (provided that in the event that the Auditor is the same as the
Earn-Out Auditor, the party alleging such breach shall select a different
independent accounting firm of recognized national standing reasonably
acceptable to the party alleged to have breached).

 

Section 1.5           Tax Treatment of Contingent Consideration. The parties
agree that for federal, state and local income tax purposes, the Contingent
Consideration shall be treated by the parties as additional consideration for
the purchase by Buyer of the Acquired Interests, and the parties shall cause
such payment to be reported in good faith in accordance herewith.

 

Section 1.6           Certain Covenants of Buyer. From and after the Second
Closing Date through the Test Date, Buyer will (a) maintain a separate set of
accounts for the Acquired Companies and their Subsidiaries as if they were a
stand-alone company separate from the other Subsidiaries of Buyer, (b) operate
in the ordinary course of business consistent with past practice and not take
any action outside the ordinary course of business the primary purpose of which
is to eliminate or reduce the Earn-Out Payment, (c) except for a Cole Sale, not
liquidate or otherwise dissolve any of the Acquired Companies or their
Subsidiaries, (d) not effect any transaction (including any allocation of
corporate expense) between Buyer or any Affiliate thereof (other than any
Acquired Company or

 

49

 

 

Subsidiary thereof), on the one hand, and an Acquired Company or a Subsidiary
thereof, on the other hand, on a basis less favorable in any material respect to
such Acquired Company or Subsidiary than would be the case if such transaction
had been at arms’-length with an unrelated third party. Notwithstanding the
foregoing, Seller acknowledges and agrees that (i) the Earn-Out Payment, if any,
is speculative and not guaranteed and subject to numerous factors outside the
control of Buyer, (ii) neither Buyer nor any of its Affiliates has promised or
projected any payments under this Annex A or any amount of Actual EBITDA for any
period following the Second Closing Date, (iii) other than the express covenants
and agreements contained in this Annex A, neither Buyer nor any of its
Affiliates (including, following the Second Closing, the Acquired Companies)
owes any duties (express or implied) to Seller, (iv) the parties solely intend
the express provisions of this Annex A and the Agreement to govern their
contractual relationship, and (v) subject to compliance with the provisions of
this Annex A and the Agreement, Buyer shall have sole discretion with respect to
all matters relating to the operation of the Acquired Companies, their
Subsidiaries and their respective businesses, and shall have no obligation to
operate any such Person or business in order to achieve any Earn-Out Payment or
to maximize the amount thereof. From and after the Second Closing until December
31, 2015, no later than thirty (30) days after the end of each calendar month,
Buyer shall prepare and deliver to Seller a written statement that sets forth in
reasonable detail its calculation of the combined earnings before interest, tax,
depreciation and amortization of the Acquired Companies, calculated in
accordance with GAAP applied on a basis consistent with Seller’s accounting
principles, policies and methodologies used in connection with the preparation
of the Financial Statements, for the previous calendar month and, beginning in
January 1, 2015, for the year to date.

 

Section 1.7           Special Earn-Out Events.

 

(a)          Buyer shall provide Seller with twenty (20) days’ prior written
notice of a Special Earn-Out Event. If a Special Earn-Out Event occurs, Seller
will have the right to require, in lieu of the Contingent Consideration payable
pursuant to this Annex A, a special payment in accordance with this Section 1.7
of Annex A. Seller may exercise such right within 60 days after obtaining actual
knowledge that such Special Earn-Out Event has occurred (the date of such
occurrence, the “Special Earn-Out Trigger Date”) by providing written notice to
Buyer of such request, which notice shall also describe the reasons supporting
the request (a “Special Earn-Out Notice”).

 

(b)          If a Special Earn-Out Event occurs and Seller delivers a Special
Earn-Out Notice in accordance with this Section 1.7, the following provisions
shall apply:

 

(1)         Upon receipt of a Special Earn-Out Notice, each of Seller and Buyer
shall engage a financial advisor of recognized national standing to prepare a
calculation of the Special Earn-Out Payment, which will incorporate such
financial advisor’s good faith projection of Actual EBITDA from the Special
Earn-Out Trigger Date through the end of the Performance Period. Each party’s
financial advisor shall submit its calculation of the Special Earn-Out Payment
within 20 Business Days of receipt by Buyer of the Special Earn-Out Notice,
along with reasonable supporting documentation for such calculations (each, a
“Special Earn-Out Statement”). Buyer shall give each financial advisor
reasonable access to its records, personnel and independent accountants for
purposes of the financial advisors’ calculations of the Special Earn-Out
Payment.

 

(2)         If the higher calculation of the Special Earn-Out Payment contained
in the two Special Earn-Out Statements is not more than 110% of the calculation
of the Special Earn-Out Payment contained in the other Special Earn-Out
Statement (such calculations collectively, the “Special Earn-Out Payment
Calculations” and each individually a “Special Earn-Out Payment Calculation”),
then the calculation of the Special Earn-Out Payment will be calculated based on
an average of the two Special Earn-Out Payment Calculations.

 

(3)         If the higher calculation of the Special Earn-Out Payment
Calculations is more than 110% of the lower Special Earn-Out Payment
Calculation, then Buyer’s and Seller’s financial advisors shall select and
engage on behalf of Buyer and Seller a third financial advisor of recognized
national standing, within ten (10) Business Days after the submission of the
Special Earn-Out Statements pursuant to Section 1.7(b)(1). The third financial
advisor so selected shall use its reasonable best efforts to render its decision
as to which of the two Special Earn-Out Payment Calculations is more accurate
within thirty (30) days of the engagement of such third financial advisor. Buyer
shall give such financial advisor reasonable

 

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access to its records, personnel and independent accountants for purposes of the
financial advisor’s calculations of the Special Earn-Out Payment.

 

(4)         Buyer and Seller agree that, upon the determination of the average
of the Special Earn-Out Payment Calculations pursuant to Section 1.7(b)(2), or
upon the rendering of the decision of the third financial advisor pursuant to
Section 1.7(b)(3), as applicable, Buyer and Seller shall be bound to such
average or such decision which shall be deemed final and binding on the parties
to the Agreement (such average or such Special Earn-Out Payment Calculation
decided as the more accurate by the third financial advisor, the “Final Special
Earn-Out Payment”). The Final Special Earn-Out Payment shall be paid by Buyer to
Seller (by wire transfer of immediately available funds to an account designated
in writing by Seller) promptly after the determination of the Final Special
Earn-Out Payment in accordance with this Section 1.7(b)(4).

 

The fees and expenses of the third financial advisor shall be allocated between
Seller on the one hand, and Buyer, on the other hand in inverse proportion as
they may prevail on the matters resolved by such financial advisor, which
proportionate allocation shall be calculated on an aggregate basis based on the
relative dollar values of the amounts in dispute and shall be determined by such
financial advisor at the time the determination of such firm is rendered on the
merits of the matters submitted.

 

51

 

 

Exhibit A

 

Form of Note

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD UNLESS REGISTERED
PURSUANT TO THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.

 

UNSECURED PROMISSORY NOTE DUE December 16, 2021

 

No. 1     New York, NY $300,000,000 [•], 2014

 

RCS CAPITAL CORPORATION

 

FOR VALUE RECEIVED, and subject to the terms and conditions set forth herein,
RCS Capital Corporation, a Delaware corporation (the “Issuer”), hereby promises
to pay to the order of ARC Properties Operating Partnership, L.P., a Delaware
limited partnership (the “Initial Holder”), or his, her or its registered
assigns on the Maturity Date (as hereafter defined), the principal amount of
Three Hundred Million Dollars ($300,000,000), together with all accrued and
unpaid interest on the principal amount of this Note (as hereafter defined
below) as provided herein. The Indebtedness (as hereafter defined below)
evidenced by this Note shall constitute unsecured Indebtedness of the Issuer.

 

1.     Definitions. Capitalized terms used herein shall have the meanings set
forth in this Section 1.

 

“Affiliate” shall mean, when used with respect to a specific Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.

 

“Applicable Rate” means, (i) from [Ÿ]1 until [Ÿ], 20182,7.50 percentage points
(7.5%) per annum, (ii) from [Ÿ], 20181 until [Ÿ], 20193, 8.50 percentage points
(8.5%) per annum, (iii) from [Ÿ], 20192 until [Ÿ], 20204, 9.50 percentage points
(9.5%) per annum and (iv) from [Ÿ], 20203 until the Maturity Date, 10.50
percentage points (10.5%) per annum.

 

“Bankruptcy Code” means the provisions of Title 11 of the United States Code, 11
U.S.C. § 101 et seq., as now or hereafter in effect or any successor thereto.

 

“beneficial owner” and the related terms “beneficially owned” and “beneficially
own” shall have the meaning as defined in Rule 13d-3 under the Exchange Act.

 

 

1 Insert date of the First Closing Date as defined in the Equity Purchase
Agreement.

2 4 years from the Issue Date.

3 5 years from the Issue Date.

4 6 years from the Issue Date.

 

 

 

 

“Business Day” means a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by Law to close.

 

“Capital Lease” shall mean, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.

 

“Capital Lease Obligation” shall mean, with respect to any Capital Lease of any
Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.

 

“Change of Control” shall be deemed to have occurred if any of the following
occurs:

 

a)any Person or “group,” other than the holder of Class B Common Stock as of the
date hereof, any of its members, and/or any of their Affiliates, is or becomes
the “beneficial owner,” directly or indirectly, of securities of the Issuer
representing 50% or more of (i) the combined voting power of all the outstanding
securities of the Issuer or (ii) the economic interest of all the outstanding
equity securities of the Issuer, voting or otherwise; or

 

b)(i)   the Issuer or any of its subsidiaries consolidates with, or mergers with
or into, another Person or “group” other than the holder of Class B Common Stock
as of the date hereof, any of its members and/or any of their Affiliates, (ii)
the Issuer sells, assigns, conveys, transfers, leases or otherwise disposes of
all or substantially all of the Issuer’s and/or its subsidiaries’ assets to
another Person or “group” other than the holder of Class B Common Stock as of
the date hereof, any of its members and/or any of their Affiliates, or (iii) any
Person other than the holder of Class B Common Stock as of the date hereof, any
of its members and/or any of their Affiliates consolidates with, or merges with
or into, the Issuer or any of its subsidiaries, in each case, other than
pursuant to a transaction in which (x) the Persons that “beneficially owned,”
directly or indirectly, securities of the Issuer, immediately prior to such
transaction “beneficially own,” directly or indirectly, immediately after giving
effect to such transaction outstanding securities of the continuing or surviving
or transferee Person (or any parent thereof) representing 50% or more of the
combined voting power of all the outstanding securities of such Person and (y)
the Persons that “beneficially owned,” directly or indirectly, equity securities
of the Issuer, immediately prior to such transaction “beneficially own,”
directly or indirectly, immediately after giving effect to such transaction
outstanding equity securities of the continuing or surviving or transferee
Person (or any parent thereof) representing 50% or more of the economic interest
of all the outstanding equity securities of such Person; or

 

c)a transaction, or series of related transactions, in which the holder of Class
B Common Stock as of the date hereof or any of its members, and/or any of their
Affiliates ceases to “beneficial own,” directly or indirectly, securities
representing 50% or more of the combined voting power of all the outstanding
securities of Issuer; or

 

2

 

 

d)at any time prior to the Maturity Date, a majority of the members of the board
of directors of the Issuer cease for any reason (other than due to death,
disability or compliance with any policy adopted by the board of directors of
the Issuer regarding mandatory retirement age) to be Incumbent Directors;

 

provided, however, that the exercise by the Issuer of its right to repurchase
the issued and outstanding share of the Class B Common Stock shall not
constitute, or be deemed to give rise to, a Change of Control.

 

“Change of Control Payment Date” has the meaning set forth in Section 3.3.

 

“Class B Common Stock” means the Class B common stock of the Issuer, par value
$0.001 per share.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Control” shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms “Controlling” and “Controlled” shall have meanings correlative thereto.

 

“Debt Service” shall mean, with respect to any Person for any fiscal period, an
amount equal to the sum of (a) Interest Expense for such period and (b) the
scheduled amortization of any outstanding Indebtedness during such period.

 

“Debt Service Coverage Ratio” shall mean with respect to any Person for any
period, the ratio of EBITDA to Debt Service.

 

“Default” means any of the events specified in Section 7 which constitutes an
Event of Default or which, upon the giving of notice, the lapse of time, or both
pursuant to Section 7, would, unless cured or waived, become an Event of
Default.

 

“Default Rate” means, at any time, the Applicable Rate plus 2.0%.

 

“EBITDA” shall mean, with respect to any Person for any fiscal period, an amount
equal to (a) net income of such Person for such period, minus (b) the sum of (i)
income tax credits, (ii) interest income, (iii) gain from extraordinary items
for such period, (iv) any aggregate net gain (but not any aggregate net loss)
during such period arising from the sale, exchange or other disposition of
capital assets by such Person (including any fixed assets, whether tangible or
intangible, all inventory sold in conjunction with the disposition of fixed
assets and all securities), and (v) any other non-cash gains which have been
added in determining net income, in each case to the extent included in the
calculation of net income of such Person for such period in accordance with
GAAP, but without duplication, plus (c) the sum of (i) any provision for income
taxes, (ii) Interest Expense, (iii) loss from extraordinary items for such
period, (iv) the amount of non-cash charges (including depreciation and
amortization) for such period, (v) amortized debt discount for such period and
(vi) the amount of any deduction to net income as the result of any grant to any
members of the management of such Person of any Stock, in each case to the
extent

 

3

 

 

included in the calculation of net income of such Person for such period in
accordance with GAAP, but without duplication. For purposes of this definition,
the following items shall be excluded in determining net income of a Person: (1)
the income (or deficit) of any other Person accrued prior to the date it became
a Subsidiary of, or was merged or consolidated into, such Person or any of such
Person’s Subsidiaries; (2) the income (or deficit) of any other Person (other
than a Subsidiary) in which such Person has an ownership interest, except to the
extent any such income has actually been received by such Person in the form of
cash dividends or distributions; (3) the undistributed earnings of any
Subsidiary of such Person to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary; (4) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
income accrued during such period; (5) any write-up of any asset; (6) any net
gain from the collection of the proceeds of life insurance policies; (7) any net
gain arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of such Person, (8) in the case of a successor
to such Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets and (9) any deferred credit representing the excess of equity in any
Subsidiary of such Person at the date of acquisition of such Subsidiary over the
cost to such Person of the investment in such Subsidiary.

 

“Equity Purchase Agreement” means that certain Equity Purchase Agreement dated
[Ÿ], 2014, by and between the Issuer and the Initial Holder.

 

“Exchange Act” means the United States Securities Exchange Act of 1934, as
amended and the rules and regulations thereunder.

 

“Event of Default” has the meaning set forth in Section 7.

 

“Funded Debt” shall mean, with respect to any Person, all Indebtedness for
borrowed money evidenced by notes, bonds, debentures, or similar evidences of
Indebtedness and which by its terms matures more than one year from, or is
directly or indirectly renewable or extendible at such Person’s option under a
revolving credit or similar agreement obligating the lender or lenders to extend
credit over a period of more than one year from the date of creation thereof,
and specifically including Capital Lease Obligations, current maturities of
long-term debt, revolving credit and short-term debt extendible beyond one year
at the option of the debtor, and also including, in the case of a Permitted
Issuer Transferee, the Notes.

 

“Governmental Authority” means the government of any nation or any political
subdivision thereof, whether at the national, state, territorial, provincial,
municipal or any other level, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of, or pertaining to, government (including any supranational bodies such as the
European Union or the European Central Bank).

 

“Gross Income” means “gross income” as such term is used for purposes of Section
856(c) of the Code.

 

4

 

 

“Holder” means a holder of the Note(s) registered in the Note Register.

 

“Incumbent Directors” shall mean (i) any of Nicholas S. Schorsch, Mark Auerbach,
Jeffrey J. Brown, Peter M. Budko, William M. Kahane, C. Thomas McMillen, Michael
Weil and Doug Wood and (ii) any director whose election, or nomination for
election by the Issuer’s stockholders, was approved by a vote of at least a
majority of the then Incumbent Directors.

 

“Indebtedness” of any Person shall mean without duplication (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property
payment for which is deferred six (6) months or more, but excluding obligations
to trade creditors incurred in the ordinary course of business that are not
overdue by more than six (6) months unless being contested in good faith, (b)
all reimbursement and other obligations with respect to letters of credit,
bankers’ acceptances and surety bonds, whether or not matured, (c) all
obligations evidenced by notes, bonds, debentures or similar instruments, (d)
all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all Capital Lease Obligations, (f) all obligations of such Person under
commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all obligations of
such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, (h) all Indebtedness referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property or other assets (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness, and (i) the
Notes.

 

“Initial Holder” has the meaning set forth in the introductory paragraph.

 

“Interest Expense” shall mean, with respect to any Person for any fiscal period,
interest expense (whether cash or non-cash) of such Person determined in
accordance with GAAP for the relevant period ended on such date, including, in
any event, interest expense with respect to any Funded Debt of such Person.

 

“Interest Payment Date” means March 16, June 16, September 16 and December 16 of
each fiscal year, as appropriate; provided that if any such day is not a
Business Day, then the applicable Interest Payment Date shall be the immediately
preceding Business Day.

 

“Issuer” has the meaning set forth in the introductory paragraph.

 

“group” shall have the meaning as defined in Section 13(d)(3) of the Exchange
Act.

 

“Issue Date” means [·].5

 

 

5 Insert date of the Second Closing Date as such term is defined in the Equity
Purchase Agreement.

 

5

 

 

“Law” as to any Person, means any law (including common law), statute,
ordinance, treaty, rule, regulation, policy or requirement of any Governmental
Authority and authoritative interpretations thereon, whether now or hereafter in
effect, in each case, applicable to or binding on such Person or any of its
properties or to which such Person or any of its properties is subject.

 

“Lien” shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the UCC or
comparable law of any jurisdiction).

 

“Limitation Notice” has the meaning set forth in Section 9(c).

 

“Majority Holder” means the Holder or Holders of at least a majority of the
aggregate principal amount of the Note(s) then outstanding, other than the
Issuer and any of its controlled Affiliates.

 

“Mandatory Change of Control Offer” has the meaning given that term in
Section 3.3.

 

“Maturity Date” means the earlier of (a) December 16, 2021 and (b) the date on
which all amounts under this Note shall become due and payable pursuant to
Section 8.

 

“Notes” means the Issuer’s aggregate principal amount of Three Hundred Million
Dollars ($300,000,000) in unsecured promissory note(s) due December 16, 2021,
issued under the Equity Purchase Agreement or in connection with any assignment
thereafter.

 

“Note Register” has the meaning set forth in Section 5.1(a).

 

“Optional Redemption Price” the meaning set forth in Section 3.2.

 

“Parties” or “Party” has the meaning set forth in the introductory paragraph.

 

“Payment Default” means a Default or an Event of Default in the payment of the
principal of, interest on and any other amount under, any Note.

 

“Permitted Issuer Transferee” means any corporation, limited liability company
or partnership organized in the United States of America (excluding, for the
avoidance of doubt any individual or Governmental Authority) that (i) if not an
Affiliate of the Issuer, (A) after taking into account the transactions in
respect of which the Note is assumed, has Stockholders’ Equity of at least $400
million, (B) pro forma, after taking into account the transactions in respect of
which the Note is assumed, has a Debt Service Coverage Ratio for the four most
recent preceding fiscal quarters of not less than 1.3:1.0, and (C) which the
Majority Holders have determined in their reasonable business judgment (which
determination shall not be unreasonably withheld, conditioned or delayed (for
purposes hereof, a delay exceeding 10 days shall be deemed to be an unreasonable
delay)) has sufficient cash flows and revenues to meet its obligations under the

 

6

 

 

Notes; and (ii) if an Affiliate of the Issuer (A) after taking into account the
transactions in respect of which the Note is assumed, has Stockholders’ Equity
of at least $250 million, (B) pro forma, after taking into account the
transactions in respect of which the Note is assumed, has a Debt Service
Coverage Ratio for the four most recent preceding fiscal quarters of not less
than 1.3:1.0, and (C) which the Majority Holders have determined in their
reasonable business judgment (which determination shall not be unreasonably
withheld, conditioned or delayed (for purposes hereof, a delay exceeding 10 days
shall be deemed to be an unreasonable delay)) has sufficient cash flows and
revenues to meet its obligations under the Notes.

 

“Permitted Transferee” means an Affiliate of the applicable Transferor so long
as such Affiliate remains an Affiliate of such Transferor.

 

“Person” means any individual, corporation, limited liability company, trust,
joint venture, association, company, limited or general partnership,
unincorporated organization, Governmental Authority or other entity.

 

“Record Date” means, with respect to any Interest Payment Date, the March 1,
June 1, September 1, or December 1 (whether or not such day is a Business Day)
immediately preceding the applicable March 16, June 16, September 16 or December
16 Interest Payment Date.

 

“Redemption Date” has the meaning set forth in Section 3.2.

 

“Redemption Notice” has the meaning set forth in Section 3.4(a).

 

“RFO Notice” has the meaning set forth in Section 10.15(b)(i).

 

“Securities Act” has the meaning set forth in the securities legend.

 

“Stock” shall mean all shares, options, warrants, general or limited partnership
interests or other equivalents (regardless of how designated) of or in a
corporation, partnership or equivalent entity whether voting or nonvoting,
including common stock, preferred stock or any other “equity security” (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the Securities and Exchange Commission under the Exchange Act).

 

“Stockholders’ Equity” means, with respect to any Permitted Issuer Transferee,
the value of its assets less its liabilities, as determined in accordance with
GAAP.

 

“Subsidiary” shall mean, with respect to any Person, (a) any corporation of
which an aggregate of more than fifty percent (50%) of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, or with respect to which any such Person has the right to vote or
designate the vote of fifty percent (50%) or more of such Stock whether by
proxy, agreement, operation of law or otherwise, and (b) any partnership or
limited liability company in which such Person and/or one or more Subsidiaries
of such Person shall have an interest (whether in the form of voting or
participation in profits or

 

7

 

 

capital contribution) of more than fifty percent (50%) or of which any such
Person is a general partner or may exercise the powers of a general partner.

 

“Taxes” has the meaning set forth in Section 9(a).

 

“Transfer” has the meaning set forth in Section 10.15(a).

 

“Transferor” has the meaning set forth in Section 10.15(a).

 

“UCC” shall mean the Uniform Commercial Code as the same may, from time to time,
be enacted and in effect in the State of New York.

 

“Voidable Transfer” has the meaning set forth in Section 10.7.

 

2.     Issuance of this Note.

 

2.1           The Issuer issued this Note under the Equity Purchase Agreement.
This Note is a general obligation of the Issuer.

 

3.     Final Payment Date; Redemption.

 

3.1           Final Payment Date. The aggregate unpaid principal amount of the
Notes, along with accrued and unpaid interest and all other amounts payable
under this Note shall become due and payable on the Maturity Date.

 

3.2           Optional Redemption. Subject to Section 9(c), the Notes shall be
redeemable, in whole or in part, at any time after December 31, 2015 at the
option of the Issuer at a redemption price equal to 100% of the outstanding
principal amount of such Notes plus all accrued and unpaid interest thereon to
the date of redemption (the “Optional Redemption Price”). The Issuer shall give
each Holder of the Notes written notice of any redemption pursuant to this
Section 3.2 at least ten (10) Business Days prior to the date of redemption.
Subject to Section 9(c), the notice shall identify the Notes to be redeemed and
shall state the redemption date, which shall be a Business Day (the “Redemption
Date”), the Optional Redemption Price (and include a reasonably detailed
calculation thereof) and, in accordance with Section 5.3(a), the manner and
place of payment. Any notice of redemption given by the Issuer pursuant to this
Section 3.2 shall be irrevocable and shall obligate the Issuer to pay the
Optional Redemption Price on the date specified in such notice.

 

3.3           Mandatory Redemption. Not later than 1:00 p.m. (New York time), at
least twenty (20) days prior to the occurrence of a Change of Control, the
Issuer shall make an offer to redeem the Notes by providing written notice
thereof to the Holder (a “Mandatory Change of Control Offer”), setting forth the
proposed date of the Change of Control and the Redemption Date (which shall be
the date upon which the Change of Control is consummated) (the “Change of
Control Payment Date”), agreeing to redeem the Notes at a redemption price equal
to

 

8

 

 

100% of the outstanding principal amount of the Notes plus any accrued but
unpaid interest thereon to the date of redemption; provided that such Mandatory
Change of Control Offer may be conditioned upon the effectiveness of such Change
of Control, in which such case, if such condition is not satisfied, such
Mandatory Change of Control Offer may be revoked by the Issuer by written notice
to the Holder by 9:00 a.m. (New York time) on the Business Day set forth in such
specified prepayment notice. On the Change of Control Payment Date, the Issuer
shall accept for payment all Notes or portions thereof properly tendered at
least three (3) Business Days prior to the Change of Control Payment Date.

 

3.4           Redemption Procedures.

 

(a)     A notice of redemption delivered pursuant to Section 3.2 (the
“Redemption Notice”) or Mandatory Change of Control Offer, if mailed in the
manner herein provided, shall be conclusively presumed to have been duly given,
whether or not the Holder receives such notice. In any case, failure to give
such Redemption Notice or Mandatory Change of Control Offer by mail or any
defect in the Redemption Notice or Mandatory Change of Control Offer to the
Holder of any Note designated for redemption in whole or in part shall not
affect the validity of the proceedings for the redemption of any other Note.
With respect to a Note that is to be redeemed in part only, the portion of the
principal amount thereof to be redeemed and after the date of redemption
thereof, upon surrender of such Note, a new Note in principal amount equal to
the unredeemed portion thereof shall be issued.

 

(b)     If fewer than all of the outstanding Notes are to be redeemed pursuant
to a Redemption Notice, the Issuer shall select the Notes to be redeemed on a
pro rata basis.

 

(c)     The Issuer may not redeem any Notes pursuant to Section 3.2 on any date
if the principal amount of the Notes has been accelerated in accordance with the
terms of the Notes and such acceleration has not been rescinded, on or prior to
the Redemption Date (except in the case of an acceleration resulting from an
Event of Default by the Issuer in the payment of the redemption price with
respect to such Notes).

 

(d)     In the event of any redemption of the Notes in accordance with this
Section 3.4, the Issuer shall not be required to issue, register the transfer of
or exchange any Note during the fifteen (15) calendar day period prior to the
date on which the Redemption Notice is deemed to have been given to all Holders
of Notes to be redeemed, or register the transfer of or exchange any Notes so
selected for redemption, in whole or in part, except the portion of any Notes
being redeemed in part that shall not be redeemed.

 

9

 

 

4.     Interest.

 

4.1           Interest. Except as otherwise provided herein, the Note shall bear
interest at the Applicable Rate from [·]6 or from the most recent date to which
interest had been paid, but excluding, the next scheduled Interest Payment Date,
until the Maturity Date.

 

4.2           Interest Payment Dates. Interest shall be payable in cash
quarterly in arrears to the Persons who are registered Holders of the Notes at
close of business on Record Date immediately preceding the applicable Interest
Payment Date.

 

4.3           Default Interest. During the continuance of an Event of Default,
the Issuer shall pay to the Holder interest at the Default Rate on the
outstanding principal amount of the Notes and on any other amount payable by the
Issuer hereunder (including accrued but unpaid interest to the extent permitted
under applicable Law). Interest payable at the Default Rate shall be payable
upon demand and in cash.

 

4.4           Computation of Interest. All computations of interest shall be
made on the basis of a year of 365 days (or 366 days in the case of a leap
year), and the actual number of days elapsed (including the first day but
excluding the last day).

 

4.5           Interest Rate Limitation. If at any time and for any reason
whatsoever, the interest rate payable on the Notes shall exceed the maximum rate
of interest permitted to be charged under applicable Law, such interest rate
shall be reduced automatically to the maximum rate of interest permitted to be
charged under applicable Law and that portion of each sum paid attributable to
that portion of such interest rate that exceeds the maximum rate of interest
permitted by applicable Law shall be deemed a voluntary prepayment of principal.

 

5.     Note Register; Payment Mechanics.

 

5.1           Note Register.

 

(a)     The Issuer shall cause to be kept at its principal office a register for
the registration and transfer of each of the Notes (the “Note Register”). The
names and addresses of the Holders of Notes, the transfer of Notes, and the
names and addresses of the transferees of the Notes shall be registered in the
Note Register.

 

(b)     The Person in whose name any registered Note shall be registered shall
be deemed and treated as the owner and holder thereof for all purposes of this
Note, and the Issuer shall not be affected by any notice to the contrary, until
due presentment of such Note for registration of

 

 

6 Insert date of the First Closing Date as defined in the Equity Purchase
Agreement.

 

10

 

 

transfer so provided in this Section 5.1. Payment of or on account of the
principal, and interest on any registered Notes shall be made to or upon the
written order of such registered holder.

 

(c)     When Notes are presented to the Issuer with a request to register the
transfer of such Notes or to exchange such Notes for an equal principal amount
of Notes of other authorized denominations, the Issuer shall register the
transfer or make the exchange as requested if requirements set for under Section
5.6 herein, are met.

 

(d)     The Person in whose name any Note is registered on the Note Register at
the close of business on any Record Date with respect to any Interest Payment
Date shall be entitled to receive the interest payable on such Interest Payment
Date. Interest shall be payable at the office or agency of the Issuer maintained
by the Issuer for such purposes. The Notes will be payable both as to principal
and interest by Federal funds wire transfer of lawful money of the United States
to each Holder’s account in any bank in the United States as may be designated
and specified in writing by such Holder at least two Business Days prior
thereto.

 

5.2           Delivery Expenses. If a Holder surrenders any Note to the Issuer
for any reason, the Issuer agrees to pay the cost of delivering to such Holder’s
home office or to the office of such Holder’s designee from the Issuer, the
Note(s) issued in substitution, replacement or exchange for, the surrendered
Note.

 

5.3           Direct Payment.

 

(a)     The Issuer will pay or cause to be paid all amounts payable with respect
to any Note (without any presentment of such Note and without any notation of
such payment being made thereon) by crediting (before 1:00 p.m., New York time),
by intra-bank or Federal funds bank wire transfer in same day funds in U.S.
Dollars to each Holder’s account in any bank in the United States as may be
designated and specified in writing by such Holder at least two Business Days
prior thereto.

 

(b)     Notwithstanding anything to the contrary contained in the Notes, if any
principal amount payable with respect to a Note is payable, at maturity, upon
redemption, or otherwise, on a day which is not a Business Day, then the Issuer
shall pay such amount on the next succeeding Business Day, and interest shall
accrue on such amount until the date on which such amount is paid and payment of
such accrued interest shall be made concurrently with the payment of such
amount; provided that the Issuer may elect to pay in full (but not in part) any
such amount on the last Business Day prior to the date such payment otherwise
would be due, and no such additional interest shall accrue on such amount.
Notwithstanding anything to the contrary contained in the Notes, if any interest
payable with respect to a Note is payable on a day which is not a Business Day,
then the Issuer may elect to pay in full (but not in part) any such interest on
the last Business Day prior to the date such payment otherwise would be due, and
such diminution in time shall be included in the computation of the interest
payment.

 

11

 

 

5.4           Lost, etc. Notes. If a mutilated Note is surrendered to the Issuer
or if the Holder of a Note claims and submits an affidavit or other evidence,
reasonably satisfactory to the Issuer to the effect that the Note has been lost,
destroyed or wrongfully taken, the Issuer shall issue a replacement Note if the
customary requirements relating to replacement securities are reasonably
satisfied. If required by the Issuer, such Holder must provide an indemnity
bond, or other form of indemnity, sufficient in the reasonable judgment of the
Issuer to protect the Issuer from any loss which it may suffer if a Note is
replaced. The affidavit of such Holder at the time of loss, setting forth the
fact of loss, theft or destruction and of its ownership of the Note at the time
of such loss, theft or destruction shall be accepted as satisfactory evidence
thereof, and no further indemnity shall be required as a condition to the
execution and delivery of a new Note other than the unsecured written agreement
of such Holder reasonably satisfactory to the Issuer to indemnify the Issuer or,
at the option of the Issuer, an indemnity bond in the amount of the Note
remaining outstanding. Every replacement Note is an obligation of the Issuer.

 

5.5           Other Covenants. The Issuer further covenants and agrees not to,
and to ensure that no affiliate (as defined in Rule 501(b) of the Securities
Act) of the Issuer will, sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Securities
Act) that would be integrated with the issuance of the Notes in a manner that
would require the registration under the Securities Act of the issuance of the
Note under the Equity Purchase Agreement.

 

5.6           Transfer Restrictions. No transfer or sale (including, without
limitation, by pledge or hypothecation) of Notes by any Holder which is
otherwise permitted hereunder, other than a transfer or sale to the Issuer,
shall be effective unless such transfer or sale is made (i) pursuant to an
effective registration statement under the Securities Act and a valid
qualification under applicable state securities or “blue sky” laws or (ii)
without such registration or qualification as a result of the availability of an
exemption therefrom, and if reasonably requested by the Issuer, counsel for such
transferee (who may be in-house) shall have furnished the Issuer with an
opinion, reasonably satisfactory in form and substance to the Issuer, to the
effect that no such registration is required because of the availability of an
exemption from the registration requirements of the Securities Act; provided,
however, that with respect to transfers by Holders to their Affiliates, no such
opinion shall be required. For the avoidance of doubt, all transfers or sales of
Notes shall be subject to Section 10.15.

 

5.7           Replacements Notes. All Notes issued by the Issuer shall be in
form and substance identical to this Note other than the principal amount and
the Holder thereof and otherwise to the extent set forth in Section 10.9(d). Any
Note

 

12

 

 

issued by the Issuer in connection with one or more assignments or redemptions
of this Note as permitted hereunder will be in the principal amount of One
Thousand Dollars ($1,000) (except in the case of any redemption following which
the aggregate principal amount remaining is less than $1,000) or integral
multiplies of One Thousand Dollars ($1,000) or excess thereof.

 

6.     Affirmative Covenants. So long as any of the Notes remain unpaid and
outstanding, the Issuer covenants to the Holders of the outstanding Notes as
follows:

 

(a)     Do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence; and

 

(b)     Provide prompt notice of the occurrence of, after the Issuer becomes
aware of any such event, any Default or Event of Default hereunder.

 

7.          Events of Default. The occurrence and continuance of any of the
following shall constitute an “Event of Default” hereunder:

 

(a)     default in any payment of interest on this Note or any other amount
(other than principal) payable hereunder when due and payable, and the default
continues for a period of five (5) days;

 

(b)     default in the payment of principal of this Note when due and payable on
the Maturity Date, upon any required redemption, upon declaration of
acceleration or otherwise;

 

(c)     failure by the Issuer to issue a Mandatory Change of Control Offer in
accordance with Section 3.3, and such failure is not cured within five (5) days
after the due date for such notice;

 

(d)     failure by any Permitted Issuer Transferee to comply with the covenants
set forth in Sections 5 and 6 of the Assumption Agreement (as defined below);

 

(e)     failure by the Issuer to comply with any of its other covenants or
agreements contained in the Note and such failure shall continue for thirty (30)
days from receipt by the Issuer of written notice thereof from the Holder;

 

(f)      default by the Issuer with respect to any mortgage, agreement or other
instrument under which there may be outstanding, or by which there may be
secured or evidenced, any indebtedness for money borrowed in excess of
Twenty-Eight Million Seven Hundred and Fifty Thousand Dollars ($28,750,000) (or
its foreign currency equivalent) in the aggregate of the Issuer whether such
indebtedness now exists or shall hereafter be created (i) resulting in such
indebtedness becoming or being declared due and payable or (ii) constituting a
failure to pay the principal or interest of any such debt when due and payable
at its stated maturity, upon required repurchase, upon declaration of
acceleration or otherwise;

 

13

 

 

(g)     a final judgment for payment of Twenty-Eight Million Seven Hundred and
Fifty Thousand Dollars ($28,750,000) (or its foreign currency equivalent) or
more (excluding any amounts covered by insurance) rendered against the Issuer,
which judgment is not discharged or stayed within sixty (60) days after (i) the
date on which the right to appeal thereof has expired if no such appeal has
commenced or (ii) the date on which all rights to appeal have extinguished;

 

(h)     the Issuer shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to the Issuer or its
debts under bankruptcy, insolvency or other similar Law now or hereafter in
effect or seeking the appointment of trustee, receiver, liquidator, custodian or
other similar official of the Issuer or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking possession
by any such official in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due; or

 

(i)      an involuntary case or other proceeding shall be commenced against the
Issuer seeking liquidation, reorganization or other relief with respect to the
Issuer or debts under any bankruptcy, insolvency or other similar Law now or
hereafter in effect or seeking the appointment of trustee, receiver, liquidator,
custodian or other similar official of the Issuer or any substantial part of its
property, and such involuntary care or other proceeding shall remain undismissed
and unstayed for a period of ninety (90) consecutive days.

 

8.      Remedies.

 

8.1           Acceleration of Notes.

 

(a)     Subject to Section 8.1(c), if an Event of Default (other than an Event
of Default specified in clause (g) or (h) of Section 7 occurs and is
continuing), the Majority Holders, by notice to the Issuer (a copy of which
shall be provided to each other Holder; provided that such copy shall not
constitute a notice for the purpose thereof), may declare the unpaid principal
of and any accrued interest on all the Notes to be due and payable, and
immediately upon such declaration, the principal and interest shall be due and
payable. If an Event of Default specified in clause (g) or (h) of Section 7
occurs, such an amount shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of any Holder.

 

(b)     Notwithstanding Section 8.1(a), but subject to Section 8.1(c), if an
Event of Default specified in clauses (a) or (b) of Section 7 occurs and is
continuing, any Holder, by notice to the Issuer (a copy of which shall be
provided to each other Holder; provided that such copy shall not constitute a
notice for the purpose thereof), may declare the unpaid principal of and any
accrued interest on all the Notes it holds to be due and payable, and
immediately upon such declaration, the principal and interest shall be due and
payable.

 

(c)     The Holder by notice to the Issuer (a copy of which shall be provided to
each other Holder; provided that such copy shall not constitute a notice for the
purpose thereof) may rescind

 

14

 

 

an acceleration and its consequences if the rescission would not conflict with
any judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that have become due solely
because of the acceleration.

 

8.2           Other Remedies.

 

(a)     If an Event of Default occurs and is continuing, the Majority Holders
or, if a Payment Default occurs and is continuing, any Holder, may pursue any
rights and remedies available under the Notes and the applicable law to collect
the payment of principal or interest on the Notes or to enforce the performance
of any provision of the Notes.

 

(b)     A delay or omission by any Holder of any Notes in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.

 

8.3           Waiver of Past Defaults. The Majority Holders by notice to the
Issuer (a copy of which shall be provided to each other Holder; provided that
such copy shall not constitute a notice for the purpose thereof) may waive an
existing Default or Event of Default under the Notes and its consequences except
a continuing Payment Default.

 

8.4           Rights of Holders to Receive Payment. Notwithstanding any other
provision of this Note, the right of any Holder of a Note to receive payment of
principal and interest on the Note, on or after the respective due dates
expressed in the Note, or to bring suit for the enforcement of any such payment
on or after such respective dates, shall not be impaired or affected without the
consent of such Holder.

 

9.     Taxes; Tax Assurances.

 

(a)     The Issuer shall make all payments, whether on account of principal,
interest or otherwise, free of and without deduction or withholding for any
present or future taxes, duties or other charges (“Taxes”), unless otherwise
required by Law.

 

(b)     The Issuer and each Holder acknowledges that it is intended that the
Notes not be readily tradable on an “established securities market” and each of
Holder and the Issuer agrees that he or it will not take any action that would
result in a Note being traded on an established securities market. Any transfer
of a Note on an established securities market shall be null and void. As used
herein, “established securities market” means (i) a national securities exchange
which is registered under Section 6 of the Exchange Act (15 U.S.C. 78f), (ii) an
exchange which is exempted from registration under Section 5 of the Exchange Act
(15 U.S.C. 78e) because of its limited volume of transactions, and (iii) any
over-the-counter market (within the meaning of Treasury Regulations Section
1.453-3(d)(4)). 

 

15

 

 

(c)     Until January 31, 2017, the Issuer shall not redeem the Notes held by
the Initial Holder or any of its Affiliates and the Initial Holder shall not
transfer all or any portion of its Note(s) in any tax year to the extent the
Gross Income that would be recognized by the Initial Holder from such redemption
or transfer if included in the Nonqualifying Income (as defined in the Equity
Purchase Agreement) for such tax year, would cause the total Gross Income to be
recognized by the Initial Holder in such tax year to exceed the Nonqualifying
Income Limitation (as defined in the Equity Purchase Agreement) in accordance
with Section 1.2(f) of the Equity Purchase Agreement. The Initial Holder shall
notify the Issuer (the “Limitation Notice”) within five (5) Business Days after
a Redemption Notice if redemption of the Notes would not be permitted. From and
after the date of any Limitation Notice until the earlier of January 31, 2017 or
the date on which the Initial Holder notifies the Issuer in writing that that
Issuer may again effect a redemption, any Note held by the Initial Holder or any
of its Affiliates shall bear interest at a rate of one percent (1%) per annum.
Nothing in this Section 9(c) shall affect the Issuer’s right to redeem, or the
interest payable on, Notes held by any other Holders.

 

10.   Miscellaneous.

 

10.1         Notices.  

 

(a)     All notices, requests or other communications required or permitted to
be delivered hereunder shall be delivered in writing:

 

(i)          If to the Issuer:

 

RCS Capital Corporation

405 Park Ave, 15th floor

New York, NY 10022

Attention: James A. Tanaka, General Counsel

Facsimile: (212) 415-6567

With copies (which shall not constitute notice) to:

 

Duane Morris LLP

30 South 17th Street

Philadelphia, PA 19103-4196

Attn: Darrick M. Mix, Esq.

Telephone: 1 215-979-1206

Facsimile: 215 827 5560

 

and

 

Proskauer Rose LLP

Eleven Times Square

New York, New York 10036

Attn: Peter M. Fass, Esq. and
          Steven L. Lichtenfeld, Esq.

 

16

 

 

Telephone: 212-969-3735

Facsimile: 212-969-2900

 

If to any Holder which acquired a Note from the Issuer on the Issue Date at the
address or facsimile number set forth on Exhibit A hereto or, the in the case of
another Holder, at the address or facsimile number provided by such Holder to
the Issuer.

 

With copies (which shall not constitute notice) to:

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attn: Michael J. Aiello, Esq. and Matthew Gilroy, Esq.

Telephone: 212-310-8552

Facsimile: 212-310-8007

 

and

 

Proskauer Rose LLP

Eleven Times Square

New York, New York 10036

Attn: Peter M. Fass, Esq. and
          Steven L. Lichtenfeld, Esq.

Telephone: 212-969-3735

Facsimile: 212-969-2900

 

(b)     Notices if (i) mailed by certified or registered mail or sent by hand or
overnight courier service shall be deemed to have been given when received, (ii)
sent by facsimile during the recipient’s normal business hours shall be deemed
to have been given when sent (and if sent after normal business hours shall be
deemed to have been given at the opening of the recipient’s business on the next
Business Day) and (iii) sent by e-mail shall be deemed received upon the
sender’s receipt of an acknowledgment from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgment).

 

10.2         Successors and Assigns. This Note shall inure to the benefit of and
be binding upon the successors and permitted assigns of each of the parties. 
The Issuer’s rights or obligations hereunder or any interest herein may not be
assigned or delegated by the Issuer to any Person without the prior written
consent of each Holder (and any attempted assignment or transfer by the Issuer
without such consent shall be null and void), provided that the Issuer may
assign all (but not part) or its rights and obligations under this Note (for the
avoidance of doubt any such transfer shall be with respect to all of the Notes
then outstanding) to a Permitted Issuer Transferee (whether or not an Affiliate
of the Issuer and whether or not in connection with a spinoff, corporate
reorganization or otherwise) so long as (a) the Issuer shall provide not less
than thirty (30) days

 

17

 

 

prior written notice of such proposed assignment to each Holder, together with
such Permitted Issuer Transferee’s most recent audited (or in the case of a
Permitted Issuer Transferee that is an Affiliate of the Issuer and for which an
audit has not been conducted, unaudited) annual and unaudited quarterly
financial statements (each in accordance with GAAP), (b) each Holder shall have
received all other information and documentation (including, without limitation,
certificates of good standing, organizational documents and legal opinions)
pertaining to such Permitted Issuer Transferee and the proposed assignment, as
reasonably requested by each Holder, (c) such Permitted Issuer Transferee shall
execute and deliver an assumption agreement with respect to this Note in the
form attached hereto as Exhibit B (the “Assumption Agreement”), pursuant to
which it shall agree to be bound by all of the terms hereof as the Issuer, and
(d) both as of the date of such assignment and immediately after giving effect
thereto (for the avoidance of doubt, pertaining to Permitted Issuer Transferee
whether or not an Affiliate of the Issuer), each of the representations and
warranties contained in the Assumption Agreement shall be true and correct in
all material respects; (e) whether or not an Affiliate of the Issuer, no Default
or Event of Default shall have occurred and be continuing, and (f) such proposed
assignment shall not be for the purpose of avoiding a Change of Control. Upon
any such assignment by the Issuer, the Issuer shall have no further obligations
under this Note.

 

10.3         GOVERNING LAW; SUBMISSION TO JURISDICTION. The Notes shall be
governed by and constructed in accordance with the internal laws of the state of
New York including, without limitation, Sections 5-1401 and 5-1402 of the New
York General Obligations Law and Rule 327(b) of the New York Civil Practice Laws
and Rules. The Issuer and each of the Holders hereby irrevocably submit to the
jurisdiction of any New York State Court sitting in the borough of Manhattan in
the city of New York or any Federal Court Sitting in the borough of Manhattan in
the City of New York in respect of any suit, action or proceeding arising out of
or relating to the Notes, and irrevocably accept for itself and in respect of
its property, generally and unconditionally, jurisdiction of the aforesaid
courts. The Issuer, and each of the Holders irrevocably waive, to the fullest
extent they may effectively do so under applicable law, any objection which they
may now or hereafter have to the laying of the venue of any such suit, action or
proceeding brought in any such court and any such claim that any such suit,
action or proceeding brought

 

18

 

 

in any such court has been brought in any inconvenient forum. Nothing herein
shall affect the right of any holder of a note to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against the Issuer in any other jurisdiction.

 

10.4         Waiver of Jury Trial. The Issuer and each Holder waives, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THE NOTES.

 

10.5         Independence of Covenants. All covenants hereunder shall be given
in any jurisdiction independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of a Default or an Event of Default if
such action is taken or condition exists.

 

10.6         Notes Solely Corporate Obligations. No recourse for the payment of
the principal of or accrued and unpaid interest on any Note, nor for any claim
based thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Issuer under any Note shall be had
against any stockholder, employee, agent, officer, member of the Board of
Directors or subsidiary, as such, past, present or future, of the Issuer or of
any successor corporation, either directly or through the Issuer or any
successor corporation whether by virtue of any constitution, statue or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the issue of the Notes.

 

10.7         Revival and Reinstatement of Obligations. If the Holder repays,
refunds, restores, or returns in whole or in part, any payment or property
previously paid or transferred to the Holder in full or partial satisfaction of
any obligation evidenced by a Note, because the payment, transfer, or the
incurrence of the obligation so satisfied is asserted or declared to be void,
voidable, or otherwise recoverable under any Law relating to creditors’ rights,
including provisions of the Bankruptcy Code relating to fraudulent transfers,
preferences, or other voidable or recoverable obligations or transfers (each, a
“Voidable Transfer”), or because the Holder elects to do so on the reasonable
advice of its counsel in connection with a claim that the payment, transfer, or
incurrence is or may be a Voidable Transfer, then, as to any such Voidable
Transfer, or the amount thereof that the Holder elects to repay, restore, or
return (including pursuant to a settlement of any claim in respect thereof), and
as to all reasonable costs, expenses, and attorneys’ fees of the Holder related
thereto, the liability of

 

19

 

 

the Issuer with respect to the amount or property paid, refunded, restored, or
returned will automatically and immediately be revived, reinstated, and restored
and will exist.

 

10.8         Waiver of Notice. The Issuer hereby waives demand for payment,
presentment for payment, protest, notice of payment, notice of dishonor, notice
of nonpayment, notice of acceleration of maturity and diligence in taking any
action to collect sums owing hereunder.

 

10.9         Amendments and Waivers.

 

(a)     With Consent of Holders. The Issuer, with the written consent of the
Majority Holders (a copy of which shall be provided to each other Holder), may
amend the Notes, provided that each Holder shall have received prior notice and
a draft of such proposed amendment. The Majority Holders may waive compliance by
the Issuer with any provision of the Notes by a written consent (a copy of which
shall be provided to each Holder), provided that each Holder shall have received
prior notice and a draft of such proposed waiver. Without the consent of each
Holder affected, however, no amendment may (with respect to any Notes held by a
nonconsenting Holder of Notes):

 

(i)reduce the principal amount of Notes;

 

(ii)reduce the principal of or change the fixed maturity of any Note, or alter
the provisions with respect to the redemption of the Notes;

 

(iii)reduce the rate of interest on any Note;

 

(iv)make any change in the provisions of this Note relating to waivers of past
Defaults or the rights of Holders of Notes to receive payments of principal of,
or interest on the Notes;

 

(v)make any change to the definition of “Majority Holders”; or

 

(vi)make any change in the foregoing amendment provisions.

 

(b)     It shall not be necessary for the consent of the Holders under Section
10.9(a) to approve the particular form of any proposed amendment or waiver, but
it shall be sufficient if such consent approves the substance thereof. After an
amendment or waiver under Section 10.9(a) becomes effective, the Issuer shall
mail to all other Holders a notice briefly describing the amendment or waiver
and a copy of the fully executed amendment or waiver. Any failure of the Issuer
to mail such notice and copy, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment or waiver.

 

(c)     In connection with any amendment under Section 10.9(a), the Issuer may
offer, but shall not be obligated to offer, to any Holder who consents to such
amendment or waiver, consideration for such Holder’s consent.

 

20

 

 

(d)     Revocation and Effectiveness of Consents. Until an amendment or waiver
becomes effective, a consent to it by a Holder is a continuing consent by the
Holder and every subsequent Holder of a Note or portion of a Note that evidence
that same debt as the consenting Holder’s Note, even if notation of the consent
is not made on any Note. However, any such Holder or subsequent Holder may
revoke the consent as to his Note or portion of his Note by notice to the Issuer
received before the date on which the Majority Holders have consented (and not
theretofore revoked such consent) to the amendment or waiver.

 

The Issuer may, but shall not be obligated to, fix a record date for the purpose
of determining the Holders entitled to consent to any amendment or waiver, which
record date shall be at least 30 days prior to the first solicitation of such
consent. If a record date is fixed, then notwithstanding the last sentence of
the immediately preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to revoke any consent previously given, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 90 days after such record date.

 

After an amendment or waiver becomes effective, it shall bind every Holder,
unless it makes a change described in any of the clauses (i) though (vi) of
Section 10.9(a), in which case, the amendment or waiver shall bind only each
Holder of a Note who consented to it and every subsequent Holder of a Note or
portion of a Note that evidences the same debt as the consenting Holder’s Note;
provided that any such waiver shall not impair or affect the right of any Holder
to receive payment of principal of, premium (if any) and interest on a Note, on
or after the respective due dates expressed in such Note, or to bring suit for
the enforcement of any such payment on or after such respective dates.

 

In determining whether the Holders of the required principal amount of Notes
have concurred in any direction, waiver, consent or amendment, Notes owned by
the Issuer or any Affiliate of the Issuer shall be considered as though not
outstanding.

 

(e)     Notation on or Exchange of Notes. If an amendment or waiver changes the
terms of a Note, the Issuer may require the Holder of the Note to deliver it to
the Issuer so that it may place an appropriate notation on the Note about the
changed terms and return it to the Holder.

 

10.10          Headings. The headings of the various Sections and subsections
herein are for reference only and shall not define, modify, expand or limit any
of the terms or provisions hereof.

 

10.11          No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising on the part of the Holder, of any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are

 

21

 

 

cumulative and not exclusive of any rights, remedies, powers and privileges
provided by Law.

 

10.12          Electronic Execution. The words “execution”, “signed”,
“signature”, and words of similar import in the Notes shall be deemed to include
electronic or digital signatures or the keeping of records in electronic form,
each of which shall be of the same effect, validity and enforceability as
manually executed signatures or a paper-based recordkeeping system, as the case
may be, to the extent and as provided for under applicable Law, including the
Electronic Signatures in Global and National Commerce Act of 2000 (15 USC § 7001
et seq.), the Electronic Signatures and Records Act of 1999 (N.Y. State Tech.
Law §§ 301-309), or any other similar state Laws based on the Uniform Electronic
Transactions Act.

 

10.13          Severability. If any term or provision of the Note is invalid,
illegal or unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of the Notes or
invalidate or render unenforceable such term or provision in any other
jurisdiction.

 

10.14          Expenses. The Issuer agrees to pay all reasonable out-of-pocket
expenses incurred by the Holder in connection with the administration of this
Note or in connection with any amendments, modifications or waivers of the
provisions hereof or thereof or incurred by the Holder in connection with the
enforcement or protection of its rights under this Note, including in connection
with any refinancing or restructuring of the credit arrangements provided under
this Note in the nature of a “work-out” or pursuant to any insolvency or
bankruptcy proceedings the reasonable fees, charges and disbursements of one New
York counsel (and counsel in each other relevant local jurisdiction) for the
Holder. The agreements in this Section 10.14 shall survive repayment of all of
the indebtedness evidenced by this Note. All amounts due under this
Section 10.14 shall be paid promptly following receipt by the Issuer of an
invoice relating thereto setting forth such expenses in reasonable detail.

 

10.15          Right of First Offer.

 

(a)     Notwithstanding anything herein to the contrary, and subject to the
terms and conditions specified in this Section 10.15, unless any Event of
Default occurs and is continuing at the time of such Transfer, the Issuer shall
have a right of first offer with respect to any sale, assignment, exchange or
other transfer, whether involuntarily or voluntarily (each, a “Transfer”), of
all or any part of this Note by the Initial Holder or any of its Affiliates (the
Initial Holder and any such Affiliate, each a “Transferor”) other than to a
Permitted Transferee.

 

(b)     If a Transferor proposes to Transfer this Note, the Transferor shall
first make an offer of this Note to the Issuer in accordance with the following
provisions:

 

22

 

 

(i)The Transferor shall deliver a notice (the “RFO Notice”) to the Issuer
stating (i) the Transferor’s bona fide intention to Transfer this Note and (ii)
the price and terms upon which it proposes to Transfer this Note.

 

(ii)Within thirty (30) calendar days after delivery of the RFO Notice, the
Issuer may elect, upon written notice to the Transferor, to purchase, at the
price and on the terms specified in the RFO Notice, this Note. If the Issuer
elects to purchase this Note, such purchase shall be completed promptly
following such notice from the Issuer to the Transferor.

 

(iii)If the Issuer does not notify the Transferor of its election to purchase
this Note in accordance with Section 10.15(b)(ii), the Transferor may, during
the ninety (90) day period following the expiration of the thirty (30)-day
period provided in Section 10.15(b)(ii) hereof, Transfer this Note to any person
or persons at a price not less than, and upon terms no more favorable to the
offeree than, those specified in the RFO Notice. If the Transferor does not
Transfer this Note within such period, the right provided hereunder shall be
deemed to be revived and this Note shall not be Transferred unless first
reoffered to the Issuer in accordance with this Section 10.15.

 

10.16    Effectiveness of Note. This Note shall become effective at and as of
the Second Closing Date (as defined in the Equity Purchase Agreement).

 

[SIGNATURE PAGE FOLLOWS]

 

23

 

  

IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed.

 

  RCS CAPITAL CORPORATION       By:       Name:     Title:

  

[Signature Page to Unsecured Promissory Note]

 

 

 

  

Exhibit A

 

Address and Facsimile Number for Notice:

 

ARC Properties Operating Partnership, L.P.

405 Park Ave, 15th floor

New York, NY 10022

Attention: Richard A. Silfen, General Counsel

Facsimile: (215) 887-2585

 

2

 

 

EXHIBIT B

 

ASSUMPTION AGREEMENT

(UNSECURED PROMISSORY NOTE DUE [DECEMBER 16, 201])

 

[•] [•], 20__

 

Reference is made to the Unsecured Promissory Note Due [December 16, 2021],
dated as of [•], 2014 (as amended, restated, amended and restated, supplemented
or otherwise modified from time to time, the “Note”) issued by RCS Capital
Corporation, a Delaware corporation (the “Initial Issuer”) in favor of ARC
Properties Operating Partnership, L.P., a Delaware limited partnership and its
registered assigns (the “Holder”). Capitalized terms used but not defined herein
shall have the meanings given to them in the Note.

 

WITNESSETH:

 

WHEREAS, the Initial Issuer wishes to assign its rights and obligations under
the Note to [•], [•] (the “New Issuer”) and the New Issuer agrees to such
assignment on the terms and subject to the conditions set forth herein.

 

WHEREAS, pursuant to Section 10.2(d) of the Note, each New Issuer is required to
become the Issuer under the Note by executing this assumption agreement (the
“Assumption Agreement”).

 

NOW, THEREFORE, the Initial Issuer and the New Issuer hereby agree as follows:

 

1.          Assignment and Assumptions. For an agreed consideration, the Initial
Issuer hereby irrevocably sells and assigns to the New Issuer, and the New
Issuer hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the terms of this Assumption Agreement and the Note, as
of the Effective Date (as defined below) all of the Initial Issuer’s rights and
obligations in its capacity as the Issuer under the Note and any other documents
or instruments delivered pursuant thereto to the extent related to the Note. The
New Issuer hereby agrees to all the terms and provisions of the Note applicable
to it as the Issuer thereunder. Each reference to the Issuer in the Credit
Agreement shall be deemed to refer to the New Issuer.

 

2.          Joinder. The New Issuer by its signature below becomes the Issuer
under the Note with the same force and effect as if originally named therein as
the Issuer. As of the Effective Date the Initial Issuer shall not have any
rights, and shall be released from its obligations, under the Note in a capacity
as the Issuer.

 

3.          Effective Date. This Assumption Agreement shall become effective on
the date (the “Effective Date”) when it shall be duly executed and delivered by
each party thereto. Upon its effectiveness, this Assumption Agreement shall
constitute a part of the Note and all references to the Note therein shall be
deemed references to the Note as supplemented by this Assumption Agreement.

 

4.          Representations and Warranties. The New Issuer hereby represents and
warrants as of the Effective Date as follows:

 

1

 

 

a)Organization and Qualification. The New Issuer is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization.

 

b)Power and Authority. The New Issuer is duly authorized to execute, deliver and
perform the Assumption Agreement and, by virtue of this Assumption Agreement,
the Note. The execution, delivery and performance of this Assumption Agreement
and, by virtue of this Assumption Agreement, the Note have been duly authorized
by all necessary action, and do not (i) require any consent or approval of any
equity holders of the New Issuer, other than those already obtained; (ii)
contravene the organizational documents of the New Issuer; (iii) violate or
cause a default under any law, rule or regulation or any decree, order or
judgment applicable to it (the “Applicable Law”) or material contract to which
it is a party; or (iv) result in or require the imposition of any Lien on any of
its property.

 

c)Enforceability. Each of this Assumption Agreement and the Note is a legal,
valid and binding obligation of the New Issuer, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally.

 

d)Title to Properties; Priority of Liens. The New Issuer has good and marketable
title to (or valid leasehold interests in) all of its real estate, and good
title to all of its personal property. The New Issuer has paid and discharged
all lawful claims that, if unpaid, could become a Lien on its properties.

 

e)Financial Statements; Solvency. The consolidated balance sheets, and related
statements of income, cash flow and shareholder's equity, of the New Issuer and
its Subsidiaries that have been and are hereafter delivered to the Holder, are
prepared in accordance with GAAP, and fairly present the financial positions and
results of operations of the New Issuer and its Subsidiaries at the dates and
for the periods indicated. Since the latest balance sheet date set forth in such
financial statements, there has been no material adverse change in the
condition, financial or otherwise, of the New Issuer and its Subsidiaries, taken
as a whole. No financial statement delivered to the Holder at any time contains
any untrue statement of a material fact, nor fails to disclose any material fact
necessary to make such statement not materially misleading. The New Issuer is
solvent.

 

f)Taxes. The New Issuer has filed all federal, state and local tax returns and
other reports that it is required by law to file, and has paid, or made
provision for the payment of, all Taxes upon it, its income and its properties
that are due and payable, except to the extent being properly contested in good
faith by appropriate proceedings promptly instituted and diligently pursued and
appropriate reserves have been established in accordance with GAAP. The
provision for Taxes on the books of the New Issuer is adequate for all years not
closed by applicable statutes, and for its current fiscal year.

 

g)Governmental Approvals. The New Issuer has, is in compliance with, and is in
good standing with respect to, all approvals by the applicable Governmental
Authorities necessary to conduct its business and to own, lease and operate its
properties.

 

h)Compliance with Laws. The New Issuer has duly complied, and its properties and

  

 

 

 

 business operations are in compliance, in all material respects with all
Applicable Law. There have been no citations, notices or orders of material
noncompliance issued to the Issuer under any Applicable Law.

 

i)Litigation. [Except as shown on Schedule [●] hereto,] there are no proceedings
or investigations pending or, to the New Issuer's knowledge, threatened against
the New Issuer or its Subsidiary, or any of their businesses, operations,
properties or conditions, that (a) relate to this Assumption Agreement, the Note
or transactions contemplated hereby or thereby; or (b) would have a material
adverse effect on the New Issuer or any of its Subsidiary. The New Issuer or
Subsidiary is not in default with respect to any order, injunction or judgment
of any Governmental Authority.

 

j)No Defaults. After giving effect to the assignment and assumption contemplated
herein, no event or circumstance has occurred or exists with respect to the New
Issuer that constitutes a Default or Event of Default. Neither the New Issuer
nor any of its Subsidiaries are in default, and no event or circumstance has
occurred or exists that with the passage of time or giving of notice would
constitute a default, under any material contract to which it is a party. To the
New Issuer’s knowledge, there is no basis upon which any party (other than the
New Issuer or any of its Subsidiaries) could terminate a material contract to
which it is a party prior to its scheduled termination date.

 

k)Not a Regulated Entity. The New Issuer is not (a) an "investment company" or a
"person directly or indirectly controlled by or acting on behalf of an
investment company" within the meaning of the Investment Company Act of 1940; or
(b) subject to regulation under any other Applicable Law regarding its authority
to incur Indebtedness.

 

l)Margin Stock. Neither the New Issuer nor any of its Subsidiaries are engaged,
principally or as one of their respective important activities, in the business
of extending credit for the purpose of purchasing or carrying any “margin stock”
(as that term is defined in Regulation U of the Board of Governors of the
Federal Reserve System). No proceeds of the Note will be used by the New Issuer
to purchase or carry, or to reduce or refinance any Indebtedness incurred to
purchase or carry, any “margin stock” (as that term is defined in Regulation U
of the Board of Governors of the Federal Reserve System) or for any related
purpose governed by Regulations T, U or X of the Board of Governors.

 

5.         Financial Covenants.

 

a)Debt Service Coverage Ratio. The New Issuer shall not permit the Debt Service
Coverage Ratio as of the last day of any fiscal quarter of the New Issuer to be
less than 1.3:1.0.

 

b)Minimum Stockholders’ Equity. The New Issuer shall not permit the
Stockholders’ Equity as of the last day of any fiscal quarter of the New Issuer
to be less than [$400 million]1/[$250 million]2.

 

 

1 If the New Issuer is not an Affiliate of the Initial Issuer.

2 If the New Issuer is an Affiliate of the Initial Issuer.

 

 

 

 

6.         Reporting Requirements. The New Issuer shall furnish to the Holder:

 

a)as soon as available, and in any event within 90 days after the close of each
fiscal year, balance sheets as of the end of such fiscal year and the related
statements of income, cash flow and Shareholders' Equity for such fiscal year,
on consolidated bases for the New Issuer and its Subsidiaries, which
consolidated statements shall be audited and certified (without qualification)
by a firm of independent certified public accountants of recognized standing
selected by the New Issuer and acceptable to the Holder, and shall set forth in
comparative form corresponding figures for the preceding fiscal year and other
information reasonably acceptable to the Holder;

 

b)as soon as available, and in any event within 30 days after the end of each
quarter (but within 60 days after the last quarter in a fiscal year), unaudited
balance sheets as of the end of such quarter and the related statements of
income and cash flow for such quarter and for the portion of the fiscal year
then elapsed, on consolidated bases for the New Issuer and its Subsidiaries,
setting forth in comparative form corresponding figures for the preceding fiscal
year and certified by the chief financial officer of the New Issuer as prepared
in accordance with GAAP and fairly presenting the financial position and results
of operations for such quarter and period, subject to normal year-end
adjustments and the absence of footnotes;

 

c)concurrently with delivery of financial statements under clauses (a) and (b)
above, a compliance certificate executed by the chief financial officer of the
New Issuer Agent, certifying (i) compliance by the New Issuer with the financial
covenants set forth in Section 5 hereof and providing supporting calculations in
the form reasonably acceptable to the Holder and (ii) that no Default or an
Event of Default has occurred and is continuing as of such date.

 

7.          Severability. If any term or provision of this Assumption Agreement
is invalid, illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or provision of
this Assumption Agreement or invalidate or render unenforceable such term or
provision in any other jurisdiction.

 

8.          Counterparts. This Assumption Agreement may be executed in
counterparts, each of which shall constitute an original. Delivery of an
executed signature page to this Assumption Agreement by facsimile transmission
or other electronic means (including “.pdf” or “.tif” format) shall be as
effective as delivery of a manually executed counterpart of this Assumption
Agreement.

 

9.          No Waiver. Except as expressly supplemented hereby, the Note shall
remain in full force and effect.

  

 

 

 

10.        Notices. All notices, requests and demands to or upon the New
Guarantors, any Agent or any Lender shall be governed by the terms of Section
10.1 of the Note and shall be delivered to the New Issuer in writing to the
following address:

 

[•]

[•]

[•]

Attn: [•]

Telephone: [•]

Facsimile: [•]

11.        Governing Law. ThIS ASSUMPTION AGREEMENT shall be governed by and
constructed in accordance with the internal laws of the state of New York
including, without limitation, Sections 5-1401 and 5-1402 of the New York
General Obligations Law and Rule 327(b) of the New York Civil Practice Laws and
Rules..

 

[Signature Pages Follow]

 

 

 

 

IN WITNESS WHEREOF, the undersigned have caused this Assumption Agreement to be
duly executed and delivered by their duly authorized officers as of the day and
year first above written.

 

  RCS CAPITAL CORPORATION,   as the Initial Issuer         By:       Name:    
Title:       [•],   as the New Issuer         By:       Name:     Title:

 

Signature Page to Joinder Agreement

 

 

 

  

  [Consented to and Accepted3:       [•],   as the Holder       By:       Name:
    Title:      ]

 

 

3 To the extent required by Section 10.2 of the Note

 

Signature Page to Joinder Agreement

 

 

 

 

Exhibit B-1

 

Form of

 

Interim Sub-advisory Agreement

 

between

 

Cole REIT Advisors IV, LLC

 

_______________

 

and

 

[RCAP Sub-advisor]

 

_______________

 

[•][•], 2014

 

Signature Page to Joinder Agreement

 

 

 

  

Table of Contents 

 

  Page     Article 1 – Definitions 1     Article 2 – Appointment 2     Article 3
– Duties of the Sub-advisor 2     Article 4 – Authority and Certain Activities
of Sub-advisor 3         Article 5 – Compensation 3           5.1 Acquisition
Fees 3           5.2 Advisory Fees 3           5.3 Disposition Fees 4          
5.4 Subordinated Performance Fee 4           5.5 Expense Reimbursements 4      
    5.6 Prior Fees and Expenses 4         Article 6 – Allocation of Expense
Reimbursements 5           6.1 All Expense Reimbursements 5           6.2
Quarterly Review of Expenses 5         Article 7 – Advisor’s Responsibilities 5
    Article 8 – Relationship of Sub-advisor and their Affiliates; Other
Activities of the Advisor and Sub-advisor 5           8.1 Relationship 5        
  8.2 Time Commitment 6           8.3 Advisor and Sub-advisor Meetings 6        
  8.4 Prospectus Guidance 6         Article 9 – Other Agreements 6     Article
10 – Representations and Warranties 7     Article 11 – Term and Termination of
the Agreement 8           11.1 Term 8           11.2 Termination 8          
11.3 Survival upon Termination 9           11.4 Sub-advisor’s Obligations on
Termination and Obligations 9         Article 12 – Assignment 9     Article 13 –
Indemnification and Limitation of Liability 9

 

i

 

  

Article 14 – Miscellaneous 10           14.1 Reaffirmation of Advisory Agreement
10           14.2 Notices 10           14.3 Modification 11           14.4
Severability 11           14.5 Construction 11           14.6 Entire Agreement
11           14.7 Waiver 11           14.8 Gender 12           14.9 Titles Not
to Affect Interpretation 12           14.10 Counterparts 12

 

ii

 

 

Interim Sub-advisory Agreement

 

This Sub-advisory Agreement, dated as of [•][•], 2014 (this “Agreement”), is
between, Cole REIT Advisors IV, LLC a Delaware limited liability company (the
“Advisor”) and [RCAP Sub-Advisor] a Delaware limited liability company (the
“Sub-advisor”)(each a “Party” and collectively, the “Parties”).

 

WITNESSETH

 

WHEREAS, Cole Credit Property Trust IV, Inc., a Maryland corporation (the
“Company”) has appointed Advisor as its advisor pursuant to the Advisory
Agreement between the Company and the Advisor, dated as of January 20, 2012 (as
the same may be amended, restated or otherwise modified from time to time in
accordance with its terms, the “Advisory Agreement”);

 

WHEREAS, the Advisor desires to avail itself of the knowledge, experience,
sources of information, advice, assistance and certain facilities available to
the Sub-advisor and to have the Sub-advisor undertake the duties and
responsibilities hereinafter set forth, on behalf of the Advisor, and subject to
the supervision of the Advisor and the Board, all as provided herein; and

 

WHEREAS, the Sub-advisor is willing to undertake such duties and
responsibilities, subject to the supervision of the Advisor and the Board, on
the terms and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the Parties hereto agree as follows:

 

Article 1

 

Definitions

 

Capitalized and other terms that are defined in the Advisory Agreement but not
otherwise defined in this Agreement have the respective meanings ascribed to
such terms in the Advisory Agreement, a copy of which is attached hereto as
Appendix A.

 

The following defined terms used in this Agreement shall have the meanings
specified below:

 

“Advisor” has the meaning set forth in the preamble to this Agreement.

 

“Advisory Agreement” has the meaning set forth in the recitals to this
Agreement.

 

“Affiliate” has the meaning set forth in the Advisory Agreement. For the
avoidance of doubt, none of the Company, the Sub-advisor, any subsidiary of the
Company, any subsidiary of the Sub-advisor and any other Person controlled by,
controlling or under common control with the Sub-advisor shall be an Affiliate
of the Advisor and none of the Company, the Advisor, any subsidiary of the
Company, any subsidiary of the Advisor and any other Person controlled by,
controlling or under common control with the Advisor shall be an Affiliate of
the Sub-advisor.

 

1

 

  

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Company” has the meaning set forth in the recitals to this Agreement.

 

“Equity Purchase Agreement” means that certain Equity Purchase Agreement, dated
as of September 30, 2014, by and between ARC Properties Operating Partnership,
L.P. and RCS Capital Corporation.

 

“Notice” has the meaning set forth in Section 14.2 of this Agreement.

 

“Party” has the meaning set forth in the preamble to this Agreement.

 

“Prospectus” means the prospectus dated May 1, 2013, as amended or supplemented
from time to time, filed by the Company pursuant to Rule 424 promulgated under
the Securities Act of 1933, as amended.

 

“Sub-advisor” has the meaning set forth in the preamble to this Agreement.

 

Article 2

 

Appointment

 

The Advisor, pursuant to its authority to engage a duly qualified and licensed
Person in the performance of its duties under the Advisory Agreement pursuant to
Section 2.02 of the Advisory Agreement, hereby appoints the Sub-advisor to serve
as the Sub-advisor for the Company. The Sub-advisor hereby accepts such
appointment. Subject to the supervision of, the Advisor and the Board, the
Sub-advisor agrees to perform the duties of the Advisor set forth in Sections
2.02(b), (d) (except as it relates to the Assets), (e) (except as it relates to
the Assets), (f) (except as it relates to the Assets), (j), (k), (n) and (w) of
the Advisory Agreement and to assist the Advisor in the performance of the
duties set forth in Section 2.02(l), (m), (p), (r) and (u) of the Advisory
Agreement, all on the terms and subject to the conditions set forth in this
Agreement.

 

Article 3

 

Duties of the Sub-advisor

 

Under the Advisory Agreement, the Advisor is responsible for using its
commercially reasonable best efforts to present to the Company potential
investment opportunities consistent with the investment objectives and policies
of the Company as determined and adopted from time to time by the Board and
managing and supervising the operations and administration of the Company’s
Assets. Consistent with Article 2 hereof, the Sub-advisor undertakes to use
commercially reasonable best efforts to manage and supervise the operations and
administration of the Company, other than the acquisition, operation and
disposition of the Company’s Assets. Subject to the limitations set forth in
this Agreement and the Advisory Agreement, consistent with the provisions of the
Articles of Incorporation and Bylaws and subject to the supervision of the
Advisor and the continuing and exclusive authority of the Board over the
supervision of the Company, the Sub-advisor shall, either directly or by
engaging an Affiliate, perform, and assist

 

2

 

  

the Advisor in the performance of, the duties under the Advisory Agreement set
forth in Article 2 of this Agreement, which duties are incorporated herein by
reference as if fully set forth herein. In the event that the Sub-advisor
engages a third party to perform the services that the Advisor has engaged
Sub-advisor to perform pursuant to this Agreement, such third party shall be
compensated by the Sub-advisor out of the fees it received pursuant to Article 5
of this Agreement.

 

Article 4

 

Authority and Certain Activities of Sub-advisor

 

To the same extent as the Advisor and subject to the supervision of the Advisor
and the Board, the Sub-advisor shall have the authority set forth in Section
2.03 of the Advisory Agreement, shall have the authority to establish and
maintain bank accounts as set forth in Section 2.04 of the Advisory Agreement
(other than with respect to the Assets), shall maintain books and records for
the Company (other than with respect to the Assets) as set forth in Section 2.05
of the Advisory Agreement, and shall abide by the limitations of Section 2.06 of
the Advisory Agreement, all of which are incorporated herein by reference as if
fully set forth herein.

 

Article 5

 

Compensation

 

As compensation for the services provided pursuant to this Agreement, the
Advisor shall pay to Sub-advisor, solely out of payments received by Advisor
from the Company under the Advisory Agreement, simultaneously with the payment
by the Company to the Advisor:

 

5.1Acquisition Fees Acquisition Fees equal to 1.00% of the Contract Purchase
Price of each Asset. Notwithstanding the foregoing, all Acquisition Fees payable
in connection with those certain Assets separately disclosed in writing prior to
the date of the Equity Purchase Agreement, with respect to which the Advisor
represents that a purchase agreement or letter of intent has been executed shall
be paid to the Advisor and the Sub-advisor shall not be entitled to any
Acquisition Fees with respect to such Assets.

 

5.2Advisory Fees. Advisory Fees calculated according to the following schedule:

 

Average Invested Assets

 

Annualized Fee Rate

      $0 — $2 billion   0.375%       Over $2 billion — $4 billion   0.350%      
Over $4 billion   0.325%

 

3

 

  

The Advisory Fee shall be applied according to the above schedule for each level
of monthly Average Invested Assets, resulting in a blended annualized rate for
fees paid in respect of Average Invested Assets in excess of $2 billion.

 

5.3Disposition Fees. 75% of any Disposition Fees paid to Advisor on the Sale of
a Property.

 

5.4Subordinated Performance Fee. 85% of all Subordinated Performance Fees paid
to the Advisor, in whatever form payable by the Company (i.e., cash, securities
or a promissory note).

 

5.5Expense Reimbursements. Subject to Article 6 of this Agreement and Section
3.04 of the Advisory Agreement, the Advisor shall reimburse Sub-advisor to the
extent the Advisor receives reimbursement from the Company for the following
expenses of the Sub-advisor to the extent they are actually incurred by the
Sub-Advisor in connection with the services the Sub-advisor provides pursuant to
this Agreement; provided, however that in each case the reimbursement is
permitted under the Advisory Agreement and Prospectus and such reimbursements
shall be determined consistent with past practice:

 

(A)The actual cost incurred by the Sub-advisor of goods, services and materials
used by the Company and obtained from Persons not affiliated with the
Sub-advisor, other than Acquisition Expenses; and

 

(B)Reimbursement for administrative service expenses of the Sub-advisor,
including all costs and expenses incurred by the Sub-advisor in fulfilling its
duties under the Sub-advisory Agreement, provided, however that the
reimbursement of the Advisor and the Sub-advisor for administrative service
expenses, in each case, shall not be greater than 50% of the amounts permitted
by the Advisory Agreement. Such costs and expenses may include reasonable wages
and salaries and other personnel-related expenses of all employees of the
Sub-advisor or its Affiliates who are engaged in the management, administration
and operations and marketing of the Company and its Assets, with respect to the
Sub-advisor who are engaged in the management, administration and operations of
the Company’s Assets and shall include taxes, insurance and benefits relating to
such employees, and legal, travel and other out-of-pocket expenses which are
directly related to their services provided under this Agreement, provided,
however that the Sub-advisor shall not be reimbursed for salaries and benefits
paid to persons who are executive officers of the Company, nor shall the Company
pay personnel costs in connection with services for which the Advisor or
Sub-advisor receives an Acquisition Fee or Disposition Fee.

 

5.6Prior Fees and Expenses. Notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement shall affect the Advisor’s right to receive
fees and expenses under the Advisory Agreement accrued prior to the date hereof.

 

4

 

  

Article 6

 

Allocation of Expense Reimbursements

 

6.1All Expense Reimbursements. All expense reimbursements will be apportioned
between the Advisor and Sub-advisor pro rata based on the amount of such expense
reimbursements due each that relate to the period commencing on the later of the
date of this Agreement or the beginning of the applicable quarter to which such
reimbursable expense relates and ending as of the date of the reimbursement;
provided, however that the Sub-advisor shall repay the Advisor its pro rata
share (as so determined) of any Excess Amount that the Advisor is required to
repay the Company pursuant to Section 3.04 of the Advisory Agreement.

 

6.2Quarterly Review of Expenses. Within 45 days of the end of each fiscal
quarter, each Party shall provide the other Party with a detailed description of
such Party’s aggregate Operating Expenses incurred during such fiscal quarter
for the purpose of the Parties’ jointly reviewing such expenses against
applicable caps and limitations set forth in the Advisory Agreement.

 

Article 7

 

Advisor’s Responsibilities

 

The Advisor shall be solely responsible for all services to the Company under
the Advisory Agreement other than the services covered by Article 3 of this
Agreement and shall bear any expenses related thereto required to be borne by
the Advisor or its Affiliates and shall be entitled to reimbursement for all
expenses related thereto, to the extent permitted under the Advisory Agreement
and the Prospectus. The Sub-advisor shall have no responsibility or obligation
in connection with providing such services to the Company or any expenses
related thereto.

 

Article 8

 

Relationship of Sub-advisor and Advisor and their Affiliates;
Other Activities of the Advisor and Sub-advisor

 

8.1Relationship. The Advisor and the Sub-advisor are not partners or joint
venturers with each other, and nothing in this Agreement shall be construed to
make them such partners or joint venturers. Nothing herein contained shall
prevent the Advisor or Sub-advisor from engaging in or earning fees from other
activities, including, without limitation, the rendering of advice to other
Persons (including other REITs) and the management of other programs advised,
sponsored or organized by the Advisor or Sub-advisor, respectively, or any of
their Affiliates. Nor shall this Agreement limit or restrict the right of any
manager, director, officer, member, partner, employee or equityholder of the
Advisor or Sub-advisor or their Affiliates to engage in or earn fees from any
other business or to render services of any kind to any other Person. Each of
the Advisor and the Sub-advisor shall promptly disclose to the Board the
existence of any condition or circumstance, existing or anticipated, of which it
has knowledge, that creates or which would reasonably result in a conflict of
interest between its obligations to the Company and its obligations to or its
interest in any other Persons.

 

5

 

  

8.2Time Commitment. The Sub-advisor shall, and shall cause its Affiliates and
their respective employees, officers and agents to, devote to the Company such
time as shall be reasonably necessary to conduct the business and affairs of the
Company in an appropriate manner consistent with the terms of this Agreement.
Each Party acknowledges that the other Party and its Affiliates and their
respective employees, officers and agents may also engage in activities
unrelated to the Company and may provide services to Persons other than the
Company or any of its Affiliates.

 

8.3Advisor and Sub-advisor Meetings. The Parties shall meet on a regular basis
(frequency to be determined) to discuss and consult with one another regarding
the Company and its assets and opportunities. The Parties will provide each
other information regarding the operations and acquisitions of the Company as
reasonably requested by the other. Each of Advisor and Sub-advisor shall have
direct access to the books and records of the Company and of each attorney,
accountant, servicer and other contracting party of the Company (except to the
extent such attorney represents either Party with respect to this Agreement).

 

8.4Prospectus Guidance. Each of the Advisor and Sub-advisor has read and will
abide by the Prospectus with respect to the Company’s investment objectives,
targeted assets and investment restrictions, targeted markets, leverage,
distribution policy, and investor profile except to the extent directed by the
Board.

 

Article 9

 

Other Agreements

 

9.1The Advisor shall not agree to an amendment to the Advisory Agreement or
waive any provision thereof, to the extent that such amendment or waiver would
directly or indirectly reduce the amount payable to the Sub-advisor pursuant to
Article 5 of this Agreement or adversely impact the Sub-advisor’s right to
indemnification under Article 13 of this Agreement without the prior written
consent of the Sub-advisor.

 

9.2The Sub-advisor shall use its commercially reasonable efforts to cooperate
with the Advisor to provide an orderly transfer and transition of services upon
the expiration or earlier termination of this Agreement and shall provide any
and all documents, reports and materials belonging or related to the services
provided to the Advisor hereunder, including any and all other documents,
reports and materials otherwise belonging or related to the Advisor or the
Company. Furthermore, the Sub-advisor will, whenever and as reasonably
requested, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered any documents that may be necessary to transition
efficiently any services covered under this Agreement.

 

9.3The Advisor shall have the right, but not the obligation, upon request and
during normal business hours, to meet with key personnel and/or other executive
level employees of the Sub-advisor on an ongoing and regular basis to provide
feedback and input regarding the performance of the Sub-advisor’s services
hereunder

 

6

 

  

9.4The Sub-advisor shall maintain appropriate records of all its activities
hereunder and shall, at the Advisor’s election, provide copies of such records
to the Company or make such records available for inspection and duplication by
the Company, its counsel, auditors and authorized agents, upon notice from the
Advisor.

 

9.5The Sub-advisor will utilize the Advisor’s accounting system in connection
with performing such duties, or a system mutually agreed to between Advisor and
Sub-advisor.

 

Article 10

 

Representations and Warranties

 

10.1The Advisor and the Sub-advisor each hereby represents and warrants to, and
agrees with, the other as follows:

 

(A)Such Party is duly formed and validly existing under the laws of the
jurisdiction of its organization;

 

(B)Such Party has full power and authority to enter into this Agreement and to
conduct its business to the extent contemplated in this Agreement;

 

(C)This Agreement has been duly authorized, executed and delivered by such Party
and constitutes the valid and legally binding agreement of such Party,
enforceable in accordance with its terms against such Party, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium and other
similar laws relating to creditors’ rights generally, and by general equitable
principles.

 

(D)The execution and delivery of this Agreement by such Party and the
performance of its duties and obligations hereunder do not result in a breach of
any of the terms, conditions or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, credit agreement, note or other evidence
of indebtedness, or any lease or other agreement, or any license, permit,
franchise or certificate to which such Party is a party or by which it is bound
or to which its properties are subject or require any authorization or approval
under or pursuant to any of the foregoing, or violate any statute, regulation,
law, order, writ, injunction, judgment or decree to which such Party is subject;

 

(E)To the knowledge of such Party, no consent, approval or authorization of, or
filing, registration or qualification with, any court or governmental authority
on the part of such Party is required for the execution and delivery of this
Agreement by such Party and the performance of its obligations and duties
hereunder and such execution, delivery and performance shall not violate any
other agreement to which such Party is bound; and

 

(F)Such Party is duly qualified and licensed to do and perform all acts and
receive all fees as contemplated by this Agreement and the Advisory Agreement.

 

7

 

 

 

 

Article 11

 

Term and Termination of the Agreement

 

11.1Term. This Agreement shall expire on the earlier of (1) consummation of the
“Second Closing” as such term is defined in the Equity Purchase Agreement, (2)
the termination of the Equity Purchase Agreement and (3) December 31, 2014.

 

11.2Termination. Subject to Section 11.1:

 

(A)This Agreement may be terminated by the Advisor, if the Sub-advisor
materially breaches this Agreement; provided, however, that the Sub-advisor
shall have 30 calendar days after the receipt of notice of such breach from the
Advisor to cure such breach or, if such material breach is not of a nature that
can be remedied within such period, the Sub-advisor does not diligently take all
reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(B)This Agreement may be terminated by the Advisor, as a result of any fraud,
criminal conduct, gross negligence or willful misconduct by Sub-advisor or any
Affiliate thereof in the performance of their respective duties hereunder;
provided, however, that the Sub-advisor does not cure any such act within 30
calendar days after the receipt of notice of such act (or at such later time as
may be stated in the notice) from the Advisor;

 

(C)This Agreement may be terminated by the Sub-advisor, if the Advisor
materially breaches this Agreement; provided, however, that the Advisor shall
have 30 calendar days after the receipt of notice of such breach from the
Sub-advisor to cure such breach or, if such material breach is not of a nature
that can be remedied within such period, the Advisor does not diligently take
all reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(D)This Agreement may be terminated by the Sub-advisor, as a result of any
fraud, criminal conduct, gross negligence or willful misconduct by the Advisor
or any Affiliate thereof in the performance of their respective duties hereunder
or under the Advisory Agreement; provided, however, that the Advisor does not
cure any such act within 30 calendar days after the receipt of notice of such
act (or at such later time as may be stated in the notice) from the Sub-advisor;

 

(E)This Agreement may be terminated by either Party, if the other Party (1)
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (2) consents to the entry of an order
for relief in an involuntary case under any such law, (3) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) for the other Party or
for any substantial part of its property, or (4) makes any general assignment
for the benefit of creditors under applicable state law; or

 

8

 

 

 

 

(F)This Agreement may be terminated by either Party, if: (1) an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect has been commenced against the other Party, and such case
has not been dismissed within 60 days after the commencement thereof; or (2) a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) has been appointed for the other Party or has taken possession of the
other Party or any substantial part of its property, and such appointment has
not been rescinded or such possession has not been relinquished within 60 days
after the occurrence thereof.

 

11.3Survival upon Termination. Notwithstanding anything else that may be to the
contrary herein, the expiration or earlier termination of this Agreement shall
not relieve a party for liability for any breach occurring prior to such
expiration or earlier termination. The provisions of Articles 1, 5, 6, 9, 11, 13
and 14 shall survive termination of this Agreement.

 

11.4Sub-advisor’s Obligations on Termination and Obligations. After termination
of this Agreement, the Sub-advisor shall have the responsibilities to the same
extent as the Advisor as set forth in Section 4.03 of the Advisory Agreement.

 

Article 12

 

Assignment

 

This Agreement shall not be assigned by the Sub-advisor, except that this
Agreement may be assigned by the Sub-advisor to an Affiliate of the Sub-advisor
with the consent of the Advisor, such consent not to be unreasonably withheld,
conditioned or delayed. This Agreement shall not be assigned by the Advisor
without the consent of the Sub-advisor; provided, however, this Agreement may be
assigned without the consent of the Sub-advisor to a permitted assignee of the
Advisor under the Advisory Agreement in connection with such a permitted
assignment of the Advisory Agreement by the Advisor.

 

Article 13

 

Indemnification and Limitation of Liability

 

The Advisor shall indemnify and hold harmless the Sub-advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Sub-advisor becomes subject to or
liable (1) that are related to or a result of the performance of, or failure to
perform, services by the Advisor which are required to be performed by it under
this Agreement or under the Advisory Agreement or (2) by reason of actions or
inactions of the Advisor (except in each case to the extent that such
performance or failure to perform or action or inaction results from any
performance or failure to perform services by Sub-advisor under this Agreement).

 

9

 

  

The Sub-advisor shall indemnify and hold harmless the Advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Advisor becomes subject to or liable,
including as a result of claims asserted against it for breach of or
indemnification under the Advisory Agreement, (1) that are related to or a
result of the performance of, or failure to perform, services by Sub-advisor
under this Agreement or (2) by reason of actions or inactions of the Sub-advisor
or its Affiliates or the Advisor is required to indemnify the Company under
Section 5.02 of the Advisory Agreement as a result of any action or inaction by
Sub-advisor under this Agreement.

 

Article 14

 

Miscellaneous

 

14.1Reaffirmation of Advisory Agreement. Sub-advisor shall use, and shall cause
its Affiliates to use, commercially reasonable best efforts to assist Advisor in
obtaining the reaffirmation or renewal by the Company, or causing the
reaffirmation or renewal by the Company, of the Advisory Agreement.

 

14.2Notices. Any notice, request, demand, approval, consent, waiver or other
communication required or permitted to be given hereunder or to be served upon
any of the Parties hereto (each a “Notice”) shall be in writing and shall be (a)
delivered in person, (b) sent by facsimile transmission (with the original
thereof also contemporaneously given by another method specified in this Section
14.2), (c) sent by a nationally-recognized overnight courier service, or (d)
sent by certified or registered mail (postage prepaid, return receipt
requested), to the address of such Party set forth herein.

 
To the Advisor:

Cole REIT Advisors V, LLC
2555 E. Camelback Road, Suite 400
Phoenix, Arizona 85016
Attention: President

 

with a copy to (which shall not constitute Notice):

Weil, Gotshal and Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Michael Aiello, Esq. and Matthew Gilroy, Esq.
Facsimile: (212) 310-8007

 

To the Sub-advisor:

 

[RCAP Sub-advisor]

405 Park Avenue, 15th Floor

10

 

  

New York, New York 10022

Attention: James A. Tanaka, General Counsel

 

with a copy to (which shall not constitute Notice):

Duane Morris LLP
30 South 17th Street
Philadelphia, Pennsylvania 19103
Attention: Darrick M. Mix, Esq. and Chad J. Rubin, Esq.
Facsimile: (215) 405-2906 

 

Either Party may at any time give Notice in writing to the other Party of a
change in its address for the purposes of this Section 14.2. Each Notice shall
be deemed given and effective upon receipt (or refusal of receipt).

 

14.3Modification. This Agreement shall not be amended, supplemented, changed,
modified, terminated or discharged, in whole or in part, except by an instrument
in writing signed by both Parties hereto, or their respective successors or
permitted assigns.

 

14.4Severability. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

 

14.5Construction. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect, without regard to the principles of conflicts of laws thereof.

 

14.6Entire Agreement. This Agreement contains the entire agreement and
understanding between the Parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. In all events, nothing contained
herein shall be read, construed, interpreted or applied in any manner that
prevents or hinders the Company from qualifying as a real estate investment
trust under Section 856(c) of the Code.

 

14.7Waiver. Neither the failure nor any delay on the part of a Party to exercise
any right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or privilege preclude any other or further exercise of the same or of any
other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed
by the Party asserted to have granted such waiver.

 

11

 

  

14.8Gender. Words used herein regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
requires.

 

14.9Titles Not to Affect Interpretation. The titles of Articles and Sections
contained in this Agreement are for convenience only, and they neither form a
part of this Agreement nor are they to be used in the construction or
interpretation hereof.

 

14.10Counterparts. This Agreement may be executed with counterpart signature
pages or in any number of counterparts, each of which shall be deemed to be an
original as against any Party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterpart signature pages or counterparts
hereof, individually or taken together, shall bear the signatures of all of the
Parties reflected hereon as the signatories.

 

[The remainder of this page is intentionally left blank.

Signature page follows.]

 

12

 

  

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date and year first above written.

 

  Cole REIT Advisors IV, LLC         By:     Name:         [RCAP Sub-advisor]  
      By:     Name:

 

[Signature Page to Interim Sub-advisory Agreement between Cole REIT Advisors IV,
LLC and

[RCAP Sub-advisor]

  

 

 

 

 

Exhibit B-2

 

Form of

 

Interim Sub-advisory Agreement

 

between

 

Cole REIT Advisors V, LLC

 

_______________

 

and

 

[RCAP Sub-advisor]

 

_______________

 

[•][•], 2014

 

 

 

  

Table of Contents

 

 

Page     Article 1 – Definitions 1     Article 2 – Appointment 2     Article 3 –
Duties of the Sub-advisor 2     Article 4 – Authority and Certain Activities of
Sub-advisor 3     Article 5 – Compensation 3       5.1 Acquisition Fees 3      
    5.2 Advisory Fees 3           5.3 Disposition Fees 4           5.4
Subordinated Performance Fee 4           5.5 Expense Reimbursements 4          
5.6 Prior Fees and Expenses 5         Article 6 – Allocation of Expense
Reimbursements 5       6.1 O&O Expense Reimbursements 5           6.2 All Other
Expense Reimbursements 5           6.3 Quarterly Review of Expenses 5        
Article 7 – Advisor’s Responsibilities 6     Article 8 – Relationship of
Sub-advisor and their Affiliates; Other Activities of the Advisor and
Sub-advisor 6       8.1 Relationship 6           8.2 Time Commitment 6          
8.3 Advisor and Sub-advisor Meetings 7           8.4 Prospectus Guidance 7      
  Article 9 – Other Agreements 7     Article 10 – Representations and Warranties
8     Article 11 – Term and Termination of the Agreement 9       11.1 Term 9    
      11.2 Termination 9           11.3 Survival upon Termination 10          
11.4 Sub-advisor’s Obligations on Termination and Obligations 10         Article
12 – Assignment 10

  

i

 

  

Article 13 – Indemnification and Limitation of Liability 10     Article 14 –
Miscellaneous 11       14.1 Reaffirmation of Advisory Agreement 11          
14.2 Notices 11           14.3 Modification 12           14.4 Severability 12  
        14.5 Construction 12           14.6 Entire Agreement 12           14.7
Waiver 13           14.8 Gender 13           14.9 Titles Not to Affect
Interpretation 13           14.10 Counterparts 13

 

ii

 

 

Interim Sub-advisory Agreement

 

This Sub-advisory Agreement, dated as of [•][•], 2014 (this “Agreement”), is
between, Cole REIT Advisors V, LLC, a Delaware limited liability company (the
“Advisor”) and [RCAP Sub-Advisor] a Delaware limited liability company (the
“Sub-advisor”)(each a “Party” and collectively, the “Parties”).

 

WITNESSETH

 

WHEREAS, Cole Credit Property Trust V, Inc., a Maryland corporation (the
“Company”) has appointed Advisor as its advisor pursuant to the Advisory
Agreement between the Company and the Advisor, dated as of March 17, 2014 (as
the same may be amended, restated or otherwise modified from time to time in
accordance with its terms, the “Advisory Agreement”);

 

WHEREAS, the Advisor desires to avail itself of the knowledge, experience,
sources of information, advice, assistance and certain facilities available to
the Sub-advisor and to have the Sub-advisor undertake the duties and
responsibilities hereinafter set forth, on behalf of the Advisor, and subject to
the supervision of the Advisor and the Board, all as provided herein; and

 

WHEREAS, the Sub-advisor is willing to undertake such duties and
responsibilities, subject to the supervision of the Advisor and the Board, on
the terms and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the Parties hereto agree as follows:

 

Article 1

 

Definitions

 

Capitalized and other terms that are defined in the Advisory Agreement but not
otherwise defined in this Agreement have the respective meanings ascribed to
such terms in the Advisory Agreement, a copy of which is attached hereto as
Appendix A.

 

The following defined terms used in this Agreement shall have the meanings
specified below:

 

“Advisor” has the meaning set forth in the preamble to this Agreement.

 

“Advisory Agreement” has the meaning set forth in the recitals to this
Agreement.

 

“Affiliate” has the meaning set forth in the Advisory Agreement. For the
avoidance of doubt, none of the Company, the Sub-advisor, any subsidiary of the
Company, any subsidiary of the Sub-advisor and any other Person controlled by,

 

1

 

 

 

controlling or under common control with the Sub-advisor shall be an Affiliate
of the Advisor and none of the Company, the Advisor, any subsidiary of the
Company, any subsidiary of the Advisor and any other Person controlled by,
controlling or under common control with the Advisor shall be an Affiliate of
the Sub-advisor.

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Company” has the meaning set forth in the recitals to this Agreement.

 

“Equity Purchase Agreement” means that certain Equity Purchase Agreement, dated
as of September 30, 2014, by and between ARC Properties Operating Partnership,
L.P. and RCS Capital Corporation.

 

“Notice” has the meaning set forth in Section 14.2 of this Agreement.

 

“Party” has the meaning set forth in the preamble to this Agreement.

 

“Prospectus” means the prospectus dated March 17, 2014, as amended or
supplemented from time to time, filed by the Company pursuant to Rule 424
promulgated under the Securities Act of 1933, as amended.

 

“Sub-advisor” has the meaning set forth in the preamble to this Agreement.

 

Article 2

 

Appointment

 

The Advisor, pursuant to its authority to engage a duly qualified and licensed
Person in the performance of its duties under the Advisory Agreement pursuant to
Section 2.02 of the Advisory Agreement, hereby appoints the Sub-advisor to serve
as the Sub-advisor for the Company. The Sub-advisor hereby accepts such
appointment. Subject to the supervision of, the Advisor and the Board, the
Sub-advisor agrees to perform the duties of the Advisor set forth in Sections
2.02(b), (d) (except as it relates to the Assets), (e) (except as it relates to
the Assets), (f) (except as it relates to the Assets), (j), (k), (n) and (w) of
the Advisory Agreement and to assist the Advisor in the performance of the
duties set forth in Section 2.02(l), (m), (p), (r), (u) and (v) of the Advisory
Agreement, all on the terms and subject to the conditions set forth in this
Agreement.

 

Article 3

 

Duties of the Sub-advisor

 

Under the Advisory Agreement, the Advisor is responsible for using its
commercially reasonable best efforts to present to the Company potential
investment opportunities consistent with the investment objectives and policies
of the Company as determined and adopted from time to time by the Board and
managing and supervising

2

 

 

the operations and administration of the Company’s Assets. Consistent with
Article 2 hereof, the Sub-advisor undertakes to use commercially reasonable best
efforts to manage and supervise the operations and administration of the
Company, other than the acquisition, operation and disposition of the Company’s
Assets. Subject to the limitations set forth in this Agreement and the Advisory
Agreement, consistent with the provisions of the Articles of Incorporation and
Bylaws and subject to the supervision of the Advisor and the continuing and
exclusive authority of the Board over the supervision of the Company, the
Sub-advisor shall, either directly or by engaging an Affiliate, perform, and
assist the Advisor in the performance of, the duties under the Advisory
Agreement set forth in Article 2 of this Agreement, which duties are
incorporated herein by reference as if fully set forth herein. In the event that
the Sub-advisor engages a third party to perform the services that the Advisor
has engaged Sub-advisor to perform pursuant to this Agreement, such third party
shall be compensated by the Sub-advisor out of the fees it received pursuant to
Article 5 of this Agreement.

 

Article 4

 

Authority and Certain Activities of Sub-advisor

 

To the same extent as the Advisor and subject to the supervision of the Advisor
and the Board, the Sub-advisor shall have the authority set forth in Section
2.03 of the Advisory Agreement, shall have the authority to establish and
maintain bank accounts as set forth in Section 2.04 of the Advisory Agreement
(other than with respect to the Assets), shall maintain books and records for
the Company (other than with respect to the Assets) as set forth in Section 2.05
of the Advisory Agreement, and shall abide by the limitations of Section 2.06 of
the Advisory Agreement, all of which are incorporated herein by reference as if
fully set forth herein.

 

Article 5

 

Compensation

 

As compensation for the services provided pursuant to this Agreement, the
Advisor shall pay to Sub-advisor, solely out of payments received by Advisor
from the Company under the Advisory Agreement, simultaneously with the payment
by the Company to the Advisor:

 

5.1Acquisition Fees Acquisition Fees equal to 1.00% of the Contract Purchase
Price of each Asset. Notwithstanding the foregoing, all Acquisition Fees payable
in connection with those certain Assets separately disclosed in writing prior to
the date of the Equity Purchase Agreement, with respect to which the Advisor
represents that a purchase agreement or letter of intent has been executed shall
be paid to the Advisor and the Sub-advisor shall not be entitled to any
Acquisition Fees with respect to such Assets.

 

5.2Advisory Fees. Advisory Fees calculated according to the following schedule:

 

3

 

 

Average Invested Assets

 

Annualized Fee Rate

      $0 — $2 billion   0.375%       Over $2 billion — $4 billion   0.350%      
Over $4 billion   0.325%

 

The Advisory Fee shall be applied according to the above schedule for each level
of monthly Average Invested Assets, resulting in a blended annualized rate for
fees paid in respect of Average Invested Assets in excess of $2 billion.

 

5.3Disposition Fees. 75% of any Disposition Fees paid to Advisor on the Sale of
a Property.

 

5.4Subordinated Performance Fee. 85% of all Subordinated Performance Fees paid
to the Advisor, in whatever form payable by the Company (i.e., cash, securities
or a promissory note).

 

5.5Expense Reimbursements. Subject to Article 6 of this Agreement and Section
3.04 of the Advisory Agreement, the Advisor shall reimburse Sub-advisor to the
extent the Advisor receives reimbursement from the Company for the following
expenses of the Sub-advisor to the extent they are actually incurred by the
Sub-Advisor in connection with the services the Sub-advisor provides pursuant to
this Agreement; provided, however that in each case the reimbursement is
permitted under the Advisory Agreement and Prospectus and such reimbursements
shall be determined consistent with past practice:

 

(A)The actual cost incurred by the Sub-advisor of goods, services and materials
used by the Company and obtained from Persons not affiliated with the
Sub-advisor, other than Acquisition Expenses;

 

(B)Reimbursement for administrative service expenses of the Sub-advisor,
including all costs and expenses incurred by the Sub-advisor in fulfilling its
duties under the Sub-advisory Agreement, provided, however that the
reimbursement of the Advisor and the Sub-advisor for administrative service
expenses, in each case, shall not be greater than 50% of the amounts permitted
by the Advisory Agreement. Such costs and expenses may include reasonable wages
and salaries and other personnel-related expenses of all employees of the
Sub-advisor or its Affiliates who are engaged in the management, administration
and operations and marketing of the Company and its Assets, with respect to the
Sub-advisor who are engaged in the management, administration and operations of
the Company’s Assets and shall include taxes, insurance and benefits relating

 

4

 

 

  to such employees, and legal, travel and other out-of-pocket expenses which
are directly related to their services provided under this Agreement, provided,
however that the Sub-advisor shall not be reimbursed for salaries and benefits
paid to persons who are executive officers of the Company, nor shall the Company
pay personnel costs in connection with services for which the Advisor or
Sub-advisor receives an Acquisition Fee or Disposition Fee; and    
(C)Reimbursement out of reimbursements paid by the Company to the Advisor for
Organization and Offering Expenses.

 

5.6Prior Fees and Expenses. Notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement shall affect the Advisor’s right to receive
fees and expenses under the Advisory Agreement accrued prior to the date hereof.

 

Article 6

 

Allocation of Expense Reimbursements

 

6.1O&O Expense Reimbursements. All Organization and Offering Expense
reimbursements received from the Company, to the extent that they are less than
the full amount of Organization and Offering Expense reimbursements due to the
Advisor and the Sub-advisor will be apportioned between the Advisor and
Sub-advisor pro rata based on the amount of such Organization and Offering
Expenses reimbursements due each that relate to the period commencing on the
date of this Agreement and ending as of the date of the reimbursement; provided,
however that within 50 days after the end of the month in which the Offering
terminates, the Sub-advisor shall reimburse the Advisor the Sub-advisor’s pro
rata share of reimbursements to the Company by the Advisor (based on its pro
rata share of reimbursements received from the Company as so determined)
pursuant to Section 3.02(a) of the Advisory Agreement for Organization and
Offering Expenses reimbursed by the Company to the extent that such
reimbursements by the Company exceed 2.0% of the Gross Proceeds raised in the
completed Offering.

 

6.2All Other Expense Reimbursements. All expense reimbursements will be
apportioned between the Advisor and Sub-advisor pro rata based on the amount of
such expense reimbursements due each that relate to the period commencing on the
later of the date of this Agreement or the beginning of the applicable quarter
to which such reimbursable expense relates and ending as of the date of the
reimbursement; provided, however that the Sub-advisor shall repay the Advisor
its pro rata share (as so determined) of any Excess Amount that the Advisor is
required to repay the Company pursuant to Section 3.04 of the Advisory
Agreement.

 

6.3Quarterly Review of Expenses. Within 45 days of the end of each fiscal
quarter, each Party shall provide the other Party with a detailed description of
such Party’s

  

5

 

  

 aggregate Organization and Offering Expenses and aggregate Operating Expenses
incurred during such fiscal quarter for the purpose of the Parties’ jointly
reviewing such expenses against applicable caps and limitations set forth in the
Advisory Agreement.

 

Article 7

 

Advisor’s Responsibilities

 

The Advisor shall be solely responsible for all services to the Company under
the Advisory Agreement other than the services covered by Article 3 of this
Agreement and shall bear any expenses related thereto required to be borne by
the Advisor or its Affiliates and shall be entitled to reimbursement for all
expenses related thereto, to the extent permitted under the Advisory Agreement
and the Prospectus. The Sub-advisor shall have no responsibility or obligation
in connection with providing such services to the Company or any expenses
related thereto.

 

Article 8

 

Relationship of Sub-advisor and Advisor and their Affiliates;
Other Activities of the Advisor and Sub-advisor

 

8.1Relationship. The Advisor and the Sub-advisor are not partners or joint
venturers with each other, and nothing in this Agreement shall be construed to
make them such partners or joint venturers. Nothing herein contained shall
prevent the Advisor or Sub-advisor from engaging in or earning fees from other
activities, including, without limitation, the rendering of advice to other
Persons (including other REITs) and the management of other programs advised,
sponsored or organized by the Advisor or Sub-advisor, respectively, or any of
their Affiliates. Nor shall this Agreement limit or restrict the right of any
manager, director, officer, member, partner, employee or equityholder of the
Advisor or Sub-advisor or their Affiliates to engage in or earn fees from any
other business or to render services of any kind to any other Person. Each of
the Advisor and the Sub-advisor shall promptly disclose to the Board the
existence of any condition or circumstance, existing or anticipated, of which it
has knowledge, that creates or which would reasonably result in a conflict of
interest between its obligations to the Company and its obligations to or its
interest in any other Persons.

 

8.2Time Commitment. The Sub-advisor shall, and shall cause its Affiliates and
their respective employees, officers and agents to, devote to the Company such
time as shall be reasonably necessary to conduct the business and affairs of the
Company in an appropriate manner consistent with the terms of this Agreement.
Each Party acknowledges that the other Party and its Affiliates and their
respective employees, officers and agents may also engage in activities
unrelated to the Company and may provide services to Persons other than the
Company or any of its Affiliates.

 

6

 

 

8.3Advisor and Sub-advisor Meetings. The Parties shall meet on a regular basis
(frequency to be determined) to discuss and consult with one another regarding
the Company and its assets and opportunities. The Parties will provide each
other information regarding the operations and acquisitions of the Company as
reasonably requested by the other. Each of Advisor and Sub-advisor shall have
direct access to the books and records of the Company and of each attorney,
accountant, servicer and other contracting party of the Company (except to the
extent such attorney represents either Party with respect to this Agreement).

 

8.4Prospectus Guidance. Each of the Advisor and Sub-advisor has read and will
abide by the Prospectus with respect to the Company’s investment objectives,
targeted assets and investment restrictions, targeted markets, leverage,
distribution policy, and investor profile except to the extent directed by the
Board.

 

Article 9

 

Other Agreements

 

9.1The Advisor shall not agree to an amendment to the Advisory Agreement or
waive any provision thereof, to the extent that such amendment or waiver would
directly or indirectly reduce the amount payable to the Sub-advisor pursuant to
Article 5 of this Agreement or adversely impact the Sub-advisor’s right to
indemnification under Article 13 of this Agreement without the prior written
consent of the Sub-advisor.

 

9.2The Sub-advisor shall use its commercially reasonable efforts to cooperate
with the Advisor to provide an orderly transfer and transition of services upon
the expiration or earlier termination of this Agreement and shall provide any
and all documents, reports and materials belonging or related to the services
provided to the Advisor hereunder, including any and all other documents,
reports and materials otherwise belonging or related to the Advisor or the
Company. Furthermore, the Sub-advisor will, whenever and as reasonably
requested, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered any documents that may be necessary to transition
efficiently any services covered under this Agreement.

 

9.3The Advisor shall have the right, but not the obligation, upon request and
during normal business hours, to meet with key personnel and/or other executive
level employees of the Sub-advisor on an ongoing and regular basis to provide
feedback and input regarding the performance of the Sub-advisor’s services
hereunder

 

9.4The Sub-advisor shall maintain appropriate records of all its activities
hereunder and shall, at the Advisor’s election, provide copies of such records
to the Company or make such records available for inspection and duplication by
the Company, its counsel, auditors and authorized agents, upon notice from the
Advisor.

 

7

 

 

9.5The Sub-advisor will utilize the Advisor’s accounting system in connection
with performing such duties, or a system mutually agreed to between Advisor and
Sub-advisor.

 

Article 10

 

Representations and Warranties

 

10.1The Advisor and the Sub-advisor each hereby represents and warrants to, and
agrees with, the other as follows:

 

(A)Such Party is duly formed and validly existing under the laws of the
jurisdiction of its organization;

 

(B)Such Party has full power and authority to enter into this Agreement and to
conduct its business to the extent contemplated in this Agreement;

 

(C)This Agreement has been duly authorized, executed and delivered by such Party
and constitutes the valid and legally binding agreement of such Party,
enforceable in accordance with its terms against such Party, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium and other
similar laws relating to creditors’ rights generally, and by general equitable
principles.

 

(D)The execution and delivery of this Agreement by such Party and the
performance of its duties and obligations hereunder do not result in a breach of
any of the terms, conditions or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, credit agreement, note or other evidence
of indebtedness, or any lease or other agreement, or any license, permit,
franchise or certificate to which such Party is a party or by which it is bound
or to which its properties are subject or require any authorization or approval
under or pursuant to any of the foregoing, or violate any statute, regulation,
law, order, writ, injunction, judgment or decree to which such Party is subject;

 

(E)To the knowledge of such Party, no consent, approval or authorization of, or
filing, registration or qualification with, any court or governmental authority
on the part of such Party is required for the execution and delivery of this
Agreement by such Party and the performance of its obligations and duties
hereunder and such execution, delivery and performance shall not violate any
other agreement to which such Party is bound; and

 

(F)Such Party is duly qualified and licensed to do and perform all acts and
receive all fees as contemplated by this Agreement and the Advisory Agreement.

 

8

 

 

Article 11

 

Term and Termination of the Agreement

 

11.1Term. This Agreement shall expire on the earlier of (1) consummation of the
“Second Closing” as such term is defined in the Equity Purchase Agreement, (2)
the termination of the Equity Purchase Agreement and (3) December 31, 2014.

 

11.2Termination. Subject to Section 11.1:

 

(A)This Agreement may be terminated by the Advisor, if the Sub-advisor
materially breaches this Agreement; provided, however, that the Sub-advisor
shall have 30 calendar days after the receipt of notice of such breach from the
Advisor to cure such breach or, if such material breach is not of a nature that
can be remedied within such period, the Sub-advisor does not diligently take all
reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(B)This Agreement may be terminated by the Advisor, as a result of any fraud,
criminal conduct, gross negligence or willful misconduct by Sub-advisor or any
Affiliate thereof in the performance of their respective duties hereunder;
provided, however, that the Sub-advisor does not cure any such act within 30
calendar days after the receipt of notice of such act (or at such later time as
may be stated in the notice) from the Advisor;

 

(C)This Agreement may be terminated by the Sub-advisor, if the Advisor
materially breaches this Agreement; provided, however, that the Advisor shall
have 30 calendar days after the receipt of notice of such breach from the
Sub-advisor to cure such breach or, if such material breach is not of a nature
that can be remedied within such period, the Advisor does not diligently take
all reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(D)This Agreement may be terminated by the Sub-advisor, as a result of any
fraud, criminal conduct, gross negligence or willful misconduct by the Advisor
or any Affiliate thereof in the performance of their respective duties hereunder
or under the Advisory Agreement; provided, however, that the Advisor does not
cure any such act within 30 calendar days after the receipt of notice of such
act (or at such later time as may be stated in the notice) from the Sub-advisor;

 

(E)This Agreement may be terminated by either Party, if the other Party (1)
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (2) consents to the entry of an order
for relief in an involuntary case under any such law, (3) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) for the other

 

9

 

 

 

  Party or for any substantial part of its property, or (4) makes any general
assignment for the benefit of creditors under applicable state law; or

 

(F)This Agreement may be terminated by either Party, if: (1) an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect has been commenced against the other Party, and such case
has not been dismissed within 60 days after the commencement thereof; or (2) a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) has been appointed for the other Party or has taken possession of the
other Party or any substantial part of its property, and such appointment has
not been rescinded or such possession has not been relinquished within 60 days
after the occurrence thereof.

 

11.3Survival upon Termination. Notwithstanding anything else that may be to the
contrary herein, the expiration or earlier termination of this Agreement shall
not relieve a party for liability for any breach occurring prior to such
expiration or earlier termination. The provisions of Articles 1, 5, 6, 9, 11, 13
and 14 shall survive termination of this Agreement.

 

11.4Sub-advisor’s Obligations on Termination and Obligations. After termination
of this Agreement, the Sub-advisor shall have the responsibilities to the same
extent as the Advisor as set forth in Section 4.03 of the Advisory Agreement.

 

Article 12

 

Assignment

 

This Agreement shall not be assigned by the Sub-advisor, except that this
Agreement may be assigned by the Sub-advisor to an Affiliate of the Sub-advisor
with the consent of the Advisor, such consent not to be unreasonably withheld,
conditioned or delayed. This Agreement shall not be assigned by the Advisor
without the consent of the Sub-advisor; provided, however, this Agreement may be
assigned without the consent of the Sub-advisor to a permitted assignee of the
Advisor under the Advisory Agreement in connection with such a permitted
assignment of the Advisory Agreement by the Advisor.

 

Article 13

 

Indemnification and Limitation of Liability

 

The Advisor shall indemnify and hold harmless the Sub-advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Sub-advisor becomes subject to or
liable (1) that are related to or a result of the performance of, or failure to
perform, services by the Advisor which are required to be performed by it under
this Agreement or under the Advisory Agreement or (2) by reason

 

10

 

 

of actions or inactions of the Advisor (except in each case to the extent that
such performance or failure to perform or action or inaction results from any
performance or failure to perform services by Sub-advisor under this Agreement).

 

The Sub-advisor shall indemnify and hold harmless the Advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Advisor becomes subject to or liable,
including as a result of claims asserted against it for breach of or
indemnification under the Advisory Agreement, (1) that are related to or a
result of the performance of, or failure to perform, services by Sub-advisor
under this Agreement or (2) by reason of actions or inactions of the Sub-advisor
or its Affiliates or the Advisor is required to indemnify the Company under
Section 5.02 of the Advisory Agreement as a result of any action or inaction by
Sub-advisor under this Agreement.

 

Article 14

 

Miscellaneous

 

14.1Reaffirmation of Advisory Agreement. Sub-advisor shall use, and shall cause
its Affiliates to use, commercially reasonable best efforts to assist Advisor in
obtaining the reaffirmation or renewal by the Company, or causing the
reaffirmation or renewal by the Company, of the Advisory Agreement.

 

14.2Notices. Any notice, request, demand, approval, consent, waiver or other
communication required or permitted to be given hereunder or to be served upon
any of the Parties hereto (each a “Notice”) shall be in writing and shall be (a)
delivered in person, (b) sent by facsimile transmission (with the original
thereof also contemporaneously given by another method specified in this Section
14.2), (c) sent by a nationally-recognized overnight courier service, or (d)
sent by certified or registered mail (postage prepaid, return receipt
requested), to the address of such Party set forth herein.

To the Advisor:

 

Cole REIT Advisors V, LLC
2325 E. Camelback Road, Suite 1100
Phoenix, Arizona 85016
Attention: President

 

with a copy to (which shall not constitute Notice):

 

Weil, Gotshal and Manges LLP
767 Fifth Avenue
New York, New York 10153

 

11

 

Attention: Michael Aiello, Esq. and Matthew Gilroy, Esq.
Facsimile: (212) 310-8007

 

To the Sub-advisor: 

 

[RCAP Sub-advisor]
405 Park Avenue, 15th Floor
New York, New York 10022
Attention: James A. Tanaka, General Counsel

 

with a copy to (which shall not constitute Notice):

 

Duane Morris LLP
30 South 17th Street
Philadelphia, Pennsylvania 19103
Attention: Darrick M. Mix, Esq. and Chad J. Rubin, Esq.
Facsimile: (215) 405-2906

  

Either Party may at any time give Notice in writing to the other Party of a
change in its address for the purposes of this Section 14.2. Each Notice shall
be deemed given and effective upon receipt (or refusal of receipt).

 

14.3Modification. This Agreement shall not be amended, supplemented, changed,
modified, terminated or discharged, in whole or in part, except by an instrument
in writing signed by both Parties hereto, or their respective successors or
permitted assigns.

 

14.4Severability. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

 

14.5Construction. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect, without regard to the principles of conflicts of laws thereof.

 

14.6Entire Agreement. This Agreement contains the entire agreement and
understanding between the Parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. In all events, nothing contained
herein shall be read, construed, interpreted or applied in any manner that
prevents or hinders the Company from qualifying as a real estate investment
trust under Section 856(c) of the Code.

 

12

 

 

14.7Waiver. Neither the failure nor any delay on the part of a Party to exercise
any right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or privilege preclude any other or further exercise of the same or of any
other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed
by the Party asserted to have granted such waiver.

 

14.8Gender. Words used herein regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
requires.

 

14.9Titles Not to Affect Interpretation. The titles of Articles and Sections
contained in this Agreement are for convenience only, and they neither form a
part of this Agreement nor are they to be used in the construction or
interpretation hereof.

 

14.10Counterparts. This Agreement may be executed with counterpart signature
pages or in any number of counterparts, each of which shall be deemed to be an
original as against any Party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterpart signature pages or counterparts
hereof, individually or taken together, shall bear the signatures of all of the
Parties reflected hereon as the signatories.

 

[The remainder of this page is intentionally left blank.

Signature page follows.]

 

13

 

  

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date and year first above written.

 

 

COLE REIT ADVISORS V, INC.         By:     Name:         [RCAP Sub-advisor]    
    By:     Name:

 

[Signature Page to Interim Sub-advisory Agreement between Cole REIT Advisors V,
Inc. and

[RCAP Sub-advisor]]

 

 

 

 

Exhibit B-3

 

Form of

 

Interim Sub-advisory Agreement

 

between

 

Cole Corporate Income Advisors, LLC

 

_______________

 

and

 

[RCAP Sub-advisor]

 

_______________

 

[•][•], 2014

 

 

 

 

Table of Contents 

 

      Page         Article 1 – Definitions 1     Article 2 – Appointment 2    
Article 3 – Duties of the Sub-advisor 2     Article 4 – Authority and Certain
Activities of Sub-advisor 3     Article 5 – Compensation 3       5.1 Acquisition
Fees 3           5.2 Advisory Fees 3           5.3 Disposition Fees 4          
5.4 Subordinated Performance Fee 4           5.5 Expense Reimbursements 4      
    5.6 Prior Fees and Expenses 5         Article 6 – Allocation of Expense
Reimbursements 5       6.1 All Expense Reimbursements 5           6.2 Quarterly
Review of Expenses 5         Article 7 – Advisor’s Responsibilities 5    
Article 8 – Relationship of Sub-advisor and their Affiliates; Other Activities
of the Advisor and Sub-advisor 5       8.1 Relationship 5           8.2 Time
Commitment 6           8.3 Advisor and Sub-advisor Meetings 6           8.4
Prospectus Guidance 6         Article 9 – Other Agreements 6     Article 10–
Representations and Warranties 7     Article 11 – Term and Termination of the
Agreement 8       11.1 Term 8           11.2 Termination 8           11.3
Survival upon Termination 9           11.4 Sub-advisor’s Obligations on
Termination and Obligations 9         Article 12 – Assignment 9     Article 13 –
Indemnification and Limitation of Liability 10

 

i

 

  

Article 14 – Miscellaneous 10       14.1 Reaffirmation of Advisory Agreement 10
          14.2 Notices 10           14.3 Modification 11           14.4
Severability 11           14.5 Construction 11           14.6 Entire Agreement
12           14.7 Waiver 12           14.8 Gender 12           14.9 Titles Not
to Affect Interpretation 12           14.10 Counterparts 12

 

ii

 

 

Interim Sub-advisory Agreement

 

This Sub-advisory Agreement, dated as of [•][•], 2014 (this “Agreement”), is
between, Cole Corporate Income Advisors, LLC, a Delaware limited liability
company (the “Advisor”) and [RCAP Sub-Advisor] a Delaware limited liability
company (the “Sub-advisor”)(each a “Party” and collectively, the “Parties”).

 

WITNESSETH

 

WHEREAS Cole Corporate Income Trust, Inc., a Maryland corporation (the
“Company”) has appointed Advisor as its advisor pursuant to the Advisory
Agreement between the Company and the Advisor, dated as of January 18, 2011 (as
the same may be amended, restated or otherwise modified from time to time in
accordance with its terms, the “Advisory Agreement”);

 

WHEREAS, the Advisor desires to avail itself of the knowledge, experience,
sources of information, advice, assistance and certain facilities available to
the Sub-advisor and to have the Sub-advisor undertake the duties and
responsibilities hereinafter set forth, on behalf of the Advisor, and subject to
the supervision of the Advisor and the Board, all as provided herein; and

 

WHEREAS, the Sub-advisor is willing to undertake such duties and
responsibilities, subject to the supervision of the Advisor and the Board, on
the terms and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the Parties hereto agree as follows:

 

Article 1

 

Definitions

 

Capitalized and other terms that are defined in the Advisory Agreement but not
otherwise defined in this Agreement have the respective meanings ascribed to
such terms in the Advisory Agreement, a copy of which is attached hereto as
Appendix A.

 

The following defined terms used in this Agreement shall have the meanings
specified below:

 

“Advisor” has the meaning set forth in the preamble to this Agreement.

 

“Advisory Agreement” has the meaning set forth in the recitals to this
Agreement.

 

“Affiliate” has the meaning set forth in the Advisory Agreement. For the
avoidance of doubt, none of the Company, the Sub-advisor, any subsidiary of the
Company, any subsidiary of the Sub-advisor and any other Person controlled by,
controlling or under common control with the Sub-advisor shall be an Affiliate
of the Advisor and none of the Company, the Advisor, any subsidiary of the
Company, any subsidiary of the Advisor and any other Person controlled by,
controlling or under common control with the Advisor shall be an Affiliate of
the Sub-advisor. 

 

1

 

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Company” has the meaning set forth in the recitals to this Agreement.

 

“Equity Purchase Agreement” means that certain Equity Purchase Agreement, dated
as of September 30, 2014, by and between ARC Properties Operating Partnership,
L.P. and RCS Capital Corporation.

 

“Notice” has the meaning set forth in Section 14.2 of this Agreement.

 

“Party” has the meaning set forth in the preamble to this Agreement.

 

“Prospectus” means the prospectus dated May 1, 2013, as amended or supplemented
from time to time, filed by the Company pursuant to Rule 424 promulgated under
the Securities Act of 1933, as amended.

 

“SIR Transaction” means the transaction announced in the Company’s press release
dated September 2, 2014 and filed as Exhibit 99.1 to the Company’s current
report on Form 8-K, filed with the U.S. Securities and Exchange Commission on
September 2, 2014.

 

“Sub-advisor” has the meaning set forth in the preamble to this Agreement.

 

Article 2

 

Appointment

 

The Advisor, pursuant to its authority to engage a duly qualified and licensed
Person in the performance of its duties under the Advisory Agreement pursuant to
Section 2.02 of the Advisory Agreement, hereby appoints the Sub-advisor to serve
as the Sub-advisor for the Company. The Sub-advisor hereby accepts such
appointment. Subject to the supervision of, the Advisor and the Board, the
Sub-advisor agrees to perform the duties of the Advisor set forth in Sections
2.02(b), (d) (except as it relates to the Assets), (e) (except as it relates to
the Assets), (f) (except as it relates to the Assets), (j), (k), (n) and (w) of
the Advisory Agreement and to assist the Advisor in the performance of the
duties set forth in Section 2.02(l), (m), (p), (r) and (u) of the Advisory
Agreement, all on the terms and subject to the conditions set forth in this
Agreement.

 

Article 3

 

Duties of the Sub-advisor

 

Under the Advisory Agreement, the Advisor is responsible for using its
commercially reasonable best efforts to present to the Company potential
investment opportunities consistent with the investment objectives and policies
of the Company as determined and adopted from time to time by the Board and
managing and supervising the operations and administration of the Company’s
Assets. Consistent with Article 2 hereof, the Sub-advisor undertakes to use
commercially reasonable best efforts to manage and supervise the operations and
administration

 

2

 

 

of the Company, other than the acquisition, operation and disposition of the
Company’s Assets. Subject to the limitations set forth in this Agreement and the
Advisory Agreement, consistent with the provisions of the Articles of
Incorporation and Bylaws and subject to the supervision of the Advisor and the
continuing and exclusive authority of the Board over the supervision of the
Company, the Sub-advisor shall, either directly or by engaging an Affiliate,
perform, and assist the Advisor in the performance of, the duties under the
Advisory Agreement set forth in Article 2 of this Agreement, which duties are
incorporated herein by reference as if fully set forth herein. In the event that
the Sub-advisor engages a third party to perform the services that the Advisor
has engaged Sub-advisor to perform pursuant to this Agreement, such third party
shall be compensated by the Sub-advisor out of the fees it received pursuant to
Article 5 of this Agreement.

 

Article 4

 

Authority and Certain Activities of Sub-advisor

 

To the same extent as the Advisor and subject to the supervision of the Advisor
and the Board, the Sub-advisor shall have the authority set forth in Section
2.03 of the Advisory Agreement, shall have the authority to establish and
maintain bank accounts as set forth in Section 2.04 of the Advisory Agreement
(other than with respect to the Assets), shall maintain books and records for
the Company (other than with respect to the Assets) as set forth in Section 2.05
of the Advisory Agreement, and shall abide by the limitations of Section 2.06 of
the Advisory Agreement, all of which are incorporated herein by reference as if
fully set forth herein.

 

Article 5

 

Compensation

 

As compensation for the services provided pursuant to this Agreement, the
Advisor shall pay to Sub-advisor, solely out of payments received by Advisor
from the Company under the Advisory Agreement, simultaneously with the payment
by the Company to the Advisor:

 

5.1Acquisition Fees Acquisition Fees equal to 1.00% of the Contract Purchase
Price of each Asset. Notwithstanding the foregoing, all Acquisition Fees payable
in connection with those certain Assets separately disclosed in writing prior to
the date of the Equity Purchase Agreement, with respect to which the Advisor
represents that a purchase agreement or letter of intent has been executed shall
be paid to the Advisor and the Sub-advisor shall not be entitled to any
Acquisition Fees with respect to such Assets.

 

5.2Advisory Fees. Advisory Fees calculated according to the following schedule:

 

3

 

 

Average Invested Assets

 

Annualized Fee Rate

      $0 — $2 billion   0.375%       Over $2 billion — $4 billion   0.350%      
Over $4 billion   0.325%

 

The Advisory Fee shall be applied according to the above schedule for each level
of monthly Average Invested Assets, resulting in a blended annualized rate for
fees paid in respect of Average Invested Assets in excess of $2 billion.

 

5.3Disposition Fees. 75% of any Disposition Fees paid to Advisor on the Sale of
a Property, except that the Sub-advisor is entitled to 100% of any Disposition
Fees payable to the Advisor in connection the SIR Transaction.

 

5.4Subordinated Performance Fee. 85% of all Subordinated Performance Fees paid
to the Advisor, in whatever form payable by the Company (i.e., cash, securities
or a promissory note) ), except that the Sub-advisor is entitled to 100% of any
Subordinated Performance Fees payable to the Advisor in connection the SIR
Transaction.

 

5.5Expense Reimbursements. Subject to Article 6 of this Agreement and Section
3.04 of the Advisory Agreement, the Advisor shall reimburse Sub-advisor to the
extent the Advisor receives reimbursement from the Company for the following
expenses of the Sub-advisor to the extent they are actually incurred by the
Sub-Advisor in connection with the services the Sub-advisor provides pursuant to
this Agreement; provided, however that in each case the reimbursement is
permitted under the Advisory Agreement and Prospectus and such reimbursements
shall be determined consistent with past practice:

 

(A)The actual cost incurred by the Sub-advisor of goods, services and materials
used by the Company and obtained from Persons not affiliated with the
Sub-advisor, other than Acquisition Expenses; and

 

(B)Reimbursement for administrative service expenses of the Sub-advisor,
including all costs and expenses incurred by the Sub-advisor in fulfilling its
duties under the Sub-advisory Agreement, provided, however that the
reimbursement of the Advisor and the Sub-advisor for administrative service
expenses, in each case, shall not be greater than 50% of the amounts permitted
by the Advisory Agreement. Such costs and expenses may include reasonable wages
and salaries and other personnel-related expenses of all employees of the
Sub-advisor or its Affiliates who are engaged in the management, administration
and operations and marketing of the Company and its Assets, with respect to the
Sub-advisor who are engaged in the management, administration and operations of
the Company’s Assets and shall include taxes, insurance and benefits relating to
such employees, and legal, travel and other out-of-pocket expenses which are
directly related to

  

4

 

 

  their services provided under this Agreement, provided, however that the
Sub-advisor shall not be reimbursed for salaries and benefits paid to persons
who are executive officers of the Company, nor shall the Company pay personnel
costs in connection with services for which the Advisor or Sub-advisor receives
an Acquisition Fee or Disposition Fee.     5.6Prior Fees and Expenses .
Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement shall affect the Advisor’s right to receive fees and expenses under
the Advisory Agreement accrued prior to the date hereof.

 

Article 6

 

Allocation of Expense Reimbursements

 

6.1All Expense Reimbursements. All expense reimbursements will be apportioned
between the Advisor and Sub-advisor pro rata based on the amount of such expense
reimbursements due each that relate to the period commencing on the later of the
date of this Agreement or the beginning of the applicable quarter to which such
reimbursable expense relates and ending as of the date of the reimbursement;
provided, however that the Sub-advisor shall repay the Advisor its pro rata
share (as so determined) of any Excess Amount that the Advisor is required to
repay the Company pursuant to Section 3.04 of the Advisory Agreement.

 

6.2Quarterly Review of Expenses. Within 45 days of the end of each fiscal
quarter, each Party shall provide the other Party with a detailed description of
such Party’s aggregate Operating Expenses incurred during such fiscal quarter
for the purpose of the Parties’ jointly reviewing such expenses against
applicable caps and limitations set forth in the Advisory Agreement.

 

Article 7

 

Advisor’s Responsibilities

 

The Advisor shall be solely responsible for all services to the Company under
the Advisory Agreement other than the services covered by Article 3 of this
Agreement and shall bear any expenses related thereto required to be borne by
the Advisor or its Affiliates and shall be entitled to reimbursement for all
expenses related thereto, to the extent permitted under the Advisory Agreement
and the Prospectus. The Sub-advisor shall have no responsibility or obligation
in connection with providing such services to the Company or any expenses
related thereto.

 

Article 8

 

Relationship of Sub-advisor and Advisor and their Affiliates;
Other Activities of the Advisor and Sub-advisor

 

8.1Relationship. The Advisor and the Sub-advisor are not partners or joint
venturers with each other, and nothing in this Agreement shall be construed to
make them such partners

 

5

 

  

 or joint venturers. Nothing herein contained shall prevent the Advisor or
Sub-advisor from engaging in or earning fees from other activities, including,
without limitation, the rendering of advice to other Persons (including other
REITs) and the management of other programs advised, sponsored or organized by
the Advisor or Sub-advisor, respectively, or any of their Affiliates. Nor shall
this Agreement limit or restrict the right of any manager, director, officer,
member, partner, employee or equityholder of the Advisor or Sub-advisor or their
Affiliates to engage in or earn fees from any other business or to render
services of any kind to any other Person. Each of the Advisor and the
Sub-advisor shall promptly disclose to the Board the existence of any condition
or circumstance, existing or anticipated, of which it has knowledge, that
creates or which would reasonably result in a conflict of interest between its
obligations to the Company and its obligations to or its interest in any other
Persons.

 

8.2Time Commitment. The Sub-advisor shall, and shall cause its Affiliates and
their respective employees, officers and agents to, devote to the Company such
time as shall be reasonably necessary to conduct the business and affairs of the
Company in an appropriate manner consistent with the terms of this Agreement.
Each Party acknowledges that the other Party and its Affiliates and their
respective employees, officers and agents may also engage in activities
unrelated to the Company and may provide services to Persons other than the
Company or any of its Affiliates.

 

8.3Advisor and Sub-advisor Meetings. The Parties shall meet on a regular basis
(frequency to be determined) to discuss and consult with one another regarding
the Company and its assets and opportunities. The Parties will provide each
other information regarding the operations and acquisitions of the Company as
reasonably requested by the other. Each of Advisor and Sub-advisor shall have
direct access to the books and records of the Company and of each attorney,
accountant, servicer and other contracting party of the Company (except to the
extent such attorney represents either Party with respect to this Agreement).

 

8.4Prospectus Guidance. Each of the Advisor and Sub-advisor has read and will
abide by the Prospectus with respect to the Company’s investment objectives,
targeted assets and investment restrictions, targeted markets, leverage,
distribution policy, and investor profile except to the extent directed by the
Board.

 

Article 9

 

Other Agreements

 

9.1The Advisor shall not agree to an amendment to the Advisory Agreement or
waive any provision thereof, to the extent that such amendment or waiver would
directly or indirectly reduce the amount payable to the Sub-advisor pursuant to
Article 5 of this Agreement or adversely impact the Sub-advisor’s right to
indemnification under Article 13 of this Agreement without the prior written
consent of the Sub-advisor.

 

9.2The Sub-advisor shall use its commercially reasonable efforts to cooperate
with the Advisor to provide an orderly transfer and transition of services upon
the expiration or

 

6

 

  

 earlier termination of this Agreement and shall provide any and all documents,
reports and materials belonging or related to the services provided to the
Advisor hereunder, including any and all other documents, reports and materials
otherwise belonging or related to the Advisor or the Company. Furthermore, the
Sub-advisor will, whenever and as reasonably requested, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered any documents that
may be necessary to transition efficiently any services covered under this
Agreement.

 

9.3The Advisor shall have the right, but not the obligation, upon request and
during normal business hours, to meet with key personnel and/or other executive
level employees of the Sub-advisor on an ongoing and regular basis to provide
feedback and input regarding the performance of the Sub-advisor’s services
hereunder

 

9.4The Sub-advisor shall maintain appropriate records of all its activities
hereunder and shall, at the Advisor’s election, provide copies of such records
to the Company or make such records available for inspection and duplication by
the Company, its counsel, auditors and authorized agents, upon notice from the
Advisor.

 

9.5The Sub-advisor will utilize the Advisor’s accounting system in connection
with performing such duties, or a system mutually agreed to between Advisor and
Sub-advisor.

 

Article 10

 

Representations and Warranties

 

10.1The Advisor and the Sub-advisor each hereby represents and warrants to, and
agrees with, the other as follows:

 

(A)Such Party is duly formed and validly existing under the laws of the
jurisdiction of its organization;

 

(B)Such Party has full power and authority to enter into this Agreement and to
conduct its business to the extent contemplated in this Agreement;

 

(C)This Agreement has been duly authorized, executed and delivered by such Party
and constitutes the valid and legally binding agreement of such Party,
enforceable in accordance with its terms against such Party, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium and other
similar laws relating to creditors’ rights generally, and by general equitable
principles.

 

(D)The execution and delivery of this Agreement by such Party and the
performance of its duties and obligations hereunder do not result in a breach of
any of the terms, conditions or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, credit agreement, note or other evidence
of indebtedness, or any lease or other agreement, or any license, permit,
franchise or certificate to which such Party is a party or by which it is bound
or to which its properties are

 

7

 

 

  subject or require any authorization or approval under or pursuant to any of
the foregoing, or violate any statute, regulation, law, order, writ, injunction,
judgment or decree to which such Party is subject;

 

(E)To the knowledge of such Party, no consent, approval or authorization of, or
filing, registration or qualification with, any court or governmental authority
on the part of such Party is required for the execution and delivery of this
Agreement by such Party and the performance of its obligations and duties
hereunder and such execution, delivery and performance shall not violate any
other agreement to which such Party is bound; and

 

(F)Such Party is duly qualified and licensed to do and perform all acts and
receive all fees as contemplated by this Agreement and the Advisory Agreement.

 

Article 11

 

Term and Termination of the Agreement

 

11.1Term. This Agreement shall expire on the earlier of (1) consummation of the
“Second Closing” as such term is defined in the Equity Purchase Agreement, (2)
the termination of the Equity Purchase Agreement and (3) December 31, 2014.

 

11.2Termination. Subject to Section 11.1:

 

(A)This Agreement may be terminated by the Advisor, if the Sub-advisor
materially breaches this Agreement; provided, however, that the Sub-advisor
shall have 30 calendar days after the receipt of notice of such breach from the
Advisor to cure such breach or, if such material breach is not of a nature that
can be remedied within such period, the Sub-advisor does not diligently take all
reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(B)This Agreement may be terminated by the Advisor, as a result of any fraud,
criminal conduct, gross negligence or willful misconduct by Sub-advisor or any
Affiliate thereof in the performance of their respective duties hereunder;
provided, however, that the Sub-advisor does not cure any such act within 30
calendar days after the receipt of notice of such act (or at such later time as
may be stated in the notice) from the Advisor;

 

(C)This Agreement may be terminated by the Sub-advisor, if the Advisor
materially breaches this Agreement; provided, however, that the Advisor shall
have 30 calendar days after the receipt of notice of such breach from the
Sub-advisor to cure such breach or, if such material breach is not of a nature
that can be remedied within such period, the Advisor does not diligently take
all reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(D)This Agreement may be terminated by the Sub-advisor, as a result of any
fraud, criminal conduct, gross negligence or willful misconduct by the Advisor
or any

 

8

 

 

 Affiliate thereof in the performance of their respective duties hereunder or
under the Advisory Agreement; provided, however, that the Advisor does not cure
any such act within 30 calendar days after the receipt of notice of such act (or
at such later time as may be stated in the notice) from the Sub-advisor;

 

(E)This Agreement may be terminated by either Party, if the other Party (1)
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (2) consents to the entry of an order
for relief in an involuntary case under any such law, (3) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) for the other Party or
for any substantial part of its property, or (4) makes any general assignment
for the benefit of creditors under applicable state law; or

 

(F)This Agreement may be terminated by either Party, if: (1) an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect has been commenced against the other Party, and such case
has not been dismissed within 60 days after the commencement thereof; or (2) a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) has been appointed for the other Party or has taken possession of the
other Party or any substantial part of its property, and such appointment has
not been rescinded or such possession has not been relinquished within 60 days
after the occurrence thereof.

 

11.3Survival upon Termination. Notwithstanding anything else that may be to the
contrary herein, the expiration or earlier termination of this Agreement shall
not relieve a party for liability for any breach occurring prior to such
expiration or earlier termination. The provisions of Articles 1, 5, 6, 9, 11, 13
and 14 shall survive termination of this Agreement.

 

11.4Sub-advisor’s Obligations on Termination and Obligations. After termination
of this Agreement, the Sub-advisor shall have the responsibilities to the same
extent as the Advisor as set forth in Section 4.03 of the Advisory Agreement.

 

Article 12

 

Assignment

 

This Agreement shall not be assigned by the Sub-advisor, except that this
Agreement may be assigned by the Sub-advisor to an Affiliate of the Sub-advisor
with the consent of the Advisor, such consent not to be unreasonably withheld,
conditioned or delayed. This Agreement shall not be assigned by the Advisor
without the consent of the Sub-advisor; provided, however, this Agreement may be
assigned without the consent of the Sub-advisor to a permitted assignee of the
Advisor under the Advisory Agreement in connection with such a permitted
assignment of the Advisory Agreement by the Advisor.

 

9

 

 

Article 13

 

Indemnification and Limitation of Liability

 

The Advisor shall indemnify and hold harmless the Sub-advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Sub-advisor becomes subject to or
liable (1) that are related to or a result of the performance of, or failure to
perform, services by the Advisor which are required to be performed by it under
this Agreement or under the Advisory Agreement or (2) by reason of actions or
inactions of the Advisor (except in each case to the extent that such
performance or failure to perform or action or inaction results from any
performance or failure to perform services by Sub-advisor under this Agreement).

 

The Sub-advisor shall indemnify and hold harmless the Advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Advisor becomes subject to or liable,
including as a result of claims asserted against it for breach of or
indemnification under the Advisory Agreement, (1) that are related to or a
result of the performance of, or failure to perform, services by Sub-advisor
under this Agreement or (2) by reason of actions or inactions of the Sub-advisor
or its Affiliates or the Advisor is required to indemnify the Company under
Section 5.02 of the Advisory Agreement as a result of any action or inaction by
Sub-advisor under this Agreement.

 

Article 14

 

Miscellaneous

 

14.1Reaffirmation of Advisory Agreement. Sub-advisor shall use, and shall cause
its Affiliates to use, commercially reasonable best efforts to assist Advisor in
obtaining the reaffirmation or renewal by the Company, or causing the
reaffirmation or renewal by the Company, of the Advisory Agreement.

 

14.2Notices. Any notice, request, demand, approval, consent, waiver or other
communication required or permitted to be given hereunder or to be served upon
any of the Parties hereto (each a “Notice”) shall be in writing and shall be (a)
delivered in person, (b) sent by facsimile transmission (with the original
thereof also contemporaneously given by another method specified in this Section
14.2), (c) sent by a nationally-recognized overnight courier service, or (d)
sent by certified or registered mail (postage prepaid, return receipt
requested), to the address of such Party set forth herein.

 

To the Advisor:

 

10

 

  

Cole Corporate Income Advisors, LLC
2555 E. Camelback Road, Suite 400
Phoenix, Arizona 85016
Attention: President

 

with a copy to (which shall not constitute Notice):

 

Weil, Gotshal and Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Michael Aiello, Esq. and Matthew Gilroy, Esq.
Facsimile: (212) 310-8007

To the Sub-advisor:

[RCAP Sub-advisor]
405 Park Avenue, 15th Floor
New York, New York 10022
Attention: James A. Tanaka, General Counsel

with a copy to (which shall not constitute Notice):

Duane Morris LLP
30 South 17th Street
Philadelphia, Pennsylvania 19103
Attention: Darrick M. Mix, Esq. and Chad J. Rubin, Esq.
Facsimile: (215) 405-2906

Either Party may at any time give Notice in writing to the other Party of a
change in its address for the purposes of this Section 14.2. Each Notice shall
be deemed given and effective upon receipt (or refusal of receipt). 

14.3Modification. This Agreement shall not be amended, supplemented, changed,
modified, terminated or discharged, in whole or in part, except by an instrument
in writing signed by both Parties hereto, or their respective successors or
permitted assigns.

 

14.4Severability. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

 

14.5Construction. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect, without regard to the principles of conflicts of laws thereof.

 

11

 

 

14.6Entire Agreement. This Agreement contains the entire agreement and
understanding between the Parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. In all events, nothing contained
herein shall be read, construed, interpreted or applied in any manner that
prevents or hinders the Company from qualifying as a real estate investment
trust under Section 856(c) of the Code.

 

14.7Waiver. Neither the failure nor any delay on the part of a Party to exercise
any right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or privilege preclude any other or further exercise of the same or of any
other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed
by the Party asserted to have granted such waiver.

 

14.8Gender. Words used herein regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
requires.

 

14.9Titles Not to Affect Interpretation. The titles of Articles and Sections
contained in this Agreement are for convenience only, and they neither form a
part of this Agreement nor are they to be used in the construction or
interpretation hereof.

 

14.10Counterparts. This Agreement may be executed with counterpart signature
pages or in any number of counterparts, each of which shall be deemed to be an
original as against any Party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterpart signature pages or counterparts
hereof, individually or taken together, shall bear the signatures of all of the
Parties reflected hereon as the signatories.

 

[The remainder of this page is intentionally left blank.

Signature page follows.]

 

12

 

  

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date and year first above written.

 

 

 

Cole Corporate Income Advisors, LLC       By:     Name:         [RCAP
Sub-advisor]       By:     Name:

 

[Signature Page to Interim Sub-advisory Agreement between Cole Corporate Income
Advisor,
LLC and [RCAP Sub-advisor]]

 

 

 

 

Exhibit B-4 

 

Form of

 

Interim Sub-advisory Agreement

 

between

 

Cole Corporate Income Advisors II, LLC

 

_______________

 

and

 

[RCAP Sub-advisor]

 

_______________

 

[•][•], 2014

 

 

 

 

Table of Contents 

 

  Page     Article 1 – Definitions 1     Article 2 – Appointment 2     Article 3
– Duties of the Sub-advisor 2     Article 4 – Authority and Certain Activities
of Sub-advisor 3     Article 5 – Compensation 3       5.1 Acquisition Fees 3    
      5.2 Advisory Fees 3           5.3 Disposition Fees 4           5.4
Subordinated Performance Fee 4           5.5 Expense Reimbursements 4          
5.6 Prior Fees and Expenses 5         Article 6 – Allocation of Expense
Reimbursements 5       6.1 O&O Expense Reimbursements 5           6.2 All Other
Expense Reimbursements 5           6.3 Quarterly Review of Expenses 5        
Article 7 – Advisor’s Responsibilities 6     Article 8 – Relationship of
Sub-advisor and their Affiliates; Other Activities of the Advisor and
Sub-advisor 6       8.1 Relationship 6           8.2 Time Commitment 6          
8.3 Advisor and Sub-advisor Meetings 6           8.4 Prospectus Guidance 7      
  Article 9 – Other Agreements 7     Article 10 – Representations and Warranties
8     Article 11 – Term and Termination of the Agreement 8       11.1 Term 8    
      11.2 Termination 9           11.3 Survival upon Termination 10          
11.4 Sub-advisor’s Obligations on Termination and Obligations 10         Article
12 – Assignment 10

 

i

 

 

    Article 13 – Indemnification and Limitation of Liability 10     Article 14 –
Miscellaneous 11       14.1 Reaffirmation of Advisory Agreement 11

 

  14.2 Notices 11           14.3 Modification 12           14.4 Severability 12
          14.5 Construction 12           14.6 Entire Agreement 12           14.7
Waiver 12           14.8 Gender 12           14.9 Titles Not to Affect
Interpretation 13           14.10 Counterparts 13

 

ii

 

  

Interim Sub-advisory Agreement

 

This Sub-advisory Agreement, dated as of [•][•], 2014 (this “Agreement”), is
between, Cole Corporate Income Advisors II, LLC, a Delaware limited liability
company (the “Advisor”) and [RCAP Sub-Advisor] a Delaware limited liability
company (the “Sub-advisor”)(each a “Party” and collectively, the “Parties”).

 

WITNESSETH

 

WHEREAS, Cole Office & Industrial REIT (CCIT II), Inc., a Maryland corporation
(the “Company”) has appointed Advisor as its advisor pursuant to the Advisory
Agreement between the Company and the Advisor, dated as of August 27, 2013 (as
the same may be amended, restated or otherwise modified from time to time in
accordance with its terms, the “Advisory Agreement”);

 

WHEREAS, the Advisor desires to avail itself of the knowledge, experience,
sources of information, advice, assistance and certain facilities available to
the Sub-advisor and to have the Sub-advisor undertake the duties and
responsibilities hereinafter set forth, on behalf of the Advisor, and subject to
the supervision of the Advisor and the Board, all as provided herein; and

 

WHEREAS, the Sub-advisor is willing to undertake such duties and
responsibilities, subject to the supervision of the Advisor and the Board, on
the terms and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the Parties hereto agree as follows:

 

Article 1

 

Definitions

 

Capitalized and other terms that are defined in the Advisory Agreement but not
otherwise defined in this Agreement have the respective meanings ascribed to
such terms in the Advisory Agreement, a copy of which is attached hereto as
Appendix A.

 

The following defined terms used in this Agreement shall have the meanings
specified below:

 

“Advisor” has the meaning set forth in the preamble to this Agreement.

 

“Advisory Agreement” has the meaning set forth in the recitals to this
Agreement.

 

“Affiliate” has the meaning set forth in the Advisory Agreement. For the
avoidance of doubt, none of the Company, the Sub-advisor, any subsidiary of the
Company, any subsidiary of the Sub-advisor and any other Person controlled by,
controlling or under common control with the Sub-advisor shall be an Affiliate
of the Advisor and none of the Company, the Advisor, any

 

1

 

 

subsidiary of the Company, any subsidiary of the Advisor and any other Person
controlled by, controlling or under common control with the Advisor shall be an
Affiliate of the Sub-advisor.

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Company” has the meaning set forth in the recitals to this Agreement.

 

“Equity Purchase Agreement” means that certain Equity Purchase Agreement, dated
as of September 30, 2014, by and between ARC Properties Operating Partnership,
L.P. and RCS Capital Corporation.

 

“Notice” has the meaning set forth in Section 14.2 of this Agreement.

 

“Party” has the meaning set forth in the preamble to this Agreement.

 

“Prospectus” means the prospectus dated September 27, 2013, as amended or
supplemented from time to time, filed by the Company pursuant to Rule 424
promulgated under the Securities Act of 1933, as amended.

 

“Sub-advisor” has the meaning set forth in the preamble to this Agreement.

 

Article 2

 

Appointment

 

The Advisor, pursuant to its authority to engage a duly qualified and licensed
Person in the performance of its duties under the Advisory Agreement pursuant to
Section 2.02 of the Advisory Agreement, hereby appoints the Sub-advisor to serve
as the Sub-advisor for the Company. The Sub-advisor hereby accepts such
appointment. Subject to the supervision of, the Advisor and the Board, the
Sub-advisor agrees to perform the duties of the Advisor set forth in Sections
2.02(b), (d) (except as it relates to the Assets), (e) (except as it relates to
the Assets), (f) (except as it relates to the Assets), (j), (k), (n) and (w) of
the Advisory Agreement and to assist the Advisor in the performance of the
duties set forth in Section 2.02(l), (m), (p), (r) and (u) of the Advisory
Agreement, all on the terms and subject to the conditions set forth in this
Agreement.

 

Article 3

 

Duties of the Sub-advisor

 

Under the Advisory Agreement, the Advisor is responsible for using its
commercially reasonable best efforts to present to the Company potential
investment opportunities consistent with the investment objectives and policies
of the Company as determined and adopted from time to time by the Board and
managing and supervising the operations and administration of the Company’s
Assets. Consistent with Article 2 hereof, the Sub-advisor undertakes to use
commercially reasonable best efforts to manage and supervise the operations and
administration of the Company, other than the acquisition, operation and
disposition of the Company’s Assets.

 

2

 

 

Subject to the limitations set forth in this Agreement and the Advisory
Agreement, consistent with the provisions of the Articles of Incorporation and
Bylaws and subject to the supervision of the Advisor and the continuing and
exclusive authority of the Board over the supervision of the Company, the
Sub-advisor shall, either directly or by engaging an Affiliate, perform, and
assist the Advisor in the performance of, the duties under the Advisory
Agreement set forth in Article 2 of this Agreement, which duties are
incorporated herein by reference as if fully set forth herein. In the event that
the Sub-advisor engages a third party to perform the services that the Advisor
has engaged Sub-advisor to perform pursuant to this Agreement, such third party
shall be compensated by the Sub-advisor out of the fees it received pursuant to
Article 5 of this Agreement.

 

Article 4

 

Authority and Certain Activities of Sub-advisor

 

To the same extent as the Advisor and subject to the supervision of the Advisor
and the Board, the Sub-advisor shall have the authority set forth in Section
2.03 of the Advisory Agreement, shall have the authority to establish and
maintain bank accounts as set forth in Section 2.04 of the Advisory Agreement
(other than with respect to the Assets), shall maintain books and records for
the Company (other than with respect to the Assets) as set forth in Section 2.05
of the Advisory Agreement, and shall abide by the limitations of Section 2.06 of
the Advisory Agreement, all of which are incorporated herein by reference as if
fully set forth herein.

 

Article 5

 

Compensation

 

As compensation for the services provided pursuant to this Agreement, the
Advisor shall pay to Sub-advisor, solely out of payments received by Advisor
from the Company under the Advisory Agreement, simultaneously with the payment
by the Company to the Advisor:

 

5.1Acquisition FeesAcquisition Fees equal to 1.00% of the Contract Purchase
Price of each Asset. Notwithstanding the foregoing, all Acquisition Fees payable
in connection with those certain Assets separately disclosed in writing prior to
the date of the Purchase Agreement, with respect to which the Advisor represents
that a purchase agreement or letter of intent has been executed shall be paid to
the Advisor and the Sub-advisor shall not be entitled to any Acquisition Fees
with respect to such Assets.

 

5.2Advisory Fees. Advisory Fees calculated according to the following schedule:

 

3

 

 

Average Invested Assets

Annualized Fee Rate

      $0 — $2 billion   0.375%       Over $2 billion — $4 billion   0.350%      
Over $4 billion   0.325%

 

The Advisory Fee shall be applied according to the above schedule for each level
of monthly Average Invested Assets, resulting in a blended annualized rate for
fees paid in respect of Average Invested Assets in excess of $2 billion.

 

5.3Disposition Fees. 75% of any Disposition Fees paid to Advisor on the Sale of
a Property.

 

5.4Subordinated Performance Fee. 85% of all Subordinated Performance Fees paid
to the Advisor, in whatever form payable by the Company (i.e., cash, securities
or a promissory note).

 

5.5Expense Reimbursements. Subject to Article 6 of this Agreement and Section
3.04 of the Advisory Agreement, the Advisor shall reimburse Sub-advisor to the
extent the Advisor receives reimbursement from the Company for the following
expenses of the Sub-advisor to the extent they are actually incurred by the
Sub-Advisor in connection with the services the Sub-advisor provides pursuant to
this Agreement; provided, however that in each case the reimbursement is
permitted under the Advisory Agreement and Prospectus and such reimbursements
shall be determined consistent with past practice:

 

(A)The actual cost incurred by the Sub-advisor of goods, services and materials
used by the Company and obtained from Persons not affiliated with the
Sub-advisor, other than Acquisition Expenses;

 

(B)Reimbursement for administrative service expenses of the Sub-advisor,
including all costs and expenses incurred by the Sub-advisor in fulfilling its
duties under the Sub-advisory Agreement, provided, however that the
reimbursement of the Advisor and the Sub-advisor for administrative service
expenses, in each case, shall not be greater than 50% of the amounts permitted
by the Advisory Agreement. Such costs and expenses may include reasonable wages
and salaries and other personnel-related expenses of all employees of the
Sub-advisor or its Affiliates who are engaged in the management, administration
and operations and marketing of the Company and its Assets, with respect to the
Sub-advisor who are engaged in the management, administration and operations of
the Company’s Assets and shall include taxes, insurance and benefits relating to
such employees, and legal, travel and other out-of-pocket expenses which are
directly related to their services provided under this Agreement, provided,
however that the

 

4

 

  

  Sub-advisor shall not be reimbursed for salaries and benefits paid to persons
who are executive officers of the Company, nor shall the Company pay personnel
costs in connection with services for which the Advisor or Sub-advisor receives
an Acquisition Fee or Disposition Fee; and     (C)Reimbursement out of
reimbursements paid by the Company to the Advisor for Organization and Offering
Expenses.

 

5.6Prior Fees and Expenses. Notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement shall affect the Advisor’s right to receive
fees and expenses under the Advisory Agreement accrued prior to the date hereof.

 

Article 6

 

Allocation of Expense Reimbursements

 

6.1O&O Expense Reimbursements. All Organization and Offering Expense
reimbursements received from the Company, to the extent that they are less than
the full amount of Organization and Offering Expense reimbursements due to the
Advisor and the Sub-advisor will be apportioned between the Advisor and
Sub-advisor pro rata based on the amount of such Organization and Offering
Expenses reimbursements due each that relate to the period commencing on the
date of this Agreement and ending as of the date of the reimbursement; provided,
however that within 50 days after the end of the month in which the Offering
terminates, the Sub-advisor shall reimburse the Advisor the Sub-advisor’s pro
rata share of reimbursements to the Company by the Advisor (based on its pro
rata share of reimbursements received from the Company as so determined)
pursuant to Section 3.02(a) of the Advisory Agreement for Organization and
Offering Expenses reimbursed by the Company to the extent that such
reimbursements by the Company exceed 2.0% of the Gross Proceeds raised in the
completed Offering.

 

6.2All Other Expense Reimbursements. All expense reimbursements will be
apportioned between the Advisor and Sub-advisor pro rata based on the amount of
such expense reimbursements due each that relate to the period commencing on the
later of the date of this Agreement or the beginning of the applicable quarter
to which such reimbursable expense relates and ending as of the date of the
reimbursement; provided, however that the Sub-advisor shall repay the Advisor
its pro rata share (as so determined) of any Excess Amount that the Advisor is
required to repay the Company pursuant to Section 3.04 of the Advisory
Agreement.

 

6.3Quarterly Review of Expenses. Within 45 days of the end of each fiscal
quarter, each Party shall provide the other Party with a detailed description of
such Party’s aggregate Organization and Offering Expenses and aggregate
Operating Expenses incurred during such fiscal quarter for the purpose of the
Parties’ jointly reviewing such expenses against applicable caps and limitations
set forth in the Advisory Agreement.

 

5

 

  

Article 7

 

Advisor’s Responsibilities

 

The Advisor shall be solely responsible for all services to the Company under
the Advisory Agreement other than the services covered by Article 3 of this
Agreement and shall bear any expenses related thereto required to be borne by
the Advisor or its Affiliates and shall be entitled to reimbursement for all
expenses related thereto, to the extent permitted under the Advisory Agreement
and the Prospectus. The Sub-advisor shall have no responsibility or obligation
in connection with providing such services to the Company or any expenses
related thereto.

 

Article 8

 

Relationship of Sub-advisor and Advisor and their Affiliates;
Other Activities of the Advisor and Sub-advisor

 

8.1Relationship. The Advisor and the Sub-advisor are not partners or joint
venturers with each other, and nothing in this Agreement shall be construed to
make them such partners or joint venturers. Nothing herein contained shall
prevent the Advisor or Sub-advisor from engaging in or earning fees from other
activities, including, without limitation, the rendering of advice to other
Persons (including other REITs) and the management of other programs advised,
sponsored or organized by the Advisor or Sub-advisor, respectively, or any of
their Affiliates. Nor shall this Agreement limit or restrict the right of any
manager, director, officer, member, partner, employee or equityholder of the
Advisor or Sub-advisor or their Affiliates to engage in or earn fees from any
other business or to render services of any kind to any other Person. Each of
the Advisor and the Sub-advisor shall promptly disclose to the Board the
existence of any condition or circumstance, existing or anticipated, of which it
has knowledge, that creates or which would reasonably result in a conflict of
interest between its obligations to the Company and its obligations to or its
interest in any other Persons.

 

8.2Time Commitment. The Sub-advisor shall, and shall cause its Affiliates and
their respective employees, officers and agents to, devote to the Company such
time as shall be reasonably necessary to conduct the business and affairs of the
Company in an appropriate manner consistent with the terms of this Agreement.
Each Party acknowledges that the other Party and its Affiliates and their
respective employees, officers and agents may also engage in activities
unrelated to the Company and may provide services to Persons other than the
Company or any of its Affiliates.

 

8.3Advisor and Sub-advisor Meetings. The Parties shall meet on a regular basis
(frequency to be determined) to discuss and consult with one another regarding
the Company and its assets and opportunities. The Parties will provide each
other information regarding the operations and acquisitions of the Company as
reasonably requested by the other. Each of Advisor and Sub-advisor shall have
direct access to the books and records of the Company and of each attorney,
accountant, servicer and other

  

6

 

 

  contracting party of the Company (except to the extent such attorney
represents either Party with respect to this Agreement).     8.4Prospectus
Guidance. Each of the Advisor and Sub-advisor has read and will abide by the
Prospectus with respect to the Company’s investment objectives, targeted assets
and investment restrictions, targeted markets, leverage, distribution policy,
and investor profile except to the extent directed by the Board.

 

Article 9

 

Other Agreements

 

9.1The Advisor shall not agree to an amendment to the Advisory Agreement or
waive any provision thereof, to the extent that such amendment or waiver would
directly or indirectly reduce the amount payable to the Sub-advisor pursuant to
Article 5 of this Agreement or adversely impact the Sub-advisor’s right to
indemnification under Article 13 of this Agreement without the prior written
consent of the Sub-advisor.

 

9.2The Sub-advisor shall use its commercially reasonable efforts to cooperate
with the Advisor to provide an orderly transfer and transition of services upon
the expiration or earlier termination of this Agreement and shall provide any
and all documents, reports and materials belonging or related to the services
provided to the Advisor hereunder, including any and all other documents,
reports and materials otherwise belonging or related to the Advisor or the
Company. Furthermore, the Sub-advisor will, whenever and as reasonably
requested, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered any documents that may be necessary to transition
efficiently any services covered under this Agreement.

 

9.3The Advisor shall have the right, but not the obligation, upon request and
during normal business hours, to meet with key personnel and/or other executive
level employees of the Sub-advisor on an ongoing and regular basis to provide
feedback and input regarding the performance of the Sub-advisor’s services
hereunder

 

9.4The Sub-advisor shall maintain appropriate records of all its activities
hereunder and shall, at the Advisor’s election, provide copies of such records
to the Company or make such records available for inspection and duplication by
the Company, its counsel, auditors and authorized agents, upon notice from the
Advisor.

 

9.5The Sub-advisor will utilize the Advisor’s accounting system in connection
with performing such duties, or a system mutually agreed to between Advisor and
Sub-advisor.

 

7

 

 

Article 10

 

Representations and Warranties

 

10.1The Advisor and the Sub-advisor each hereby represents and warrants to, and
agrees with, the other as follows:

 

(A)Such Party is duly formed and validly existing under the laws of the
jurisdiction of its organization;

 

(B)Such Party has full power and authority to enter into this Agreement and to
conduct its business to the extent contemplated in this Agreement;

 

(C)This Agreement has been duly authorized, executed and delivered by such Party
and constitutes the valid and legally binding agreement of such Party,
enforceable in accordance with its terms against such Party, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium and other
similar laws relating to creditors’ rights generally, and by general equitable
principles;

 

(D)The execution and delivery of this Agreement by such Party and the
performance of its duties and obligations hereunder do not result in a breach of
any of the terms, conditions or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, credit agreement, note or other evidence
of indebtedness, or any lease or other agreement, or any license, permit,
franchise or certificate to which such Party is a party or by which it is bound
or to which its properties are subject or require any authorization or approval
under or pursuant to any of the foregoing, or violate any statute, regulation,
law, order, writ, injunction, judgment or decree to which such Party is subject;

 

(E)To the knowledge of such Party, no consent, approval or authorization of, or
filing, registration or qualification with, any court or governmental authority
on the part of such Party is required for the execution and delivery of this
Agreement by such Party and the performance of its obligations and duties
hereunder and such execution, delivery and performance shall not violate any
other agreement to which such Party is bound; and

 

(F)Such Party is duly qualified and licensed to do and perform all acts and
receive all fees as contemplated by this Agreement and the Advisory Agreement.

 

Article 11

 

Term and Termination of the Agreement

 

11.1Term. This Agreement shall expire on the earlier of (1) consummation of the
“Second Closing” as such term is defined in the Equity Purchase Agreement, (2)
the termination of the Equity Purchase Agreement and (3) December 31, 2014.

 

8

 

 

11.2Termination. Subject to Section 11.1:

 

(A)This Agreement may be terminated by the Advisor, if the Sub-advisor
materially breaches this Agreement; provided, however, that the Sub-advisor
shall have 30 calendar days after the receipt of notice of such breach from the
Advisor to cure such breach or, if such material breach is not of a nature that
can be remedied within such period, the Sub-advisor does not diligently take all
reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(B)This Agreement may be terminated by the Advisor, as a result of any fraud,
criminal conduct, gross negligence or willful misconduct by Sub-advisor or any
Affiliate thereof in the performance of their respective duties hereunder;
provided, however, that the Sub-advisor does not cure any such act within 30
calendar days after the receipt of notice of such act (or at such later time as
may be stated in the notice) from the Advisor;

 

(C)This Agreement may be terminated by the Sub-advisor, if the Advisor
materially breaches this Agreement; provided, however, that the Advisor shall
have 30 calendar days after the receipt of notice of such breach from the
Sub-advisor to cure such breach or, if such material breach is not of a nature
that can be remedied within such period, the Advisor does not diligently take
all reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(D)This Agreement may be terminated by the Sub-advisor, as a result of any
fraud, criminal conduct, gross negligence or willful misconduct by the Advisor
or any Affiliate thereof in the performance of their respective duties hereunder
or under the Advisory Agreement; provided, however, that the Advisor does not
cure any such act within 30 calendar days after the receipt of notice of such
act (or at such later time as may be stated in the notice) from the Sub-advisor;

 

(E)This Agreement may be terminated by either Party, if the other Party (1)
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (2) consents to the entry of an order
for relief in an involuntary case under any such law, (3) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) for the other Party or
for any substantial part of its property, or (4) makes any general assignment
for the benefit of creditors under applicable state law; or

 

(F)This Agreement may be terminated by either Party, if: (1) an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect has been commenced against the other Party, and such case
has not been dismissed within 60 days after the commencement thereof; or (2) a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) has been appointed for the other Party or has taken possession of the
other Party or any substantial part of its property, and such appointment has
not been rescinded or

 

9

 

 

  such possession has not been relinquished within 60 days after the occurrence
thereof.     11.3Survival upon Termination. Notwithstanding anything else that
may be to the contrary herein, the expiration or earlier termination of this
Agreement shall not relieve a party for liability for any breach occurring prior
to such expiration or earlier termination. The provisions of Articles 1, 5, 6,
9, 11, 13 and 14 shall survive termination of this Agreement.

 

11.4Sub-advisor’s Obligations on Termination and Obligations. After termination
of this Agreement, the Sub-advisor shall have the responsibilities to the same
extent as the Advisor as set forth in Section 4.03 of the Advisory Agreement.

 

Article 12

 

Assignment

 

This Agreement shall not be assigned by the Sub-advisor, except that this
Agreement may be assigned by the Sub-advisor to an Affiliate of the Sub-advisor
with the consent of the Advisor, such consent not to be unreasonably withheld,
conditioned or delayed. This Agreement shall not be assigned by the Advisor
without the consent of the Sub-advisor; provided, however, this Agreement may be
assigned without the consent of the Sub-advisor to a permitted assignee of the
Advisor under the Advisory Agreement in connection with such a permitted
assignment of the Advisory Agreement by the Advisor.

 

Article 13

 

Indemnification and Limitation of Liability

 

The Advisor shall indemnify and hold harmless the Sub-advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Sub-advisor becomes subject to or
liable (1) that are related to or a result of the performance of, or failure to
perform, services by the Advisor which are required to be performed by it under
this Agreement or under the Advisory Agreement or (2) by reason of actions or
inactions of the Advisor (except in each case to the extent that such
performance or failure to perform or action or inaction results from any
performance or failure to perform services by Sub-advisor under this Agreement).

 

The Sub-advisor shall indemnify and hold harmless the Advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Advisor becomes subject to or liable,
including

 

10

 

 

as a result of claims asserted against it for breach of or indemnification under
the Advisory Agreement, (1) that are related to or a result of the performance
of, or failure to perform, services by Sub-advisor under this Agreement or (2)
by reason of actions or inactions of the Sub-advisor or its Affiliates or the
Advisor is required to indemnify the Company under Section 5.02 of the Advisory
Agreement as a result of any action or inaction by Sub-advisor under this
Agreement.

 

Article 14

 

Miscellaneous

 

14.1Reaffirmation of Advisory Agreement. Sub-advisor shall use, and shall cause
its Affiliates to use, commercially reasonable best efforts to assist Advisor in
obtaining the reaffirmation or renewal by the Company, or causing the
reaffirmation or renewal by the Company, of the Advisory Agreement.

  

14.2Notices. Any notice, request, demand, approval, consent, waiver or other
communication required or permitted to be given hereunder or to be served upon
any of the Parties hereto (each a “Notice”) shall be in writing and shall be (a)
delivered in person, (b) sent by facsimile transmission (with the original
thereof also contemporaneously given by another method specified in this Section
14.2), (c) sent by a nationally-recognized overnight courier service, or (d)
sent by certified or registered mail (postage prepaid, return receipt
requested), to the address of such Party set forth herein.

 

To the Advisor:

Cole Corporate Income Advisors II, LLC
2325 E. Camelback Road, Suite 1100
Phoenix, Arizona 85016
Attention: President

 

with a copy to (which shall not constitute Notice):

Weil, Gotshal and Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Michael Aiello, Esq. and Matthew Gilroy, Esq.
Facsimile: (212) 310-8007

 

To the Sub-advisor:

[RCAP Sub-advisor]
405 Park Avenue, 15th Floor
New York, New York 10022
Attention: James A. Tanaka, General Counsel

with a copy to (which shall not constitute Notice): 

 

11

 

Duane Morris LLP
30 South 17th Street
Philadelphia, Pennsylvania 19103
Attention: Darrick M. Mix, Esq. and Chad J. Rubin, Esq.
Facsimile: (215) 405-2906

 

Either Party may at any time give Notice in writing to the other Party of a
change in its address for the purposes of this Section 14.2. Each Notice shall
be deemed given and effective upon receipt (or refusal of receipt).

 

14.3Modification. This Agreement shall not be amended, supplemented, changed,
modified, terminated or discharged, in whole or in part, except by an instrument
in writing signed by both Parties hereto, or their respective successors or
permitted assigns.

 

14.4Severability. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

 

14.5Construction. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect, without regard to the principles of conflicts of laws thereof.

 

14.6Entire Agreement. This Agreement contains the entire agreement and
understanding between the Parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. In all events, nothing contained
herein shall be read, construed, interpreted or applied in any manner that
prevents or hinders the Company from qualifying as a real estate investment
trust under Section 856(c) of the Code.

 

14.7Waiver. Neither the failure nor any delay on the part of a Party to exercise
any right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or privilege preclude any other or further exercise of the same or of any
other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed
by the Party asserted to have granted such waiver.

 

14.8Gender. Words used herein regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
requires.

 

12

 

 

14.9Titles Not to Affect Interpretation. The titles of Articles and Sections
contained in this Agreement are for convenience only, and they neither form a
part of this Agreement nor are they to be used in the construction or
interpretation hereof.

 

14.10Counterparts. This Agreement may be executed with counterpart signature
pages or in any number of counterparts, each of which shall be deemed to be an
original as against any Party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterpart signature pages or counterparts
hereof, individually or taken together, shall bear the signatures of all of the
Parties reflected hereon as the signatories.

 

[The remainder of this page is intentionally left blank.

Signature page follows.]

 

13

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date and year first above written.

 

 

Cole Corporate Income Advisors II, LLC         By:     Name:         [RCAP
Sub-advisor]       By:     Name:

 

[Signature Page to Interim Sub-advisory Agreement between Cole Corporate Income
Advisors

II, LLC and [RCAP Sub-advisor]]

 

 

 

 

Exhibit B-5

 

Form of

 

Interim Sub-advisory Agreement

 

between

 

Cole Real Estate Income Strategy (Daily NAV) Advisors, LLC

 

_______________

 

and

 

[RCAP Sub-advisor]

 

_______________

 

[•][•], 2014

 

 

 

 

 

Table of Contents

 

  Page     Article 1 – Definitions 1     Article 2 – Appointment 2     Article 3
– Duties of the Sub-advisor 3     Article 4 – Authority and Certain Activities
of Sub-advisor1 3     Article 5 – Compensation 3       5.1 Fees 3           5.2
Expense Reimbursements 4           5.3 O&O Expense Reimbursements 4        
Article 6 – Allocation of Expense Reimbursements 5       6.1 O&O Expense
Reimbursements 5           6.2 All Other Expense Reimbursements 5           6.3
Review of Expenses 5         Article 7 – Advisor’s Responsibilities 5    
Article 8 – Relationship of Sub-advisor and their Affiliates; Other Activities
of the Advisor and Sub-advisor 6       8.1 Relationship 6           8.2 Time
Commitment 6           8.3 Advisor and Sub-advisor Meetings 6           8.4
Prospectus Guidance 7         Article 9 – Other Agreements1 7     Article 10 –
Representations and Warranties 7     Article 11 – Term and Termination of the
Agreement 8       11.1 Term 8           11.2 Termination 8           11.3
Survival upon Termination 10           11.4 Sub-advisor’s Obligations on
Termination and Obligations 10         Article 12 – Assignment 10     Article 13
– Indemnification and Limitation of Liability 10     Article 14 – Miscellaneous
11       14.1 Reaffirmation of Advisory Agreement 11

 

i

 

  

  14.2 Notices 11           14.3 Modification 12           14.4 Severability 12
          14.5 Construction 12           14.6 Entire Agreement 12           14.7
Waiver 12           14.8 Gender 13           14.9 Titles Not to Affect
Interpretation 13           14.10 Counterparts 13

  

ii

 

  

Interim Sub-advisory Agreement

 

This Sub-advisory Agreement, dated as of [•], 2014 (this “Agreement”), is
between, Cole Real Estate Income Strategy (Daily NAV) Advisors, LLC, a Delaware
limited liability company (the “Advisor”) and [RCAP Sub-Advisor] a Delaware
limited liability company (the “Sub-advisor”)(each a “Party” and collectively,
the “Parties”).

 

WITNESSETH

 

WHEREAS, Cole Real Estate Income Strategy (Daily NAV), Inc., a Maryland
corporation (the “Company”) has appointed Advisor as its advisor pursuant to the
Amended and Restated Advisory Agreement between the Company, Cole Real Estate
Income Strategy (Daily NAV) Operating Partnership, LP, and the Advisor, dated as
of August 26, 2013 (as the same may be amended, restated or otherwise modified
from time to time in accordance with its terms, the “Advisory Agreement”);

 

WHEREAS, the Advisor desires to avail itself of the knowledge, experience,
sources of information, advice, assistance and certain facilities available to
the Sub-advisor and to have the Sub-advisor undertake the duties and
responsibilities hereinafter set forth, on behalf of the Advisor, and subject to
the supervision of the Advisor and the Board, all as provided herein; and

 

WHEREAS, the Sub-advisor is willing to undertake such duties and
responsibilities, subject to the supervision of the Advisor and the Board, on
the terms and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the Parties hereto agree as follows:

 

Article 1

 

Definitions

 

Capitalized and other terms that are defined in the Advisory Agreement but not
otherwise defined in this Agreement have the respective meanings ascribed to
such terms in the Advisory Agreement, a copy of which is attached hereto as
Appendix A.

 

The following defined terms used in this Agreement shall have the meanings
specified below:

 

“Advisor” has the meaning set forth in the preamble to this Agreement.

 

“Advisory Agreement” has the meaning set forth in the recitals to this
Agreement. 

 

1

 

 

“Affiliate” has the meaning set forth in the Advisory Agreement. For the
avoidance of doubt, none of the Company, the Sub-advisor, any subsidiary of the
Company, any subsidiary of the Sub-advisor and any other Person controlled by,
controlling or under common control with the Sub-advisor shall be an Affiliate
of the Advisor and none of the Company, the Advisor, any subsidiary of the
Company, any subsidiary of the Advisor and any other Person controlled by,
controlling or under common control with the Advisor shall be an Affiliate of
the Sub-advisor.

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Company” has the meaning set forth in the recitals to this Agreement.

 

“Equity Purchase Agreement” means that certain Equity Purchase Agreement, dated
as of September 30, 2014, by and between ARC Properties Operating Partnership,
L.P. and RCS Capital Corporation.

 

“Notice” has the meaning set forth in Section 14.2 of this Agreement.

 

“Party” has the meaning set forth in the preamble to this Agreement.

 

“Prospectus” means the prospectus dated May 28, 2014, as amended or supplemented
from time to time, filed by the Company pursuant to Rule 424 promulgated under
the Securities Act of 1933, as amended.

 

“Sub-advisor” has the meaning set forth in the preamble to this Agreement.

 

Article 2

 

Appointment

 

The Advisor, pursuant to its authority to engage a duly qualified and licensed
Person in the performance of its duties under the Advisory Agreement pursuant to
Section 2.02 of the Advisory Agreement, hereby appoints the Sub-advisor to serve
as the Sub-advisor for the Company. The Sub-advisor hereby accepts such
appointment. Subject to the supervision of, the Advisor and the Board, the
Sub-advisor agrees to perform the duties of the Advisor set forth in Sections
2.02, (f) (except as it relates to the Assets), (e) (except as it relates to the
Assets), (g) (except as it relates to the Assets), (h), (k), (l), (n), (p), (q),
(r), (t), (v), (w), (x) and (y) of the Advisory Agreement and to assist the
Advisor in the performance of the duties set forth in Section 2.02(l), (m), (p),
(r), (u) and (v) of the Advisory Agreement, all on the terms and subject to the
conditions set forth in this Agreement.

 

2

 

 

Article 3

 

Duties of the Sub-advisor

 

Under the Advisory Agreement, the Advisor is responsible for using its
commercially reasonable best efforts to present to the Company potential
investment opportunities consistent with the investment objectives and policies
of the Company as determined and adopted from time to time by the Board and
managing and supervising the operations and administration of the Company’s
Assets. Consistent with Article 2 hereof, the Sub-advisor undertakes to use
commercially reasonable best efforts to manage and supervise the operations and
administration of the Company, other than the acquisition, operation and
disposition of the Company’s Assets. Subject to the limitations set forth in
this Agreement and the Advisory Agreement, consistent with the provisions of the
Articles of Incorporation and Bylaws and subject to the supervision of the
Advisor and the continuing and exclusive authority of the Board over the
supervision of the Company, the Sub-advisor shall, either directly or by
engaging an Affiliate, perform, and assist the Advisor in the performance of,
the duties under the Advisory Agreement set forth in Article 2 of this
Agreement, which duties are incorporated herein by reference as if fully set
forth herein. In the event that the Sub-advisor engages a third party to perform
the services that the Advisor has engaged Sub-advisor to perform pursuant to
this Agreement, such third party shall be compensated by the Sub-advisor out of
the fees it received pursuant to Article 5 of this Agreement.

 

Article 4

 

Authority and Certain Activities of Sub-advisor

 

To the same extent as the Advisor and subject to the supervision of the Advisor
and the Board, the Sub-advisor shall have the authority set forth in Section
2.03 of the Advisory Agreement, shall have the authority to establish and
maintain bank accounts as set forth in Section 2.04 of the Advisory Agreement
(other than with respect to the Assets), shall maintain books and records for
the Company (other than with respect to the Assets) as set forth in Section 2.05
of the Advisory Agreement, and shall abide by the limitations of Section 2.06 of
the Advisory Agreement, all of which are incorporated herein by reference as if
fully set forth herein.

 

Article 5

 

Compensation

 

As compensation for the services provided pursuant to this Agreement, the
Advisor shall pay to Sub-advisor, solely out of payments received by Advisor
from the Company under the Advisory Agreement, simultaneously with the payment
by the Company to the Advisor:

 

5.1Fees. 50% of any Fees paid to the Advisor pursuant to Section 3.01 in
whatever form payable by the Company; provided, however that, during the
calendar month

 

3

 

 

 and calendar year in which this Agreement is executed, the Advisor shall be
entitled to 100% of the Advisory Fee and 100% Performance Fee for such calendar
month and calendar year, respectively, prorated for the number of days elapsed
since the beginning of such month and year until the date hereof and 50% of the
balance of the Advisory Fee and Performance fee payable for such month and year
after subtracting such prorated amount from the total Advisory Fee and
Performance Fee payable.

 

5.2Expense Reimbursements. Subject to Article 6 of this Agreement and Section
3.04 of the Advisory Agreement, the Advisor shall reimburse Sub-advisor to the
extent the Advisor receives reimbursement from the Company for the following
expenses of the Sub-advisor to the extent they are actually incurred by the
Sub-advisor in connection with the services the Sub-advisor provides pursuant to
this Agreement; provided, however that in each case the reimbursement is
permitted under the Advisory Agreement and Prospectus and such reimbursements
shall be determined consistent with past practice:

 

(A)The actual cost incurred by the Sub-advisor of goods, services and materials
used by the Company and obtained from Persons not affiliated with the
Sub-advisor, other than Acquisition Expenses;

 

(B)Reimbursement for administrative service expenses of the Sub-advisor,
including all costs and expenses incurred by the Sub-advisor in fulfilling its
duties under the Sub-advisory Agreement, provided, however that the
reimbursement of the Advisor and the Sub-advisor for administrative service
expenses, in each case, shall not be greater than 50% of the amounts permitted
by the Advisory Agreement. Such costs and expenses may include reasonable wages
and salaries and other personnel-related expenses of all employees of the
Sub-advisor or its Affiliates who are engaged in the management, administration
and operations and marketing of the Company and its Assets, with respect to the
Sub-advisor who are engaged in the management, administration and operations of
the Company’s Assets and shall include taxes, insurance and benefits relating to
such employees, and legal, travel and other out-of-pocket expenses which are
directly related to their services provided under this Agreement, provided,
however that the Sub-advisor shall not be reimbursed for salaries and benefits
paid to persons who are executive officers of the Company, nor shall the Company
pay personnel costs in connection with services for which the Advisor or
Sub-advisor receives an Acquisition Fee or Disposition Fee; and

 

(C)Reimbursement out of reimbursements paid by the Company to the Advisor for
Organization and Offering Expenses.

 

5.3Prior Fees and Expenses. Notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement shall affect the Advisor’s right to receive
fees and expenses under the Advisory Agreement accrued prior to the date hereof.

 

4

 

 

Article 6

 

Allocation of Expense Reimbursements

 

6.1O&O Expense Reimbursements. All Organization and Offering Expense
reimbursements received from the Company, to the extent that they are less than
the full amount of Organization and Offering Expense reimbursements due to the
Advisor and the Sub-advisor will be apportioned between the Advisor and
Sub-advisor pro rata based on the amount of such Organization and Offering
Expenses reimbursements due each that relate to the period commencing on the
date of this Agreement and ending as of the date of the reimbursement; provided,
however that within 50 days after the end of the month in which the Offering
terminates, the Sub-advisor shall reimburse the Advisor the Sub-advisor’s pro
rata share of reimbursements to the Company by the Advisor (based on its pro
rata share of reimbursements received from the Company as so determined)
pursuant to Section 3.02(a) of the Advisory Agreement for Organization and
Offering Expenses reimbursed by the Company to the extent that such
reimbursements by the Company exceed 15.0% of the Gross Proceeds raised in the
completed Offering.

 

6.2All Other Expense Reimbursements. All expense reimbursements will be
apportioned between the Advisor and Sub-advisor pro rata based on the amount of
such expense reimbursements due each that relate to the period commencing on the
later of the date of this Agreement or the beginning of the applicable quarter
to which such reimbursable expense relates and ending as of the date of the
reimbursement; provided, however that the Sub-advisor shall repay the Advisor
its pro rata share (as so determined) of any Excess Amount that the Advisor is
required to repay the Company pursuant to Section 3.04 of the Advisory
Agreement.

 

6.3Review of Expenses. Within 35 days of the end of each month in the case of
expenses other than Organization and Offering Expenses and 10 days of the end of
each month in the case of Organization and Offering Expenses, each Party shall
provide the other Party with a detailed statement of such Party’s aggregate
expenses (including a specific statement of Operating Expenses) other than
Organization and Offering Expenses and a statement of such Party’s aggregate
Organization and Offering Expenses, respectively, incurred during such month for
the purpose of the Parties’ jointly reviewing such expenses against applicable
caps and limitations set forth in the Advisory Agreement and preparing the
statements required under Section 3.04(c) and (d) of the Advisory Agreement.

 

Article 7

 

Advisor’s Responsibilities

 

The Advisor shall be solely responsible for all services to the Company under
the Advisory Agreement other than the services covered by Article 3 of this
Agreement and

 

5

 

 

shall bear any expenses related thereto required to be borne by the Advisor or
its Affiliates and shall be entitled to reimbursement for all expenses related
thereto, to the extent permitted under the Advisory Agreement and the
Prospectus. The Sub-advisor shall have no responsibility or obligation in
connection with providing such services to the Company or any expenses related
thereto.

 

Article 8

 

Relationship of Sub-advisor and Advisor and their Affiliates;
Other Activities of the Advisor and Sub-advisor

 

8.1Relationship. The Advisor and the Sub-advisor are not partners or joint
venturers with each other, and nothing in this Agreement shall be construed to
make them such partners or joint venturers. Nothing herein contained shall
prevent the Advisor or Sub-advisor from engaging in or earning fees from other
activities, including, without limitation, the rendering of advice to other
Persons (including other REITs) and the management of other programs advised,
sponsored or organized by the Advisor or Sub-advisor, respectively, or any of
their Affiliates. Nor shall this Agreement limit or restrict the right of any
manager, director, officer, member, partner, employee or equityholder of the
Advisor or Sub-advisor or their Affiliates to engage in or earn fees from any
other business or to render services of any kind to any other Person. Each of
the Advisor and the Sub-advisor shall promptly disclose to the Board the
existence of any condition or circumstance, existing or anticipated, of which it
has knowledge, that creates or which would reasonably result in a conflict of
interest between its obligations to the Company and its obligations to or its
interest in any other Persons.

 

8.2Time Commitment. The Sub-advisor shall, and shall cause its Affiliates and
their respective employees, officers and agents to, devote to the Company such
time as shall be reasonably necessary to conduct the business and affairs of the
Company in an appropriate manner consistent with the terms of this Agreement.
Each Party acknowledges that the other Party and its Affiliates and their
respective employees, officers and agents may also engage in activities
unrelated to the Company and may provide services to Persons other than the
Company or any of its Affiliates.

 

8.3Advisor and Sub-advisor Meetings. The Parties shall meet on a regular basis
(frequency to be determined) to discuss and consult with one another regarding
the Company and its assets and opportunities. The Parties will provide each
other information regarding the operations and acquisitions of the Company as
reasonably requested by the other. Each of Advisor and Sub-advisor shall have
direct access to the books and records of the Company and of each attorney,
accountant, servicer and other contracting party of the Company (except to the
extent such attorney represents either Party with respect to this Agreement).

 

6

 

 

8.4Prospectus Guidance. Each of the Advisor and Sub-advisor has read and will
abide by the Prospectus with respect to the Company’s investment objectives,
targeted assets and investment restrictions, targeted markets, leverage,
distribution policy, and investor profile except to the extent directed by the
Board.

 

Article 9

 

Other Agreements

 

9.1The Advisor shall not agree to any amendment to the Advisory Agreement or
waive any provision thereof without the prior written consent of the
Sub-advisor.

 

9.2The Sub-advisor shall use its commercially reasonable efforts to cooperate
with the Advisor to provide an orderly transfer and transition of services upon
the expiration or earlier termination of this Agreement and shall provide any
and all documents, reports and materials belonging or related to the services
provided to the Advisor hereunder, including any and all other documents,
reports and materials otherwise belonging or related to the Advisor or the
Company. Furthermore, the Sub-advisor will, whenever and as reasonably
requested, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered any documents that may be necessary to transition
efficiently any services covered under this Agreement.

 

9.3The Advisor shall have the right, but not the obligation, upon request and
during normal business hours, to meet with key personnel and/or other executive
level employees of the Sub-advisor on an ongoing and regular basis to provide
feedback and input regarding the performance of the Sub-advisor’s services
hereunder

 

9.4The Sub-advisor shall maintain appropriate records of all its activities
hereunder and shall, at the Advisor’s election, provide copies of such records
to the Company or make such records available for inspection and duplication by
the Company, its counsel, auditors and authorized agents, upon notice from the
Advisor.

 

9.5The Sub-advisor will utilize the Advisor’s accounting system in connection
with performing such duties, or a system mutually agreed to between Advisor and
Sub-advisor.

 

Article 10

 

Representations and Warranties

 

10.1The Advisor and the Sub-advisor each hereby represents and warrants to, and
agrees with, the other as follows:

 

7

 

 

(A)Such Party is duly formed and validly existing under the laws of the
jurisdiction of its organization;

 

(B)Such Party has full power and authority to enter into this Agreement and to
conduct its business to the extent contemplated in this Agreement;

 

(C)This Agreement has been duly authorized, executed and delivered by such Party
and constitutes the valid and legally binding agreement of such Party,
enforceable in accordance with its terms against such Party, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium and other
similar laws relating to creditors’ rights generally, and by general equitable
principles.

 

(D)The execution and delivery of this Agreement by such Party and the
performance of its duties and obligations hereunder do not result in a breach of
any of the terms, conditions or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, credit agreement, note or other evidence
of indebtedness, or any lease or other agreement, or any license, permit,
franchise or certificate to which such Party is a party or by which it is bound
or to which its properties are subject or require any authorization or approval
under or pursuant to any of the foregoing, or violate any statute, regulation,
law, order, writ, injunction, judgment or decree to which such Party is subject;

 

(E)To the knowledge of such Party, no consent, approval or authorization of, or
filing, registration or qualification with, any court or governmental authority
on the part of such Party is required for the execution and delivery of this
Agreement by such Party and the performance of its obligations and duties
hereunder and such execution, delivery and performance shall not violate any
other agreement to which such Party is bound; and

 

(F)Such Party is duly qualified and licensed to do and perform all acts and
receive all fees as contemplated by this Agreement and the Advisory Agreement.

 

Article 11

 

Term and Termination of the Agreement

 

11.1Term. This Agreement shall expire on the earlier of (1) consummation of the
“Second Closing” as such term is defined in the Equity Purchase Agreement, (2)
the termination of the Equity Purchase Agreement and (3) December 31, 2014.

 

11.2Termination. Subject to Section 11.1:

 

8

 

 

(A)This Agreement may be terminated by the Advisor, if the Sub-advisor
materially breaches this Agreement; provided, however, that the Sub-advisor
shall have 30 calendar days after the receipt of notice of such breach from the
Advisor to cure such breach or, if such material breach is not of a nature that
can be remedied within such period, the Sub-advisor does not diligently take all
reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(B)This Agreement may be terminated by the Advisor, as a result of any fraud,
criminal conduct, gross negligence or willful misconduct by Sub-advisor or any
Affiliate thereof in the performance of their respective duties hereunder;
provided, however, that the Sub-advisor does not cure any such act within 30
calendar days after the receipt of notice of such act (or at such later time as
may be stated in the notice) from the Advisor;

 

(C)This Agreement may be terminated by the Sub-advisor, if the Advisor
materially breaches this Agreement; provided, however, that the Advisor shall
have 30 calendar days after the receipt of notice of such breach from the
Sub-advisor to cure such breach or, if such material breach is not of a nature
that can be remedied within such period, the Advisor does not diligently take
all reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(D)This Agreement may be terminated by the Sub-advisor, as a result of any
fraud, criminal conduct, gross negligence or willful misconduct by the Advisor
or any Affiliate thereof in the performance of their respective duties hereunder
or under the Advisory Agreement; provided, however, that the Advisor does not
cure any such act within 30 calendar days after the receipt of notice of such
act (or at such later time as may be stated in the notice) from the Sub-advisor;

 

(E)This Agreement may be terminated by either Party, if the other Party (1)
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (2) consents to the entry of an order
for relief in an involuntary case under any such law, (3) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) for the other Party or
for any substantial part of its property, or (4) makes any general assignment
for the benefit of creditors under applicable state law; or

 

(F)This Agreement may be terminated by either Party, if: (1) an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect has been commenced against the other Party, and such case
has not been dismissed within 60 days after the commencement thereof; or (2) a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) has been appointed for the other Party or has taken possession of the
other Party or any substantial part of its

 

9

 

 

property, and such appointment has not been rescinded or such possession has not
been relinquished within 60 days after the occurrence thereof.

 

11.3Survival upon Termination. Notwithstanding anything else that may be to the
contrary herein, the expiration or earlier termination of this Agreement shall
not relieve a party for liability for any breach occurring prior to such
expiration or earlier termination. The provisions of Articles 1, 5, 6, 9, 11, 13
and 14 shall survive termination of this Agreement.

 

11.4Sub-advisor’s Obligations on Termination and Obligations. After termination
of this Agreement, the Sub-advisor shall have the responsibilities to the same
extent as the Advisor as set forth in Section 4.03 of the Advisory Agreement.

 

Article 12

 

Assignment

 

This Agreement shall not be assigned by the Sub-advisor, except that this
Agreement may be assigned by the Sub-advisor to an Affiliate of the Sub-advisor
with the consent of the Advisor, such consent not to be unreasonably withheld,
conditioned or delayed. This Agreement shall not be assigned by the Advisor
without the consent of the Sub-advisor; provided, however, this Agreement may be
assigned without the consent of the Sub-advisor to a permitted assignee of the
Advisor under the Advisory Agreement in connection with such a permitted
assignment of the Advisory Agreement by the Advisor.

 

Article 13

 

Indemnification and Limitation of Liability

 

The Advisor shall indemnify and hold harmless the Sub-advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Sub-advisor becomes subject to or
liable (1) that are related to or a result of the performance of, or failure to
perform, services by the Advisor which are required to be performed by it under
this Agreement or under the Advisory Agreement or (2) by reason of actions or
inactions of the Advisor (except in each case to the extent that such
performance or failure to perform or action or inaction results from any
performance or failure to perform services by Sub-advisor under this Agreement).

 

The Sub-advisor shall indemnify and hold harmless the Advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Advisor becomes subject to or liable,
including as a result of claims asserted

 

10

 

 

against it for breach of or indemnification under the Advisory Agreement, (1)
that are related to or a result of the performance of, or failure to perform,
services by Sub-advisor under this Agreement or (2) by reason of actions or
inactions of the Sub-advisor or its Affiliates or the Advisor is required to
indemnify the Company or Cole Real Estate Income Strategy (Daily NAV) Operating
Partnership, LP under Section 5.02 of the Advisory Agreement as a result of any
action or inaction by Sub-advisor under this Agreement.

 

Article 14

 

Miscellaneous

 

14.1Reaffirmation of Advisory Agreement. Sub-advisor shall use, and shall cause
its Affiliates to use, commercially reasonable best efforts to assist Advisor in
obtaining the reaffirmation or renewal by the Company, or causing the
reaffirmation or renewal by the Company, of the Advisory Agreement.

 

14.2Notices. Any notice, request, demand, approval, consent, waiver or other
communication required or permitted to be given hereunder or to be served upon
any of the Parties hereto (each a “Notice”) shall be in writing and shall be (a)
delivered in person, (b) sent by facsimile transmission (with the original
thereof also contemporaneously given by another method specified in this Section
14.2), (c) sent by a nationally-recognized overnight courier service, or (d)
sent by certified or registered mail (postage prepaid, return receipt
requested), to the address of such Party set forth herein.

  

To the Advisor:

Cole Real Estate Income Strategy (Daily NAV) Advisors, LLC
2325 E. Camelback Road, Suite 1100
Phoenix, Arizona 85016
Attention: President

 

with a copy to (which shall not constitute Notice):

 

Weil, Gotshal and Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Michael Aiello, Esq. and Matthew Gilroy, Esq.
Facsimile: (212) 310-8007

 

To the Sub-advisor:

 

[RCAP Sub-advisor]
405 Park Avenue, 15th Floor
New York, New York 10022
Attention: James A. Tanaka, General Counsel

 

11

 

with a copy to (which shall not constitute Notice):

 

Duane Morris LLP
30 South 17th Street
Philadelphia, Pennsylvania 19103
Attention: Darrick M. Mix, Esq. and Chad J. Rubin, Esq.
Facsimile: (215) 405-2906

 

Either Party may at any time give Notice in writing to the other Party of a
change in its address for the purposes of this Section 14.2. Each Notice shall
be deemed given and effective upon receipt (or refusal of receipt).

 

14.3Modification. This Agreement shall not be amended, supplemented, changed,
modified, terminated or discharged, in whole or in part, except by an instrument
in writing signed by both Parties hereto, or their respective successors or
permitted assigns.

 

14.4Severability. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

 

14.5Construction. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect, without regard to the principles of conflicts of laws thereof.

 

14.6Entire Agreement. This Agreement contains the entire agreement and
understanding between the Parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. In all events, nothing contained
herein shall be read, construed, interpreted or applied in any manner that
prevents or hinders the Company from qualifying as a real estate investment
trust under Section 856(c) of the Code.

 

14.7Waiver. Neither the failure nor any delay on the part of a Party to exercise
any right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or privilege preclude any other or further exercise of the same or of any
other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed
by the Party asserted to have granted such waiver.

 

12

 

 

14.8Gender. Words used herein regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
requires.

 

14.9Titles Not to Affect Interpretation. The titles of Articles and Sections
contained in this Agreement are for convenience only, and they neither form a
part of this Agreement nor are they to be used in the construction or
interpretation hereof.

 

14.10Counterparts. This Agreement may be executed with counterpart signature
pages or in any number of counterparts, each of which shall be deemed to be an
original as against any Party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterpart signature pages or counterparts
hereof, individually or taken together, shall bear the signatures of all of the
Parties reflected hereon as the signatories.

 

[The remainder of this page is intentionally left blank.

Signature page follows.]

 

13

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date and year first above written.

 

 

 

COLE Real Estate Income Strategy (Daily NAV) Advisors, LLC         By:     Name:
        [RCAP Sub-advisor]         By:     Name:

 

[Signature Page to Interim Sub-advisory Agreement between Cole Real Estate
Income
Strategy (Daily NAV) Advisors, LLC and [RCAP Sub-advisor]]

 

 

 

 

Exhibit C-1

 

FORM OF WHOLESALING AGREEMENT

 

[                  ], 2014

Realty Capital Securities, LLC

One Beacon Street
14th Floor
Boston, MA 02108

 

Ladies and Gentlemen:

 

Cole Capital Corporation, a Delaware corporation (the “Dealer Manager”), with
its address at 2325 East Camelback Road, Suite 1100, Phoenix, AZ 85016, has
entered into an agreement dated as of September 17, 2013 (the “Dealer Manager
Agreement”), with Cole Office & Industrial REIT (CCIT II), Inc. (the “Company”).
Under the Dealer Manager Agreement, the Dealer Manager serves as the Company’s
exclusive Dealer Manager in connection with a public offering (the “Offering”)
of the Company’s common stock. The shares of the Company’s stock (the “Offered
Shares”) are being issued and sold to the public on a “best efforts” basis
through the Dealer Manager and the broker-dealers and other appropriately
licensed firms participating in the Offering (the “Participating
Broker-Dealers”), pursuant to Participating Broker-Dealer Agreements between the
Dealer Manager and each Participating Broker-Dealer (each, a “Participating
Broker-Dealer Agreement”). The Dealer-Manager shall provide to the Wholesaler
the form of the Participating Broker-Dealer Agreement used by the Dealer
Manager. Capitalized terms used herein but not otherwise defined shall have the
respective meanings ascribed to them in the Dealer Manager Agreement.

 

In consideration of the mutual covenants and agreements contained herein,
intending to be legally bound, the parties hereby agree to the following terms
and conditions set forth in this Wholesaling Agreement (this “Agreement”):

 

1.Appointment and Acceptance of the Wholesaler

 

Upon the terms and subject to the conditions set forth in this Agreement, the
Dealer Manager hereby appoints Realty Capital Securities, LLC, a Delaware
limited liability company (the “Wholesaler”), and the Wholesaler hereby accepts
such appointment, as the Dealer Manager’s distribution agent to assist, through
the Wholesaler’s employees, agents, contractors, registered representatives and
all other representatives who will perform services hereunder (collectively, the
“RCS Service Providers”), the Dealer Manager with the sale of Offered Shares
through the recruitment of, and the provision of assistance to, Participating
Broker-Dealers, and the Wholesaler desires to accept such engagement; provided,
however, that nothing herein shall be construed to: (i) contravene the Company’s
appointment of the Dealer Manager as its exclusive agent and dealer manager
during the Offering Period, and the Dealer Manager’s acceptance of such
appointment, pursuant to Section 3.1 of the Dealer Manager Agreement; or (ii)
imply that the Dealer Manager shall not have sole discretion to accept or reject
any subscription for the Offered Shares in whole or in part.

 

2.Undertakings of the Wholesaler

 

(a)          The Wholesaler will use diligent efforts to recruit certain
broker-dealers and other appropriately licensed firms to serve as Participating
Broker-Dealers, each of which shall be a member of the Financial Industry
Regulatory Authority, Inc. (“FINRA”) in good standing, to agree to offer and
sell the Offered Shares on a best efforts basis without any commitment on the
Participating Broker-Dealers’ part to purchase any Offered Shares pursuant to a
Participating Broker-Dealer Agreement with the Dealer Manager.

 

(b)          The Wholesaler will use diligent efforts to assist the Dealer
Manager in providing certain services to Participating Broker-Dealers in
connection with the Offering, which will consist primarily of:

 

 

 

 

(i)          providing training and education regarding the Company and the
offering of the Offered Shares to Participating Broker-Dealers;

 

(ii)         providing marketing and sales support for Participating
Broker-Dealers,; and

 

(iii)        such other assistance to Participating Broker-Dealers and their
registered representatives in marketing the Offered Shares and otherwise
participating in the Offering as shall be reasonably determined to be
appropriate by the Dealer Manager.

 

(c)          The Wholesaler acknowledges that it is familiar with FINRA Rule
2310 and that it will comply in all material respects with all the terms thereof
to the extent FINRA Rule 2310 applies to the conduct contemplated herein.
Notwithstanding the foregoing sentence, the Wholesaler shall not be responsible
for the obligations of the Dealer Manager under the Dealer Manager Agreement and
Section 6(i) to assure compliance with the organization and offering expenses
limitations of FINRA Rule 2310(b)(4).

 

3.Compensation and Expense Reimbursement

 

(a)          In consideration for the Wholesaler performing its obligations
under this Agreement, the Dealer Manager shall pay the Wholesaler a sourcing fee
(the “Sourcing Fee”) equal to 1.80% of the Selling Price of each of the Offered
Shares sold by Participating Broker-Dealers who entered into dealer agreements
with the Dealer Manager primarily as a result of the efforts of RCS Service
Providers (“RCS Sales”); provided, however, the Sourcing Fee shall be payable
solely from that portion of the Dealer Manager Fee that is (i) actually received
by the Dealer Manager from the Company pursuant to Section 3,3 of the Dealer
Manager Agreement, and (ii) not reallowed to any Participating Broker-Dealer
pursuant to Section 3.3 of the Dealer Manager Agreement (a “Sourcing Fee
Reallowance”) in respect of any RCS Sales.

 

(b)          The Sourcing Fee shall be paid substantially concurrently with the
receipt of corresponding payments to the Dealer Manager from the Company
pursuant to Section 3.3 of the Dealer Manager Agreement, but in no event no
later than five business days thereafter.

 

(c)          The Dealer Manager also will reimburse the Wholesaler for all costs
and expenses incurred that are: (i) in connection with bona fide due diligence
activities; and (ii) incident to the Offering, but only to the extent such costs
or expenses (A) are permitted pursuant to prevailing rules and regulations of
FINRA, (B) would have been incurred by the Dealer Manager if the Wholesaler had
not incurred them, and (C) are otherwise eligible for reimbursement from the
Company pursuant to Section 3.6 of the Dealer Manager Agreement. The Wholesaler
will present the Dealer Manager with itemized and detailed invoices for all
incurred costs and expenses that are reimbursable pursuant to this Section 3(c).
The Dealer Manager will submit such request to the Company within five business
days following receipt of such invoices and will reimburse the Wholesaler within
five business days following receipt of funds from the Company for such
reimbursement.

 

4.Representations and Warranties of the Dealer Manager

 

(a)          The Dealer Manager is a corporation duly organized and validly
existing under the laws of the State of Delaware, with full power and authority
to conduct its business and to enter into this Agreement and to perform the
transactions contemplated hereby.

 

(b)          This Agreement has been duly authorized, executed and delivered by
the Dealer Manager, constitutes a legal, valid and binding agreement of the
Dealer Manager, enforceable against the Dealer Manager in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
and by general equitable principles relating to the availability of remedies,
and except to the extent that the enforceability of the indemnity provisions
contained in this Agreement may be limited under applicable securities laws.

 

2

 

 

(c)          The Dealer Manager (A) is duly registered as a broker-dealer
pursuant to the provisions of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), (B) is a member of FINRA in good standing, (C) is a broker
or dealer registered as such in those states and jurisdictions where the Dealer
Manager is required to be registered in order to provide the services
contemplated by this Agreement and the Dealer Manager Agreement, and (D) it and
those of its employees and representatives who are required to have approvals,
licenses or registrations to act under this Agreement have all applicable
required approvals, licenses and registrations to act under this Agreement.
There is no provision in the Dealer Manager’s FINRA membership agreement that
would prohibit or restrict the ability of the Dealer Manager to carry out the
services related to the Offering as contemplated by this Agreement and the
Dealer Manager Agreement or to perform its obligations hereunder and thereunder.
With respect to its participation in the offer and sale of the Offered Shares
(including, without limitation any resales and transfers of Offered Shares), the
Dealer Manager shall comply in all material respects with all applicable
requirements of (1) the Securities Act of 1933, as amended (the “Securities
Act”), and the applicable rules and regulations promulgated thereunder (the
“Securities Act Regulations”), the Exchange Act and the applicable rules and
regulations promulgated thereunder (the “Exchange Act Regulations”) and all
other federal rules and regulations applicable to the Offering and the sale of
the Offered Shares, (2) applicable state securities or “blue sky” laws, and (3)
the rules set forth in the FINRA rulebook applicable to the Offering, which
currently consists of rules promulgated by FINRA, the National Association of
Securities Dealers (“NASD”) and the New York Stock Exchange (collectively, the
“FINRA Rules”), specifically including, but not in any way limited to, FINRA
Rule 2310, FINRA Rule 5110, FINRA Rule 5141, NASD Rule 2340 and NASD Rule 2420.

 

(d)          The Dealer Manager and its representatives have all required
Governmental Licenses and have made all filings and registrations with federal
and state governmental and regulatory agencies required to conduct their
business and to perform their obligations under this Agreement and the Dealer
Manager Agreement, except where the inability of such Governmental Licenses to
be in full force and effect would not have a material adverse effect on the
business, properties, financial position, results of operations or cash flows of
the Dealer Manager or as otherwise may be disclosed in the Registration
Statement and the Prospectus. The performance of the obligations of the Dealer
Manager under this Agreement and the Dealer Manager Agreement will not
(A) violate or result in a breach of any provisions of its articles of
incorporation or by-laws (or similar instruments or documents) or any order, law
or regulation binding upon it, and (B) result in a material breach of any
provisions of any agreement or instrument to which it is a party or which is
otherwise binding upon it.

 

5.Representations and Warranties of the Wholesaler

 

The Wholesaler represents and warrants to the Dealer Manager:

 

(a)          The Wholesaler is a limited liability company duly organized and
validly existing under the laws of the State of Delaware, with full power and
authority to conduct its business and to enter into this Agreement and to
perform the transactions contemplated hereby.

 

(b)          This Agreement has been duly authorized, executed and delivered by
the Wholesaler and, assuming due authorization, execution and delivery of this
Agreement by the Dealer Manager, constitutes a legal, valid and binding
agreement of the Wholesaler, enforceable against the Wholesaler in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general equitable principles relating to the
availability of remedies, and except to the extent that the enforceability of
the indemnity provisions contained in this Agreement may be limited under
applicable securities laws.

 

(c)          The Wholesaler (i) is duly registered as a broker-dealer pursuant
to the provisions of the Exchange Act, (ii) is a member of FINRA in good
standing, (iii) is a broker or dealer registered as such in those states and
jurisdictions where the Wholesaler is required to be registered in order to
provide the services contemplated by this Agreement, and (iv) it and those of
its employees and representatives who are required to have approvals, licenses
or registrations to act under this Agreement have all applicable required
approvals, licenses and registrations to act under this Agreement. There is no
provision in the Wholesaler’s FINRA membership agreement that would prohibit or
restrict the ability of the

 

3

 

 

Wholesaler to carry out the services related to the Offering as contemplated by
this Agreement or to perform its obligations hereunder. With respect to its
participation in the offer and sale of the Offered Shares (including, without
limitation any resales and transfers of Offered Shares), the Wholesaler agrees
to comply in all material respects with all applicable requirements, in each
case to the extent such requirements are applicable to the Wholesaler in
connection with the performance of its obligations hereunder, of (i) the
Securities Act, the Exchange Act, the Securities Act Regulations and the
Exchange Act Regulations and all other federal rules and regulations applicable
to the Offering and the sale of the Offered Shares, (ii) applicable state
securities or “blue sky” laws, and (iii) the FINRA Rules, specifically
including, but not in any way limited to, FINRA Rule 2310, FINRA Rule 5110,
FINRA Rule 5141, NASD Rule 2340 and NASD Rule 2420.

 

(d)          The Wholesaler and those of its employees and representatives who
are required to have Governmental Licenses have all required Governmental
Licenses and have made all filings and registrations with federal and state
governmental and regulatory agencies required to conduct their business and to
perform their obligations under this Agreement. The performance of the
obligations of the Wholesaler under this Agreement will not violate or result in
a breach of any provisions of its articles of incorporation or by-laws (or
similar instruments or documents) or any agreement, instrument, order, law or
regulation binding upon it.

 

(e)          To the extent required by applicable law in connection with the
transactions contemplated in this Agreement, the Wholesaler represents that it
has established and implemented an anti-money laundering compliance program
(“AML Program”) in accordance with applicable law, including applicable FINRA
Rules, Exchange Act Regulations, the USA PATRIOT Act and implementing
regulations, specifically including, but not limited to, Section 352 of the
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001 (the “Money Laundering Abatement Act,” and together with the USA PATRIOT
Act, the “AML Rules”) reasonably expected to detect and cause the reporting of
suspicious transactions in connection with the offering and sale of the Offered
Shares. The Wholesaler further represents that it is currently in compliance
with all AML Rules, specifically including, but not limited to, the Customer
Identification Program requirements under Section 326 of the Money Laundering
Abatement Act; has Know Your Customer (KYC) policies and procedures in place;
that the AML Program has been adopted by a person with sufficient authority to
oversee the AML policies and procedures; that the AML Program has education
and/or training programs for officers and employees regarding AML policies and
procedures; and that the Wholesaler will remain in compliance with such
requirements. The Wholesaler shall, upon request by the Dealer Manager or the
Company, provide a certification that, as of the date of such certification, (i)
its AML Program then in effect is consistent with the AML Rules and (ii) it is
currently in compliance with its AML Program and all AML Rules, specifically
including, but not limited to, the Customer Identification Program requirements
under Section 326 of the Money Laundering Abatement Act.

 

6.Covenants of the Dealer Manager

 

(a)          The Dealer Manager shall comply with the record keeping
requirements of the Exchange Act, including but not limited to, Rules 17a-3 and
17a-4 promulgated under the Exchange Act. The Dealer Manager will make such
documents and records available to (i) the Wholesaler, upon reasonable request,
and (ii) representatives of the Securities and Exchange Commission (“SEC”),
FINRA and applicable state securities administrators upon the receipt of an
appropriate document subpoena or other appropriate request for documents from
any such agency; provided, however, that if the Dealer Manager determines, in
its sole discretion, not to provide documents in accordance with this section,
it may oppose such document subpoena or other request, provided that the Dealer
Manager shall be responsible for all reasonable direct costs of such opposition.
The Dealer Manager further agrees to keep such required records with respect to
each customer who purchases Offered Shares, the customer’s suitability and the
amount of Offered Shares sold, and to retain such records for six years or such
period of time as may be required by the SEC, any state securities commission,
FINRA or the Company, whichever is later. The Wholesaler, agree that the Dealer
Manager can satisfy its recordkeeping obligations hereunder by contractually
requiring such information to be maintained by the Participating Broker-Dealers,
investment advisors or banks offering the Offered Shares.

 

4

 

 

(b)          The Dealer Manager shall abide by and comply with: (i) the privacy
standards and requirements of the Gramm-Leach Bliley Act of 1999 (“GLB Act”);
(ii) the privacy standards and requirements of any other applicable federal or
state law; (iii) any reasonable written privacy policies and standards provided
to the Dealer Manager by the Wholesaler and the Company; and (d) the Dealer
Manager’s own internal privacy policies and procedures, each as may be amended
from time to time.

 

(c)          To the extent the Dealer Manager directly sells Offered Shares, the
Dealer Manager will only offer and sell Offered Shares in jurisdictions in which
qualifications or exemptions for the offer and sale of the Offered Shares are in
effect as of the relevant date (“Qualified Jurisdictions”). No Offered Shares
shall be offered or sold for the account of the Company in any other states or
foreign jurisdictions.

 

(d)          The Dealer Manager is familiar with Rule 15c2-8 under the Exchange
Act, relating to the distribution of preliminary and final Prospectuses, and
confirms that it has complied and will comply therewith.

 

(e)          The Dealer Manager will notify the Wholesaler immediately (i) when
any amendment to the Registration Statement shall have become effective, (ii) of
the issuance by the SEC or any other Federal or state regulatory body of any
order suspending the effectiveness of the Registration Statement under the
Securities Act or the registration of Offered Shares under the Blue Sky or
securities laws of any state or other jurisdiction or any order or decree
enjoining the offering or the use of the Prospectus or of the institution, or
notice of the intended institution, of any action or proceeding for that
purpose, and (iii) when any Prospectus shall have been filed under the
Securities Act with the SEC.

 

(f)          The Dealer Manager will deliver to the Wholesaler as promptly as
practicable from time to time during the period when the Prospectus is required
to be delivered under the Securities Act, with reasonable quantities of copies
of the Prospectus (as amended or supplemented), as provided by the Company, for
delivery to investors and for the purposes contemplated by the Securities Act or
any rules or regulations thereunder.

 

(g)          The Dealer Manager will provide a reasonable amount of Authorized
Sales Material to the Wholesaler as and when requested by the Wholesaler,
subject to receipt of such material by the Dealer Manager from the Company.

 

(h)          The Dealer Manager shall be responsible for the timely filing of
all documents and information to be filed with the Corporate Financing
Department of FINRA, as required under FINRA Rules 5110(b)(5) and 5110(b)(6),
and shall have and maintain internal controls sufficient to monitor compliance
with the organization and offering expense limitations of FINRA Rule 2310(b)(4).

 

(i)          The Dealer Manager shall comply, in all material respects, with all
applicable laws, and the applicable rules and regulations of FINRA, the SEC,
state securities administrators and any other applicable regulatory body in
connection with the Offering.

 

7.Covenants of the Wholesaler

 

(a)          The Wholesaler shall, in all material respects and to the extent
such requirements are applicable to the Wholesaler in connection with the
performance of its obligations hereunder, comply, with the record keeping
requirements of the Exchange Act, including but not limited to, Rules 17a-3 and
17a-4 promulgated under the Exchange Act. The Wholesaler will make such
documents and records available to (i) the Dealer Manager and the Company upon
reasonable request, and (ii) representatives of the SEC, FINRA and applicable
state securities administrators upon the receipt of an appropriate document
subpoena or other appropriate request for documents from any such agency;
provided, however, that in the event the Wholesaler determines, in its sole
discretion, not to provide documents in accordance with this section, it may
oppose such document subpoena or other request, provided that the Wholesaler
shall be responsible for all reasonable direct costs of such opposition.

 

5

 

 

(b)          The Wholesaler shall, in all material respects and to the extent
such requirements are applicable to the Wholesaler in connection with the
performance of its obligations hereunder, abide by and comply with (i) the
privacy standards and requirements of the GLB Act; (ii) the privacy standards
and requirements of any other applicable federal or state law; (iii) any
reasonable written privacy policies and standards provided to the Wholesaler by
the Dealer Manager and the Company; and (iv) the Wholesaler’s own internal
privacy policies and procedures, each as may be amended from time to time.

 

(c)          To the extent the Wholesaler directly sells Offered Shares in
connection with the performance of its obligations hereunder, the Wholesaler
will only offer and sell Offered Shares in Qualified Jurisdictions. No Offered
Shares shall be offered or sold for the account of the Company in any other
states or foreign jurisdictions.

 

(d)          The Wholesaler is familiar with Rule 15c2-8 under the Exchange Act,
relating to the distribution of preliminary and final Prospectuses, and confirms
that it will, to the extent applicable to the Wholesaler in connection with the
performance of its obligations hereunder, comply with Rule 15c2-8 under the
Exchange Act.

 

(e)          The Dealer Manager will provide the Wholesaler with certain
Authorized Sales Materials to be used by the Wholesaler and the Participating
Broker-Dealers in connection with the Offering. If the Wholesaler elects to use
such Authorized Sales Materials in connection with the performance of its
obligations hereunder, then the Wholesaler agrees that such material shall not
be used by it in connection with the Offering and that it will direct
Participating Broker-Dealers not to make such use of any Authorized Sales
Materials unless accompanied or preceded by the Prospectus. If the Wholesaler
elects to use such Authorized Sales Materials in connection with the performance
of its obligations hereunder, the Wholesaler will only use Authorized Sales
Materials provided by the Dealer Manager. The Wholesaler shall not give or
provide any information or make any representation other than those contained in
the Prospectus or the Authorized Sales Materials. The Wholesaler will not use
any “broker-dealer use only” Authorized Sales Materials with members of the
public in connection with offers or sales or the Offered Shares.

 

(f)          The Wholesaler will suspend or terminate the offering and sale of
the Offered Shares by the Wholesaler upon request of the Company at any time and
resume offering and sale of the Offered Shares upon subsequent request of the
Company if required to do so in connection with the performance of its
obligations hereunder.

 

(g)          The Wholesaler will provide to the Company and the Dealer Manager
as soon as practicable upon receipt by the Wholesaler copies of any written or
otherwise documented customer complaints received by the Wholesaler from
Participating Broker-Dealers relating in any way to the Offering (including, but
not limited to, the manner in which the Offered Shares are offered by any
Participating Broker-Dealer), the Offered Shares or the Company.

 

(h)          Other than with respect to use of Authorized Sales Materials or the
Prospectus or otherwise pursuant to or in connection with this Agreement, the
Wholesaler will not, without the Company’s prior written consent, make a
source-identifying use of (i) the Company’s name, brand, logo or trademark or
any reasonably similar variant or derivative thereof or (ii) the “ Cole  ” name,
brand, logo or trademark or any reasonably similar variant or derivative
thereof.

 

(i)          The Wholesaler shall under no circumstances engage in any
activities hereunder in any jurisdiction (i) in which the Dealer Manager has not
informed the Wholesaler that counsel’s advice has been received that the Offered
Shares are qualified for sale or are exempt under the applicable securities or
Blue Sky laws thereof, or (ii) in which the Wholesaler may not lawfully engage.

 

(j)          The Wholesaler shall comply, in all material respects, with all
applicable laws, and the applicable rules and regulations of FINRA, the SEC,
state securities administrators and any other applicable regulatory body in
connection with the Offering. 

 

6

 

 

8.Indemnification; Contribution

 

(a)          The Dealer Manager will indemnify, defend (subject to Section 4 of
the Dealer Manager Agreement) and hold harmless the Wholesaler, its affiliates
and their respective officers, directors, shareholders, members, partners, other
equity-holders and control persons (collectively, the “Other Indemnified
Parties”), from and against any losses, claims (including the reasonable costs
of investigation and legal fees), damages or liabilities (or actions in respect
thereof), to which the Wholesaler, its affiliates or their respective Other
Indemnified Parties may become subject under the Securities Act or the Exchange
Act, or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon: (i) any inaccuracy
in or breach of a representation or warranty contained herein by the Dealer
Manager, any breach of a covenant or agreement contained herein of the Dealer
Manager, or any failure by the Dealer Manager to comply with state or federal
securities law applicable to the Offering; (ii) any untrue statement or alleged
untrue statement of a material fact contained in the information relating to the
Dealer Manager that appears in the Dealer Manager Sections of the Prospectus or
any amendment thereof, or arise out of or are based upon the omission or alleged
omission to state in the Dealer Manager Sections 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; and (iii) any
unauthorized use of sales materials or use of unauthorized verbal
representations concerning the Offered Shares by the Dealer Manager. The Dealer
Manager will reimburse the Wholesaler and its Other Indemnified Parties for any
legal or other expenses reasonably incurred by such Wholesaler, its affiliates
and their respective Other Indemnified Parties in connection with investigating
or defending such loss, claim, damage, liability or action.

 

(b)          The Wholesaler will indemnify, defend and hold harmless the Dealer
Manager, the Company and their respective Other Indemnified Parties, from and
against any losses, claims (including the reasonable costs of investigation and
legal fees), damages or liabilities (or actions in respect thereof), to which
the Dealer Manager, the Company and any of their respective Other Indemnified
Parties may become subject under the Securities Act or the Exchange Act, or
otherwise, insofar as such losses, claims (including the reasonable costs of
investigation and legal fees), damages or liabilities (or actions in respect
thereof) arise out of or are based upon: (i) any inaccuracy in or breach of a
representation or warranty contained herein by the Wholesaler, any breach of a
covenant or agreement contained herein of the Wholesaler, or any failure by the
Wholesaler to comply with state or federal securities laws applicable to the
Offering; and (ii) any unauthorized use of sales materials or use of
unauthorized verbal representations concerning the Shares by the Wholesaler.

 

(c)          Promptly after receipt by an indemnified party of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party, notify the indemnifying
party in writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under this Section 8
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in this Agreement. The indemnifying party
shall be entitled to appoint counsel of the indemnifying party’s choice at the
indemnifying party’s expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be subject to approval by the
indemnified party, not to be unreasonably withheld or delayed. Notwithstanding
the indemnifying party’s election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have the right to
employ and select separate counsel (including local counsel), subject to
approval by the indemnifying party not to be unreasonably withheld or delayed,
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel for the indemnified party
(subject to approval by the indemnified party not to be unreasonably withheld

 

7

 

 

or delayed) to represent the indemnified party within a reasonable time after
notice of the institution of such action or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the expense of the
indemnifying party. An indemnifying party may settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder but may not do so without the prior written consent of
the indemnified parties, unless such settlement, compromise or consent includes
an unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding.

 

(d)          If the right to indemnification provided for in this Section 8
would by its terms be available to a person hereunder, but is held to be
unavailable by a court of competent jurisdiction for any reason, then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party as a result of such Losses and expenses in respect
thereof, as incurred, in such proportion as is appropriate to reflect the
relative fault of the Dealer Manager and the Wholesaler, as applicable, in
connection with the statements, omissions or other circumstances which resulted
in such Losses or expenses, as well as any other relevant equitable
considerations. The relative fault of the Dealer Manager and the Wholesaler, as
applicable, shall be determined by reference to, among other things, the
parties’ relative intent, knowledge, and access to information. It is understood
that it would not be just and equitable if contribution pursuant to this Section
8(d) were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 8(d). Notwithstanding the provisions of this Section 8(d), the
Dealer Manager shall not be required to contribute any amount in excess of the
total price of the Offering Shares sold by it. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8(d), each Other
Indemnified Party affiliate of the Dealer Manager shall have the same rights to
contribution as the Dealer Manager and each Other Indemnified Party of the
Wholesaler shall have the same rights to contribution as the Wholesaler.

 

9.Relationship of Wholesaler, Participating Broker-Dealers and the Dealer
Manager

 

(a)          The obligations of each of the Wholesaler and the Participating
Broker-Dealers are several and not joint. Nothing herein contained shall
constitute the Wholesaler and the Participating Broker-Dealers, or any of them,
as an association, partnership, unincorporated business or other separate
entity. The Dealer Manager and the Company shall be under no liability to the
Wholesaler except for lack of good faith and for obligations expressly assumed
by the Dealer Manager and the Company in this Agreement.

 

(b)          The parties hereto acknowledge that, other than as expressly set
forth herein, the Wholesaler is not authorized to act as agent of the Dealer
Manager or the Company in any connection or transaction, and the Wholesaler
agrees that it will not so act or purport to so act.

 

(c)          The parties hereto acknowledge that the Wholesaler’s obligations
under this Agreement, including without limitation the Wholesaler Exclusivity
have no impact on, and in no way release the Dealer Manager from, the Dealer
Manager’s obligations and rights to act as the dealer manager for the Company
pursuant to Section 3.1 of the Dealer Manager Agreement.

 

10.Termination

 

This Agreement shall terminate upon the earlier to occur of (i) termination of
the Offering, (ii) the Second Closing (as defined in the Equity Purchase
Agreement (the “Equity Purchase Agreement”), dated as of September 30, 2014, by
and between ARC Properties Operating Partnership, L.P. and RCS Capital
Corporation), (iii) termination of the Equity Purchase Agreement or (iv)
December 31, 2014.

 

(a)          Wholesaler may terminate this Agreement at any time by giving ten
days’ prior written notice thereof to the other parties hereto. This Agreement
automatically shall terminate with no further action by any party hereto if the

 

8

 

 

Wholesaler or the Dealer Manager ceases to be a member in good standing of
FINRA, or with the securities commission of the state in which its principal
office is located. The Wholesaler will notify the Dealer Manager immediately if
the Wholesaler ceases to be a member in good standing of FINRA or with the
securities commission of any state in which the Wholesaler is currently
registered or licensed. The Dealer Manager will notify the Wholesaler
immediately if the Dealer Manager ceases to be a member in good standing of
FINRA or with the securities commission of any state in which the Dealer Manager
is currently registered or licensed.

 

(b)          In the event of termination under Section 11(b), the Dealer Manager
will continue to pay any Sourcing Fees with respect to RCS Sales to the
Wholesaler and reimburse costs and expenses incurred, to the extent reimbursable
under Section 3(c), for so long as Offered Shares remain outstanding (it being
understood and agreed that the calculation of the Sourcing Fees in such event
shall take into account the number of Offered Shares sold primarily from the
efforts of RCS Service Providers in the Offering). Notwithstanding the foregoing
sentence, the Dealer Manager will not continue to pay the Sourcing Fee to the
Wholesaler and reimburse costs and expenses related to the Offering incurred by
the Wholesaler pursuant to Section 3(c) subsequent to the termination of the
Offering to the extent, but only to the extent, that such payments or
reimbursements would cause the total underwriting compensation (as defined in
accordance with applicable FINRA rules) paid with respect to the Offering to
exceed 10% of the gross proceeds from the sale of the Offered Shares calculated
as of the termination of the Offering.

 

(c)          The termination of this Agreement for any reason shall not affect
(i) the Wholesaler’s obligations under the second sentence of Section 10(a),
(ii) the indemnification obligations under Section 8, or (iii) this Section 10.
Without limiting the foregoing, the provisions of this Agreement shall survive
the termination of this Agreement with respect to any matter arising while this
Agreement was in effect.

 

11.Amendment

 

(a)          The Dealer Manager has the right, subject to written consent from
the other parties hereto which shall not be unreasonably withheld or delayed, to
amend this Agreement as necessary, in the reasonable opinion of outside counsel
to the Dealer Manager, to comply with applicable law or the requirements of any
governmental or self-regulatory body or agency.

 

(b)          This Agreement may not otherwise be amended, supplemented or waived
except by the express written consent of the parties hereto. No waiver of any
provision of this Agreement may be implied from any course of dealing between or
among any of the parties hereto or from any failure by any party hereto to
assert its rights under this Agreement on any occasion or series of occasions.

 

12.Miscellaneous

 

(a)          No party may assign this Agreement without the prior written
consent of the other parties. This Agreement shall be binding upon and inure to
the benefit of the respective successors and permitted assigns of the parties
hereto.

 

(b)          All notices, requests, demands, approvals, consents, waivers and
other communications required or permitted to be given under this Agreement
(each, a “Notice”) shall be in writing and shall be (i) delivered personally,
(ii) mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, (iii) sent by next-day or overnight mail or
delivery, or (iv) sent by facsimile transmission (provided, however, that the
original copy thereof also is sent by one of the other means specified above in
this Section 13(b)):

 

If to the Dealer Manager:

 

Cole Capital Corporation

2325 East Camelback Road

 

9

 

 

Suite 1100

Phoenix, AZ 85016,

Attention: Jim Siegel, Chief Compliance Officer

Facsimile: (480) 449-7001

 
If to the Wholesaler:

 

Realty Capital Securities, LLC
One Beacon Street
14th Floor
Boston, MA 02108
Attention:

Facsimile:

 

or to such other Person or address as any party shall specify by Notice in
writing to the other parties in accordance with this Section 13(b). Each Notice
shall be deemed effective and given upon actual receipt or refusal of receipt.

 

(c)          This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to the principles of
choice of the law thereof.

 

(d)          If any party hereto initiates any legal action arising out of or in
connection with this Agreement, the prevailing party shall be entitled to
recover from the other party all reasonable attorneys’ fees, expert witness fees
and expenses incurred by the prevailing party in connection therewith.

 

(e)          All captions used in this Agreement are for convenience only, are
not a part hereof and are not to be used in construing or interpreting any
aspect hereof.

 

(f)          This Agreement may be executed (including by facsimile
transmission) with counterpart signature pages or in multiple counterparts, each
such counterpart to be deemed an original but which all together shall
constitute one and the same instrument.

 

(g)          If any provision of this Agreement, or the application of any
provision to any person or circumstance, shall be held to be inconsistent with
any law, ruling, rule or regulation, the remainder of this Agreement or the
application of the provision to persons or circumstances other than those as to
which it is held inconsistent, shall not be affected thereby.

 

If the foregoing is in accordance with your understanding of this Agreement,
please sign and return a counterpart signature page or a counterpart hereof,
whereupon this Agreement will become a binding agreement among us in accordance
with its terms.

 

[Signature pages follow.]

 

10

 

 

  COLE CAPITAL CORPORATION         By:     Name:     Title:           By:    
Name:     Title:  

 

Confirmed, Accepted and Agreed to   as of the date first above written:      
REALTY CAPITAL SECURITIES, LLC         By:     Name:     Title:    

  

[Signature Page to Wholesaling Agreement – CCIT II]

 

 

 

  

 Exhibit C-2

 

FORM OF WHOLESALING AGREEMENT

 

[                  ], 2014

Realty Capital Securities, LLC
One Beacon Street
14th Floor
Boston, MA 02108

 

Ladies and Gentlemen:

 

Cole Capital Corporation, a Delaware corporation (the “Dealer Manager”), with
its address at 2325 East Camelback Road, Suite 1100, Phoenix, AZ 85016, has
entered into an agreement dated as of August 26, 2013 (the “Dealer Manager
Agreement”), with Cole Real Estate Income Strategy (Daily NAV), Inc. (the
“Company”). Under the Dealer Manager Agreement, the Dealer Manager serves as the
Company’s exclusive Dealer Manager in connection with a public offering (the
“Offering”) of the Company’s common stock. The shares of the Company’s stock
(the “Offered Shares”) are being issued and sold to the public on a “best
efforts” basis through the Dealer Manager and the broker-dealers and other
appropriately licensed firms participating in the Offering (the “Participating
Broker-Dealers”), pursuant to Participating Broker-Dealer Agreements between the
Dealer Manager and each Participating Broker-Dealer (each, a “Participating
Broker-Dealer Agreement”). The Dealer-Manager shall provide to the Wholesaler
the form of the Participating Broker-Dealer Agreement used by the Dealer
Manager. Capitalized terms used herein but not otherwise defined shall have the
respective meanings ascribed to them in the Dealer Manager Agreement.

 

In consideration of the mutual covenants and agreements contained herein,
intending to be legally bound, the parties hereby agree to the following terms
and conditions set forth in this Wholesaling Agreement (this “Agreement”):

 

1.Appointment and Acceptance of the Wholesaler

 

Upon the terms and subject to the conditions set forth in this Agreement, the
Dealer Manager hereby appoints Realty Capital Securities, LLC, a Delaware
limited liability company (the “Wholesaler”), and the Wholesaler hereby accepts
such appointment, as the Dealer Manager’s distribution agent to assist, through
the Wholesaler’s employees, agents, contractors, registered representatives and
all other representatives who will perform services hereunder (collectively, the
“RCS Service Providers”), the Dealer Manager with the sale of Offered Shares
through the recruitment of, and the provision of assistance to, Participating
Broker-Dealers, and the Wholesaler desires to accept such engagement; provided,
however, that nothing herein shall be construed to: (i) contravene the Company’s
appointment of the Dealer Manager as its exclusive agent and dealer manager
during the Offering Period, and the Dealer Manager’s acceptance of such
appointment, pursuant to Section 3.1 of the Dealer Manager Agreement; or (ii)
imply that the Dealer Manager shall not have sole discretion to accept or reject
any subscription for the Offered Shares in whole or in part.

 

2.Undertakings of the Wholesaler

 

(a)          The Wholesaler will use diligent efforts to recruit certain
broker-dealers and other appropriately licensed firms to serve as Participating
Broker-Dealers, each of which shall be a member of the Financial Industry
Regulatory Authority, Inc. (“FINRA”) in good standing, to agree to offer and
sell the Offered Shares on a best efforts basis without any commitment on the
Participating Broker-Dealers’ part to purchase any Offered Shares pursuant to a
Participating Broker-Dealer Agreement with the Dealer Manager.

 

(b)          The Wholesaler will use diligent efforts to assist the Dealer
Manager in providing certain services to Participating Broker-Dealers in
connection with the Offering, which will consist primarily of:

 

 

 

 

(i)          providing training and education regarding the Company and the
offering of the Offered Shares to Participating Broker-Dealers;

 

(ii)         providing marketing and sales support for Participating
Broker-Dealers,; and

 

(iii)        such other assistance to Participating Broker-Dealers and their
registered representatives in marketing the Offered Shares and otherwise
participating in the Offering as shall be reasonably determined to be
appropriate by the Dealer Manager.

 

(c)          The Wholesaler acknowledges that it is familiar with FINRA Rule
2310 and that it will comply in all material respects with all the terms thereof
to the extent FINRA Rule 2310 applies to the conduct contemplated herein.
Notwithstanding the foregoing sentence, the Wholesaler shall not be responsible
for the obligations of the Dealer Manager under the Dealer Manager Agreement and
Section 6(i) to assure compliance with the organization and offering expenses
limitations of FINRA Rule 2310(b)(4).

 

3.Compensation and Expense Reimbursement

 

(a)          In consideration for the Wholesaler performing its obligations
under this Agreement, the Dealer Manager shall pay the Wholesaler a sourcing fee
(the “Sourcing Fee”) equal to 3.375% of the Selling Price of each of the Offered
Shares sold by Participating Broker-Dealers who entered into dealer agreements
with the Dealer Manager primarily as a result of the efforts of RCS Service
Providers (“RCS Sales”); provided, however, the Sourcing Fee shall be payable
solely from that portion of the Dealer Manager Fee that is (i) actually received
by the Dealer Manager from the Company pursuant to Section 3,3 of the Dealer
Manager Agreement, and (ii) not reallowed to any Participating Broker-Dealer
pursuant to Section 3.3 of the Dealer Manager Agreement (a “Sourcing Fee
Reallowance”) in respect of any RCS Sales.

 

(b)          The Sourcing Fee shall be paid substantially concurrently with the
receipt of corresponding payments to the Dealer Manager from the Company
pursuant to Section 3.3 of the Dealer Manager Agreement, but in no event no
later than five business days thereafter.

 

(c)          The Dealer Manager also will reimburse the Wholesaler for all costs
and expenses incurred that are: (i) in connection with bona fide due diligence
activities; and (ii) incident to the Offering, but only to the extent such costs
or expenses (A) are permitted pursuant to prevailing rules and regulations of
FINRA, (B) would have been incurred by the Dealer Manager if the Wholesaler had
not incurred them, and (C) are otherwise eligible for reimbursement from the
Company pursuant to Section 3.5 of the Dealer Manager Agreement. The Wholesaler
will present the Dealer Manager with itemized and detailed invoices for all
incurred costs and expenses that are reimbursable pursuant to this Section 3(c).
The Dealer Manager will submit such request to the Company within five business
days following receipt of such invoices and will reimburse the Wholesaler within
five business days following receipt of funds from the Company for such
reimbursement.

 

4.Representations and Warranties of the Dealer Manager

 

(a)          The Dealer Manager is a corporation duly organized and validly
existing under the laws of the State of Delaware, with full power and authority
to conduct its business and to enter into this Agreement and to perform the
transactions contemplated hereby.

 

(b)          This Agreement has been duly authorized, executed and delivered by
the Dealer Manager, constitutes a legal, valid and binding agreement of the
Dealer Manager, enforceable against the Dealer Manager in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
and by general equitable principles relating to the availability of remedies,
and except to the extent that the enforceability of the indemnity provisions
contained in this Agreement may be limited under applicable securities laws.

 

2

 

 

(c)          The Dealer Manager (A) is duly registered as a broker-dealer
pursuant to the provisions of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), (B) is a member of FINRA in good standing, (C) is a broker
or dealer registered as such in those states and jurisdictions where the Dealer
Manager is required to be registered in order to provide the services
contemplated by this Agreement and the Dealer Manager Agreement, and (D) it and
those of its employees and representatives who are required to have approvals,
licenses or registrations to act under this Agreement have all applicable
required approvals, licenses and registrations to act under this Agreement.
There is no provision in the Dealer Manager’s FINRA membership agreement that
would prohibit or restrict the ability of the Dealer Manager to carry out the
services related to the Offering as contemplated by this Agreement and the
Dealer Manager Agreement or to perform its obligations hereunder and thereunder.
With respect to its participation in the offer and sale of the Offered Shares
(including, without limitation any resales and transfers of Offered Shares), the
Dealer Manager shall comply in all material respects with all applicable
requirements of (1) the Securities Act of 1933, as amended (the “Securities
Act”), and the applicable rules and regulations promulgated thereunder (the
“Securities Act Regulations”), the Exchange Act and the applicable rules and
regulations promulgated thereunder (the “Exchange Act Regulations”) and all
other federal rules and regulations applicable to the Offering and the sale of
the Offered Shares, (2) applicable state securities or “blue sky” laws, and (3)
the rules set forth in the FINRA rulebook applicable to the Offering, which
currently consists of rules promulgated by FINRA, the National Association of
Securities Dealers (“NASD”) and the New York Stock Exchange (collectively, the
“FINRA Rules”), specifically including, but not in any way limited to, FINRA
Rule 2310, FINRA Rule 5110, FINRA Rule 5141, NASD Rule 2340 and NASD Rule 2420.

 

(d)          The Dealer Manager and its representatives have all required
Governmental Licenses and have made all filings and registrations with federal
and state governmental and regulatory agencies required to conduct their
business and to perform their obligations under this Agreement and the Dealer
Manager Agreement, except where the inability of such Governmental Licenses to
be in full force and effect would not have a material adverse effect on the
business, properties, financial position, results of operations or cash flows of
the Dealer Manager or as otherwise may be disclosed in the Registration
Statement and the Prospectus. The performance of the obligations of the Dealer
Manager under this Agreement and the Dealer Manager Agreement will not
(A) violate or result in a breach of any provisions of its articles of
incorporation or by-laws (or similar instruments or documents) or any order, law
or regulation binding upon it, and (B) result in a material breach of any
provisions of any agreement or instrument to which it is a party or which is
otherwise binding upon it.

 

5.Representations and Warranties of the Wholesaler

 

The Wholesaler represents and warrants to the Dealer Manager:

 

(a)          The Wholesaler is a limited liability company duly organized and
validly existing under the laws of the State of Delaware, with full power and
authority to conduct its business and to enter into this Agreement and to
perform the transactions contemplated hereby.

 

(b)          This Agreement has been duly authorized, executed and delivered by
the Wholesaler and, assuming due authorization, execution and delivery of this
Agreement by the Dealer Manager, constitutes a legal, valid and binding
agreement of the Wholesaler, enforceable against the Wholesaler in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general equitable principles relating to the
availability of remedies, and except to the extent that the enforceability of
the indemnity provisions contained in this Agreement may be limited under
applicable securities laws.

 

(c)          The Wholesaler (i) is duly registered as a broker-dealer pursuant
to the provisions of the Exchange Act, (ii) is a member of FINRA in good
standing, (iii) is a broker or dealer registered as such in those states and
jurisdictions where the Wholesaler is required to be registered in order to
provide the services contemplated by this Agreement, and (iv) it and those of
its employees and representatives who are required to have approvals, licenses
or registrations to act under this Agreement have all applicable required
approvals, licenses and registrations to act under this Agreement. There is no
provision in the Wholesaler’s FINRA membership agreement that would prohibit or
restrict the ability of the

 

3

 

 

Wholesaler to carry out the services related to the Offering as contemplated by
this Agreement or to perform its obligations hereunder. With respect to its
participation in the offer and sale of the Offered Shares (including, without
limitation any resales and transfers of Offered Shares), the Wholesaler agrees
to comply in all material respects with all applicable requirements, in each
case to the extent such requirements are applicable to the Wholesaler in
connection with the performance of its obligations hereunder, of (i) the
Securities Act, the Exchange Act, the Securities Act Regulations and the
Exchange Act Regulations and all other federal rules and regulations applicable
to the Offering and the sale of the Offered Shares, (ii) applicable state
securities or “blue sky” laws, and (iii) the FINRA Rules, specifically
including, but not in any way limited to, FINRA Rule 2310, FINRA Rule 5110,
FINRA Rule 5141, NASD Rule 2340 and NASD Rule 2420.

 

(d)          The Wholesaler and those of its employees and representatives who
are required to have Governmental Licenses have all required Governmental
Licenses and have made all filings and registrations with federal and state
governmental and regulatory agencies required to conduct their business and to
perform their obligations under this Agreement. The performance of the
obligations of the Wholesaler under this Agreement will not violate or result in
a breach of any provisions of its articles of incorporation or by-laws (or
similar instruments or documents) or any agreement, instrument, order, law or
regulation binding upon it.

 

(e)          To the extent required by applicable law in connection with the
transactions contemplated in this Agreement, the Wholesaler represents that it
has established and implemented an anti-money laundering compliance program
(“AML Program”) in accordance with applicable law, including applicable FINRA
Rules, Exchange Act Regulations, the USA PATRIOT Act and implementing
regulations, specifically including, but not limited to, Section 352 of the
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001 (the “Money Laundering Abatement Act,” and together with the USA PATRIOT
Act, the “AML Rules”) reasonably expected to detect and cause the reporting of
suspicious transactions in connection with the offering and sale of the Offered
Shares. The Wholesaler further represents that it is currently in compliance
with all AML Rules, specifically including, but not limited to, the Customer
Identification Program requirements under Section 326 of the Money Laundering
Abatement Act; has Know Your Customer (KYC) policies and procedures in place;
that the AML Program has been adopted by a person with sufficient authority to
oversee the AML policies and procedures; that the AML Program has education
and/or training programs for officers and employees regarding AML policies and
procedures; and that the Wholesaler will remain in compliance with such
requirements. The Wholesaler shall, upon request by the Dealer Manager or the
Company, provide a certification that, as of the date of such certification, (i)
its AML Program then in effect is consistent with the AML Rules and (ii) it is
currently in compliance with its AML Program and all AML Rules, specifically
including, but not limited to, the Customer Identification Program requirements
under Section 326 of the Money Laundering Abatement Act.

 

6.Covenants of the Dealer Manager

 

(a)          The Dealer Manager shall comply with the record keeping
requirements of the Exchange Act, including but not limited to, Rules 17a-3 and
17a-4 promulgated under the Exchange Act. The Dealer Manager will make such
documents and records available to (i) the Wholesaler, upon reasonable request,
and (ii) representatives of the Securities and Exchange Commission (“SEC”),
FINRA and applicable state securities administrators upon the receipt of an
appropriate document subpoena or other appropriate request for documents from
any such agency; provided, however, that if the Dealer Manager determines, in
its sole discretion, not to provide documents in accordance with this section,
it may oppose such document subpoena or other request, provided that the Dealer
Manager shall be responsible for all reasonable direct costs of such opposition.
The Dealer Manager further agrees to keep such required records with respect to
each customer who purchases Offered Shares, the customer’s suitability and the
amount of Offered Shares sold, and to retain such records for six years or such
period of time as may be required by the SEC, any state securities commission,
FINRA or the Company, whichever is later. The Wholesaler, agree that the Dealer
Manager can satisfy its recordkeeping obligations hereunder by contractually
requiring such information to be maintained by the Participating Broker-Dealers,
investment advisors or banks offering the Offered Shares.

 

4

 

 

(b)          The Dealer Manager shall abide by and comply with: (i) the privacy
standards and requirements of the Gramm-Leach Bliley Act of 1999 (“GLB Act”);
(ii) the privacy standards and requirements of any other applicable federal or
state law; (iii) any reasonable written privacy policies and standards provided
to the Dealer Manager by the Wholesaler and the Company; and (d) the Dealer
Manager’s own internal privacy policies and procedures, each as may be amended
from time to time.

 

(c)          To the extent the Dealer Manager directly sells Offered Shares, the
Dealer Manager will only offer and sell Offered Shares in jurisdictions in which
qualifications or exemptions for the offer and sale of the Offered Shares are in
effect as of the relevant date (“Qualified Jurisdictions”). No Offered Shares
shall be offered or sold for the account of the Company in any other states or
foreign jurisdictions.

 

(d)          The Dealer Manager is familiar with Rule 15c2-8 under the Exchange
Act, relating to the distribution of preliminary and final Prospectuses, and
confirms that it has complied and will comply therewith.

 

(e)          The Dealer Manager will notify the Wholesaler immediately (i) when
any amendment to the Registration Statement shall have become effective, (ii) of
the issuance by the SEC or any other Federal or state regulatory body of any
order suspending the effectiveness of the Registration Statement under the
Securities Act or the registration of Offered Shares under the Blue Sky or
securities laws of any state or other jurisdiction or any order or decree
enjoining the offering or the use of the Prospectus or of the institution, or
notice of the intended institution, of any action or proceeding for that
purpose, and (iii) when any Prospectus shall have been filed under the
Securities Act with the SEC.

 

(f)          The Dealer Manager will deliver to the Wholesaler as promptly as
practicable from time to time during the period when the Prospectus is required
to be delivered under the Securities Act, with reasonable quantities of copies
of the Prospectus (as amended or supplemented), as provided by the Company, for
delivery to investors and for the purposes contemplated by the Securities Act or
any rules or regulations thereunder.

 

(g)          The Dealer Manager will provide a reasonable amount of Authorized
Sales Material to the Wholesaler as and when requested by the Wholesaler,
subject to receipt of such material by the Dealer Manager from the Company.

 

(h)          The Dealer Manager shall be responsible for the timely filing of
all documents and information to be filed with the Corporate Financing
Department of FINRA, as required under FINRA Rules 5110(b)(5) and 5110(b)(6),
and shall have and maintain internal controls sufficient to monitor compliance
with the organization and offering expense limitations of FINRA Rule 2310(b)(4).

 

(i)          The Dealer Manager shall comply, in all material respects, with all
applicable laws, and the applicable rules and regulations of FINRA, the SEC,
state securities administrators and any other applicable regulatory body in
connection with the Offering.

 

7.Covenants of the Wholesaler

 

(a)          The Wholesaler shall, in all material respects and to the extent
such requirements are applicable to the Wholesaler in connection with the
performance of its obligations hereunder, comply, with the record keeping
requirements of the Exchange Act, including but not limited to, Rules 17a-3 and
17a-4 promulgated under the Exchange Act. The Wholesaler will make such
documents and records available to (i) the Dealer Manager and the Company upon
reasonable request, and (ii) representatives of the SEC, FINRA and applicable
state securities administrators upon the receipt of an appropriate document
subpoena or other appropriate request for documents from any such agency;
provided, however, that in the event the Wholesaler determines, in its sole
discretion, not to provide documents in accordance with this section, it may
oppose such document subpoena or other request, provided that the Wholesaler
shall be responsible for all reasonable direct costs of such opposition.

 

5

 

 

(b)          The Wholesaler shall, in all material respects and to the extent
such requirements are applicable to the Wholesaler in connection with the
performance of its obligations hereunder, abide by and comply with (i) the
privacy standards and requirements of the GLB Act; (ii) the privacy standards
and requirements of any other applicable federal or state law; (iii) any
reasonable written privacy policies and standards provided to the Wholesaler by
the Dealer Manager and the Company; and (iv) the Wholesaler’s own internal
privacy policies and procedures, each as may be amended from time to time.

 

(c)          To the extent the Wholesaler directly sells Offered Shares in
connection with the performance of its obligations hereunder, the Wholesaler
will only offer and sell Offered Shares in Qualified Jurisdictions. No Offered
Shares shall be offered or sold for the account of the Company in any other
states or foreign jurisdictions.

 

(d)          The Wholesaler is familiar with Rule 15c2-8 under the Exchange Act,
relating to the distribution of preliminary and final Prospectuses, and confirms
that it will, to the extent applicable to the Wholesaler in connection with the
performance of its obligations hereunder, comply with Rule 15c2-8 under the
Exchange Act.

 

(e)          The Dealer Manager will provide the Wholesaler with certain
Authorized Sales Materials to be used by the Wholesaler and the Participating
Broker-Dealers in connection with the Offering. If the Wholesaler elects to use
such Authorized Sales Materials in connection with the performance of its
obligations hereunder, then the Wholesaler agrees that such material shall not
be used by it in connection with the Offering and that it will direct
Participating Broker-Dealers not to make such use of any Authorized Sales
Materials unless accompanied or preceded by the Prospectus. If the Wholesaler
elects to use such Authorized Sales Materials in connection with the performance
of its obligations hereunder, the Wholesaler will only use Authorized Sales
Materials provided by the Dealer Manager. The Wholesaler shall not give or
provide any information or make any representation other than those contained in
the Prospectus or the Authorized Sales Materials. The Wholesaler will not use
any “broker-dealer use only” Authorized Sales Materials with members of the
public in connection with offers or sales or the Offered Shares.

 

(f)          The Wholesaler will suspend or terminate the offering and sale of
the Offered Shares by the Wholesaler upon request of the Company at any time and
resume offering and sale of the Offered Shares upon subsequent request of the
Company if required to do so in connection with the performance of its
obligations hereunder.

 

(g)          The Wholesaler will provide to the Company and the Dealer Manager
as soon as practicable upon receipt by the Wholesaler copies of any written or
otherwise documented customer complaints received by the Wholesaler from
Participating Broker-Dealers relating in any way to the Offering (including, but
not limited to, the manner in which the Offered Shares are offered by any
Participating Broker-Dealer), the Offered Shares or the Company.

 

(h)          Other than with respect to use of Authorized Sales Materials or the
Prospectus or otherwise pursuant to or in connection with this Agreement, the
Wholesaler will not, without the Company’s prior written consent, make a
source-identifying use of (i) the Company’s name, brand, logo or trademark or
any reasonably similar variant or derivative thereof or (ii) the “ Cole ” name,
brand, logo or trademark or any reasonably similar variant or derivative
thereof.

 

(i)          The Wholesaler shall under no circumstances engage in any
activities hereunder in any jurisdiction (i) in which the Dealer Manager has not
informed the Wholesaler that counsel’s advice has been received that the Offered
Shares are qualified for sale or are exempt under the applicable securities or
Blue Sky laws thereof, or (ii) in which the Wholesaler may not lawfully engage.

 

(j)          The Wholesaler shall comply, in all material respects, with all
applicable laws, and the applicable rules and regulations of FINRA, the SEC,
state securities administrators and any other applicable regulatory body in
connection with the Offering.

 

6

 

 

8.Indemnification; Contribution

 

(a)          The Dealer Manager will indemnify, defend (subject to Section 4 of
the Dealer Manager Agreement) and hold harmless the Wholesaler, its affiliates
and their respective officers, directors, shareholders, members, partners, other
equity-holders and control persons (collectively, the “Other Indemnified
Parties”), from and against any losses, claims (including the reasonable costs
of investigation and legal fees), damages or liabilities (or actions in respect
thereof), to which the Wholesaler, its affiliates or their respective Other
Indemnified Parties may become subject under the Securities Act or the Exchange
Act, or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon: (i) any inaccuracy
in or breach of a representation or warranty contained herein by the Dealer
Manager, any breach of a covenant or agreement contained herein of the Dealer
Manager, or any failure by the Dealer Manager to comply with state or federal
securities law applicable to the Offering; (ii) any untrue statement or alleged
untrue statement of a material fact contained in the information relating to the
Dealer Manager that appears in the Dealer Manager Sections of the Prospectus or
any amendment thereof, or arise out of or are based upon the omission or alleged
omission to state in the Dealer Manager Sections 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; and (iii) any
unauthorized use of sales materials or use of unauthorized verbal
representations concerning the Offered Shares by the Dealer Manager. The Dealer
Manager will reimburse the Wholesaler and its Other Indemnified Parties for any
legal or other expenses reasonably incurred by such Wholesaler, its affiliates
and their respective Other Indemnified Parties in connection with investigating
or defending such loss, claim, damage, liability or action.

 

(b)          The Wholesaler will indemnify, defend and hold harmless the Dealer
Manager, the Company and their respective Other Indemnified Parties, from and
against any losses, claims (including the reasonable costs of investigation and
legal fees), damages or liabilities (or actions in respect thereof), to which
the Dealer Manager, the Company and any of their respective Other Indemnified
Parties may become subject under the Securities Act or the Exchange Act, or
otherwise, insofar as such losses, claims (including the reasonable costs of
investigation and legal fees), damages or liabilities (or actions in respect
thereof) arise out of or are based upon: (i) any inaccuracy in or breach of a
representation or warranty contained herein by the Wholesaler, any breach of a
covenant or agreement contained herein of the Wholesaler, or any failure by the
Wholesaler to comply with state or federal securities laws applicable to the
Offering; and (ii) any unauthorized use of sales materials or use of
unauthorized verbal representations concerning the Shares by the Wholesaler.

 

(c)          Promptly after receipt by an indemnified party of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party, notify the indemnifying
party in writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under this Section 8
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in this Agreement. The indemnifying party
shall be entitled to appoint counsel of the indemnifying party’s choice at the
indemnifying party’s expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be subject to approval by the
indemnified party, not to be unreasonably withheld or delayed. Notwithstanding
the indemnifying party’s election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have the right to
employ and select separate counsel (including local counsel), subject to
approval by the indemnifying party not to be unreasonably withheld or delayed,
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel for the indemnified party
(subject to approval by the indemnified party not to be unreasonably withheld

 

7

 

 

or delayed) to represent the indemnified party within a reasonable time after
notice of the institution of such action or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the expense of the
indemnifying party. An indemnifying party may settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder but may not do so without the prior written consent of
the indemnified parties, unless such settlement, compromise or consent includes
an unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding.

 

(d)          If the right to indemnification provided for in this Section 8
would by its terms be available to a person hereunder, but is held to be
unavailable by a court of competent jurisdiction for any reason, then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party as a result of such Losses and expenses in respect
thereof, as incurred, in such proportion as is appropriate to reflect the
relative fault of the Dealer Manager and the Wholesaler, as applicable, in
connection with the statements, omissions or other circumstances which resulted
in such Losses or expenses, as well as any other relevant equitable
considerations. The relative fault of the Dealer Manager and the Wholesaler, as
applicable, shall be determined by reference to, among other things, the
parties’ relative intent, knowledge, and access to information. It is understood
that it would not be just and equitable if contribution pursuant to this Section
8(d) were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 8(d). Notwithstanding the provisions of this Section 8(d), the
Dealer Manager shall not be required to contribute any amount in excess of the
total price of the Offering Shares sold by it. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8(d), each Other
Indemnified Party affiliate of the Dealer Manager shall have the same rights to
contribution as the Dealer Manager and each Other Indemnified Party of the
Wholesaler shall have the same rights to contribution as the Wholesaler.

 

9.Relationship of Wholesaler, Participating Broker-Dealers and the Dealer
Manager

 

(a)          The obligations of each of the Wholesaler and the Participating
Broker-Dealers are several and not joint. Nothing herein contained shall
constitute the Wholesaler and the Participating Broker-Dealers, or any of them,
as an association, partnership, unincorporated business or other separate
entity. The Dealer Manager and the Company shall be under no liability to the
Wholesaler except for lack of good faith and for obligations expressly assumed
by the Dealer Manager and the Company in this Agreement.

 

(b)          The parties hereto acknowledge that, other than as expressly set
forth herein, the Wholesaler is not authorized to act as agent of the Dealer
Manager or the Company in any connection or transaction, and the Wholesaler
agrees that it will not so act or purport to so act.

 

(c)          The parties hereto acknowledge that the Wholesaler’s obligations
under this Agreement, including without limitation the Wholesaler Exclusivity
have no impact on, and in no way release the Dealer Manager from, the Dealer
Manager’s obligations and rights to act as the dealer manager for the Company
pursuant to Section 3.1 of the Dealer Manager Agreement.

 

10.Termination

 

This Agreement shall terminate upon the earlier to occur of (i) termination of
the Offering, (ii) the Second Closing (as defined in the Equity Purchase
Agreement (the “Equity Purchase Agreement”), dated as of September 30, 2014, by
and between ARC Properties Operating Partnership, L.P. and RCS Capital
Corporation), (iii) termination of the Equity Purchase Agreement or (iv)
December 31, 2014.

 

(a)          Wholesaler may terminate this Agreement at any time by giving ten
days’ prior written notice thereof to the other parties hereto. This Agreement
automatically shall terminate with no further action by any party hereto if the

 

8

 

 

Wholesaler or the Dealer Manager ceases to be a member in good standing of
FINRA, or with the securities commission of the state in which its principal
office is located. The Wholesaler will notify the Dealer Manager immediately if
the Wholesaler ceases to be a member in good standing of FINRA or with the
securities commission of any state in which the Wholesaler is currently
registered or licensed. The Dealer Manager will notify the Wholesaler
immediately if the Dealer Manager ceases to be a member in good standing of
FINRA or with the securities commission of any state in which the Dealer Manager
is currently registered or licensed.

 

(b)          In the event of termination under Section 11(b), the Dealer Manager
will continue to pay any Sourcing Fees with respect to RCS Sales to the
Wholesaler and reimburse costs and expenses incurred, to the extent reimbursable
under Section 3(c), for so long as Offered Shares remain outstanding (it being
understood and agreed that the calculation of the Sourcing Fees in such event
shall take into account the number of Offered Shares sold primarily from the
efforts of RCS Service Providers in the Offering). Notwithstanding the foregoing
sentence, the Dealer Manager will not continue to pay the Sourcing Fee to the
Wholesaler and reimburse costs and expenses related to the Offering incurred by
the Wholesaler pursuant to Section 3(c) subsequent to the termination of the
Offering to the extent, but only to the extent, that such payments or
reimbursements would cause the total underwriting compensation (as defined in
accordance with applicable FINRA rules) paid with respect to the Offering to
exceed 10% of the gross proceeds from the sale of the Offered Shares calculated
as of the termination of the Offering.

 

(c)          The termination of this Agreement for any reason shall not affect
(i) the Wholesaler’s obligations under the second sentence of Section 10(a),
(ii) the indemnification obligations under Section 8, or (iii) this Section 10.
Without limiting the foregoing, the provisions of this Agreement shall survive
the termination of this Agreement with respect to any matter arising while this
Agreement was in effect.

 

11.Amendment

 

(a)          The Dealer Manager has the right, subject to written consent from
the other parties hereto which shall not be unreasonably withheld or delayed, to
amend this Agreement as necessary, in the reasonable opinion of outside counsel
to the Dealer Manager, to comply with applicable law or the requirements of any
governmental or self-regulatory body or agency.

 

(b)          This Agreement may not otherwise be amended, supplemented or waived
except by the express written consent of the parties hereto. No waiver of any
provision of this Agreement may be implied from any course of dealing between or
among any of the parties hereto or from any failure by any party hereto to
assert its rights under this Agreement on any occasion or series of occasions.

 

12.Miscellaneous

 

(a)          No party may assign this Agreement without the prior written
consent of the other parties. This Agreement shall be binding upon and inure to
the benefit of the respective successors and permitted assigns of the parties
hereto.

 

(b)          All notices, requests, demands, approvals, consents, waivers and
other communications required or permitted to be given under this Agreement
(each, a “Notice”) shall be in writing and shall be (i) delivered personally,
(ii) mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, (iii) sent by next-day or overnight mail or
delivery, or (iv) sent by facsimile transmission (provided, however, that the
original copy thereof also is sent by one of the other means specified above in
this Section 13(b)):

 

If to the Dealer Manager:

 

Cole Capital Corporation

2325 East Camelback Road

 

9

 

 

Suite 1100

Phoenix, AZ 85016,

Attention: Jim Siegel, Chief Compliance Officer

Facsimile: (480) 449-7001

If to the Wholesaler:

 

Realty Capital Securities, LLC
One Beacon Street
14th Floor
Boston, MA 02108
Attention:

Facsimile:

 

or to such other Person or address as any party shall specify by Notice in
writing to the other parties in accordance with this Section 13(b). Each Notice
shall be deemed effective and given upon actual receipt or refusal of receipt.

 

(c)          This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to the principles of
choice of the law thereof.

 

(d)          If any party hereto initiates any legal action arising out of or in
connection with this Agreement, the prevailing party shall be entitled to
recover from the other party all reasonable attorneys’ fees, expert witness fees
and expenses incurred by the prevailing party in connection therewith.

 

(e)          All captions used in this Agreement are for convenience only, are
not a part hereof and are not to be used in construing or interpreting any
aspect hereof.

 

(f)          This Agreement may be executed (including by facsimile
transmission) with counterpart signature pages or in multiple counterparts, each
such counterpart to be deemed an original but which all together shall
constitute one and the same instrument.

 

(g)          If any provision of this Agreement, or the application of any
provision to any person or circumstance, shall be held to be inconsistent with
any law, ruling, rule or regulation, the remainder of this Agreement or the
application of the provision to persons or circumstances other than those as to
which it is held inconsistent, shall not be affected thereby.

 

If the foregoing is in accordance with your understanding of this Agreement,
please sign and return a counterpart signature page or a counterpart hereof,
whereupon this Agreement will become a binding agreement among us in accordance
with its terms.

 

[Signature pages follow.]

 

10

 

  

  COLE CAPITAL CORPORATION         By:     Name:     Title:           By:    
Name:     Title:  

 

Confirmed, Accepted and Agreed to   as of the date first above written:        
REALTY CAPITAL SECURITIES, LLC         By:     Name:     Title:    

 

[Signature Page to Wholesaling Agreement – INAV] 

 

 

 

  

Exhibit C-3

 

FORM OF WHOLESALING AGREEMENT

 

[                  ], 2014

Realty Capital Securities, LLC

One Beacon Street
14th Floor
Boston, MA 02108

 

Ladies and Gentlemen:

 

Cole Capital Corporation, a Delaware corporation (the “Dealer Manager”), with
its address at 2325 East Camelback Road, Suite 1100, Phoenix, AZ 85016, has
entered into an agreement dated as of February 10, 2011 (the “Dealer Manager
Agreement”), with Cole Corporate Income Trust, Inc. (the “Company”). Under the
Dealer Manager Agreement, the Dealer Manager serves as the Company’s exclusive
Dealer Manager in connection with a public offering (the “Offering”) of the
Company’s common stock. The shares of the Company’s stock (the “Offered Shares”)
are being issued and sold to the public on a “best efforts” basis through the
Dealer Manager and the broker-dealers and other appropriately licensed firms
participating in the Offering (the “Participating Broker-Dealers”), pursuant to
Participating Broker-Dealer Agreements between the Dealer Manager and each
Participating Broker-Dealer (each, a “Participating Broker-Dealer Agreement”).
The Dealer-Manager shall provide to the Wholesaler the form of the Participating
Broker-Dealer Agreement used by the Dealer Manager. Capitalized terms used
herein but not otherwise defined shall have the respective meanings ascribed to
them in the Dealer Manager Agreement.

 

In consideration of the mutual covenants and agreements contained herein,
intending to be legally bound, the parties hereby agree to the following terms
and conditions set forth in this Wholesaling Agreement (this “Agreement”):

 

1.Appointment and Acceptance of the Wholesaler

 

Upon the terms and subject to the conditions set forth in this Agreement, the
Dealer Manager hereby appoints Realty Capital Securities, LLC, a Delaware
limited liability company (the “Wholesaler”), and the Wholesaler hereby accepts
such appointment, as the Dealer Manager’s distribution agent to assist, through
the Wholesaler’s employees, agents, contractors, registered representatives and
all other representatives who will perform services hereunder (collectively, the
“RCS Service Providers”), the Dealer Manager with the sale of Offered Shares
through the recruitment of, and the provision of assistance to, Participating
Broker-Dealers, and the Wholesaler desires to accept such engagement; provided,
however, that nothing herein shall be construed to: (i) contravene the Company’s
appointment of the Dealer Manager as its exclusive agent and dealer manager
during the Offering Period, and the Dealer Manager’s acceptance of such
appointment, pursuant to Section 3.1 of the Dealer Manager Agreement; or (ii)
imply that the Dealer Manager shall not have sole discretion to accept or reject
any subscription for the Offered Shares in whole or in part.

 

2.Undertakings of the Wholesaler

 

(a)          The Wholesaler will use diligent efforts to recruit certain
broker-dealers and other appropriately licensed firms to serve as Participating
Broker-Dealers, each of which shall be a member of the Financial Industry
Regulatory Authority, Inc. (“FINRA”) in good standing, to agree to offer and
sell the Offered Shares on a best efforts basis without any commitment on the
Participating Broker-Dealers’ part to purchase any Offered Shares pursuant to a
Participating Broker-Dealer Agreement with the Dealer Manager.

 

(b)          The Wholesaler will use diligent efforts to assist the Dealer
Manager in providing certain services to Participating Broker-Dealers in
connection with the Offering, which will consist primarily of:

 

 

 

 

(i)          providing training and education regarding the Company and the
offering of the Offered Shares to Participating Broker-Dealers;

 

(ii)         providing marketing and sales support for Participating
Broker-Dealers,; and

 

(iii)        such other assistance to Participating Broker-Dealers and their
registered representatives in marketing the Offered Shares and otherwise
participating in the Offering as shall be reasonably determined to be
appropriate by the Dealer Manager.

 

(c)          The Wholesaler acknowledges that it is familiar with FINRA Rule
2310 and that it will comply in all material respects with all the terms thereof
to the extent FINRA Rule 2310 applies to the conduct contemplated herein.
Notwithstanding the foregoing sentence, the Wholesaler shall not be responsible
for the obligations of the Dealer Manager under the Dealer Manager Agreement and
Section 6(i) to assure compliance with the organization and offering expenses
limitations of FINRA Rule 2310(b)(4).

 

3.Compensation and Expense Reimbursement

 

(a)          In consideration for the Wholesaler performing its obligations
under this Agreement, the Dealer Manager shall pay the Wholesaler a sourcing fee
(the “Sourcing Fee”) equal to 1.80% of the Selling Price of each of the Offered
Shares sold by Participating Broker-Dealers who entered into dealer agreements
with the Dealer Manager primarily as a result of the efforts of RCS Service
Providers (“RCS Sales”); provided, however, the Sourcing Fee shall be payable
solely from that portion of the Dealer Manager Fee that is (i) actually received
by the Dealer Manager from the Company pursuant to Section 3,3 of the Dealer
Manager Agreement, and (ii) not reallowed to any Participating Broker-Dealer
pursuant to Section 3.3 of the Dealer Manager Agreement (a “Sourcing Fee
Reallowance”) in respect of any RCS Sales.

 

(b)          The Sourcing Fee shall be paid substantially concurrently with the
receipt of corresponding payments to the Dealer Manager from the Company
pursuant to Section 3.3 of the Dealer Manager Agreement, but in no event no
later than five business days thereafter.

 

(c)          The Dealer Manager also will reimburse the Wholesaler for all costs
and expenses incurred that are: (i) in connection with bona fide due diligence
activities; and (ii) incident to the Offering, but only to the extent such costs
or expenses (A) are permitted pursuant to prevailing rules and regulations of
FINRA, (B) would have been incurred by the Dealer Manager if the Wholesaler had
not incurred them, and (C) are otherwise eligible for reimbursement from the
Company pursuant to Section 3.6 of the Dealer Manager Agreement. The Wholesaler
will present the Dealer Manager with itemized and detailed invoices for all
incurred costs and expenses that are reimbursable pursuant to this Section 3(c).
The Dealer Manager will submit such request to the Company within five business
days following receipt of such invoices and will reimburse the Wholesaler within
five business days following receipt of funds from the Company for such
reimbursement.

 

4.Representations and Warranties of the Dealer Manager

 

(a)          The Dealer Manager is a corporation duly organized and validly
existing under the laws of the State of Delaware, with full power and authority
to conduct its business and to enter into this Agreement and to perform the
transactions contemplated hereby.

 

(b)          This Agreement has been duly authorized, executed and delivered by
the Dealer Manager, constitutes a legal, valid and binding agreement of the
Dealer Manager, enforceable against the Dealer Manager in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
and by general equitable principles relating to the availability of remedies,
and except to the extent that the enforceability of the indemnity provisions
contained in this Agreement may be limited under applicable securities laws.

 

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(c)          The Dealer Manager (A) is duly registered as a broker-dealer
pursuant to the provisions of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), (B) is a member of FINRA in good standing, (C) is a broker
or dealer registered as such in those states and jurisdictions where the Dealer
Manager is required to be registered in order to provide the services
contemplated by this Agreement and the Dealer Manager Agreement, and (D) it and
those of its employees and representatives who are required to have approvals,
licenses or registrations to act under this Agreement have all applicable
required approvals, licenses and registrations to act under this Agreement.
There is no provision in the Dealer Manager’s FINRA membership agreement that
would prohibit or restrict the ability of the Dealer Manager to carry out the
services related to the Offering as contemplated by this Agreement and the
Dealer Manager Agreement or to perform its obligations hereunder and thereunder.
With respect to its participation in the offer and sale of the Offered Shares
(including, without limitation any resales and transfers of Offered Shares), the
Dealer Manager shall comply in all material respects with all applicable
requirements of (1) the Securities Act of 1933, as amended (the “Securities
Act”), and the applicable rules and regulations promulgated thereunder (the
“Securities Act Regulations”), the Exchange Act and the applicable rules and
regulations promulgated thereunder (the “Exchange Act Regulations”) and all
other federal rules and regulations applicable to the Offering and the sale of
the Offered Shares, (2) applicable state securities or “blue sky” laws, and (3)
the rules set forth in the FINRA rulebook applicable to the Offering, which
currently consists of rules promulgated by FINRA, the National Association of
Securities Dealers (“NASD”) and the New York Stock Exchange (collectively, the
“FINRA Rules”), specifically including, but not in any way limited to, FINRA
Rule 2310, FINRA Rule 5110, FINRA Rule 5141, NASD Rule 2340 and NASD Rule 2420.

 

(d)          The Dealer Manager and its representatives have all required
Governmental Licenses and have made all filings and registrations with federal
and state governmental and regulatory agencies required to conduct their
business and to perform their obligations under this Agreement and the Dealer
Manager Agreement, except where the inability of such Governmental Licenses to
be in full force and effect would not have a material adverse effect on the
business, properties, financial position, results of operations or cash flows of
the Dealer Manager or as otherwise may be disclosed in the Registration
Statement and the Prospectus. The performance of the obligations of the Dealer
Manager under this Agreement and the Dealer Manager Agreement will not
(A) violate or result in a breach of any provisions of its articles of
incorporation or by-laws (or similar instruments or documents) or any order, law
or regulation binding upon it, and (B) result in a material breach of any
provisions of any agreement or instrument to which it is a party or which is
otherwise binding upon it.

 

5.Representations and Warranties of the Wholesaler

 

The Wholesaler represents and warrants to the Dealer Manager:

 

(a)          The Wholesaler is a limited liability company duly organized and
validly existing under the laws of the State of Delaware, with full power and
authority to conduct its business and to enter into this Agreement and to
perform the transactions contemplated hereby.

 

(b)          This Agreement has been duly authorized, executed and delivered by
the Wholesaler and, assuming due authorization, execution and delivery of this
Agreement by the Dealer Manager, constitutes a legal, valid and binding
agreement of the Wholesaler, enforceable against the Wholesaler in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general equitable principles relating to the
availability of remedies, and except to the extent that the enforceability of
the indemnity provisions contained in this Agreement may be limited under
applicable securities laws.

 

(c)          The Wholesaler (i) is duly registered as a broker-dealer pursuant
to the provisions of the Exchange Act, (ii) is a member of FINRA in good
standing, (iii) is a broker or dealer registered as such in those states and
jurisdictions where the Wholesaler is required to be registered in order to
provide the services contemplated by this Agreement, and (iv) it and those of
its employees and representatives who are required to have approvals, licenses
or registrations to act under this Agreement have all applicable required
approvals, licenses and registrations to act under this Agreement. There is no
provision in the Wholesaler’s FINRA membership agreement that would prohibit or
restrict the ability of the

 

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Wholesaler to carry out the services related to the Offering as contemplated by
this Agreement or to perform its obligations hereunder. With respect to its
participation in the offer and sale of the Offered Shares (including, without
limitation any resales and transfers of Offered Shares), the Wholesaler agrees
to comply in all material respects with all applicable requirements, in each
case to the extent such requirements are applicable to the Wholesaler in
connection with the performance of its obligations hereunder, of (i) the
Securities Act, the Exchange Act, the Securities Act Regulations and the
Exchange Act Regulations and all other federal rules and regulations applicable
to the Offering and the sale of the Offered Shares, (ii) applicable state
securities or “blue sky” laws, and (iii) the FINRA Rules, specifically
including, but not in any way limited to, FINRA Rule 2310, FINRA Rule 5110,
FINRA Rule 5141, NASD Rule 2340 and NASD Rule 2420.

 

(d)          The Wholesaler and those of its employees and representatives who
are required to have Governmental Licenses have all required Governmental
Licenses and have made all filings and registrations with federal and state
governmental and regulatory agencies required to conduct their business and to
perform their obligations under this Agreement. The performance of the
obligations of the Wholesaler under this Agreement will not violate or result in
a breach of any provisions of its articles of incorporation or by-laws (or
similar instruments or documents) or any agreement, instrument, order, law or
regulation binding upon it.

 

(e)          To the extent required by applicable law in connection with the
transactions contemplated in this Agreement, the Wholesaler represents that it
has established and implemented an anti-money laundering compliance program
(“AML Program”) in accordance with applicable law, including applicable FINRA
Rules, Exchange Act Regulations, the USA PATRIOT Act and implementing
regulations, specifically including, but not limited to, Section 352 of the
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001 (the “Money Laundering Abatement Act,” and together with the USA PATRIOT
Act, the “AML Rules”) reasonably expected to detect and cause the reporting of
suspicious transactions in connection with the offering and sale of the Offered
Shares. The Wholesaler further represents that it is currently in compliance
with all AML Rules, specifically including, but not limited to, the Customer
Identification Program requirements under Section 326 of the Money Laundering
Abatement Act; has Know Your Customer (KYC) policies and procedures in place;
that the AML Program has been adopted by a person with sufficient authority to
oversee the AML policies and procedures; that the AML Program has education
and/or training programs for officers and employees regarding AML policies and
procedures; and that the Wholesaler will remain in compliance with such
requirements. The Wholesaler shall, upon request by the Dealer Manager or the
Company, provide a certification that, as of the date of such certification, (i)
its AML Program then in effect is consistent with the AML Rules and (ii) it is
currently in compliance with its AML Program and all AML Rules, specifically
including, but not limited to, the Customer Identification Program requirements
under Section 326 of the Money Laundering Abatement Act.

 

6.Covenants of the Dealer Manager

 

(a)          The Dealer Manager shall comply with the record keeping
requirements of the Exchange Act, including but not limited to, Rules 17a-3 and
17a-4 promulgated under the Exchange Act. The Dealer Manager will make such
documents and records available to (i) the Wholesaler, upon reasonable request,
and (ii) representatives of the Securities and Exchange Commission (“SEC”),
FINRA and applicable state securities administrators upon the receipt of an
appropriate document subpoena or other appropriate request for documents from
any such agency; provided, however, that if the Dealer Manager determines, in
its sole discretion, not to provide documents in accordance with this section,
it may oppose such document subpoena or other request, provided that the Dealer
Manager shall be responsible for all reasonable direct costs of such opposition.
The Dealer Manager further agrees to keep such required records with respect to
each customer who purchases Offered Shares, the customer’s suitability and the
amount of Offered Shares sold, and to retain such records for six years or such
period of time as may be required by the SEC, any state securities commission,
FINRA or the Company, whichever is later. The Wholesaler, agree that the Dealer
Manager can satisfy its recordkeeping obligations hereunder by contractually
requiring such information to be maintained by the Participating Broker-Dealers,
investment advisors or banks offering the Offered Shares.

 

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(b)          The Dealer Manager shall abide by and comply with: (i) the privacy
standards and requirements of the Gramm-Leach Bliley Act of 1999 (“GLB Act”);
(ii) the privacy standards and requirements of any other applicable federal or
state law; (iii) any reasonable written privacy policies and standards provided
to the Dealer Manager by the Wholesaler and the Company; and (d) the Dealer
Manager’s own internal privacy policies and procedures, each as may be amended
from time to time.

 

(c)          To the extent the Dealer Manager directly sells Offered Shares, the
Dealer Manager will only offer and sell Offered Shares in jurisdictions in which
qualifications or exemptions for the offer and sale of the Offered Shares are in
effect as of the relevant date (“Qualified Jurisdictions”). No Offered Shares
shall be offered or sold for the account of the Company in any other states or
foreign jurisdictions.

 

(d)          The Dealer Manager is familiar with Rule 15c2-8 under the Exchange
Act, relating to the distribution of preliminary and final Prospectuses, and
confirms that it has complied and will comply therewith.

 

(e)          The Dealer Manager will notify the Wholesaler immediately (i) when
any amendment to the Registration Statement shall have become effective, (ii) of
the issuance by the SEC or any other Federal or state regulatory body of any
order suspending the effectiveness of the Registration Statement under the
Securities Act or the registration of Offered Shares under the Blue Sky or
securities laws of any state or other jurisdiction or any order or decree
enjoining the offering or the use of the Prospectus or of the institution, or
notice of the intended institution, of any action or proceeding for that
purpose, and (iii) when any Prospectus shall have been filed under the
Securities Act with the SEC.

 

(f)          The Dealer Manager will deliver to the Wholesaler as promptly as
practicable from time to time during the period when the Prospectus is required
to be delivered under the Securities Act, with reasonable quantities of copies
of the Prospectus (as amended or supplemented), as provided by the Company, for
delivery to investors and for the purposes contemplated by the Securities Act or
any rules or regulations thereunder.

 

(g)          The Dealer Manager will provide a reasonable amount of Authorized
Sales Material to the Wholesaler as and when requested by the Wholesaler,
subject to receipt of such material by the Dealer Manager from the Company.

 

(h)          The Dealer Manager shall be responsible for the timely filing of
all documents and information to be filed with the Corporate Financing
Department of FINRA, as required under FINRA Rules 5110(b)(5) and 5110(b)(6),
and shall have and maintain internal controls sufficient to monitor compliance
with the organization and offering expense limitations of FINRA Rule 2310(b)(4).

 

(i)          The Dealer Manager shall comply, in all material respects, with all
applicable laws, and the applicable rules and regulations of FINRA, the SEC,
state securities administrators and any other applicable regulatory body in
connection with the Offering.

 

7.Covenants of the Wholesaler

 

(a)          The Wholesaler shall, in all material respects and to the extent
such requirements are applicable to the Wholesaler in connection with the
performance of its obligations hereunder, comply, with the record keeping
requirements of the Exchange Act, including but not limited to, Rules 17a-3 and
17a-4 promulgated under the Exchange Act. The Wholesaler will make such
documents and records available to (i) the Dealer Manager and the Company upon
reasonable request, and (ii) representatives of the SEC, FINRA and applicable
state securities administrators upon the receipt of an appropriate document
subpoena or other appropriate request for documents from any such agency;
provided, however, that in the event the Wholesaler determines, in its sole
discretion, not to provide documents in accordance with this section, it may
oppose such document subpoena or other request, provided that the Wholesaler
shall be responsible for all reasonable direct costs of such opposition.

 

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(b)          The Wholesaler shall, in all material respects and to the extent
such requirements are applicable to the Wholesaler in connection with the
performance of its obligations hereunder, abide by and comply with (i) the
privacy standards and requirements of the GLB Act; (ii) the privacy standards
and requirements of any other applicable federal or state law; (iii) any
reasonable written privacy policies and standards provided to the Wholesaler by
the Dealer Manager and the Company; and (iv) the Wholesaler’s own internal
privacy policies and procedures, each as may be amended from time to time.

 

(c)          To the extent the Wholesaler directly sells Offered Shares in
connection with the performance of its obligations hereunder, the Wholesaler
will only offer and sell Offered Shares in Qualified Jurisdictions. No Offered
Shares shall be offered or sold for the account of the Company in any other
states or foreign jurisdictions.

 

(d)          The Wholesaler is familiar with Rule 15c2-8 under the Exchange Act,
relating to the distribution of preliminary and final Prospectuses, and confirms
that it will, to the extent applicable to the Wholesaler in connection with the
performance of its obligations hereunder, comply with Rule 15c2-8 under the
Exchange Act.

 

(e)          The Dealer Manager will provide the Wholesaler with certain
Authorized Sales Materials to be used by the Wholesaler and the Participating
Broker-Dealers in connection with the Offering. If the Wholesaler elects to use
such Authorized Sales Materials in connection with the performance of its
obligations hereunder, then the Wholesaler agrees that such material shall not
be used by it in connection with the Offering and that it will direct
Participating Broker-Dealers not to make such use of any Authorized Sales
Materials unless accompanied or preceded by the Prospectus. If the Wholesaler
elects to use such Authorized Sales Materials in connection with the performance
of its obligations hereunder, the Wholesaler will only use Authorized Sales
Materials provided by the Dealer Manager. The Wholesaler shall not give or
provide any information or make any representation other than those contained in
the Prospectus or the Authorized Sales Materials. The Wholesaler will not use
any “broker-dealer use only” Authorized Sales Materials with members of the
public in connection with offers or sales or the Offered Shares.

 

(f)          The Wholesaler will suspend or terminate the offering and sale of
the Offered Shares by the Wholesaler upon request of the Company at any time and
resume offering and sale of the Offered Shares upon subsequent request of the
Company if required to do so in connection with the performance of its
obligations hereunder.

 

(g)          The Wholesaler will provide to the Company and the Dealer Manager
as soon as practicable upon receipt by the Wholesaler copies of any written or
otherwise documented customer complaints received by the Wholesaler from
Participating Broker-Dealers relating in any way to the Offering (including, but
not limited to, the manner in which the Offered Shares are offered by any
Participating Broker-Dealer), the Offered Shares or the Company.

 

(h)          Other than with respect to use of Authorized Sales Materials or the
Prospectus or otherwise pursuant to or in connection with this Agreement, the
Wholesaler will not, without the Company’s prior written consent, make a
source-identifying use of (i) the Company’s name, brand, logo or trademark or
any reasonably similar variant or derivative thereof or (ii) the “ Cole  ” name,
brand, logo or trademark or any reasonably similar variant or derivative
thereof.

 

(i)          The Wholesaler shall under no circumstances engage in any
activities hereunder in any jurisdiction (i) in which the Dealer Manager has not
informed the Wholesaler that counsel’s advice has been received that the Offered
Shares are qualified for sale or are exempt under the applicable securities or
Blue Sky laws thereof, or (ii) in which the Wholesaler may not lawfully engage.

 

(j)          The Wholesaler shall comply, in all material respects, with all
applicable laws, and the applicable rules and regulations of FINRA, the SEC,
state securities administrators and any other applicable regulatory body in
connection with the Offering.

 

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8.Indemnification; Contribution

 

(a)          The Dealer Manager will indemnify, defend (subject to Section 4 of
the Dealer Manager Agreement) and hold harmless the Wholesaler, its affiliates
and their respective officers, directors, shareholders, members, partners, other
equity-holders and control persons (collectively, the “Other Indemnified
Parties”), from and against any losses, claims (including the reasonable costs
of investigation and legal fees), damages or liabilities (or actions in respect
thereof), to which the Wholesaler, its affiliates or their respective Other
Indemnified Parties may become subject under the Securities Act or the Exchange
Act, or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon: (i) any inaccuracy
in or breach of a representation or warranty contained herein by the Dealer
Manager, any breach of a covenant or agreement contained herein of the Dealer
Manager, or any failure by the Dealer Manager to comply with state or federal
securities law applicable to the Offering; (ii) any untrue statement or alleged
untrue statement of a material fact contained in the information relating to the
Dealer Manager that appears in the Dealer Manager Sections of the Prospectus or
any amendment thereof, or arise out of or are based upon the omission or alleged
omission to state in the Dealer Manager Sections 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; and (iii) any
unauthorized use of sales materials or use of unauthorized verbal
representations concerning the Offered Shares by the Dealer Manager. The Dealer
Manager will reimburse the Wholesaler and its Other Indemnified Parties for any
legal or other expenses reasonably incurred by such Wholesaler, its affiliates
and their respective Other Indemnified Parties in connection with investigating
or defending such loss, claim, damage, liability or action.

 

(b)          The Wholesaler will indemnify, defend and hold harmless the Dealer
Manager, the Company and their respective Other Indemnified Parties, from and
against any losses, claims (including the reasonable costs of investigation and
legal fees), damages or liabilities (or actions in respect thereof), to which
the Dealer Manager, the Company and any of their respective Other Indemnified
Parties may become subject under the Securities Act or the Exchange Act, or
otherwise, insofar as such losses, claims (including the reasonable costs of
investigation and legal fees), damages or liabilities (or actions in respect
thereof) arise out of or are based upon: (i) any inaccuracy in or breach of a
representation or warranty contained herein by the Wholesaler, any breach of a
covenant or agreement contained herein of the Wholesaler, or any failure by the
Wholesaler to comply with state or federal securities laws applicable to the
Offering; and (ii) any unauthorized use of sales materials or use of
unauthorized verbal representations concerning the Shares by the Wholesaler.

 

(c)          Promptly after receipt by an indemnified party of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party, notify the indemnifying
party in writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under this Section 8
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in this Agreement. The indemnifying party
shall be entitled to appoint counsel of the indemnifying party’s choice at the
indemnifying party’s expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be subject to approval by the
indemnified party, not to be unreasonably withheld or delayed. Notwithstanding
the indemnifying party’s election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have the right to
employ and select separate counsel (including local counsel), subject to
approval by the indemnifying party not to be unreasonably withheld or delayed,
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel for the indemnified party
(subject to approval by the indemnified party not to be unreasonably withheld

 

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or delayed) to represent the indemnified party within a reasonable time after
notice of the institution of such action or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the expense of the
indemnifying party. An indemnifying party may settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder but may not do so without the prior written consent of
the indemnified parties, unless such settlement, compromise or consent includes
an unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding.

 

(d)          If the right to indemnification provided for in this Section 8
would by its terms be available to a person hereunder, but is held to be
unavailable by a court of competent jurisdiction for any reason, then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party as a result of such Losses and expenses in respect
thereof, as incurred, in such proportion as is appropriate to reflect the
relative fault of the Dealer Manager and the Wholesaler, as applicable, in
connection with the statements, omissions or other circumstances which resulted
in such Losses or expenses, as well as any other relevant equitable
considerations. The relative fault of the Dealer Manager and the Wholesaler, as
applicable, shall be determined by reference to, among other things, the
parties’ relative intent, knowledge, and access to information. It is understood
that it would not be just and equitable if contribution pursuant to this Section
8(d) were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 8(d). Notwithstanding the provisions of this Section 8(d), the
Dealer Manager shall not be required to contribute any amount in excess of the
total price of the Offering Shares sold by it. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8(d), each Other
Indemnified Party affiliate of the Dealer Manager shall have the same rights to
contribution as the Dealer Manager and each Other Indemnified Party of the
Wholesaler shall have the same rights to contribution as the Wholesaler.

 

9.Relationship of Wholesaler, Participating Broker-Dealers and the Dealer
Manager

 

(a)          The obligations of each of the Wholesaler and the Participating
Broker-Dealers are several and not joint. Nothing herein contained shall
constitute the Wholesaler and the Participating Broker-Dealers, or any of them,
as an association, partnership, unincorporated business or other separate
entity. The Dealer Manager and the Company shall be under no liability to the
Wholesaler except for lack of good faith and for obligations expressly assumed
by the Dealer Manager and the Company in this Agreement.

 

(b)          The parties hereto acknowledge that, other than as expressly set
forth herein, the Wholesaler is not authorized to act as agent of the Dealer
Manager or the Company in any connection or transaction, and the Wholesaler
agrees that it will not so act or purport to so act.

 

(c)          The parties hereto acknowledge that the Wholesaler’s obligations
under this Agreement, including without limitation the Wholesaler Exclusivity
have no impact on, and in no way release the Dealer Manager from, the Dealer
Manager’s obligations and rights to act as the dealer manager for the Company
pursuant to Section 3.1 of the Dealer Manager Agreement.

 

10.Termination

 

This Agreement shall terminate upon the earlier to occur of (i) termination of
the Offering, (ii) the Second Closing (as defined in the Equity Purchase
Agreement (the “Equity Purchase Agreement”), dated as of September 30, 2014, by
and between ARC Properties Operating Partnership, L.P. and RCS Capital
Corporation), (iii) termination of the Equity Purchase Agreement or (iv)
December 31, 2014.

 

(a)          Wholesaler may terminate this Agreement at any time by giving ten
days’ prior written notice thereof to the other parties hereto. This Agreement
automatically shall terminate with no further action by any party hereto if the

 

8

 

 

Wholesaler or the Dealer Manager ceases to be a member in good standing of
FINRA, or with the securities commission of the state in which its principal
office is located. The Wholesaler will notify the Dealer Manager immediately if
the Wholesaler ceases to be a member in good standing of FINRA or with the
securities commission of any state in which the Wholesaler is currently
registered or licensed. The Dealer Manager will notify the Wholesaler
immediately if the Dealer Manager ceases to be a member in good standing of
FINRA or with the securities commission of any state in which the Dealer Manager
is currently registered or licensed.

 

(b)          In the event of termination under Section 11(b), the Dealer Manager
will continue to pay any Sourcing Fees with respect to RCS Sales to the
Wholesaler and reimburse costs and expenses incurred, to the extent reimbursable
under Section 3(c), for so long as Offered Shares remain outstanding (it being
understood and agreed that the calculation of the Sourcing Fees in such event
shall take into account the number of Offered Shares sold primarily from the
efforts of RCS Service Providers in the Offering). Notwithstanding the foregoing
sentence, the Dealer Manager will not continue to pay the Sourcing Fee to the
Wholesaler and reimburse costs and expenses related to the Offering incurred by
the Wholesaler pursuant to Section 3(c) subsequent to the termination of the
Offering to the extent, but only to the extent, that such payments or
reimbursements would cause the total underwriting compensation (as defined in
accordance with applicable FINRA rules) paid with respect to the Offering to
exceed 10% of the gross proceeds from the sale of the Offered Shares calculated
as of the termination of the Offering.

 

(c)          The termination of this Agreement for any reason shall not affect
(i) the Wholesaler’s obligations under the second sentence of Section 10(a),
(ii) the indemnification obligations under Section 8, or (iii) this Section 10.
Without limiting the foregoing, the provisions of this Agreement shall survive
the termination of this Agreement with respect to any matter arising while this
Agreement was in effect.

 

11.Amendment

 

(a)          The Dealer Manager has the right, subject to written consent from
the other parties hereto which shall not be unreasonably withheld or delayed, to
amend this Agreement as necessary, in the reasonable opinion of outside counsel
to the Dealer Manager, to comply with applicable law or the requirements of any
governmental or self-regulatory body or agency.

 

(b)          This Agreement may not otherwise be amended, supplemented or waived
except by the express written consent of the parties hereto. No waiver of any
provision of this Agreement may be implied from any course of dealing between or
among any of the parties hereto or from any failure by any party hereto to
assert its rights under this Agreement on any occasion or series of occasions.

 

12.Miscellaneous

 

(a)          No party may assign this Agreement without the prior written
consent of the other parties. This Agreement shall be binding upon and inure to
the benefit of the respective successors and permitted assigns of the parties
hereto.

 

(b)          All notices, requests, demands, approvals, consents, waivers and
other communications required or permitted to be given under this Agreement
(each, a “Notice”) shall be in writing and shall be (i) delivered personally,
(ii) mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, (iii) sent by next-day or overnight mail or
delivery, or (iv) sent by facsimile transmission (provided, however, that the
original copy thereof also is sent by one of the other means specified above in
this Section 13(b)):

 

If to the Dealer Manager:

 

Cole Capital Corporation

2325 East Camelback Road

 

9

 

 

Suite 1100

Phoenix, AZ 85016,

Attention: Jim Siegel, Chief Compliance Officer

Facsimile: (480) 449-7001

If to the Wholesaler:

 

Realty Capital Securities, LLC
One Beacon Street
14th Floor
Boston, MA 02108
Attention:

Facsimile:

or to such other Person or address as any party shall specify by Notice in
writing to the other parties in accordance with this Section 13(b). Each Notice
shall be deemed effective and given upon actual receipt or refusal of receipt.

 

(c)          This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to the principles of
choice of the law thereof.

 

(d)          If any party hereto initiates any legal action arising out of or in
connection with this Agreement, the prevailing party shall be entitled to
recover from the other party all reasonable attorneys’ fees, expert witness fees
and expenses incurred by the prevailing party in connection therewith.

 

(e)          All captions used in this Agreement are for convenience only, are
not a part hereof and are not to be used in construing or interpreting any
aspect hereof.

 

(f)          This Agreement may be executed (including by facsimile
transmission) with counterpart signature pages or in multiple counterparts, each
such counterpart to be deemed an original but which all together shall
constitute one and the same instrument.

 

(g)          If any provision of this Agreement, or the application of any
provision to any person or circumstance, shall be held to be inconsistent with
any law, ruling, rule or regulation, the remainder of this Agreement or the
application of the provision to persons or circumstances other than those as to
which it is held inconsistent, shall not be affected thereby.

 

If the foregoing is in accordance with your understanding of this Agreement,
please sign and return a counterpart signature page or a counterpart hereof,
whereupon this Agreement will become a binding agreement among us in accordance
with its terms.

 

[Signature pages follow.]

  

10

 

  

  COLE CAPITAL CORPORATION         By:     Name:     Title:           By:    
Name:     Title:  

 

Confirmed, Accepted and Agreed to   as of the date first above written:      
REALTY CAPITAL SECURITIES, LLC         By:     Name:     Title:    

 

[Signature Page to Wholesaling Agreement – CCIT]

 

 

 

 

Exhibit C-4

 

FORM OF WHOLESALING AGREEMENT

 

[                  ], 2014

Realty Capital Securities, LLC

One Beacon Street
14th Floor
Boston, MA 02108

 

Ladies and Gentlemen:

 

Cole Capital Corporation, a Delaware corporation (the “Dealer Manager”), with
its address at 2325 East Camelback Road, Suite 1100, Phoenix, AZ 85016, has
entered into an agreement dated as of January 26, 2012 (the “Dealer Manager
Agreement”), with Cole Credit Property Trust IV, Inc. (the “Company”). Under the
Dealer Manager Agreement, the Dealer Manager serves as the Company’s exclusive
Dealer Manager in connection with a public offering (the “Offering”) of the
Company’s common stock. The shares of the Company’s stock (the “Offered Shares”)
are being issued and sold to the public on a “best efforts” basis through the
Dealer Manager and the broker-dealers and other appropriately licensed firms
participating in the Offering (the “Participating Broker-Dealers”), pursuant to
Participating Broker-Dealer Agreements between the Dealer Manager and each
Participating Broker-Dealer (each, a “Participating Broker-Dealer Agreement”).
The Dealer-Manager shall provide to the Wholesaler the form of the Participating
Broker-Dealer Agreement used by the Dealer Manager. Capitalized terms used
herein but not otherwise defined shall have the respective meanings ascribed to
them in the Dealer Manager Agreement.

 

In consideration of the mutual covenants and agreements contained herein,
intending to be legally bound, the parties hereby agree to the following terms
and conditions set forth in this Wholesaling Agreement (this “Agreement”):

 

1.Appointment and Acceptance of the Wholesaler

 

Upon the terms and subject to the conditions set forth in this Agreement, the
Dealer Manager hereby appoints Realty Capital Securities, LLC, a Delaware
limited liability company (the “Wholesaler”), and the Wholesaler hereby accepts
such appointment, as the Dealer Manager’s distribution agent to assist, through
the Wholesaler’s employees, agents, contractors, registered representatives and
all other representatives who will perform services hereunder (collectively, the
“RCS Service Providers”), the Dealer Manager with the sale of Offered Shares
through the recruitment of, and the provision of assistance to, Participating
Broker-Dealers, and the Wholesaler desires to accept such engagement; provided,
however, that nothing herein shall be construed to: (i) contravene the Company’s
appointment of the Dealer Manager as its exclusive agent and dealer manager
during the Offering Period, and the Dealer Manager’s acceptance of such
appointment, pursuant to Section 3.1 of the Dealer Manager Agreement; or (ii)
imply that the Dealer Manager shall not have sole discretion to accept or reject
any subscription for the Offered Shares in whole or in part.

 

2.Undertakings of the Wholesaler

 

(a)          The Wholesaler will use diligent efforts to recruit certain
broker-dealers and other appropriately licensed firms to serve as Participating
Broker-Dealers, each of which shall be a member of the Financial Industry
Regulatory Authority, Inc. (“FINRA”) in good standing, to agree to offer and
sell the Offered Shares on a best efforts basis without any commitment on the
Participating Broker-Dealers’ part to purchase any Offered Shares pursuant to a
Participating Broker-Dealer Agreement with the Dealer Manager.

 

(b)          The Wholesaler will use diligent efforts to assist the Dealer
Manager in providing certain services to Participating Broker-Dealers in
connection with the Offering, which will consist primarily of:

 

 

 

 

(i)          providing training and education regarding the Company and the
offering of the Offered Shares to Participating Broker-Dealers;

 

(ii)         providing marketing and sales support for Participating
Broker-Dealers,; and

 

(iii)        such other assistance to Participating Broker-Dealers and their
registered representatives in marketing the Offered Shares and otherwise
participating in the Offering as shall be reasonably determined to be
appropriate by the Dealer Manager.

 

(c)          The Wholesaler acknowledges that it is familiar with FINRA Rule
2310 and that it will comply in all material respects with all the terms thereof
to the extent FINRA Rule 2310 applies to the conduct contemplated herein.
Notwithstanding the foregoing sentence, the Wholesaler shall not be responsible
for the obligations of the Dealer Manager under the Dealer Manager Agreement and
Section 6(i) to assure compliance with the organization and offering expenses
limitations of FINRA Rule 2310(b)(4).

 

3.Compensation and Expense Reimbursement

 

(a)          In consideration for the Wholesaler performing its obligations
under this Agreement, the Dealer Manager shall pay the Wholesaler a sourcing fee
(the “Sourcing Fee”) equal to 1.80% of the Selling Price of each of the Offered
Shares sold by Participating Broker-Dealers who entered into dealer agreements
with the Dealer Manager primarily as a result of the efforts of RCS Service
Providers (“RCS Sales”); provided, however, the Sourcing Fee shall be payable
solely from that portion of the Dealer Manager Fee that is (i) actually received
by the Dealer Manager from the Company pursuant to Section 3,3 of the Dealer
Manager Agreement, and (ii) not reallowed to any Participating Broker-Dealer
pursuant to Section 3.3 of the Dealer Manager Agreement (a “Sourcing Fee
Reallowance”) in respect of any RCS Sales.

 

(b)          The Sourcing Fee shall be paid substantially concurrently with the
receipt of corresponding payments to the Dealer Manager from the Company
pursuant to Section 3.3 of the Dealer Manager Agreement, but in no event no
later than five business days thereafter.

 

(c)          The Dealer Manager also will reimburse the Wholesaler for all costs
and expenses incurred that are: (i) in connection with bona fide due diligence
activities; and (ii) incident to the Offering, but only to the extent such costs
or expenses (A) are permitted pursuant to prevailing rules and regulations of
FINRA, (B) would have been incurred by the Dealer Manager if the Wholesaler had
not incurred them, and (C) are otherwise eligible for reimbursement from the
Company pursuant to Section 3.6 of the Dealer Manager Agreement. The Wholesaler
will present the Dealer Manager with itemized and detailed invoices for all
incurred costs and expenses that are reimbursable pursuant to this Section 3(c).
The Dealer Manager will submit such request to the Company within five business
days following receipt of such invoices and will reimburse the Wholesaler within
five business days following receipt of funds from the Company for such
reimbursement.

 

4.Representations and Warranties of the Dealer Manager

 

(a)          The Dealer Manager is a corporation duly organized and validly
existing under the laws of the State of Delaware, with full power and authority
to conduct its business and to enter into this Agreement and to perform the
transactions contemplated hereby.

 

(b)          This Agreement has been duly authorized, executed and delivered by
the Dealer Manager, constitutes a legal, valid and binding agreement of the
Dealer Manager, enforceable against the Dealer Manager in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
and by general equitable principles relating to the availability of remedies,
and except to the extent that the enforceability of the indemnity provisions
contained in this Agreement may be limited under applicable securities laws.

 

2

 

 

(c)          The Dealer Manager (A) is duly registered as a broker-dealer
pursuant to the provisions of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), (B) is a member of FINRA in good standing, (C) is a broker
or dealer registered as such in those states and jurisdictions where the Dealer
Manager is required to be registered in order to provide the services
contemplated by this Agreement and the Dealer Manager Agreement, and (D) it and
those of its employees and representatives who are required to have approvals,
licenses or registrations to act under this Agreement have all applicable
required approvals, licenses and registrations to act under this Agreement.
There is no provision in the Dealer Manager’s FINRA membership agreement that
would prohibit or restrict the ability of the Dealer Manager to carry out the
services related to the Offering as contemplated by this Agreement and the
Dealer Manager Agreement or to perform its obligations hereunder and thereunder.
With respect to its participation in the offer and sale of the Offered Shares
(including, without limitation any resales and transfers of Offered Shares), the
Dealer Manager shall comply in all material respects with all applicable
requirements of (1) the Securities Act of 1933, as amended (the “Securities
Act”), and the applicable rules and regulations promulgated thereunder (the
“Securities Act Regulations”), the Exchange Act and the applicable rules and
regulations promulgated thereunder (the “Exchange Act Regulations”) and all
other federal rules and regulations applicable to the Offering and the sale of
the Offered Shares, (2) applicable state securities or “blue sky” laws, and (3)
the rules set forth in the FINRA rulebook applicable to the Offering, which
currently consists of rules promulgated by FINRA, the National Association of
Securities Dealers (“NASD”) and the New York Stock Exchange (collectively, the
“FINRA Rules”), specifically including, but not in any way limited to, FINRA
Rule 2310, FINRA Rule 5110, FINRA Rule 5141, NASD Rule 2340 and NASD Rule 2420.

 

(d)          The Dealer Manager and its representatives have all required
Governmental Licenses and have made all filings and registrations with federal
and state governmental and regulatory agencies required to conduct their
business and to perform their obligations under this Agreement and the Dealer
Manager Agreement, except where the inability of such Governmental Licenses to
be in full force and effect would not have a material adverse effect on the
business, properties, financial position, results of operations or cash flows of
the Dealer Manager or as otherwise may be disclosed in the Registration
Statement and the Prospectus. The performance of the obligations of the Dealer
Manager under this Agreement and the Dealer Manager Agreement will not
(A) violate or result in a breach of any provisions of its articles of
incorporation or by-laws (or similar instruments or documents) or any order, law
or regulation binding upon it, and (B) result in a material breach of any
provisions of any agreement or instrument to which it is a party or which is
otherwise binding upon it.

 

5.Representations and Warranties of the Wholesaler

 

The Wholesaler represents and warrants to the Dealer Manager:

 

(a)          The Wholesaler is a limited liability company duly organized and
validly existing under the laws of the State of Delaware, with full power and
authority to conduct its business and to enter into this Agreement and to
perform the transactions contemplated hereby.

 

(b)          This Agreement has been duly authorized, executed and delivered by
the Wholesaler and, assuming due authorization, execution and delivery of this
Agreement by the Dealer Manager, constitutes a legal, valid and binding
agreement of the Wholesaler, enforceable against the Wholesaler in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general equitable principles relating to the
availability of remedies, and except to the extent that the enforceability of
the indemnity provisions contained in this Agreement may be limited under
applicable securities laws.

 

(c)          The Wholesaler (i) is duly registered as a broker-dealer pursuant
to the provisions of the Exchange Act, (ii) is a member of FINRA in good
standing, (iii) is a broker or dealer registered as such in those states and
jurisdictions where the Wholesaler is required to be registered in order to
provide the services contemplated by this Agreement, and (iv) it and those of
its employees and representatives who are required to have approvals, licenses
or registrations to act under this Agreement have all applicable required
approvals, licenses and registrations to act under this Agreement. There is no
provision in the Wholesaler’s FINRA membership agreement that would prohibit or
restrict the ability of the

 

3

 

 

Wholesaler to carry out the services related to the Offering as contemplated by
this Agreement or to perform its obligations hereunder. With respect to its
participation in the offer and sale of the Offered Shares (including, without
limitation any resales and transfers of Offered Shares), the Wholesaler agrees
to comply in all material respects with all applicable requirements, in each
case to the extent such requirements are applicable to the Wholesaler in
connection with the performance of its obligations hereunder, of (i) the
Securities Act, the Exchange Act, the Securities Act Regulations and the
Exchange Act Regulations and all other federal rules and regulations applicable
to the Offering and the sale of the Offered Shares, (ii) applicable state
securities or “blue sky” laws, and (iii) the FINRA Rules, specifically
including, but not in any way limited to, FINRA Rule 2310, FINRA Rule 5110,
FINRA Rule 5141, NASD Rule 2340 and NASD Rule 2420.

 

(d)          The Wholesaler and those of its employees and representatives who
are required to have Governmental Licenses have all required Governmental
Licenses and have made all filings and registrations with federal and state
governmental and regulatory agencies required to conduct their business and to
perform their obligations under this Agreement. The performance of the
obligations of the Wholesaler under this Agreement will not violate or result in
a breach of any provisions of its articles of incorporation or by-laws (or
similar instruments or documents) or any agreement, instrument, order, law or
regulation binding upon it.

 

(e)          To the extent required by applicable law in connection with the
transactions contemplated in this Agreement, the Wholesaler represents that it
has established and implemented an anti-money laundering compliance program
(“AML Program”) in accordance with applicable law, including applicable FINRA
Rules, Exchange Act Regulations, the USA PATRIOT Act and implementing
regulations, specifically including, but not limited to, Section 352 of the
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001 (the “Money Laundering Abatement Act,” and together with the USA PATRIOT
Act, the “AML Rules”) reasonably expected to detect and cause the reporting of
suspicious transactions in connection with the offering and sale of the Offered
Shares. The Wholesaler further represents that it is currently in compliance
with all AML Rules, specifically including, but not limited to, the Customer
Identification Program requirements under Section 326 of the Money Laundering
Abatement Act; has Know Your Customer (KYC) policies and procedures in place;
that the AML Program has been adopted by a person with sufficient authority to
oversee the AML policies and procedures; that the AML Program has education
and/or training programs for officers and employees regarding AML policies and
procedures; and that the Wholesaler will remain in compliance with such
requirements. The Wholesaler shall, upon request by the Dealer Manager or the
Company, provide a certification that, as of the date of such certification, (i)
its AML Program then in effect is consistent with the AML Rules and (ii) it is
currently in compliance with its AML Program and all AML Rules, specifically
including, but not limited to, the Customer Identification Program requirements
under Section 326 of the Money Laundering Abatement Act.

 

6.Covenants of the Dealer Manager

 

(a)          The Dealer Manager shall comply with the record keeping
requirements of the Exchange Act, including but not limited to, Rules 17a-3 and
17a-4 promulgated under the Exchange Act. The Dealer Manager will make such
documents and records available to (i) the Wholesaler, upon reasonable request,
and (ii) representatives of the Securities and Exchange Commission (“SEC”),
FINRA and applicable state securities administrators upon the receipt of an
appropriate document subpoena or other appropriate request for documents from
any such agency; provided, however, that if the Dealer Manager determines, in
its sole discretion, not to provide documents in accordance with this section,
it may oppose such document subpoena or other request, provided that the Dealer
Manager shall be responsible for all reasonable direct costs of such opposition.
The Dealer Manager further agrees to keep such required records with respect to
each customer who purchases Offered Shares, the customer’s suitability and the
amount of Offered Shares sold, and to retain such records for six years or such
period of time as may be required by the SEC, any state securities commission,
FINRA or the Company, whichever is later. The Wholesaler, agree that the Dealer
Manager can satisfy its recordkeeping obligations hereunder by contractually
requiring such information to be maintained by the Participating Broker-Dealers,
investment advisors or banks offering the Offered Shares.

 

4

 

 

(b)          The Dealer Manager shall abide by and comply with: (i) the privacy
standards and requirements of the Gramm-Leach Bliley Act of 1999 (“GLB Act”);
(ii) the privacy standards and requirements of any other applicable federal or
state law; (iii) any reasonable written privacy policies and standards provided
to the Dealer Manager by the Wholesaler and the Company; and (d) the Dealer
Manager’s own internal privacy policies and procedures, each as may be amended
from time to time.

 

(c)          To the extent the Dealer Manager directly sells Offered Shares, the
Dealer Manager will only offer and sell Offered Shares in jurisdictions in which
qualifications or exemptions for the offer and sale of the Offered Shares are in
effect as of the relevant date (“Qualified Jurisdictions”). No Offered Shares
shall be offered or sold for the account of the Company in any other states or
foreign jurisdictions.

 

(d)          The Dealer Manager is familiar with Rule 15c2-8 under the Exchange
Act, relating to the distribution of preliminary and final Prospectuses, and
confirms that it has complied and will comply therewith.

 

(e)          The Dealer Manager will notify the Wholesaler immediately (i) when
any amendment to the Registration Statement shall have become effective, (ii) of
the issuance by the SEC or any other Federal or state regulatory body of any
order suspending the effectiveness of the Registration Statement under the
Securities Act or the registration of Offered Shares under the Blue Sky or
securities laws of any state or other jurisdiction or any order or decree
enjoining the offering or the use of the Prospectus or of the institution, or
notice of the intended institution, of any action or proceeding for that
purpose, and (iii) when any Prospectus shall have been filed under the
Securities Act with the SEC.

 

(f)          The Dealer Manager will deliver to the Wholesaler as promptly as
practicable from time to time during the period when the Prospectus is required
to be delivered under the Securities Act, with reasonable quantities of copies
of the Prospectus (as amended or supplemented), as provided by the Company, for
delivery to investors and for the purposes contemplated by the Securities Act or
any rules or regulations thereunder.

 

(g)          The Dealer Manager will provide a reasonable amount of Authorized
Sales Material to the Wholesaler as and when requested by the Wholesaler,
subject to receipt of such material by the Dealer Manager from the Company.

 

(h)          The Dealer Manager shall be responsible for the timely filing of
all documents and information to be filed with the Corporate Financing
Department of FINRA, as required under FINRA Rules 5110(b)(5) and 5110(b)(6),
and shall have and maintain internal controls sufficient to monitor compliance
with the organization and offering expense limitations of FINRA Rule 2310(b)(4).

 

(i)          The Dealer Manager shall comply, in all material respects, with all
applicable laws, and the applicable rules and regulations of FINRA, the SEC,
state securities administrators and any other applicable regulatory body in
connection with the Offering.

 

7.Covenants of the Wholesaler

 

(a)          The Wholesaler shall, in all material respects and to the extent
such requirements are applicable to the Wholesaler in connection with the
performance of its obligations hereunder, comply, with the record keeping
requirements of the Exchange Act, including but not limited to, Rules 17a-3 and
17a-4 promulgated under the Exchange Act. The Wholesaler will make such
documents and records available to (i) the Dealer Manager and the Company upon
reasonable request, and (ii) representatives of the SEC, FINRA and applicable
state securities administrators upon the receipt of an appropriate document
subpoena or other appropriate request for documents from any such agency;
provided, however, that in the event the Wholesaler determines, in its sole
discretion, not to provide documents in accordance with this section, it may
oppose such document subpoena or other request, provided that the Wholesaler
shall be responsible for all reasonable direct costs of such opposition.

 

5

 

 

(b)          The Wholesaler shall, in all material respects and to the extent
such requirements are applicable to the Wholesaler in connection with the
performance of its obligations hereunder, abide by and comply with (i) the
privacy standards and requirements of the GLB Act; (ii) the privacy standards
and requirements of any other applicable federal or state law; (iii) any
reasonable written privacy policies and standards provided to the Wholesaler by
the Dealer Manager and the Company; and (iv) the Wholesaler’s own internal
privacy policies and procedures, each as may be amended from time to time.

 

(c)          To the extent the Wholesaler directly sells Offered Shares in
connection with the performance of its obligations hereunder, the Wholesaler
will only offer and sell Offered Shares in Qualified Jurisdictions. No Offered
Shares shall be offered or sold for the account of the Company in any other
states or foreign jurisdictions.

 

(d)          The Wholesaler is familiar with Rule 15c2-8 under the Exchange Act,
relating to the distribution of preliminary and final Prospectuses, and confirms
that it will, to the extent applicable to the Wholesaler in connection with the
performance of its obligations hereunder, comply with Rule 15c2-8 under the
Exchange Act.

 

(e)          The Dealer Manager will provide the Wholesaler with certain
Authorized Sales Materials to be used by the Wholesaler and the Participating
Broker-Dealers in connection with the Offering. If the Wholesaler elects to use
such Authorized Sales Materials in connection with the performance of its
obligations hereunder, then the Wholesaler agrees that such material shall not
be used by it in connection with the Offering and that it will direct
Participating Broker-Dealers not to make such use of any Authorized Sales
Materials unless accompanied or preceded by the Prospectus. If the Wholesaler
elects to use such Authorized Sales Materials in connection with the performance
of its obligations hereunder, the Wholesaler will only use Authorized Sales
Materials provided by the Dealer Manager. The Wholesaler shall not give or
provide any information or make any representation other than those contained in
the Prospectus or the Authorized Sales Materials. The Wholesaler will not use
any “broker-dealer use only” Authorized Sales Materials with members of the
public in connection with offers or sales or the Offered Shares.

 

(f)          The Wholesaler will suspend or terminate the offering and sale of
the Offered Shares by the Wholesaler upon request of the Company at any time and
resume offering and sale of the Offered Shares upon subsequent request of the
Company if required to do so in connection with the performance of its
obligations hereunder.

 

(g)          The Wholesaler will provide to the Company and the Dealer Manager
as soon as practicable upon receipt by the Wholesaler copies of any written or
otherwise documented customer complaints received by the Wholesaler from
Participating Broker-Dealers relating in any way to the Offering (including, but
not limited to, the manner in which the Offered Shares are offered by any
Participating Broker-Dealer), the Offered Shares or the Company.

 

(h)          Other than with respect to use of Authorized Sales Materials or the
Prospectus or otherwise pursuant to or in connection with this Agreement, the
Wholesaler will not, without the Company’s prior written consent, make a
source-identifying use of (i) the Company’s name, brand, logo or trademark or
any reasonably similar variant or derivative thereof or (ii) the “ Cole  ” name,
brand, logo or trademark or any reasonably similar variant or derivative
thereof.

 

(i)          The Wholesaler shall under no circumstances engage in any
activities hereunder in any jurisdiction (i) in which the Dealer Manager has not
informed the Wholesaler that counsel’s advice has been received that the Offered
Shares are qualified for sale or are exempt under the applicable securities or
Blue Sky laws thereof, or (ii) in which the Wholesaler may not lawfully engage.

 

(j)          The Wholesaler shall comply, in all material respects, with all
applicable laws, and the applicable rules and regulations of FINRA, the SEC,
state securities administrators and any other applicable regulatory body in
connection with the Offering.

 

6

 

 

8.Indemnification; Contribution

 

(a)          The Dealer Manager will indemnify, defend (subject to Section 4 of
the Dealer Manager Agreement) and hold harmless the Wholesaler, its affiliates
and their respective officers, directors, shareholders, members, partners, other
equity-holders and control persons (collectively, the “Other Indemnified
Parties”), from and against any losses, claims (including the reasonable costs
of investigation and legal fees), damages or liabilities (or actions in respect
thereof), to which the Wholesaler, its affiliates or their respective Other
Indemnified Parties may become subject under the Securities Act or the Exchange
Act, or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon: (i) any inaccuracy
in or breach of a representation or warranty contained herein by the Dealer
Manager, any breach of a covenant or agreement contained herein of the Dealer
Manager, or any failure by the Dealer Manager to comply with state or federal
securities law applicable to the Offering; (ii) any untrue statement or alleged
untrue statement of a material fact contained in the information relating to the
Dealer Manager that appears in the Dealer Manager Sections of the Prospectus or
any amendment thereof, or arise out of or are based upon the omission or alleged
omission to state in the Dealer Manager Sections 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; and (iii) any
unauthorized use of sales materials or use of unauthorized verbal
representations concerning the Offered Shares by the Dealer Manager. The Dealer
Manager will reimburse the Wholesaler and its Other Indemnified Parties for any
legal or other expenses reasonably incurred by such Wholesaler, its affiliates
and their respective Other Indemnified Parties in connection with investigating
or defending such loss, claim, damage, liability or action.

 

(b)          The Wholesaler will indemnify, defend and hold harmless the Dealer
Manager, the Company and their respective Other Indemnified Parties, from and
against any losses, claims (including the reasonable costs of investigation and
legal fees), damages or liabilities (or actions in respect thereof), to which
the Dealer Manager, the Company and any of their respective Other Indemnified
Parties may become subject under the Securities Act or the Exchange Act, or
otherwise, insofar as such losses, claims (including the reasonable costs of
investigation and legal fees), damages or liabilities (or actions in respect
thereof) arise out of or are based upon: (i) any inaccuracy in or breach of a
representation or warranty contained herein by the Wholesaler, any breach of a
covenant or agreement contained herein of the Wholesaler, or any failure by the
Wholesaler to comply with state or federal securities laws applicable to the
Offering; and (ii) any unauthorized use of sales materials or use of
unauthorized verbal representations concerning the Shares by the Wholesaler.

 

(c)          Promptly after receipt by an indemnified party of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party, notify the indemnifying
party in writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under this Section 8
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in this Agreement. The indemnifying party
shall be entitled to appoint counsel of the indemnifying party’s choice at the
indemnifying party’s expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be subject to approval by the
indemnified party, not to be unreasonably withheld or delayed. Notwithstanding
the indemnifying party’s election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have the right to
employ and select separate counsel (including local counsel), subject to
approval by the indemnifying party not to be unreasonably withheld or delayed,
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel for the indemnified party
(subject to approval by the indemnified party not to be unreasonably withheld

 

7

 

 

or delayed) to represent the indemnified party within a reasonable time after
notice of the institution of such action or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the expense of the
indemnifying party. An indemnifying party may settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder but may not do so without the prior written consent of
the indemnified parties, unless such settlement, compromise or consent includes
an unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding.

 

(d)          If the right to indemnification provided for in this Section 8
would by its terms be available to a person hereunder, but is held to be
unavailable by a court of competent jurisdiction for any reason, then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party as a result of such Losses and expenses in respect
thereof, as incurred, in such proportion as is appropriate to reflect the
relative fault of the Dealer Manager and the Wholesaler, as applicable, in
connection with the statements, omissions or other circumstances which resulted
in such Losses or expenses, as well as any other relevant equitable
considerations. The relative fault of the Dealer Manager and the Wholesaler, as
applicable, shall be determined by reference to, among other things, the
parties’ relative intent, knowledge, and access to information. It is understood
that it would not be just and equitable if contribution pursuant to this Section
8(d) were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 8(d). Notwithstanding the provisions of this Section 8(d), the
Dealer Manager shall not be required to contribute any amount in excess of the
total price of the Offering Shares sold by it. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8(d), each Other
Indemnified Party affiliate of the Dealer Manager shall have the same rights to
contribution as the Dealer Manager and each Other Indemnified Party of the
Wholesaler shall have the same rights to contribution as the Wholesaler.

 

9.Relationship of Wholesaler, Participating Broker-Dealers and the Dealer
Manager

 

(a)          The obligations of each of the Wholesaler and the Participating
Broker-Dealers are several and not joint. Nothing herein contained shall
constitute the Wholesaler and the Participating Broker-Dealers, or any of them,
as an association, partnership, unincorporated business or other separate
entity. The Dealer Manager and the Company shall be under no liability to the
Wholesaler except for lack of good faith and for obligations expressly assumed
by the Dealer Manager and the Company in this Agreement.

 

(b)          The parties hereto acknowledge that, other than as expressly set
forth herein, the Wholesaler is not authorized to act as agent of the Dealer
Manager or the Company in any connection or transaction, and the Wholesaler
agrees that it will not so act or purport to so act.

 

(c)          The parties hereto acknowledge that the Wholesaler’s obligations
under this Agreement, including without limitation the Wholesaler Exclusivity
have no impact on, and in no way release the Dealer Manager from, the Dealer
Manager’s obligations and rights to act as the dealer manager for the Company
pursuant to Section 3.1 of the Dealer Manager Agreement.

 

10.Termination

 

(a)          This Agreement shall terminate upon the earlier to occur of (i)
termination of the Offering, (ii) the Second Closing (as defined in the Equity
Purchase Agreement (the “Equity Purchase Agreement”), dated as of September 30,
2014, by and between ARC Properties Operating Partnership, L.P. and RCS Capital
Corporation), (iii) termination of the Equity Purchase Agreement or (iv)
December 31, 2014.

 

(b)          Wholesaler may terminate this Agreement at any time by giving ten
days’ prior written notice thereof to the other parties hereto. This Agreement
automatically shall terminate with no further action by any party hereto if the

 

8

 

 

Wholesaler or the Dealer Manager ceases to be a member in good standing of
FINRA, or with the securities commission of the state in which its principal
office is located. The Wholesaler will notify the Dealer Manager immediately if
the Wholesaler ceases to be a member in good standing of FINRA or with the
securities commission of any state in which the Wholesaler is currently
registered or licensed. The Dealer Manager will notify the Wholesaler
immediately if the Dealer Manager ceases to be a member in good standing of
FINRA or with the securities commission of any state in which the Dealer Manager
is currently registered or licensed.

 

(c)          In the event of termination under Section 11(b), the Dealer Manager
will continue to pay any Sourcing Fees with respect to RCS Sales to the
Wholesaler and reimburse costs and expenses incurred, to the extent reimbursable
under Section 3(c), for so long as Offered Shares remain outstanding (it being
understood and agreed that the calculation of the Sourcing Fees in such event
shall take into account the number of Offered Shares sold primarily from the
efforts of RCS Service Providers in the Offering). Notwithstanding the foregoing
sentence, the Dealer Manager will not continue to pay the Sourcing Fee to the
Wholesaler and reimburse costs and expenses related to the Offering incurred by
the Wholesaler pursuant to Section 3(c) subsequent to the termination of the
Offering to the extent, but only to the extent, that such payments or
reimbursements would cause the total underwriting compensation (as defined in
accordance with applicable FINRA rules) paid with respect to the Offering to
exceed 10% of the gross proceeds from the sale of the Offered Shares calculated
as of the termination of the Offering.

 

(d)          The termination of this Agreement for any reason shall not affect
(i) the Wholesaler’s obligations under the second sentence of Section 10(a),
(ii) the indemnification obligations under Section 8, or (iii) this Section 10.
Without limiting the foregoing, the provisions of this Agreement shall survive
the termination of this Agreement with respect to any matter arising while this
Agreement was in effect.

 

11.Amendment

 

(a)          The Dealer Manager has the right, subject to written consent from
the other parties hereto which shall not be unreasonably withheld or delayed, to
amend this Agreement as necessary, in the reasonable opinion of outside counsel
to the Dealer Manager, to comply with applicable law or the requirements of any
governmental or self-regulatory body or agency.

 

(b)          This Agreement may not otherwise be amended, supplemented or waived
except by the express written consent of the parties hereto. No waiver of any
provision of this Agreement may be implied from any course of dealing between or
among any of the parties hereto or from any failure by any party hereto to
assert its rights under this Agreement on any occasion or series of occasions.

 

12.Miscellaneous

 

(a)          No party may assign this Agreement without the prior written
consent of the other parties. This Agreement shall be binding upon and inure to
the benefit of the respective successors and permitted assigns of the parties
hereto.

 

(b)          All notices, requests, demands, approvals, consents, waivers and
other communications required or permitted to be given under this Agreement
(each, a “Notice”) shall be in writing and shall be (i) delivered personally,
(ii) mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, (iii) sent by next-day or overnight mail or
delivery, or (iv) sent by facsimile transmission (provided, however, that the
original copy thereof also is sent by one of the other means specified above in
this Section 13(b)):

 

If to the Dealer Manager:

 

Cole Capital Corporation

2325 East Camelback Road

 

9

 

 

Suite 1100

Phoenix, AZ 85016,

Attention: Jim Siegel, Chief Compliance Officer
Facsimile: (480) 449-7001

If to the Wholesaler:

Realty Capital Securities, LLC
One Beacon Street
14th Floor
Boston, MA 02108
Attention:
Facsimile:

or to such other Person or address as any party shall specify by Notice in
writing to the other parties in accordance with this Section 13(b). Each Notice
shall be deemed effective and given upon actual receipt or refusal of receipt.

 

(c)          This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to the principles of
choice of the law thereof.

 

(d)          If any party hereto initiates any legal action arising out of or in
connection with this Agreement, the prevailing party shall be entitled to
recover from the other party all reasonable attorneys’ fees, expert witness fees
and expenses incurred by the prevailing party in connection therewith.

 

(e)          All captions used in this Agreement are for convenience only, are
not a part hereof and are not to be used in construing or interpreting any
aspect hereof.

 

(f)          This Agreement may be executed (including by facsimile
transmission) with counterpart signature pages or in multiple counterparts, each
such counterpart to be deemed an original but which all together shall
constitute one and the same instrument.

 

(g)          If any provision of this Agreement, or the application of any
provision to any person or circumstance, shall be held to be inconsistent with
any law, ruling, rule or regulation, the remainder of this Agreement or the
application of the provision to persons or circumstances other than those as to
which it is held inconsistent, shall not be affected thereby.

 

If the foregoing is in accordance with your understanding of this Agreement,
please sign and return a counterpart signature page or a counterpart hereof,
whereupon this Agreement will become a binding agreement among us in accordance
with its terms.

 

[Signature pages follow.]

 

10

 

  

  COLE CAPITAL CORPORATION         By:     Name:     Title:           By:    
Name:     Title:  

 

Confirmed, Accepted and Agreed to   as of the date first above written:        
REALTY CAPITAL SECURITIES, LLC         By:     Name:     Title:    

  

[Signature Page to Wholesaling Agreement – CCPT IV]

 

 

 

 

Exhibit C-5 

 

WHOLESALING AGREEMENT

 

[                  ], 2014

Realty Capital Securities, LLC

One Beacon Street
14th Floor
Boston, MA 02108

 

Ladies and Gentlemen:

 

Cole Capital Corporation, a Delaware corporation (the “Dealer Manager”), with
its address at 2325 East Camelback Road, Suite 1100, Phoenix, AZ 85016, has
entered into an agreement dated as of March 17, 2014 (the “Dealer Manager
Agreement”), with Cole Credit Property Trust V, INC. (the “Company”). Under the
Dealer Manager Agreement, the Dealer Manager serves as the Company’s exclusive
Dealer Manager in connection with a public offering (the “Offering”) of the
Company’s common stock. The shares of the Company’s stock (the “Offered Shares”)
are being issued and sold to the public on a “best efforts” basis through the
Dealer Manager and the broker-dealers and other appropriately licensed firms
participating in the Offering (the “Participating Broker-Dealers”), pursuant to
Participating Broker-Dealer Agreements between the Dealer Manager and each
Participating Broker-Dealer (each, a “Participating Broker-Dealer Agreement”).
The Dealer-Manager shall provide to the Wholesaler the form of the Participating
Broker-Dealer Agreement used by the Dealer Manager. Capitalized terms used
herein but not otherwise defined shall have the respective meanings ascribed to
them in the Dealer Manager Agreement.

 

In consideration of the mutual covenants and agreements contained herein,
intending to be legally bound, the parties hereby agree to the following terms
and conditions set forth in this Wholesaling Agreement (this “Agreement”):

 

1.Appointment and Acceptance of the Wholesaler

 

Upon the terms and subject to the conditions set forth in this Agreement, the
Dealer Manager hereby appoints Realty Capital Securities, LLC, a Delaware
limited liability company (the “Wholesaler”), and the Wholesaler hereby accepts
such appointment, as the Dealer Manager’s distribution agent to assist, through
the Wholesaler’s employees, agents, contractors, registered representatives and
all other representatives who will perform services hereunder (collectively, the
“RCAP Service Providers”), the Dealer Manager with the sale of Offered Shares
through the recruitment of, and the provision of assistance to, Participating
Broker-Dealers, and the Wholesaler desires to accept such engagement; provided,
however, that nothing herein shall be construed to: (i) contravene the Company’s
appointment of the Dealer Manager as its exclusive agent and dealer manager
during the Offering Period, and the Dealer Manager’s acceptance of such
appointment, pursuant to Section 3.1 of the Dealer Manager Agreement; or (ii)
imply that the Dealer Manager shall not have sole discretion to accept or reject
any subscription for the Offered Shares in whole or in part.

 

2.Undertakings of the Wholesaler

 

(a)          The Wholesaler will use diligent efforts to recruit certain
broker-dealers and other appropriately licensed firms to serve as Participating
Broker-Dealers, each of which shall be a member of the Financial Industry
Regulatory Authority, Inc. (“FINRA”) in good standing, to agree to offer and
sell the Offered Shares on a best efforts basis without any commitment on the
Participating Broker-Dealers’ part to purchase any Offered Shares pursuant to a
Participating Broker-Dealer Agreement with the Dealer Manager.

 

(b)          The Wholesaler will use diligent efforts to assist the Dealer
Manager in providing certain services to Participating Broker-Dealers in
connection with the Offering, which will consist primarily of:

 

 

 

 

(i)          providing training and education regarding the Company and the
offering of the Offered Shares to Participating Broker-Dealers;

 

(ii)         providing marketing and sales support for Participating
Broker-Dealers,; and

 

(iii)        such other assistance to Participating Broker-Dealers and their
registered representatives in marketing the Offered Shares and otherwise
participating in the Offering as shall be reasonably determined to be
appropriate by the Dealer Manager.

 

(c)          The Wholesaler acknowledges that it is familiar with FINRA Rule
2310 and that it will comply in all material respects with all the terms thereof
to the extent FINRA Rule 2310 applies to the conduct contemplated herein.
Notwithstanding the foregoing sentence, the Wholesaler shall not be responsible
for the obligations of the Dealer Manager under the Dealer Manager Agreement and
Section 6(i) to assure compliance with the organization and offering expenses
limitations of FINRA Rule 2310(b)(4).

 

3.Compensation and Expense Reimbursement

 

(a)          In consideration for the Wholesaler performing its obligations
under this Agreement, the Dealer Manager shall pay the Wholesaler a sourcing fee
(the “Sourcing Fee”) equal to 1.80% of the Selling Price of each of the Offered
Shares sold by Participating Broker-Dealers who entered into dealer agreements
with the Dealer Manager primarily as a result of the efforts of RCAP Service
Providers (“RCAP Sales”); provided, however, the Sourcing Fee shall be payable
solely from that portion of the Dealer Manager Fee that is (i) actually received
by the Dealer Manager from the Company pursuant to Section 3,3 of the Dealer
Manager Agreement, and (ii) not reallowed to any Participating Broker-Dealer
pursuant to Section 3.3 of the Dealer Manager Agreement (a “Sourcing Fee
Reallowance”) in respect of any RCAP Sales.

 

(b)          The Sourcing Fee shall be paid substantially concurrently with the
receipt of corresponding payments to the Dealer Manager from the Company
pursuant to Section 3.3 of the Dealer Manager Agreement, but in no event no
later than five business days thereafter.

 

(c)          The Dealer Manager also will reimburse the Wholesaler for all costs
and expenses incurred that are: (i) in connection with bona fide due diligence
activities; and (ii) incident to the Offering, but only to the extent such costs
or expenses (A) are permitted pursuant to prevailing rules and regulations of
FINRA, (B) would have been incurred by the Dealer Manager if the Wholesaler had
not incurred them, and (C) are otherwise eligible for reimbursement from the
Company pursuant to Section 3.6 of the Dealer Manager Agreement. The Wholesaler
will present the Dealer Manager with itemized and detailed invoices for all
incurred costs and expenses that are reimbursable pursuant to this Section 3(c).
The Dealer Manager will submit such request to the Company within five business
days following receipt of such invoices and will reimburse the Wholesaler within
five business days following receipt of funds from the Company for such
reimbursement.

 

4.Representations and Warranties of the Dealer Manager

 

(a)          The Dealer Manager is a corporation duly organized and validly
existing under the laws of the State of Delaware, with full power and authority
to conduct its business and to enter into this Agreement and to perform the
transactions contemplated hereby.

 

(b)          This Agreement has been duly authorized, executed and delivered by
the Dealer Manager, constitutes a legal, valid and binding agreement of the
Dealer Manager, enforceable against the Dealer Manager in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
and by general equitable principles relating to the availability of remedies,
and except

 

2

 

 

to the extent that the enforceability of the indemnity provisions contained in
this Agreement may be limited under applicable securities laws.

 

(c)          The Dealer Manager (A) is duly registered as a broker-dealer
pursuant to the provisions of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), (B) is a member of FINRA in good standing, (C) is a broker
or dealer registered as such in those states and jurisdictions where the Dealer
Manager is required to be registered in order to provide the services
contemplated by this Agreement and the Dealer Manager Agreement, and (D) it and
those of its employees and representatives who are required to have approvals,
licenses or registrations to act under this Agreement have all applicable
required approvals, licenses and registrations to act under this Agreement.
There is no provision in the Dealer Manager’s FINRA membership agreement that
would prohibit or restrict the ability of the Dealer Manager to carry out the
services related to the Offering as contemplated by this Agreement and the
Dealer Manager Agreement or to perform its obligations hereunder and thereunder.
With respect to its participation in the offer and sale of the Offered Shares
(including, without limitation any resales and transfers of Offered Shares), the
Dealer Manager shall comply in all material respects with all applicable
requirements of (1) the Securities Act of 1933, as amended (the “Securities
Act”), and the applicable rules and regulations promulgated thereunder (the
“Securities Act Regulations”), the Exchange Act and the applicable rules and
regulations promulgated thereunder (the “Exchange Act Regulations”) and all
other federal rules and regulations applicable to the Offering and the sale of
the Offered Shares, (2) applicable state securities or “blue sky” laws, and (3)
the rules set forth in the FINRA rulebook applicable to the Offering, which
currently consists of rules promulgated by FINRA, the National Association of
Securities Dealers (“NASD”) and the New York Stock Exchange (collectively, the
“FINRA Rules”), specifically including, but not in any way limited to, FINRA
Rule 2310, FINRA Rule 5110, FINRA Rule 5141, NASD Rule 2340 and NASD Rule 2420.

 

(d)          The Dealer Manager and its representatives have all required
Governmental Licenses and have made all filings and registrations with federal
and state governmental and regulatory agencies required to conduct their
business and to perform their obligations under this Agreement and the Dealer
Manager Agreement, except where the inability of such Governmental Licenses to
be in full force and effect would not have a material adverse effect on the
business, properties, financial position, results of operations or cash flows of
the Dealer Manager or as otherwise may be disclosed in the Registration
Statement and the Prospectus. The performance of the obligations of the Dealer
Manager under this Agreement and the Dealer Manager Agreement will not
(A) violate or result in a breach of any provisions of its articles of
incorporation or by-laws (or similar instruments or documents) or any order, law
or regulation binding upon it, and (B) result in a material breach of any
provisions of any agreement or instrument to which it is a party or which is
otherwise binding upon it.

 

5.Representations and Warranties of the Wholesaler

 

The Wholesaler represents and warrants to the Dealer Manager:

 

(a)          The Wholesaler is a limited liability company duly organized and
validly existing under the laws of the State of Delaware, with full power and
authority to conduct its business and to enter into this Agreement and to
perform the transactions contemplated hereby.

 

(b)          This Agreement has been duly authorized, executed and delivered by
the Wholesaler and, assuming due authorization, execution and delivery of this
Agreement by the Dealer Manager, constitutes a legal, valid and binding
agreement of the Wholesaler, enforceable against the Wholesaler in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general equitable principles relating to the
availability of remedies, and except to the extent that the enforceability of
the indemnity provisions contained in this Agreement may be limited under
applicable securities laws.

 

(c)          The Wholesaler (i) is duly registered as a broker-dealer pursuant
to the provisions of the Exchange Act, (ii) is a member of FINRA in good
standing, (iii) is a broker or dealer registered as such in those states and
jurisdictions where the Wholesaler is required to be registered in order to
provide the services contemplated by this Agreement, and

 

3

 

 

(iv) it and those of its employees and representatives who are required to have
approvals, licenses or registrations to act under this Agreement have all
applicable required approvals, licenses and registrations to act under this
Agreement. There is no provision in the Wholesaler’s FINRA membership agreement
that would prohibit or restrict the ability of the Wholesaler to carry out the
services related to the Offering as contemplated by this Agreement or to perform
its obligations hereunder. With respect to its participation in the offer and
sale of the Offered Shares (including, without limitation any resales and
transfers of Offered Shares), the Wholesaler agrees to comply in all material
respects with all applicable requirements, in each case to the extent such
requirements are applicable to the Wholesaler in connection with the performance
of its obligations hereunder, of (i) the Securities Act, the Exchange Act, the
Securities Act Regulations and the Exchange Act Regulations and all other
federal rules and regulations applicable to the Offering and the sale of the
Offered Shares, (ii) applicable state securities or “blue sky” laws, and (iii)
the FINRA Rules, specifically including, but not in any way limited to, FINRA
Rule 2310, FINRA Rule 5110, FINRA Rule 5141, NASD Rule 2340 and NASD Rule 2420.

 

(d)          The Wholesaler and those of its employees and representatives who
are required to have Governmental Licenses have all required Governmental
Licenses and have made all filings and registrations with federal and state
governmental and regulatory agencies required to conduct their business and to
perform their obligations under this Agreement. The performance of the
obligations of the Wholesaler under this Agreement will not violate or result in
a breach of any provisions of its articles of incorporation or by-laws (or
similar instruments or documents) or any agreement, instrument, order, law or
regulation binding upon it.

 

(e)          To the extent required by applicable law in connection with the
transactions contemplated in this Agreement, the Wholesaler represents that it
has established and implemented an anti-money laundering compliance program
(“AML Program”) in accordance with applicable law, including applicable FINRA
Rules, Exchange Act Regulations, the USA PATRIOT Act and implementing
regulations, specifically including, but not limited to, Section 352 of the
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001 (the “Money Laundering Abatement Act,” and together with the USA PATRIOT
Act, the “AML Rules”) reasonably expected to detect and cause the reporting of
suspicious transactions in connection with the offering and sale of the Offered
Shares. The Wholesaler further represents that it is currently in compliance
with all AML Rules, specifically including, but not limited to, the Customer
Identification Program requirements under Section 326 of the Money Laundering
Abatement Act; has Know Your Customer (KYC) policies and procedures in place;
that the AML Program has been adopted by a person with sufficient authority to
oversee the AML policies and procedures; that the AML Program has education
and/or training programs for officers and employees regarding AML policies and
procedures; and that the Wholesaler will remain in compliance with such
requirements. The Wholesaler shall, upon request by the Dealer Manager or the
Company, provide a certification that, as of the date of such certification, (i)
its AML Program then in effect is consistent with the AML Rules and (ii) it is
currently in compliance with its AML Program and all AML Rules, specifically
including, but not limited to, the Customer Identification Program requirements
under Section 326 of the Money Laundering Abatement Act.

 

6.Covenants of the Dealer Manager

 

(a)          The Dealer Manager shall comply with the record keeping
requirements of the Exchange Act, including but not limited to, Rules 17a-3 and
17a-4 promulgated under the Exchange Act. The Dealer Manager will make such
documents and records available to (i) the Wholesaler, upon reasonable request,
and (ii) representatives of the Securities and Exchange Commission (“SEC”),
FINRA and applicable state securities administrators upon the receipt of an
appropriate document subpoena or other appropriate request for documents from
any such agency; provided, however, that if the Dealer Manager determines, in
its sole discretion, not to provide documents in accordance with this section,
it may oppose such document subpoena or other request, provided that the Dealer
Manager shall be responsible for all reasonable direct costs of such opposition.
The Dealer Manager further agrees to keep such required records with respect to
each customer who purchases Offered Shares, the customer’s suitability and the
amount of Offered Shares sold, and to retain such records for six years or such
period of time as may be required by the SEC, any state securities commission,
FINRA or the Company, whichever is later. The Wholesaler, agree that the Dealer
Manager can satisfy its recordkeeping

 

4

 

 

obligations hereunder by contractually requiring such information to be
maintained by the Participating Broker-Dealers, investment advisors or banks
offering the Offered Shares.

 

(b)          The Dealer Manager shall abide by and comply with: (i) the privacy
standards and requirements of the Gramm-Leach Bliley Act of 1999 (“GLB Act”);
(ii) the privacy standards and requirements of any other applicable federal or
state law; (iii) any reasonable written privacy policies and standards provided
to the Dealer Manager by the Wholesaler and the Company; and (d) the Dealer
Manager’s own internal privacy policies and procedures, each as may be amended
from time to time.

 

(c)          To the extent the Dealer Manager directly sells Offered Shares, the
Dealer Manager will only offer and sell Offered Shares in jurisdictions in which
qualifications or exemptions for the offer and sale of the Offered Shares are in
effect as of the relevant date (“Qualified Jurisdictions”). No Offered Shares
shall be offered or sold for the account of the Company in any other states or
foreign jurisdictions.

 

(d)          The Dealer Manager is familiar with Rule 15c2-8 under the Exchange
Act, relating to the distribution of preliminary and final Prospectuses, and
confirms that it has complied and will comply therewith.

 

(e)          The Dealer Manager will notify the Wholesaler immediately (i) when
any amendment to the Registration Statement shall have become effective, (ii) of
the issuance by the SEC or any other Federal or state regulatory body of any
order suspending the effectiveness of the Registration Statement under the
Securities Act or the registration of Offered Shares under the Blue Sky or
securities laws of any state or other jurisdiction or any order or decree
enjoining the offering or the use of the Prospectus or of the institution, or
notice of the intended institution, of any action or proceeding for that
purpose, and (iii) when any Prospectus shall have been filed under the
Securities Act with the SEC.

 

(f)          The Dealer Manager will deliver to the Wholesaler as promptly as
practicable from time to time during the period when the Prospectus is required
to be delivered under the Securities Act, with reasonable quantities of copies
of the Prospectus (as amended or supplemented), as provided by the Company, for
delivery to investors and for the purposes contemplated by the Securities Act or
any rules or regulations thereunder.

 

(g)          The Dealer Manager will provide a reasonable amount of Authorized
Sales Material to the Wholesaler as and when requested by the Wholesaler,
subject to receipt of such material by the Dealer Manager from the Company.

 

(h)          The Dealer Manager shall be responsible for the timely filing of
all documents and information to be filed with the Corporate Financing
Department of FINRA, as required under FINRA Rules 5110(b)(5) and 5110(b)(6),
and shall have and maintain internal controls sufficient to monitor compliance
with the organization and offering expense limitations of FINRA Rule 2310(b)(4).

 

(i)          The Dealer Manager shall comply, in all material respects, with all
applicable laws, and the applicable rules and regulations of FINRA, the SEC,
state securities administrators and any other applicable regulatory body in
connection with the Offering.

 

7.Covenants of the Wholesaler

 

(a)          The Wholesaler shall, in all material respects and to the extent
such requirements are applicable to the Wholesaler in connection with the
performance of its obligations hereunder, comply, with the record keeping
requirements of the Exchange Act, including but not limited to, Rules 17a-3 and
17a-4 promulgated under the Exchange Act. The Wholesaler will make such
documents and records available to (i) the Dealer Manager and the Company upon
reasonable request, and (ii) representatives of the SEC, FINRA and applicable
state securities administrators upon the receipt of an appropriate document
subpoena or other appropriate request for documents from any such agency;
provided, however, that in the event the Wholesaler determines, in its sole
discretion, not to provide documents in accordance with

 

5

 

 

this section, it may oppose such document subpoena or other request, provided
that the Wholesaler shall be responsible for all reasonable direct costs of such
opposition.

 

(b)          The Wholesaler shall, in all material respects and to the extent
such requirements are applicable to the Wholesaler in connection with the
performance of its obligations hereunder, abide by and comply with (i) the
privacy standards and requirements of the GLB Act; (ii) the privacy standards
and requirements of any other applicable federal or state law; (iii) any
reasonable written privacy policies and standards provided to the Wholesaler by
the Dealer Manager and the Company; and (iv) the Wholesaler’s own internal
privacy policies and procedures, each as may be amended from time to time.

 

(c)          To the extent the Wholesaler directly sells Offered Shares in
connection with the performance of its obligations hereunder, the Wholesaler
will only offer and sell Offered Shares in Qualified Jurisdictions. No Offered
Shares shall be offered or sold for the account of the Company in any other
states or foreign jurisdictions.

 

(d)          The Wholesaler is familiar with Rule 15c2-8 under the Exchange Act,
relating to the distribution of preliminary and final Prospectuses, and confirms
that it will, to the extent applicable to the Wholesaler in connection with the
performance of its obligations hereunder, comply with Rule 15c2-8 under the
Exchange Act.

 

(e)          The Dealer Manager will provide the Wholesaler with certain
Authorized Sales Materials to be used by the Wholesaler and the Participating
Broker-Dealers in connection with the Offering. If the Wholesaler elects to use
such Authorized Sales Materials in connection with the performance of its
obligations hereunder, then the Wholesaler agrees that such material shall not
be used by it in connection with the Offering and that it will direct
Participating Broker-Dealers not to make such use of any Authorized Sales
Materials unless accompanied or preceded by the Prospectus. If the Wholesaler
elects to use such Authorized Sales Materials in connection with the performance
of its obligations hereunder, the Wholesaler will only use Authorized Sales
Materials provided by the Dealer Manager. The Wholesaler shall not give or
provide any information or make any representation other than those contained in
the Prospectus or the Authorized Sales Materials. The Wholesaler will not use
any “broker-dealer use only” Authorized Sales Materials with members of the
public in connection with offers or sales or the Offered Shares.

 

(f)          The Wholesaler will suspend or terminate the offering and sale of
the Offered Shares by the Wholesaler upon request of the Company at any time and
resume offering and sale of the Offered Shares upon subsequent request of the
Company if required to do so in connection with the performance of its
obligations hereunder.

 

(g)          The Wholesaler will provide to the Company and the Dealer Manager
as soon as practicable upon receipt by the Wholesaler copies of any written or
otherwise documented customer complaints received by the Wholesaler from
Participating Broker-Dealers relating in any way to the Offering (including, but
not limited to, the manner in which the Offered Shares are offered by any
Participating Broker-Dealer), the Offered Shares or the Company.

 

(h)          Other than with respect to use of Authorized Sales Materials or the
Prospectus or otherwise pursuant to or in connection with this Agreement, the
Wholesaler will not, without the Company’s prior written consent, make a
source-identifying use of (i) the Company’s name, brand, logo or trademark or
any reasonably similar variant or derivative thereof or (ii) the “ Cole  ” name,
brand, logo or trademark or any reasonably similar variant or derivative
thereof.

 

(i)          The Wholesaler shall under no circumstances engage in any
activities hereunder in any jurisdiction (i) in which the Dealer Manager has not
informed the Wholesaler that counsel’s advice has been received that the Offered
Shares are qualified for sale or are exempt under the applicable securities or
Blue Sky laws thereof, or (ii) in which the Wholesaler may not lawfully engage.

 

6

 

 

(j)          The Wholesaler shall comply, in all material respects, with all
applicable laws, and the applicable rules and regulations of FINRA, the SEC,
state securities administrators and any other applicable regulatory body in
connection with the Offering.

 

8.Indemnification; Contribution

 

(a)          The Dealer Manager will indemnify, defend (subject to Section 4 of
the Dealer Manager Agreement) and hold harmless the Wholesaler, its affiliates
and their respective officers, directors, shareholders, members, partners, other
equity-holders and control persons (collectively, the “Other Indemnified
Parties”), from and against any losses, claims (including the reasonable costs
of investigation and legal fees), damages or liabilities (or actions in respect
thereof), to which the Wholesaler, its affiliates or their respective Other
Indemnified Parties may become subject under the Securities Act or the Exchange
Act, or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon: (i) any inaccuracy
in or breach of a representation or warranty contained herein by the Dealer
Manager, any breach of a covenant or agreement contained herein of the Dealer
Manager, or any failure by the Dealer Manager to comply with state or federal
securities law applicable to the Offering; (ii) any untrue statement or alleged
untrue statement of a material fact contained in the information relating to the
Dealer Manager that appears in the Dealer Manager Sections of the Prospectus or
any amendment thereof, or arise out of or are based upon the omission or alleged
omission to state in the Dealer Manager Sections 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; and (iii) any
unauthorized use of sales materials or use of unauthorized verbal
representations concerning the Offered Shares by the Dealer Manager. The Dealer
Manager will reimburse the Wholesaler and its Other Indemnified Parties for any
legal or other expenses reasonably incurred by such Wholesaler, its affiliates
and their respective Other Indemnified Parties in connection with investigating
or defending such loss, claim, damage, liability or action.

 

(b)          The Wholesaler will indemnify, defend and hold harmless the Dealer
Manager, the Company and their respective Other Indemnified Parties, from and
against any losses, claims (including the reasonable costs of investigation and
legal fees), damages or liabilities (or actions in respect thereof), to which
the Dealer Manager, the Company and any of their respective Other Indemnified
Parties may become subject under the Securities Act or the Exchange Act, or
otherwise, insofar as such losses, claims (including the reasonable costs of
investigation and legal fees), damages or liabilities (or actions in respect
thereof) arise out of or are based upon: (i) any inaccuracy in or breach of a
representation or warranty contained herein by the Wholesaler, any breach of a
covenant or agreement contained herein of the Wholesaler, or any failure by the
Wholesaler to comply with state or federal securities laws applicable to the
Offering; and (ii) any unauthorized use of sales materials or use of
unauthorized verbal representations concerning the Shares by the Wholesaler.

 

(c)          Promptly after receipt by an indemnified party of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party, notify the indemnifying
party in writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under this Section 8
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in this Agreement. The indemnifying party
shall be entitled to appoint counsel of the indemnifying party’s choice at the
indemnifying party’s expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be subject to approval by the
indemnified party, not to be unreasonably withheld or delayed. Notwithstanding
the indemnifying party’s election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have the right to
employ and select separate counsel (including local counsel), subject to
approval by the indemnifying party not to be unreasonably withheld or delayed,
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or

 

7

 

 

targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
for the indemnified party (subject to approval by the indemnified party not to
be unreasonably withheld or delayed) to represent the indemnified party within a
reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party may
settle or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder but may not do so
without the prior written consent of the indemnified parties, unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action, suit or
proceeding.

 

(d)          If the right to indemnification provided for in this Section 8
would by its terms be available to a person hereunder, but is held to be
unavailable by a court of competent jurisdiction for any reason, then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party as a result of such Losses and expenses in respect
thereof, as incurred, in such proportion as is appropriate to reflect the
relative fault of the Dealer Manager and the Wholesaler, as applicable, in
connection with the statements, omissions or other circumstances which resulted
in such Losses or expenses, as well as any other relevant equitable
considerations. The relative fault of the Dealer Manager and the Wholesaler, as
applicable, shall be determined by reference to, among other things, the
parties’ relative intent, knowledge, and access to information. It is understood
that it would not be just and equitable if contribution pursuant to this Section
8(d) were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 8(d). Notwithstanding the provisions of this Section 8(d), the
Dealer Manager shall not be required to contribute any amount in excess of the
total price of the Offering Shares sold by it. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8(d), each Other
Indemnified Party affiliate of the Dealer Manager shall have the same rights to
contribution as the Dealer Manager and each Other Indemnified Party of the
Wholesaler shall have the same rights to contribution as the Wholesaler.

 

9.Relationship of Wholesaler, Participating Broker-Dealers and the Dealer
Manager

 

(a)          The obligations of each of the Wholesaler and the Participating
Broker-Dealers are several and not joint. Nothing herein contained shall
constitute the Wholesaler and the Participating Broker-Dealers, or any of them,
as an association, partnership, unincorporated business or other separate
entity. The Dealer Manager and the Company shall be under no liability to the
Wholesaler except for lack of good faith and for obligations expressly assumed
by the Dealer Manager and the Company in this Agreement.

 

(b)          The parties hereto acknowledge that, other than as expressly set
forth herein, the Wholesaler is not authorized to act as agent of the Dealer
Manager or the Company in any connection or transaction, and the Wholesaler
agrees that it will not so act or purport to so act.

 

(c)          The parties hereto acknowledge that the Wholesaler’s obligations
under this Agreement, including without limitation the Wholesaler Exclusivity
have no impact on, and in no way release the Dealer Manager from, the Dealer
Manager’s obligations and rights to act as the dealer manager for the Company
pursuant to Section 3.1 of the Dealer Manager Agreement.

 

10.Termination

 

(a)          This Agreement shall terminate upon the earlier to occur of (i)
termination of the Offering, (ii) the Second Closing (as defined in the Equity
Purchase Agreement (the “Equity Purchase Agreement”), dated as of September

 

8

 

 

30, 2014, by and between ARC Properties Operating Partnership, L.P. and RCS
Capital Corporation), (iii) termination of the Equity Purchase Agreement or (iv)
December 31, 2014.

 

(b)          Wholesaler may terminate this Agreement at any time by giving ten
days’ prior written notice thereof to the other parties hereto. This Agreement
automatically shall terminate with no further action by any party hereto if the
Wholesaler or the Dealer Manager ceases to be a member in good standing of
FINRA, or with the securities commission of the state in which its principal
office is located. The Wholesaler will notify the Dealer Manager immediately if
the Wholesaler ceases to be a member in good standing of FINRA or with the
securities commission of any state in which the Wholesaler is currently
registered or licensed. The Dealer Manager will notify the Wholesaler
immediately if the Dealer Manager ceases to be a member in good standing of
FINRA or with the securities commission of any state in which the Dealer Manager
is currently registered or licensed.

 

(c)          In the event of termination under Section 11(b), the Dealer Manager
will continue to pay any Sourcing Fees with respect to RCAP Sales to the
Wholesaler and reimburse costs and expenses incurred, to the extent reimbursable
under Section 3(c), for so long as Offered Shares remain outstanding (it being
understood and agreed that the calculation of the Sourcing Fees in such event
shall take into account the number of Offered Shares sold primarily from the
efforts of RCAP Service Providers in the Offering). Notwithstanding the
foregoing sentence, the Dealer Manager will not continue to pay the Sourcing Fee
to the Wholesaler and reimburse costs and expenses related to the Offering
incurred by the Wholesaler pursuant to Section 3(c) subsequent to the
termination of the Offering to the extent, but only to the extent, that such
payments or reimbursements would cause the total underwriting compensation (as
defined in accordance with applicable FINRA rules) paid with respect to the
Offering to exceed 10% of the gross proceeds from the sale of the Offered Shares
calculated as of the termination of the Offering.

 

(d)          The termination of this Agreement for any reason shall not affect
(i) the Wholesaler’s obligations under the second sentence of Section 10(a),
(ii) the indemnification obligations under Section 8, or (iii) this Section 10.
Without limiting the foregoing, the provisions of this Agreement shall survive
the termination of this Agreement with respect to any matter arising while this
Agreement was in effect.

 

11.Amendment

 

(a)          The Dealer Manager has the right, subject to written consent from
the other parties hereto which shall not be unreasonably withheld or delayed, to
amend this Agreement as necessary, in the reasonable opinion of outside counsel
to the Dealer Manager, to comply with applicable law or the requirements of any
governmental or self-regulatory body or agency.

 

(b)          This Agreement may not otherwise be amended, supplemented or waived
except by the express written consent of the parties hereto. No waiver of any
provision of this Agreement may be implied from any course of dealing between or
among any of the parties hereto or from any failure by any party hereto to
assert its rights under this Agreement on any occasion or series of occasions.

 

12.Miscellaneous

 

(a)          No party may assign this Agreement without the prior written
consent of the other parties. This Agreement shall be binding upon and inure to
the benefit of the respective successors and permitted assigns of the parties
hereto.

 

(b)          All notices, requests, demands, approvals, consents, waivers and
other communications required or permitted to be given under this Agreement
(each, a “Notice”) shall be in writing and shall be (i) delivered personally,
(ii) mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, (iii) sent by next-day or overnight mail or
delivery, or (iv) sent by facsimile transmission (provided, however, that the
original copy thereof also is sent by one of the other means specified above in
this Section 13(b)):

 

9

 

 

If to the Dealer Manager:

 

Cole Capital Corporation

2325 East Camelback Road

Suite 1100, Phoenix, AZ 85016,

Attention: Jim Siegel, Chief Compliance Officer

Facsimile: (480) 449-7001

If to the Wholesaler:

 

Realty Capital Securities, LLC
One Beacon Street
14th Floor
Boston, MA 02108
Attention:
Facsimile: 

or to such other Person or address as any party shall specify by Notice in
writing to the other parties in accordance with this Section 13(b). Each Notice
shall be deemed effective and given upon actual receipt or refusal of receipt.

 

(c)          This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to the principles of
choice of the law thereof.

 

(d)          If any party hereto initiates any legal action arising out of or in
connection with this Agreement, the prevailing party shall be entitled to
recover from the other party all reasonable attorneys’ fees, expert witness fees
and expenses incurred by the prevailing party in connection therewith.

 

(e)          All captions used in this Agreement are for convenience only, are
not a part hereof and are not to be used in construing or interpreting any
aspect hereof.

 

(f)          This Agreement may be executed (including by facsimile
transmission) with counterpart signature pages or in multiple counterparts, each
such counterpart to be deemed an original but which all together shall
constitute one and the same instrument.

 

(g)          If any provision of this Agreement, or the application of any
provision to any person or circumstance, shall be held to be inconsistent with
any law, ruling, rule or regulation, the remainder of this Agreement or the
application of the provision to persons or circumstances other than those as to
which it is held inconsistent, shall not be affected thereby.

 

If the foregoing is in accordance with your understanding of this Agreement,
please sign and return a counterpart signature page or a counterpart hereof,
whereupon this Agreement will become a binding agreement among us in accordance
with its terms.

 

[Signature pages follow.]

 

10

 

 

  COLE CAPITAL CORPORATION         By:     Name:     Title:           By:    
Name:     Title:  

 

Confirmed, Accepted and Agreed to   as of the date first above written:        
REALTY CAPITAL SECURITIES, LLC         By:     Name:     Title:    

 

[Signature Page to Wholesaling Agreement – CCPT V]

 

 

 

 

Exhibit D

 

FORM OF EMPLOYEE LEASING AGREEMENT

 

This EMPLOYEE LEASING AGREEMENT (this “Agreement”), is hereby made as of [•],
2014 (the “Effective Date”) by and between ARC Properties Operating Partnership,
L.P., a Delaware limited partnership (“ARCP OP”), and RCS Capital Corporation, a
Delaware corporation (“RCAP”).

 

WITNESSETH:

 

WHEREAS, ARCP OP and RCAP are parties to that certain Equity Purchase Agreement
dated as of September 30, 2014 (the “Equity Purchase Agreement”) (capitalized
terms used herein without definition shall have the meaning ascribed to such
terms in the Equity Purchase Agreement);

 

WHEREAS, following the First Closing RCAP will engage in certain aspects of the
Business, and, pursuant to the terms and conditions of the Equity Purchase
Agreement, RCAP has agreed to acquire from ARCP OP all of the outstanding Equity
Interests held by ARCP OP in each of the Acquired Companies, such that,
immediately following the consummation of the Second Closing, RCAP, through the
Acquired Companies and their respective Subsidiaries, will be engaged in the
Business; and

 

WHEREAS, RCAP desires to utilize certain employees of the Acquired Companies and
their Subsidiaries (collectively, along with ARCP OP, the “ARCP Companies”) to
perform work for RCAP relating to the Business during the period between the
consummation of the First Closing and the earlier of (i) the consummation of the
Second Closing, (ii) the termination of the Equity Purchase Agreement pursuant
the terms thereof and (iii) December 31, 2014 (the “Leasing Period”) as
hereinafter provided and ARCP OP desires to lease such employees to RCAP.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
set forth, RCAP and ARCP OP (collectively, the “Parties”) agree as follows:

 

1.          Term. This Agreement shall be effective as of the First Closing and
shall continue in full force and effect through the Leasing Period or such
earlier date as agreed to by the Parties (the “Term”).

 

2.          Leasing of Employees and Compensation. During the Term, ARCP OP
shall, or shall cause the applicable ARCP Company to, lease to RCAP, or one or
more of its Affiliates (collectively, along with RCAP (other than Realty Capital
Securities, LLC), the “RCAP Companies”) specified by RCAP, for the purpose of
performing work in the Business, the services of the persons identified in
Attachment A (with such additions as are from time to time agreed to by the
Parties and such subtractions as are from time to time determined by RCAP in its
sole discretion, the “Leased Employees”). A lease may be for a Leased Employee’s
full or part work time as agreed from time to time by the Parties. Attachment A
shall include, with respect to each such Leased Employee, the Leased Employee’s
current annual base compensation rate and commission, bonus or any other
incentive-based compensation. ARCP

 

 

 

  

OP shall use commercially reasonable efforts to cause all services performed by
the Leased Employees under this Agreement to be performed at service and
performance levels consistent with those provided to the Business prior to the
beginning of the Term. ARCP OP shall not take any action to intentionally
degrade such services during the Term. During the Term, RCAP shall compensate
ARCP OP for all Leased Employee wage and benefit costs as provided in Attachment
B.

 

3.          Payroll and Benefits. The ARCP Companies shall be solely responsible
during the Term for (i) paying to the Leased Employees all compensation at the
wage and salary rates set forth on Attachment A, (ii) providing to the Leased
Employees all benefits pursuant to the ARCP Companies’ applicable employee
benefit plans or programs and as otherwise provided under applicable Law and
(iii) providing all payroll, accounting and administrative services associated
with payment of each Leased Employee’s compensation and the administration and
provision of benefits pursuant to ARCP OP’s employee benefit plans or programs
and as provided under applicable Law. The ARCP Companies shall be solely
responsible for the payment of all required federal, foreign, state and local
payroll taxes, workers’ compensation insurance, unemployment compensation and
social security benefits for the Leased Employees and for preparing and filing
all returns and reports concerning the Leased Employees.

 

4.          Management. During the Term, (i) the applicable ARCP Company shall
be, at all times, the employer for all purposes of the Leased Employees, (ii)
the Leased Employees shall not be deemed to be employees of any RCAP Company for
any purpose and (iii) RCAP shall have supervisory authority over the activities
of the Leased Employees on behalf of the applicable RCAP Companies with respect
to the services provided under this Agreement. Notwithstanding anything herein
to the contrary, during the Term the Leased Employees shall be subject to the
exclusive control of the ARCP Companies and the ARCP Companies shall be
responsible for all personnel matters regarding the Leased Employees, including,
but not limited to, employment terminations, promotions, transfers,
compensation, performance evaluations and all disciplinary actions.

 

5.          Compliance with Laws. The ARCP Companies will use commercially
reasonable efforts to comply, and will use commercially reasonable efforts to
cause all of their applicable personnel, including, without limitation, the
Leased Employees, to comply, with applicable federal, foreign, state and local
labor and employment Laws with respect to the Leased Employees. The applicable
ARCP Companies shall be responsible for maintaining time records, payroll
records, employment eligibility forms, personnel files, medical files, workers’
compensation records, unemployment compensation records and other documents
pertaining to the Leased Employees, in accordance with applicable federal,
foreign, state and local Laws. The RCAP Companies will use commercially
reasonable efforts, and will use commercially reasonable efforts to cause all of
their applicable personnel, to comply, with the requirements of any applicable
Laws pertaining to the RCAP Companies’ lease of the Leased Employees.

 

6.          Indemnification.

 

a.RCAP will indemnify each of the ARCP Companies providing Leased Employees
against, and agrees to hold any of them harmless from, any and all damage, loss,
claim, liability and expense (including, without limitation, reasonable
attorneys’ fees

 

2

 

 

  and expenses in connection with any claim, action, suit or proceeding brought
against any of them) incurred or suffered by such ARCP Company arising out of:

 

i.    a breach of this Agreement by RCAP; or

 

ii.   any acts or omissions of a Leased Employee while performing services at
the direction of RCAP as a Leased Employee during the Term or the acts or
omissions of a RCAP Company with regard to any Leased Employee.

provided, however, that none of the RCAP Companies shall be obligated to
indemnify any ARCP Company for any damage, loss, claim, liability and expense to
the extent arising or resulting directly from the gross negligence or
intentional misconduct of any ARCP Company. In the event of any litigation or
proceeding against ARCP OP (but not against any RCAP Company) relating to the
subject matter of this Agreement, ARCP OP shall control the litigation with
counsel of its choice; provided that ARCP OP shall not settle any claim without
RCAP’s consent, which consent shall not unreasonably be withheld.

 

b.     ARCP OP will indemnify each of the RCAP Companies against, and agrees to
hold any of them harmless from, any and all damage, loss, claim, liability and
expense (including, without limitation, reasonable attorneys’ fees and expenses
in connection with any claim, action, suit or proceeding brought against any of
them) incurred or suffered by any RCAP Company arising out of:

 

i.    a breach of this Agreement by ARCP OP;

 

ii.   any claim for compensation or benefits by the Leased Employees (or the
dependents or beneficiaries thereof) related to or arising from events during or
preceding the Term; or

 

iii.  acts or omissions relating to the subject matter of this Agreement by an
ARCP Company employee, excluding the Leased Employees while Leased Employees, or
an agent or contractor engaged by an ARCP Company or the acts or omissions of
any ARCP Company.

 

provided, however, that none of the ARCP Companies shall be obligated to
indemnify any RCAP Company for any damage, loss, claim, liability and expense to
the extent arising or resulting directly from the gross negligence or
intentional misconduct of any RCAP Company.

 

7.          Controlling Law. The interpretation and enforcement of this
Agreement shall be governed by the laws of the State of Delaware, without regard
to its conflict of law doctrines.

 

8.          Modifications. The Parties agree that the provisions of this
Agreement may not be modified by any subsequent agreement unless the modifying
agreement is (i) in writing, (ii) specifically references this Agreement, and
(iii) is signed by authorized representatives of the Parties.

 

3

 

 

9.          Access to Leased Employee Records. Subject to any limitations
imposed by applicable Law, the ARCP Companies shall make payroll and employee
benefit plan records with respect to the Leased Employees available to RCAP for
the reasonable and legitimate business, financial and tax requirements of RCAP
upon reasonable request and at the expense of RCAP.

 

10.         Severability. The Parties acknowledge and agree that each provision
of this Agreement shall be enforceable independently of every other provision.
Furthermore, in the event that any provision is deemed to be unenforceable for
any reason, the remaining provisions shall remain effective, binding and
enforceable.

 

11.         Controlling Upon Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors and assigns. This Agreement may not be assigned by any Party, except
to a wholly controlled affiliate or wholly owned subsidiary of such Party, or
with the written permission of the other Party.

 

12.         Notices. All notices or other communications hereunder shall be
given and received in the manner set forth under Section 10.2 of the Equity
Purchase Agreement.

 

13.         Counterparts. This Agreement may be executed in multiple
counterparts, all of which shall constitute a single agreement.

 

14.         Captions. The titles of the sections herein have been inserted as a
matter of convenience of reference only and shall not control or affect the
meaning or construction of any of the terms and provisions hereof. As used in
this Agreement, the plural shall include the singular and the singular shall
include the plural whenever appropriate.

 

15.         Waivers. No waiver of any of the provisions of this Agreement shall
be valid and enforceable unless such waiver is in writing and signed by the
Parties to be charged, and, unless otherwise stated therein, no such waiver
shall constitute a waiver of any other provision hereof (whether or not similar)
or a continuing waiver.

 

16.         Third Parties. Except as otherwise explicitly provided herein,
nothing in this Agreement, whether expressed or implied, is intended to confer
any rights or remedies under or by reason of this Agreement on any other persons
(including the Leased Employees) other than the Parties and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any Party, nor
shall any provision give any third parties any right of subrogation or action
over or against any of the Parties hereto. This Agreement is not intended to and
does not create any third party beneficiary rights whatsoever.

 

17.         Relationship of the Parties. No joint venture, partnership, agency,
employment or co-employment relationship is created by this Agreement. No Party
shall act as an agent or partner of the other Party or make any commitments for
or create any obligations of the other Party, except as provided herein, without
the other Party’s prior written consent.

 

18.         Survival. The provisions of this Agreement shall survive the
expiration of the Term and the termination of ARCP OP’s services pursuant to
this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

4

 

  

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly
authorized.

 

  ARC PROPERTIES OPERATING PARTNERSHIP, L.P.       By:       Name:     Title:

 

  RCS CAPITAL CORPORATION       By:       Name:     Title:

 

[Signature Page to Employee Leasing Agreement]

 

 

 

Attachment A

 

[Leased Employees to be listed and associated wage and salary rates per Leased
Employee]

 

 

 

  

Attachment B

 

On the Effective Date with respect to both the remainder of the calendar month
in which the Effective Date occurs and the subsequent calendar month, and
thereafter not less than five days prior to the commencement of any subsequent
calendar month during the Term, RCAP shall pay to ARCP OP an amount equal to the
sum of the following for services to be rendered to a RCAP Company by the Leased
Employees during each calendar month (or portion thereof) of the Term. Any
excess of amounts paid for any calendar month shall be credited towards and
reduce RCAP’s payment obligations for the next calendar month. ARCP OP shall
refund to RCAP any amounts paid as of the expiration of the Term that are in
excess of the amounts actually paid by ARCP OP by no later than 10 business days
after the expiration of the Term.

 

1.The wages and salary payable by the applicable ARCP Company to the Leased
Employees in the ordinary course of business consistent with past practice with
respect to such services, including for holidays but excluding paid time off,
with such wages and salary to be based on the wage and salary rates set forth on
Attachment A;

 

2.Employer matching contributions in the ordinary course of business which are
consistent with past practice due to the applicable ARCP Company’s defined
contribution plan based on 401(k) contributions deferred from wages and salary
described in item 1;

 

3.All insurance premiums payable by the applicable ARCP Company pursuant to this
Agreement (adjusted pro-rata based on the number of Leased Employees as compared
to the total number of such ARCP Company’s employees covered under each
applicable policy of insurance), including the employer-paid portion of premiums
under any insured welfare/workers’ compensation plan or program due for such
period (pro-rated if is appropriate and actual coverage provided is less than a
full calendar month) in respect of Leased Employees; and

 

4.The amount of payroll taxes imposed on and payable by the applicable ARCP
Company during such period in respect of the above items.

 

The amount payable with respect to any Leased Employee whose lease provides for
less than the Leased Employee’s full work time will be pro-rated based on the
percentage of work time such Leased Employee will provide to the RCAP Companies.
For the avoidance of doubt, any amount paid by RCAP for Leased Employee services
shall not include any costs attributable to any other ARCP OP (or any of its
Affiliates) compensation or benefit plan or program, including, without
limitation any severance plan or program.

 

ARCP OP shall provide RCAP with a statement of the amounts to be paid by RCAP
hereunder prior to the Effective Date with respect to the first such period and
not less than 10 days prior to the first day of each subsequent calendar month
thereafter.

 

 

 

 

Exhibit E

 

FORM OF TRANSITION SERVICES SIDE LETTER 

 

COLE CAPITAL ADVISORS, INC.

 

CONFIDENTIAL

 

RCS Capital Corporation

405 Park Avenue, 15th Floor

New York, NY 10022

 

Ladies and Gentlemen:

 

Reference is hereby made to that certain Equity Purchase Agreement (the
“Purchase Agreement”), dated September 30, 2014, by and between ARC Properties
Operating Partnership, L.P., a Delaware limited partnership (“Seller”), and RCS
Capital Corporation, a Delaware corporation (“Buyer”). Capitalized terms used
but not defined herein shall have their respective meanings as set forth in the
Purchase Agreement.

 

In connection with the sale of the Business from Seller to Buyer as contemplated
by the Purchase Agreement, Cole Capital Advisors, Inc. (“CCA”) (or its designee)
shall provide assistance in the conveyance of the Business to Buyer, including
the services set forth on Exhibit A hereto (the “Services”), for a period
commencing on October 1, 2014 and ending on December 31, 2014. As consideration
for the Services to be rendered hereunder, Buyer agrees to pay to CCA such
amount in cash as set forth on Exhibit B, payable at least three (3) Business
Days prior to the Second Closing (the “Consideration”). In the event that the
Second Closing does not occur by the Outside Date, CCA shall promptly refund to
Buyer any amounts paid hereunder.

 

Neither this letter agreement nor any of the rights, interests or obligations
under this letter agreement shall be assigned by either of the parties without
the prior written consent of the other party; provided, that, CCA (or its
designee) may assign this letter agreement or any of its rights, interests or
obligations hereunder (including its right to receive the Consideration) to one
or more of its Affiliates. Subject to the preceding sentence, this letter
agreement shall be binding upon, inure to the benefit of and be enforceable by
each of the parties and their respective successors and permitted assigns.

 

This letter agreement shall be governed and construed in accordance with the
internal laws of the State of Delaware applicable to contracts made and wholly
performed within such state, without regard to any applicable conflicts of law
principles. The parties hereto agree that any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this letter agreement or the transactions contemplated hereby
shall be brought in any federal or state court located in the State of Delaware,
and each party hereby irrevocably consents to the jurisdiction of such courts
(and of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum. Process in any such suit,

 

 

 

 

action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court.

 

This letter agreement may be executed in two (2) or more counterparts, including
facsimile counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
of the parties hereto and delivered to the other party, it being understood that
each party need not sign the same counterpart.

 

[SIGNATURE PAGE FOLLOWS] 

 

2

 

  

If you are in agreement with the foregoing, please sign and return one copy of
this letter agreement which will thereupon constitute the agreement of the
parties hereto with respect to the subject matter of this letter agreement.

 

  Very truly yours,       COLE CAPITAL ADVISORS, INC.         By:       Name:  
    Title:

 

Accepted and agreed to as of the date   first written above:       RCS CAPITAL
CORPORATION         By:       Name:       Title:  

 

[Signature Page to Transition Services Side Letter]

 

 

 

  

Exhibit A

 

1.Transfer of FF&E items

2.Assistance in transfer of selling agreements

3.Assistance in conveyance of employees and related matters

4.Event coordination

5.Conveyance of accounting systems

6.Assistance in IT transfer

 

 

 

  

Exhibit B

 

Seller’s reasonable estimate of the cost of providing the Services.

 

 

 

 

Exhibit F 

 

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

 

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Assignment”), dated as of [Ÿ],
2014, is entered between ARC Properties Operating Partnership, L.P., a Delaware
limited partnership (“Assignor”), and RCS Capital Corporation, a Delaware
corporation (“Assignee”).

 

WITNESSETH:

 

WHEREAS, this Assignment is being executed and delivered pursuant to that
certain Equity Purchase Agreement dated as of September 30, 2014 (the “Purchase
Agreement”) by and between Assignor and Assignee. Capitalized terms used but not
defined herein shall have the meanings assigned to them in the Purchase
Agreement.

 

WHEREAS, Assignor owns one hundred percent (100%) of the limited liability
company interests (the “Interests”) in Cole Capital Partners, LLC, an Arizona
limited liability company (“CCP”);

 

WHEREAS, Assignor desires to assign, transfer and convey one hundred percent
(100%) of Assignor's right, title and interest in, to and under the Interests to
Assignee; and

 

WHEREAS, Assignee desires to acquire one hundred percent (100%) of the
Interests.

 

NOW, THEREFORE, the undersigned, in consideration of the premises, covenants and
agreement contained herein, and for other good and valuable consideration, do
hereby agree as follows:

 

1.Assignment and Assumption. Upon the execution of this Assignment by the
parties hereto, Assignor does hereby assign, transfer and convey to Assignee one
hundred percent (100%) of the Interests, free and clear of all Liens, and all of
Assignor’s rights with respect to such Interests. Assignee does hereby assume
and accept one hundred percent (100%) of the Interests and all of the duties and
responsibilities thereto to the extent provided for in the Purchase Agreement.

 

2.Admission. Contemporaneously with the assignment described in Paragraph 1 of
this Assignment, Assignee shall become the sole member of CCP, and Assignor
shall cease to be a member of CCP.

 

3.Continuation of CCP. The assignment of one hundred percent (100%) of the
Interests shall not dissolve CCP, and the business of CCP shall continue.

 

4.Consideration. Assignee has paid good and valuable consideration to Assignor
for one hundred percent (100%) of the Interests, the receipt and sufficiency of
which are hereby acknowledged.

 

5.Binding Effect. This Assignment shall be binding upon, and shall inure to the
benefit of the parties hereto and their respective successors and assigns.

 

6.Execution in Counterparts. This Assignment may be executed (a) in
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument, and (b) by telecopy or other facsimile
signature (which shall be deemed an original for all purposes).

 

7.Governing Law. This Assignment shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to the
choice of law principles thereof.

 

8.Recourse. This Assignment is made without recourse, representation or
warranty, except as otherwise set forth in the Purchase Agreement.

 

9.Conflict. In the event of any conflict or inconsistency between the terms of
the Purchase Agreement and the terms of this Assignment, the terms of the
Purchase Agreement shall govern.

  

 

 

 

10.Further Assurances. Each party hereto shall cooperate at all times from and
after the date hereof with respect to all of the matters described herein, and
shall execute such further documents as may be reasonably requested for the
purpose of giving effect to, or evidencing or giving notice of, the transactions
contemplated by this Assignment. Without limiting the foregoing, Assignor hereby
irrevocably constitutes and appoints Assignee as Assignor’s attorney-in-fact to
transfer Assignor’s Interests on the books and records of CCP, with full power
of substitution in the premises.

 

[signature page follows]

 

2

 

  

IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly
executed as of the day and year first above written.

 

  ARC PROPERTIES OPERATING PARTNERSHIP, INC.       By:       Name:     Title:

 

  RCS CAPITAL CORPORATION       By:       Name:     Title:

 

[Signature Page to Assignment and Assumption Agreement]

 

 

 

 

Exhibit G

 

FORM OF INVESTMENT OPPORTUNITY ALLOCATION AGREEMENT

 

This INVESTMENT OPPORTUNITY ALLOCATION AGREEMENT (this “Agreement”) is dated as
of [•]1, 2014, by and among American Realty Capital Properties, Inc., a Maryland
corporation (“ARCP”), RCS Capital Corporation, a Delaware corporation (“RCAP”),
[ARCP Sub-advisor 1], a Delaware limited liability company (“ARCP Sub-advisor
1”), [ARCP Sub-advisor 2], a Delaware limited liability company (“ARCP
Sub-advisor 2”), [ARCP Sub-advisor 3], a Delaware limited liability company
(“ARCP Sub-advisor 3”), [ARCP Sub-advisor 4], a Delaware limited liability
company (“ARCP Sub-advisor 4”), and [ARCP Sub-advisor 5], a Delaware limited
liability company (“ARCP Sub-advisor 5” and, collectively, the “Sub-advisors”).

 

WHEREAS, ARCP is the general partner of ARC Properties Operating Partnership,
L.P., a Delaware limited partnership (the “Seller”);

 

WHEREAS, RCAP and the Seller have entered into that certain Equity Purchase
Agreement dated as of September 30, 2014 (the “Purchase Agreement”);

 

WHEREAS, the Purchase Agreement requires delivery of this Agreement;

 

WHEREAS, Cole Credit Property Trust IV, Inc., a Maryland corporation (“CCPT
IV”), receives certain sub-advisory services from ARCP or one or more Affiliates
of ARCP, pursuant to a Sub-advisory Agreement, dated as of [•]2, 2014, as
amended from time to time, by and between ARCP Sub-advisor 1, as sub-advisor,
and Cole REIT Advisors IV, LLC, a Delaware limited liability company (“CCPT IV
Advisor”), as advisor (the “CCPT IV Agreement”);

 

WHEREAS, Cole Credit Property Trust V, Inc., a Maryland corporation (“CCPT V”),
receives certain sub-advisory services from ARCP or one or more Affiliates of
ARCP, pursuant to a Sub-advisory Agreement, dated as of [•]3, 2014, as amended
from time to time, by and between ARCP Sub-advisor 2, as sub-advisor, and Cole
REIT Advisors V, LLC, a Delaware limited liability company (“CCPT V Advisor”),
as advisor (the “CCPT V Agreement”);

 

WHEREAS, Cole Corporate Income Trust, Inc., a Maryland corporation (“CCIT”),
receives certain sub-advisory services from ARCP or one or more Affiliates of
ARCP, pursuant to a Sub-advisory Agreement, dated as of [•]4, 2014, as amended
from time to time, by and between ARCP Sub-advisor 3, as sub-advisor, and Cole
Corporate Income Advisors, LLC, a Delaware limited liability company (“CCIT
Advisor”), as advisor (the “CCIT Agreement”);

 

 

1 To be the date of the Second Closing Date.

 

2 To be the date of the Second Closing Date.

 

3 To be the date of the Second Closing Date.

 

4 To be the date of the Second Closing Date.

 

 

 

  

WHEREAS, Cole Office & Industrial REIT (CCIT II), Inc., a Maryland corporation
(“CCIT II”), receives certain sub-advisory services from ARCP or one or more
Affiliates of ARCP, pursuant to a Sub-advisory Agreement, dated as of [•]5,
2014, as amended from time to time, by and between ARCP Sub-advisor 4, as
sub-advisor, and Cole Corporate Income Advisors II, LLC, a Delaware limited
liability company (“CCIT II Advisor”), as advisor (the “CCIT II Agreement”);

 

WHEREAS, Cole Real Estate Income Strategy (Daily Nav), Inc., a Maryland
corporation (“INAV”) receives certain sub-advisory services from ARCP or one or
more Affiliates of ARCP, pursuant to a Sub-advisory Agreement, dated as of [•]6,
2014, as amended from time to time, by and between ARCP Sub-advisor 5, as
sub-advisor, and Cole Real Estate Income Strategy (Daily NAV), LLC, a Delaware
limited liability company (“INAV Advisor”), as advisor (the “INAV Agreement”);

 

WHEREAS, it is contemplated that Cole Office & Industrial REIT (CCIT III), Inc.,
a Maryland corporation (“CCIT III”), will receive certain sub-advisory services
from ARCP or one or more Affiliates of ARCP, pursuant to a Sub-advisory
Agreement to be entered into by and between ARCP or one or more Affiliates of
ARCP, as sub-advisor, and Cole Corporate Income Advisors III, LLC, a Delaware
limited liability company (“CCIT III Advisor”), as advisor (the “CCIT III
Agreement”);

 

WHEREAS, it is contemplated that Cole Credit Property Trust VI, Inc., a Maryland
corporation (“CCPT VI” and together with CCPT IV, CCPT V, CCIT, CCIT II, INAV
and CCIT III, the “Funds” and each, a “Fund”), will receive certain sub-advisory
services from ARCP or one or more Affiliates of ARCP, pursuant to a Sub-advisory
Agreement to be entered into by and between ARCP or one or more Affiliates of
ARCP, as sub-advisor, and Cole REIT Advisors VI, LLC, a Delaware limited
liability company (“CCPT VI Advisor” and together with CCPT IV Advisor, CCPT V
Advisor, CCIT Advisor, CCIT II Advisor, INAV Advisor and CCIT III Advisor, the
“Advisors”), as advisor (the “CCPT VI Agreement” and together with the CCPT IV
Agreement, CCPT V Agreement, CCIT Agreement, CCIT II Agreement, INAV Agreement
and  CCIT III Agreement, the “Sub-advisor Agreements”);

 

WHEREAS, each Fund is a public real estate investment trust sponsored by Cole
Capital Corporation, an Arizona corporation, or its Affiliates;

 

WHEREAS, ARCP (and/or its Affiliates) and each Fund has invested in, or may in
the future invest in, the Proposed Property Acquisitions; and

 

WHEREAS, ARCP and the Funds wish to delineate their respective rights and
obligations with respect to each other in connection with investing in the
Proposed Property Acquisitions.

 

 

5 To be the date of the Second Closing Date.

 

6 To be the date of the Second Closing Date.

 

2

 

 

NOW, THEREFORE, in consideration of the mutual agreements herein made and
intending to be legally bound, the parties hereto hereby agree as follows:

 

ARTICLE I     
INVESTMENT OPPORTUNITIES

1.1           Committees.

 

(a)          The parties agree that ARCP shall establish and maintain an
investment allocation committee (the “Allocation Committee”), which shall
allocate Proposed Property Acquisitions as set forth in this Article I. The
members of the Allocation Committee shall be appointed by ARCP’s Chief Executive
Officer, and shall serve at the pleasure of ARCP’s Chief Executive Officer;
provided, however, that RCAP shall have the right to appoint one member to the
Allocation Committee. ARCP’s Chief Executive Officer also may appoint one or
more alternates for each Allocation Committee member who shall be authorized to
act in such Allocation Committee member’s absence.

 

(b)          The parties agree that ARCP shall establish and maintain a
portfolio strategy committee (the “Portfolio Committee”), which shall review the
allocations made by the Allocation Committee. The members of the Portfolio
Committee shall be appointed by ARCP’s Chief Executive Officer, and shall serve
at the pleasure of ARCP’s Chief Executive Officer; provided, however, that RCAP
shall have the right to appoint one member to the Portfolio Committee.

 

1.2           Investment Allocation Process.

 

(a)          The Allocation Committee shall endeavor to meet on a weekly basis.
Members of the Allocation Committee may participate by means of conference
telephone or other communications equipment if all persons participating in the
meeting can hear each other at the same time. The Advisors shall be provided
with, on a quarterly basis upon request, certified copies of the minutes of all
meetings of the Allocation Committee.

 

(b)          When a Proposed Property Acquisition is introduced to the
Allocation Committee for review, the Allocation Committee shall analyze the
following factors in determining whether a Proposed Property Acquisition is most
appropriate for ARCP or a particular Fund (each, an “Entity”): (i) how the
Proposed Property Acquisition fits into each Entity’s respective investment
objectives; (ii) which Entity has available cash to acquire the Proposed
Property Acquisition, the amount of such available cash, and how long such cash
has been available for investment; (iii) the anticipated operating cash flows
and cash requirements of each Entity, respectively; (iv) how the Proposed
Property Acquisition would affect the tenant, industry and geographic
concentrations in each Entity, respectively; and (v) how the size, income tax
effect, potential leverage and projected cash flow of the Proposed Property
Acquisition would affect each Entity, respectively. If the Allocation Committee
determines that a Proposed Property Acquisition is equally appropriate for one
or more Entities, the Allocation Committee

 

3

 

 

shall first offer such Proposed Property Acquisition to the Entity that has had
the longest period of time elapse since it was allocated an investment
opportunity of a similar size and type (e.g., office, industrial or single
tenant or multi-tenant retail).

 

(c)          Notwithstanding the foregoing, in the event that the Allocation
Committee, in accordance with Section 1.2(b) above, allocates a Proposed
Property Acquisition with a value greater than one hundred million dollars
($100,000,000) to any of CCIT II, CCPT V, CCIT III or CCPT VI, then ARCP shall
have the right to veto such allocation and allocate such Proposed Property
Acquisition to ARCP.

 

1.3           Review by Portfolio Committee.

 

(a) The Portfolio Committee shall meet on a monthly basis to review the
allocations made by the Allocation Committee. Members of the Portfolio Committee
may participate by means of conference telephone or other communications
equipment if all persons participating in the meeting can hear each other at the
same time.

 

(b) If there have been no subsequent developments associated with a particular
Proposed Property Acquisition or the Entity to which the Proposed Property
Acquisition was initially allocated by the Allocation Committee, the Portfolio
Committee will confirm the allocation of the Proposed Property Acquisition to
the selected Entity. If, in the judgment of the Portfolio Committee, a
subsequent development has caused any such Proposed Property Acquisition to be
more appropriate for an Entity other than an Entity to which the Proposed
Property Acquisition was initially allocated, the Portfolio Committee may
override the Allocation Committee and specify that the Proposed Property
Acquisition should be made available to such other Entity. In making this
determination, the Portfolio Committee shall examine the factors set forth in
Section 1.2(b) above. For the avoidance of doubt, the Portfolio Committee may
not re-allocate a Proposed Property Acquisition with respect to which ARCP
exercised its veto right set forth in Section 1.2(b) above. The re-allocation
decisions, if any, made by the Portfolio Committee shall be recorded and the
record retained by ARCP.

 

1.4           Compliance with this Agreement. Any determination of a failure to
comply with this Agreement shall be reported immediately to the Allocation
Committee and to members of senior management of ARCP.

 

1.5           Miscellaneous.

 

(a)          The Portfolio Committee shall meet on a quarterly basis with the
Allocation Committee to report to the Allocation Committee on the prior
quarter’s allocations and to discuss potential investments that are in the
pipeline, as well as the Portfolio Committee’s then-current thinking on future
allocations.

 

(b)          The Allocation Committee shall be responsible for establishing and
updating the policies and rules set forth herein as it deems appropriate, taking
into account all contractual and legal requirements it deems applicable, and
shall suggest any amendments to this Agreement

 

4

 

 

as necessary to comply with applicable law. The Allocation Committee shall,
notwithstanding any contrary provision or policy, follow the Portfolio
Committee’s guidance and directives.

 

(c)          The covenants and agreements set forth in this Article I shall not
apply to the extent inconsistent with the constituent documents of any of the
Funds or ARCP (or any of its Affiliates), or applicable law.

 

ARTICLE II
MISCELLANEOUS

 

2.1           Definitions. For purposes of this Agreement:

 

(a)          “Affiliate” means, with respect to a specified Person, any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person.

 

(b)          “Person” means any individual, general partnership, limited
partnership, limited liability company, corporation, joint venture, trust,
business trust, cooperative or association and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person
where the context so permits.

 

(c)          “Proposed Property Acquisition” means any freestanding,
single-tenant real estate assets net leased to investment grade and other
creditworthy tenants with a lease duration of 10 or more years.

 

2.2           Effectiveness of Agreement. This Agreement shall become effective
at and as of the Second Closing Date (as defined in the Purchase Agreement).

 

2.3           No Fiduciary Relationship. The parties acknowledge and agree that
neither ARCP nor any of its Affiliates nor any of the Sub-advisors is a
fiduciary to, or shall be deemed to have any type of fiduciary relationship
with, any of the Funds.

 

2.4            Sub-advisor Agreements. This Agreement is subject to the terms of
each of the Sub-advisor Agreements. In the event of a conflict between the terms
of this Agreement and the terms of any of the Sub-advisor Agreements, the terms
of such Sub-advisor Agreement shall control.

 

2.5            Termination. This Agreement shall terminate, with respect to a
specific Sub-advisor, on the earliest of the date on which (i) the advisory
agreement between the applicable Fund and the Advisor who is party to such
Sub-advisor’s Sub-advisor Agreement terminates; (ii) the Sub-advisor Agreement
to which such Sub-advisor is party terminates or expires in accordance with its
terms and (iii) the Advisor for the Fund to which the Sub-advisor provides
advisory services is no longer majority owned and controlled by RCAP or its
Affiliates.

 

2.6            Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly

 

5

 

 

provided herein, shall be deemed to have been duly given or made when delivered
against receipt or upon actual receipt of (i) personal delivery, (ii) delivery
by reputable overnight courier, (iii) delivery by facsimile transmission with
telephonic confirmation or (iv) delivery by registered or certified mail,
postage prepaid, return receipt requested, addressed as set forth below (or to
such other address as may be hereafter notified by the respective parties hereto
in accordance with this Section 2.6): 

 

ARCP: American Realty Capital Properties, Inc.   405 Park Avenue, 15th Floor  
New York, New York 10022   Attention: Richard A. Silfen, General Counsel  
Facsimile: (215) 887-2585     with copies to: Weil, Gotshal and Manges LLP   767
Fifth Avenue   New York, New York 10153   Attention: Michael Aiello, Esq. and
Matthew Gilroy, Esq.   Facsimile: (212) 310-8007       Proskauer Rose LLP  
Eleven Times Square   New York, NY  10036   Attention: Peter Fass, Esq. and
Steven Lichtenfeld, Esq.   Facsimile:  (212) 969-2900     RCAP: RCS Capital
Corporation   405 Park Avenue, 15th Floor   New York, NY 10022  
Attention:  James A. Tanaka, General Counsel   Fax:  (212) 415-6567     with
copies to: Duane Morris LLP   30 South 17th Street   Philadelphia, Pennsylvania
19103   Attention: Darrick M. Mix, Esq. and Chad J. Rubin, Esq.   Facsimile:
(215) 405-2906       Proskauer Rose LLP   Eleven Times Square   New York,
NY  10036   Attention: Peter Fass, Esq. and Steven Lichtenfeld, Esq.  
Facsimile:  (212) 969-2900

 

6

 

 

2.7           Binding Nature of Agreement; Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors and assigns as
provided herein.

 

2.8           Third-Party Beneficiary Rights. This Agreement is not intended to
and shall not confer upon any person other than the parties hereto any rights or
remedies hereunder; provided, however, that the Advisors shall be third-party
beneficiaries solely for the purposes of Section 1.2(a) and Section 2.10 of this
Agreement.

 

2.9           Integration. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof.

 

2.10         Amendments; Waivers. This Agreement and the terms hereof may not be
amended, supplemented or modified except in an instrument in writing executed by
the parties hereto, and no waiver of any term or condition hereof or obligation
hereunder shall be valid unless made in writing and signed by the party to which
performance is due; provided, that no amendment or waiver of this Agreement or
any provision hereof shall be effective without the prior written consent of the
Advisors (which consent shall not be unreasonably withheld, conditioned or
delayed).

 

2.11          GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND
THE UNITED STATES DISTRICT COURT FOR ANY DISTRICT WITHIN SUCH STATE FOR THE
PURPOSE OF ANY ACTION OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND TO THE LAYING OF VENUE IN
SUCH COURT.

 

2.12         WAIVER OF JURY TRIAL. EACH PARTY HERETO ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

7

 

 

2.13         No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of a party hereto, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

 

2.14         Section Headings. The section and subsection headings in this
Agreement are for convenience in reference only and shall not be deemed to alter
or affect the interpretation of any provisions hereof.

 

2.15         Counterparts. This Agreement may be executed (including by
facsimile transmission) by the parties to this Agreement on any number of
separate counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.

 

2.16         Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

8

 

  

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.

 

  AMERICAN REALTY CAPITAL PROPERTIES, INC.       By:       Name:     Title:

 

  RCS CAPITAL CORPORATION       By:       Name:     Title:

 

  [ARCP SUB-ADVISOR 1]         By:       Name:     Title:   

 

  [ARCP SUB-ADVISOR 2]         By:       Name:     Title:   

 

  [ARCP SUB-ADVISOR 3]         By:       Name:     Title:   

 

[Signature Page to Investment Opportunity Allocation Agreement]

 

 

 

 

  [ARCP SUB-ADVISOR 4]       By:       Name:     Title:   

 

  [ARCP SUB-ADVISOR 5]         By:       Name:    

Title: 

 

[Signature Page to Investment Opportunity Allocation Agreement]

  

 

 

 

Exhibit H

 

FORM OF SERVICES AGREEMENT

 

This SERVICES AGREEMENT (this “Agreement”) dated as of [•], 2014, is by and
between RCS Capital Corporation, a Delaware corporation (the “Buyer”), and ARC
Properties Operating Partnership, L.P. (the “Seller”). The Buyer and the Seller
are sometimes referred to herein collectively as the “Parties” and each
individually as a “Party” or, as applicable, the “Receiving Party” and the
“Providing Party,” which shall mean the applicable Party receiving services
hereunder and the applicable Party providing such services hereunder,
respectively.

 

WITNESSETH:

  

WHEREAS, the Buyer and the Seller have entered into that certain Equity Purchase
Agreement dated as of September 30, 2014 (the “Purchase Agreement”);

 

WHEREAS, the Purchase Agreement requires delivery of this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, IT IS HEREBY AGREED:

 

1.          Definitions. Capitalized terms, as used herein, shall have the
meanings set forth below:

 

“Acquired Business” shall mean the private capital management business,
including the broker-dealer, wholesale distribution, non-traded REIT sponsorship
and advisory businesses.

 

“Affiliate” shall mean, with respect to a Person, (a) any officer, director,
trustee, partner, manager, employee or holder of ten percent (10%) or more of
any class of the voting securities of, or equity interest in, such Person; (b)
any corporation, partnership, limited liability company, trust or other entity
controlling, controlled by or under common control with such Person; or (c) any
officer, director, trustee, partner, manager, employee or holder of ten percent
(10%) or more of the outstanding voting securities of any corporation,
partnership, limited liability company, trust or other entity controlling,
controlled by or under common control with such Person. For purposes of this
definition, the term “controls,” “is controlled by,” or “is under common control
with” shall mean the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of an entity, whether through
the ownership of voting rights, by contract or otherwise.

 

“Agreement” shall have the meaning set forth in the preamble.

 

“Business Day” shall mean any day other than a Saturday, a Sunday or a day on
which banks in New York, New York are authorized or obligated by Law or
executive order to close.

 

“Buyer” shall have the meaning set forth in the preamble.

 

“Buyer Business Information” shall have the meaning set forth in Section 18(a).

 

“Confidentiality Agreement” shall have the meaning set forth in Section 18(a).

 

 

 

 

“Force Majeure Event” shall have the meaning set forth in Section 12.

 

“Governmental Entity” shall mean any court, administrative agency or commission
or other governmental authority or instrumentality or applicable self-regulatory
organization.

    

“Landlord” shall have the meaning set forth in Section 6.

 

“Law” shall mean any applicable federal, state, local or foreign or provincial
law, statute, ordinance, rule, regulation, judgment, order, injunction, decree,
award or agency requirement of or undertaking to or agreement with any
Governmental Entity.         

 

“Parties” and “Party” shall have the meaning set forth in the preamble.         

 

“Person” shall mean an individual, corporation, partnership, joint venture,
association, company (whether of limited liability or otherwise), trust, bank or
other entity, or government or any agency or political subdivision of a
government.

 

“Premises” shall mean floors 1, 8 and 9 in that certain commercial office
building located at 2325 E. Camelback Road, Phoenix, Arizona 85106.

 

“Premises Lease” shall mean that certain Office Lease Agreement by and between
24TH AND CAMELBACK PHASE II L.L.C., as landlord, and Diamond Real Estate, LLC,
as tenant, dated as of December 16, 2010.

 

“Premises License” shall have the meaning set forth in Section 6.

 

“Purchase Agreement” shall have the meaning set forth in the recitals.

 

“Representative” of a Person means any director, officer, employee, agent,
consultant, accountant, auditor, attorney or other representative of such
Person.

 

“SEC” shall mean the United States Securities and Exchange Commission.

 

“Seller” shall have the meaning set forth in the preamble.

 

“Seller Business” shall mean the business of the Seller (excluding the Acquired
Business) as presently conducted or as proposed to be conducted on the date
hereof.

 

“Seller Business Information” shall have the meaning set forth in Section 18(a).

 

“Sub-Advisory Agreements” shall mean those certain sub-advisory agreements,
dated as of the date hereof, by and between the Seller (or its Affiliate) and
each of Cole Credit Property Trust IV, Inc., a Maryland corporation; Cole Credit
Property Trust V, Inc., a Maryland corporation; Cole Corporate Income Trust,
Inc., a Maryland corporation; Cole Office &

 

2

 

 

Industrial REIT (CCIT II), Inc., a Maryland corporation; and Cole Real Estate
Income Strategy (Daily NAV), Inc., a Maryland corporation.

 

“Sublease” shall have the meaning set forth in Section 6.

 

2.          Effectiveness of Agreement. This Agreement shall become effective at
and as of the Second Closing Date (as defined in the Purchase Agreement).

 

3.          Services Provided to the Buyer.

 

(a)          The Buyer, on its own behalf and on behalf of its Affiliates,
hereby retains and appoints the Seller as the services provider of the Buyer and
to perform the services hereinafter set forth (or to cause an Affiliate of the
Seller to provide such services), and the Seller hereby accepts such
appointment, all subject to the terms and conditions hereinafter set forth. In
the performance of this undertaking, the Seller shall devote sufficient
resources to discharge its obligations hereunder and shall provide the following
services (or shall cause an Affiliate of the Seller to provide such services):

 

·acquisition support;

·accounting support;

·information technology support;

·asset management services on behalf of the 1031 exchange, tenant in common and
Delaware statutory trust businesses acquired by the Buyer in connection with the
transactions contemplated by the Purchase Agreement; and

·any and all other services requested by the Buyer (including, without
limitation, the services set forth in the Sub-Advisory Agreements) in accordance
with Section 3(e).

 

(b)          The foregoing services shall not include any legal support
services.

 

(c)          The services hereunder shall be available to the Buyer only for
purposes of conducting the Acquired Business substantially in the manner it was
conducted by the Seller prior to the date hereof. In furtherance of the
foregoing and, subject to the terms and conditions set forth in this Agreement,
during the term of this Agreement, the Seller shall provide, or shall cause to
be provided, to the Buyer (and/or its Affiliates) each of the services
hereunder, but in each case only at the locations such services have been
provided to the Acquired Business prior to the date hereof in the ordinary
course of the Acquired Business.

 

(d)          The Seller shall not be obligated to provide, or cause to be
provided, any services hereunder if to do so would require it or any of its
Affiliates to incur (after giving effect to the fees payable hereunder) any cost
or expense, to hire any additional employees or consultants, to pay overtime to
employees, or to acquire any additional equipment or software. If any service
cannot be provided by reason of this Section 3(d), the Seller shall provide the
Buyer with written notice thereof (together with a reasonable description of
such service and the approximate actual cost thereof to the Seller (without
markup) to provide such service). Upon

 

3

 

 

receipt of such notice, the Buyer may request that the Seller, and the Seller
shall, provide or cause to be provided such service upon the Buyer’s agreement
to bear such incremental costs; provided, however, that the Seller shall not be
required to provide such service to the extent it is required to hire any
additional employees (other than temporary employees) beyond the number of
employees necessary to provide such service prior to the date hereof.

 

(e)          The Buyer may request in writing that the Seller provide additional
services not otherwise provided hereunder, which request must include a
description of the services requested to be performed and, if any, the
associated business specifications. The Seller shall consider such request by
the Buyer in good faith and if the Seller agrees to perform such additional
services, then the performance of such additional services shall be subject to
the terms and conditions of this Agreement; provided, however, the Seller shall
have no obligation to provide such additional services to the Buyer.

(f)           The Buyer hereby grants to the Seller, to the extent of any
proprietary interest the Buyer or its Affiliates may have in the name “Cole
Capital” or any derivative thereof a non-transferable, non-assignable,
non-exclusive, royalty-free right and license to use the name “Cole Capital” or
any derivative thereof in connection with providing services hereunder until the
expiration or termination of this Agreement. The Seller shall have the authority
to enter into contracts in the name of any entity with respect to which the
Parties have entered into a Sub-Advisory Agreement in connection with the
performance of its duties under this Agreement.

 

4.          Services Provided to the Seller.

 

(a)          The Seller, on its own behalf and on behalf of its Affiliates,
hereby retains and appoints the Buyer as the services provider of the Seller and
to perform the services hereinafter set forth (or to cause an Affiliate of the
Buyer to provide such services), and the Buyer hereby accepts such appointment,
all subject to the terms and conditions hereinafter set forth. In the
performance of this undertaking, the Buyer shall devote sufficient resources to
discharge its obligations hereunder and shall provide the following services (or
shall cause an Affiliate of the Buyer to provide such services):

 

·accounting system services; and

·any and all other services requested by the Seller in accordance with Section
4(e).

 

(b)          The foregoing services shall not include any legal support
services.

 

(c)          The services hereunder shall be available to the Seller only for
purposes of conducting the Seller Business substantially in the manner it was
conducted prior to the date hereof. In furtherance of the foregoing and, subject
to the terms and conditions set forth in this Agreement, during the term of this
Agreement, the Buyer shall provide, or shall cause to be provided, to the Seller
(and/or its Affiliates) each of the services hereunder, but in each case only at
the locations such services have been provided to the Seller Business prior to
the date hereof in the ordinary course of the Seller Business.

 

4

 

 

(d)          The Buyer shall not be obligated to provide, or cause to be
provided, any services hereunder if to do so would require it or any of its
Affiliates to incur (after giving effect to the fees payable hereunder) any cost
or expense, to hire any additional employees or consultants, to pay overtime to
employees, or to acquire any additional equipment or software. If any service
cannot be provided by reason of this Section 4(d), the Buyer shall provide the
Seller with written notice thereof (together with a reasonable description of
such service and the approximate actual cost thereof to the Buyer (without
markup) to provide such service). Upon receipt of such notice, the Seller may
request that the Buyer, and the Buyer shall, provide or cause to be provided
such service upon the Seller’s agreement to bear such incremental costs;
provided, however, that the Buyer shall not be required to provide such service
to the extent it is required to hire any additional employees (other than
temporary employees) beyond the number of employees necessary to provide such
service prior to the date hereof.

 

(e)          The Seller may request in writing that the Buyer provide additional
services not otherwise provided hereunder, which request must include a
description of the services requested to be performed and, if any, the
associated business specifications. The Buyer shall consider such request by the
Seller in good faith and if the Buyer agrees to perform such additional
services, then the performance of such additional services shall be subject to
the terms and conditions of this Agreement; provided, however, the Buyer shall
have no obligation to provide such additional services to the Seller.

 

5.           Standard of Care.

 

(a)          The duties to be performed by the Providing Party pursuant to this
Agreement may be performed by it or by its officers, members or directors or by
Affiliates of the foregoing under the direction of the Providing Party or
delegated to unaffiliated third parties under the Providing Party’s direction.
If any duties to be performed hereunder are delegated by the Providing Party to
an unaffiliated third party, then the Providing Party shall provide the
Receiving Party with written notice of such delegation.

 

(b)          Except as otherwise provided in this Agreement, and provided that
the Providing Party is not restricted by an existing contract with a third party
or by Law, the Providing Party agrees to perform, or cause to be performed, the
services hereunder such that the standard of care at which such services are
performed shall be substantially the same as the standard of care that the
Providing Party provides to its Affiliates with respect to such services. In the
event there is any restriction on the Providing Party by an existing contract
with a third party or by Law that would restrict the standard of care applicable
to delivery of the services to be provided by the Providing Party to the
Receiving Party, the Providing Party shall use its commercially reasonable best
efforts in good faith to provide such services in a manner as closely as
possible to the standards described in this Section 5(b).

 

(c)          Each Party hereto shall be responsible for its own compliance with
any and all Laws applicable to its performance under this Agreement. No Party
will take any action in violation of any such applicable Law that would
reasonably be likely to result in liability being imposed on the other Party.

 

5

 

 

(d)          Except as expressly set forth herein, the Parties acknowledge and
agree that the services hereunder are provided as-is, that the Receiving Party
assumes all risks and liability arising from or relating to its use of and
reliance upon such services and the Providing Party makes no representation or
warranty with respect thereto. EXCEPT AS EXPRESSLY SET FORTH HEREIN, THE
PROVIDING PARTY HEREBY EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES
REGARDING THE SERVICES HEREUNDER, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY
REPRESENTATION OR WARRANTY IN REGARD TO QUALITY, PERFORMANCE, NON-INFRINGEMENT,
COMMERCIAL UTILITY, MERCHANTABILITY OR FITNESS OF THE SERVICES HEREUNDER FOR A
PARTICULAR PURPOSE.

 

6.          Premises. Subject to obtaining the prior written consent of 24TH AND
CAMELBACK PHASE II L.L.C. (the “Landlord”), the Seller shall provide the Buyer
with exclusive use of, and access to, the Premises, and the use of the equipment
located at the Premises that has been previously used by the Seller or its
Affiliates prior to the date hereof, in each case in substantially the same
manner as such space and equipment was used or accessed in the conduct of the
Acquired Business prior to the date hereof (collectively, the “Premises
License”). The Premises License shall terminate upon the termination of this
Agreement in accordance with its terms. Promptly following the date hereof, the
Seller and the Buyer shall use their reasonable efforts (a) to negotiate a
sublease (the “Sublease”) with respect to the Premises (provided that the terms
of the Sublease shall in no way increase the cost of the use and access of the
Premises and the related service provided hereunder by the Seller or any of its
Affiliates to the Buyer or any of its Affiliates), or (b) assist the Buyer to
negotiate a lease of the premises directly with the Landlord. To the extent not
obtained prior to the date hereof, the Seller shall use its best efforts to
obtain the written consent of the Landlord to (i) the use and access of the
Premises by the Buyer pursuant to this Section 6 and (ii) the execution by the
Seller and the Buyer of the Sublease. The Buyer shall not use the Premises in a
manner, or take, cause or allow to be taken, an action with respect to the
Premises that would cause the Seller to be in violation of the terms of the
Premises Lease.

 

7.          Fees and Other Compensation of the Seller. The Seller or its
designees shall be entitled to receive from the Buyer its actual costs and
expenses incurred (with costs and expenses in connection with the services
provided by Seller’s Representatives calculated based on hourly rates set forth
on Annex A). The Seller shall invoice the Buyer monthly in arrears for all costs
and expenses due pursuant to this Section 7. The Buyer (or the Buyer’s
Affiliates on behalf of the Buyer) shall pay to the Seller all invoiced amounts
by wire transfer within thirty (30) days of the date of receipt of such invoice
as instructed by the Seller.

 

8.          Fees and Other Compensation of the Buyer. The Buyer or its designees
shall be entitled to receive from the Seller its actual costs and expenses
incurred (with costs and expenses in connection with the services provided by
Buyer’s Representatives calculated based on hourly rates set forth on Annex B).
The Buyer shall invoice the Seller monthly in arrears for all costs and expenses
due pursuant to this Section 8. The Seller (or the Seller’s Affiliates on behalf
of the Seller) shall pay to the Buyer all invoiced amounts by wire transfer
within thirty (30) days of the date of receipt of such invoice as instructed by
the Buyer.

 

6

 

 

9.          Records. At all times, the Providing Party shall keep books of
account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Receiving Party
and the Receiving Party’s Representatives at any time during the ordinary
business hours of the Providing Party.

 

10.         Access. The Receiving Party shall, and shall cause its Affiliates
to, allow the Providing Party and its Representatives reasonable access to the
facilities of the Receiving Party necessary for the Providing Party to provide
services under this Agreement.

 

11.         Term; Termination of Agreement. This Agreement shall continue in
full force and effect so long as any of the Sub-Advisory Agreements are in full
force and effect; provided, however, that either Party may terminate this
Agreement upon sixty (60) days’ prior written notice to the other Party. Upon
the termination of this Agreement, each Party will cooperate with the other
Party and take all reasonable steps requested to assist such other Party in
making an orderly transition of the services provided hereunder. From and after
the effective date of termination of this Agreement, neither Party shall be
entitled to compensation for further services provided hereunder, but shall be
paid all compensation and reimbursed for all expenses accrued through the date
of termination within thirty (30) days of such termination.

 

12.         Force Majeure. Each Party will be excused for any failure or delay
in performing any of its obligations under this Agreement (other than payment
obligations) if such failure or delay is caused by any act of God, accident,
explosion, fire, act of terrorism, storm, earthquake, flood, strike, labor
dispute or similar extraordinary circumstance or event outside the reasonable
control of the non-performing Party (each a “Force Majeure Event”). Following
notice of a Force Majeure Event by a Party, the Parties shall consult to assess
the Force Majeure Event and any ways in which the same may be avoided or
mitigated. During the pendency of a Force Majeure Event, the affected Providing
Party shall use its commercially reasonable efforts to minimize the effect of
Force Majeure Event on and to resume the performance of its obligations under
this Agreement with the least practicable delay.

 

13.         No Partnership or Joint Venture. The Buyer and the Seller are not
partners or joint venturers with each other and nothing herein shall be
construed to make them partners or joint venturers or impose any liability as
such on either of them.

 

14.         Indemnification.

 

(a)          Subject to subsections (b)-(d) below, the Receiving Party shall
indemnify the Providing Party and its Affiliates for any loss arising out of any
of their acts or omissions in connection with this Agreement and the Providing
Party and its Affiliates will be held harmless for any loss or liability
(whether in contract, tort or otherwise) suffered by the Receiving Party or any
of its Affiliates, as applicable.

 

(b)          The Receiving Party shall not indemnify the Providing Party or its
Affiliates for any loss or liability suffered by the Providing Party or its
Affiliates, nor shall it hold the Providing Party or its Affiliates harmless for
any loss or liability suffered by the Receiving Party or any of its Affiliates
unless all of the following conditions are met: (i) the

 

7

 

 

Providing Party or its Affiliates determined in good faith that the course of
conduct which caused the loss or liability was in the best interests of the
Receiving Party (and/or its Affiliates, as applicable), (ii) the Providing Party
or its Affiliates were acting on behalf of the Receiving Party or its Affiliates
or performing services for the Receiving Party or its Affiliates, (iii) such
liability or loss or expense was not the result of gross negligence or willful
misconduct on the part of the Providing Party or its Affiliates and (iv) such
indemnification or agreement to hold harmless shall be recoverable only out of
the net assets of the Receiving Party and its Affiliates and not from the
stockholders, partners or members of the Receiving Party and its Affiliates.

 

(c)          Notwithstanding anything to the contrary in Section 14(b) above,
the Receiving Party shall not indemnify the Providing Party or its Affiliates or
any persons acting as a broker-dealer for any losses, liabilities or expenses
arising from or out of an alleged violation of federal or state securities Laws
by such party 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 as to the particular indemnitee, (ii) such claims have
been dismissed with prejudice on the merits by a court of competent jurisdiction
as to the particular indemnitee or (iii) a court of competent jurisdiction
approves a settlement of the claims against a particular indemnitee and finds
that indemnification of the settlement and related costs should be made, and the
court considering the matter has been advised of the position of the SEC and the
published position of any state securities regulatory authority as to
indemnification for violations of securities Law.

 

(d)          The Receiving Party will advance amounts to the Providing Party or
its Affiliates for legal expenses and other costs incurred as a result of any
legal action for which indemnification is being sought is permissible 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 on
behalf of the Receiving Party or its Affiliates, (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 the advancement and (iii) the Providing Party
or its Affiliates undertake in writing to repay the advanced funds to the
Receiving Party or its Affiliates, as applicable, together with the applicable
legal rate of interest thereon, in cases in which the Providing Party or its
Affiliates are found not to be entitled to indemnification.

 

15.         Amendments. Subject to compliance with applicable Law, the
provisions of this Agreement may not be amended, modified or supplemented
without the prior written consent of each of the Parties. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
Parties. Any waiver of compliance with any provision of this Agreement shall be
valid only if set forth in an instrument in writing signed by the Party to be
bound thereby.

 

16.         Assignment. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned by either of the Parties
(whether by operation of law or otherwise) without the prior written consent of
the other Party, except (i) the Buyer may assign this Agreement or any of its
rights or obligations hereunder to one or more of its Affiliates, provided that
no such assignment shall relieve the Buyer of any of its obligations hereunder,
and (ii) the Seller may assign this Agreement or any of its rights or
obligations hereunder to one or more of its Affiliates, provided that no such
assignment shall relieve the Seller of any of its obligations

 

8

 

 

hereunder. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by each of the Parties and
their respective successors and permitted assigns. This Agreement (including the
documents and instruments referred to in this Agreement) is not intended to and
does not confer upon any Person other than the Parties hereto any rights or
remedies under this Agreement.

 

17.         Notices. All notices and other communications in connection with
this Agreement shall be in writing and shall be deemed given if delivered
personally, sent via facsimile (with confirmation), mailed by registered or
certified mail (return receipt requested) or delivered by an express courier
(with confirmation) to the Parties at the following addresses (or at such other
address for a Party as shall be specified by like notice):

 

If to the Buyer, to:

 

RCS Capital Corporation

405 Park Avenue, 15th Floor

New York, New York 10022

Attention: James A. Tanaka, General Counsel

Facsimile: (212) 415-6567

 

with copies to:

 

Duane Morris LLP

30 South 17th Street

Philadelphia, Pennsylvania 19103

Attention: Darrick M. Mix, Esq. and Chad J. Rubin, Esq.

Facsimile: (215) 405-2906

 

Proskauer Rose LLP

Eleven Times Square

New York, NY 10036

Attention: Peter Fass, Esq. and Steven L. Lichtenfeld, Esq.

Facsimile: (212) 969-2900

 

If to the Seller, to

 

American Realty Capital Properties, Inc.

405 Park Avenue, 15th Floor

New York, New York 10022

Attention: Richard A. Silfen, General Counsel

Facsimile: (215) 887-2585

 

with copies to:

 

9

 

 

Weil, Gotshal and Manges LLP

767 Fifth Avenue

New York, New York 10153

Attention: Michael Aiello, Esq. and Matthew Gilroy, Esq.

Facsimile: (212) 310-8007

 

Proskauer Rose LLP

Eleven Times Square

New York, NY 10036

Attention: Peter Fass, Esq. and Steven Lichtenfeld, Esq.

Facsimile: (212) 969-2900

 

18.         Confidential Information.

 

(a)          All information and materials provided pursuant to or in connection
with this Agreement shall be subject to the provisions of the Confidentiality
Agreement entered into between the Seller and the Buyer on September 3, 2014
(the “Confidentiality Agreement”). From and after the date hereof, the Seller
shall, and shall cause its Affiliates and Representatives to, keep confidential
and not use for any purpose all nonpublic information regarding the Acquired
Business or any of the Buyer, its Affiliates or their respective subsidiaries of
which the Seller or such Affiliates or Representatives may be aware (“Buyer
Business Information”), subject only to the exceptions to the confidentiality
and non-use obligations of the Seller and such Affiliates and Representatives in
the Confidentiality Agreement, as applied mutatis mutandis to the Seller and
such Affiliates and Representatives with respect to Buyer Business Information.
From and after the date hereof, the Buyer shall, and shall cause its Affiliates
and Representatives to, keep confidential and not use for any purpose all
nonpublic information regarding the Seller Business or any of the Seller, its
Affiliates or their respective subsidiaries of which the Buyer or such
Affiliates or Representatives may be aware (“Seller Business Information”),
subject only to the exceptions to the confidentiality and non-use obligations of
the Buyer and such Affiliates and Representatives in the Confidentiality
Agreement, as applied mutatis mutandis to the Buyer and such Affiliates and
Representatives with respect to Seller Business Information.

 

(b)          Each Party shall comply with all applicable state, federal and
foreign privacy and data protection Laws that are or that may in the future be
applicable to the provision of services hereunder.

 

19.         Headings. The section headings herein have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction, interpretation or effect of this Agreement.

 

20.         No Waivers. Neither the failure nor any delay on the part of a Party
to exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise of the
same or of any other right, remedy, power or privilege, nor shall any waiver of
any right, remedy, power or privilege with respect to any occurrence be

 

10

 

 

construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrences. No waiver shall be effective unless it is in writing and
is signed by the Party asserted to have granted such waiver.

 

21.         Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each of the Parties
and delivered to the other Party, it being understood that each Party need not
sign the same counterpart.

 

22.         Entire Agreement. This Agreement (including the documents and the
instruments referred to in this Agreement) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the Parties with respect to the subject matter of this Agreement.

 

23.         Governing Law. This Agreement shall be governed and construed in
accordance with the internal laws of the State of Delaware applicable to
contracts made and wholly performed within such state, without regard to any
applicable conflicts of law principles. The Parties agree that any suit, action
or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought in any federal or state court located in
the State of Delaware, and each Party hereby irrevocably consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. Process in any such suit, action or proceeding
may be served on any Party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each Party
agrees that service of process on such Party as provided in Section 17 shall be
deemed effective service of process on such Party. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

24.         Non-Recourse. No past, present or future incorporator, member,
partner, stockholder, Affiliate or Representative of either Party or its
Affiliates shall have any liability for any obligations or liabilities of such
Party or its Affiliates, under this Agreement of or for any claim based on, in
respect of, or by reason of, the transactions contemplated hereby.

 

25.         Severability. If any provision of this Agreement is held to be
invalid, void or unenforceable, the remaining provisions shall nevertheless
continue in full force and effect.

 

[Signature Page Follows] 

 

11

 

  

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed as
of the day and year first above written.

 

  AMERICAN REALTY CAPITAL PROPERTIES, INC.       By:       Name:     Title:

 

  RCS CAPITAL CORPORATION       By:       Name:     Title:

 

[Signature Page to Services Agreement]

 

 

 

  

Annex A

 

Seller Rates

 

[To be provided.]

 

 

 

  

Annex B

 

Buyer Rates

 

[To be provided.]

 

 

 

 

Exhibit I

 

FORM OF NON-COMPETITION AND EXCLUSIVITY AGREEMENT

 

This Non-Competition AND EXCLUSIVITY Agreement (this “Agreement”) is made as of
the [[•] day of [•]]1, 2014, by and among RCS Capital Corporation, a Delaware
corporation (the “Company”), American Realty Capital Properties, Inc., a
Maryland corporation (“Seller GP”), and the executives of Seller GP set forth on
the signature pages hereto (the “Seller GP Executives”). The Company, Seller GP
and the Seller GP Executives are sometimes referred to herein collectively as
the “Parties” and each individually as a “Party.”

 

WHEREAS, Seller GP is the general partner of ARC Properties Operating
Partnership, L.P., a Delaware limited partnership (the “Seller”);

 

WHEREAS, the Company and Seller have entered into that certain Equity Purchase
Agreement dated as of September 30, 2014 (the “Purchase Agreement”); and

 

WHEREAS, the Purchase Agreement requires delivery of this Agreement.

 

NOW, THEREFORE, the Parties hereto, in consideration of the foregoing recitals
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, do hereby agree as follows:

 

1.           Definitions. Capitalized terms, as used herein, shall have the
meanings set forth below:

 

“Advisory Services” shall mean, whether pursuant to an advisory agreement,
sub-advisory agreement, management agreement or otherwise, services of the type
provided or to be provided to the Carbon Funds by Seller GP or any Affiliate of
Seller GP, including, without limitation: investment and financial advice,
investment analysis, transaction structure and negotiation advice, general
administration services, property management and leasing services, and daily
management and supervision services.

 

“Affiliate” shall mean, with respect to a Person, (a) any officer, director,
trustee, partner, manager, employee or holder of ten percent (10%) or more of
any class of the voting securities of or equity interest in such Person; (b) any
corporation, partnership, limited liability company, trust or other entity
controlling, controlled by or under common control with such Person; or (c) any
officer, director, trustee, partner, manager, employee or holder of ten percent
(10%) or more of the outstanding voting securities of any corporation,
partnership, limited liability company, trust or other entity controlling,
controlled by or under common control with such Person. For purposes of this
definition, the term “controls,” “is controlled by,” or “is under common control
with” shall mean the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of an entity, whether through
the ownership of voting rights, by contract or otherwise.

 

“Agreement” shall have the meaning set forth in the preamble.         

 

 

1 To be the date of the Second Closing Date.

 

 

 

  

“Carbon Funds” shall mean Cole Real Estate Income Strategy (Daily Nav), Inc., a
Maryland corporation, Cole Credit Property Trust IV, Inc., a Maryland
corporation, Cole Credit Property Trust V, Inc., a Maryland corporation, Cole
Credit Property Trust VI, Inc., a Maryland corporation, Cole Corporate Income
Trust, Inc., a Maryland corporation, Cole Office & Industrial REIT (CCIT II),
Inc., a Maryland corporation, and Cole Office & Industrial REIT (CCIT III),
Inc., a Maryland corporation.

 

“Company” shall have the meaning set forth in the preamble.         

 

“Parties” and “Party” shall have the meaning set forth in the preamble.         

 

“Person” shall mean an individual, corporation, partnership, joint venture,
association, company (whether of limited liability or otherwise), trust, bank or
other entity, or government or any agency or political subdivision of a
government.

 

“Purchase Agreement” shall have the meaning set forth in the recitals.         

 

“Restricted Activities” shall have the meaning provided in Section 3(a).

 

“Seller” shall have the meaning set forth in the recitals.

 

“Seller GP” shall have the meaning set forth in the preamble.

 

“Seller GP Executives” shall have the meaning set forth in the
preamble.         

 

“U.S. Net Lease REITs” means non-traded REITs or similar offerings whose primary
investment strategy, in each case, is to invest in single tenant net-leased
properties in the United States.

 

2.           Effectiveness of Agreement. This Agreement shall be effective at
and as of the Second Closing Date (as defined in the Purchase Agreement).

 

3.           Covenant Not to Compete.

 

(a)          Each of Seller GP and the Seller GP Executives expressly agrees and
acknowledges that such Party shall not (and shall cause its controlled
Affiliates, and in the case of Seller GP, the Seller GP Executives, not to),
directly or indirectly, (i) sponsor, distribute any securities of, raise capital
for, invest in, or engage in similar activities with respect to any U.S. Net
Lease REITs (the “Restricted Activities”) other than the Carbon Funds or (ii)
hold any interest in, or perform services in any capacity for, any Person that
directly or indirectly engages in any Restricted Activities other than the
Carbon Funds; provided, however, that nothing herein contained shall be deemed
to prevent Seller GP or the Seller GP Executives from investing in or acquiring
5% or less of any class of securities of any Person if such class of securities
is listed on a national securities exchange.

 

2

 

 

(b)          The restriction set forth in Section 3(a) above shall remain in
full force and effect for so long as the Company is in the business of
sponsoring, distributing any securities of, raising capital for, or otherwise
investing in any U.S. Net Lease REITs.

 

(c)          At the request of the Company, Seller GP will enforce, or cause to
be enforced, any non-competition agreement or covenant between a Seller GP
Executive, on the one hand, and Seller GP or any of its Affiliates, on the other
hand.

 

4.          Non-Interference. Without the prior written consent of the Company,
each of Seller GP and the Seller GP Executives expressly agrees and acknowledges
that such Party shall not (and shall cause its controlled Affiliates, and in the
case of Seller GP, the Seller GP Executives, not to), directly or indirectly,
solicit, employ or retain the services of, accept business from, endeavor to
knowingly entice away from the Company or any of its Affiliates or otherwise
knowingly interfere with the relationship of the Company or any of its
Affiliates with (a) any person (other than senior executives or wholesalers) who
is employed by or otherwise engaged to perform services for the Company or any
of its Affiliates, in each case, primarily related to U.S. Net Lease REITs, (b)
any person who is, or was within the then most recent six month period, a senior
executive or wholesaler of the Company or any of its Affiliates, in each case,
whose engagement with the Company or any of its Affiliates primarily relates to
U.S. Net Lease REITs, or (c) any account of the Company or any of its Affiliates
primarily related to U.S. Net Lease REITs; provided, however, that this
Agreement shall not prohibit (i) any advertisement or general solicitation (or
hiring, retention of services or business relationship as a result thereof) that
is not specifically targeted at such persons or accounts, (ii) the solicitation
(or hiring, retention of services or business relationship as a result thereof)
of any such person or account who initiates discussions with Seller GP or the
Seller GP Executives, (iii) the solicitation (or hiring, retention of services
or business relationship as a result thereof) of any such person whose
employment was terminated or such account whose business relationship was
terminated by the Company or any of its Affiliates, or (iv) any action by Seller
GP or the Seller GP Executives not related to U.S. Net Lease REITs. The
restrictions set forth in this Section 4 shall remain in full force and effect
for so long as the Company is in the business of sponsoring, distributing any
securities of, raising capital for, or otherwise investing in any U.S. Net Lease
REITs.

 

5.           Exclusivity Covenant.

 

(a)          Seller GP expressly agrees and acknowledges that Seller GP shall
not (and shall cause its controlled Affiliates not to) provide Advisory Services
to any funds (other than the Carbon Funds), sponsors (other than sponsors of the
Carbon Funds) or any competitors of the Carbon Funds. The restriction set forth
in this Section 5(a) shall remain in full force and effect for so long as the
Company is in the business of sponsoring, distributing any securities of,
raising capital for, or otherwise investing in any U.S. Net Lease REITs.

 

(b)          The Company expressly agrees and acknowledges that the Company
shall not engage any sub-advisor to perform Advisory Services for the Carbon
Funds other than Seller GP. The restriction set forth in this Section 5(b) above
shall remain in full force and effect for so long as the Company is in the
business of sponsoring, distributing any securities of, or raising capital for,
the Carbon Funds.

 

3

 

 

6.           Termination. Notwithstanding any other provision in this Agreement
to the contrary, this Agreement shall terminate and be of no further force and
effect solely with respect to any Seller GP Executive following the date on
which such Seller GP Executive is no longer an officer of Seller GP or any of
its Affiliates.

 

7.           Enforceability; Reformation. Each of the obligations in this
Agreement is an entire, separate and independent restriction, despite the fact
that they may be contained in the same phrase, and if any part is found to be
invalid or unenforceable the remainder will remain valid and enforceable. While
the restrictions are considered by the parties to be fair and reasonable under
the circumstances, the Parties hereto agree that, if any court of competent
jurisdiction determines that a specified time period, a specified geographical
area, a specified business limitation or any other relevant feature of this
Agreement is unreasonable, arbitrary or against public policy, then a lesser
period of time, geographical area, business limitation or other relevant feature
which is determined by such court to be reasonable, not arbitrary and not
against public policy may be enforced against the applicable Party.

 

8.           Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties hereto and their respective successors,
permitted assigns and legal representatives, including any successor to the
Company or Seller GP by merger, purchase or otherwise or any acquirer of all or
substantially all of the Company or Seller GP, as applicable. This Agreement is
not assignable by the Seller GP Executives. The Company may assign its rights,
but not its obligations, hereunder, without the Consent of any Party hereto, to
any Affiliate of the Company, any successor thereof and to any other person or
entity which acquires all or substantially all of the assets of the Company.
Seller GP may assign its rights, but not its obligations, hereunder, without the
Consent of any Party hereto to any Affiliate of Seller GP, any successor thereof
and to any other person or entity which acquires all or substantially all of the
assets of Seller GP.

 

9.           Entire Agreement; Recitals. This Agreement (including the documents
and the instruments referred to in this Agreement), constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, between the Parties with respect to the subject matter of this
Agreement. The recitals set forth above are incorporated herein and made a part
of this Agreement as if set forth at length herein.

 

10.         Amendments. Subject to compliance with applicable law, the
provisions of this Agreement may not be amended, modified or supplemented
without the prior written consent of each of the Parties. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
Parties. Any waiver of compliance with any provision of this Agreement shall be
valid only if set forth in an instrument in writing signed by the Party to be
bound thereby.

 

11.         Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each of the Parties
and delivered to the other Parties, it being understood that each Party need not
sign the same counterpart.

 

4

 

 

12.         Injunctive Relief. Each Party acknowledges that compliance with this
Agreement is necessary to protect the goodwill and other proprietary interests
of the other Parties. Each Party acknowledges that a breach of this Agreement
may result in irreparable and continuing damage to the other Parties and/or
their respective Affiliates and their respective businesses, for which there may
be no adequate remedy at law. Each Party further agrees that in the event of any
breach of this Agreement, the other Parties and their respective successors and
assigns shall be entitled to seek injunctive relief and to such other and
further relief, including damages, as may be proper without any requirement of
the posting of any bond or similar security.

 

13.         Governing Law. This Agreement shall be governed and construed in
accordance with the internal laws of the State of Delaware applicable to
contracts made and wholly performed within such state, without regard to any
applicable conflicts of law principles. The Parties agree that any suit, action
or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought in any federal or state court located in
the State of Delaware, and each Party hereby irrevocably consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. Process in any such suit, action or proceeding
may be served on any Party anywhere in the world, whether within or without the
jurisdiction of any such court. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

[Signature page follows]

 

5

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first written above.

 

  AMERICAN REALTY CAPITAL PROPERTIES, INC.       By:       Name:     Title:

 

  RCS CAPITAL CORPORATION       By:       Name:     Title:

 

      David S. Kay

 

      Lisa E. Beeson

 

[Signature Page to Non-Competition and Exclusivity Agreement]

 

 

 

 

Exhibit J

 

FORM OF REGISTRATION RIGHTS AGREEMENT

dated as of

[             ] , 2014

among

ARC PROPERTIES OPERATING PARTNERSHIP, L.P.,

 

RCS CAPITAL CORPORATION

and

THE PARTIES HERETO

 

 

 

  

FORM OF REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT dated as of [____________], 2014 (this
“Agreement”), is entered into by and among RCS Capital Corporation, a Delaware
corporation (the “Company”), and ARC Properties Operating Partnership, L.P., a
Delaware limited partnership (“ARCP OP”), and any Transferee thereof that become
party to this Agreement (collectively, the “Investors”).

 

WHEREAS, ARCP OP and the Company have entered into that certain Equity Purchase
Agreement dated as of September 30, 2014 (the “Purchase Agreement”); and

 

WHEREAS, the Purchase Agreement requires delivery of this Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises made herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

ARTICLE 1
Definitions

 

Section 1.01. Definitions. (a) The following terms, as used herein, have the
following meanings:

 

“Affiliate,” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 144 under the
Securities Act.

 

“Agreement” has the meaning set forth in the preamble, as amended, modified or
supplemented from time to time, together with any exhibits, schedules,
appendices or other attachments thereto.

 

“ARCP OP” has the meaning set forth in the preamble.

 

“Business Day” means any day that is not a Saturday, Sunday or other day in
which banks are not required or authorized to be closed in New York City, New
York.

 

“Common Stock” means the Class A Common Stock of the Company.

 

“Company” has the meaning set forth in the preamble.

 

“Damages” has the meaning set forth in Section 3.01.

 

“Demand” has the meaning set forth in Section 2.03(a).

 

“Demand Notice” has the meaning set forth in Section 2.03(a).

 

 

 

 

“Effective Date” means, with respect to each Registration Statement, the date
that such Registration Statement is first declared effective by the SEC or if
the Company is a WKSI, the date that such Registration Statement is filed with
the SEC.

 

“Effectiveness Date” means, with respect to the Shelf Registration Statement
required to be filed hereunder, the 40th calendar day following the Filing Date;
provided, however, that in the event the Company is notified by the SEC that the
Shelf Registration Statement will not be reviewed or is no longer subject to
further review and comments, the Effectiveness Date as to such Registration
Statement shall be not later than the fifth Trading Day following the date on
which the Company is so notified if such date precedes the date otherwise
required above.

 

“Earn-out Payment” has the meaning set forth in the Purchase Agreement.

 

“Effectiveness Period” has the meaning set forth in Section 2.01(b).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Filing Date” means, with respect to the Shelf Registration Statement, the tenth
day after the Stock Issuance Date or, if such date is not a Business Day, the
next date that is a Business Day, and, if after the Stock Issuance Date, Common
Stock is issued to the Investor pursuant to the Earn-out Payment, such shares of
Common Stock are not registered pursuant to a Registration Statement previously
filed under Section 2.01 and such shares of Common Stock cannot be sold publicly
without any volume limitations under Rule 144, the tenth day after the Stock
Issuance Date with respect to the Common Stock issued to Investors pursuant to
the Earn-out Payment or, if such date is not a Business Day, the next date that
is a Business Day.

 

“FINRA” means the Financial Industry Regulatory Authority, Inc., or any
successor thereto.

 

“Indemnified Party” has the meaning set forth in Section 3.03.

 

“Indemnifying Party” has the meaning set forth in Section 3.03.

 

“Investors” has the meaning set forth in the preamble.

 

“Joinder Agreement” has the meaning set forth in Section 4.02(b).

 

“Non-Underwritten Shelf Takedown” has the meaning set forth in Section 2.03(c).

 

“Notice” has the meaning set forth in Section 4.03.

 

“Person” means an individual, corporation, partnership, joint venture,
association, company (whether of limited liability or otherwise), trust, bank or
other entity, or government or any agency or political subdivision of a
government.

 

“Piggyback Registration” has the meaning set forth in Section 2.02(a).

 

“Prospectus” means the prospectus included in the Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as

 

2

 

 

amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus including post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such Prospectus.

 

“Purchase Agreement” has the meaning set forth in the recitals.

 

“Registrable Securities” means the Common Stock issued or issuable to the
Investors pursuant to the Purchase Agreement, together with any securities
issued or issuable upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to the foregoing.

 

“Registration Statement” means each registration statement required to be filed
under Article 2 with respect to the Registrable Securities, including (in each
case) the Prospectus, amendments and supplements to such registration statement
or Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference or deemed to be incorporated
by reference in such registration statement

 

“Rule 144,” “Rule 172,” “Rule 415,” and “Rule 424” means Rule 144, Rule 172,
Rule 415 and Rule 424, respectively, promulgated by the SEC pursuant to the
Securities Act, as such rules may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.

 

“Rule 144A” means Rule 144A as promulgated by the SEC under the Securities Act,
and any successor rule or regulation thereto.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, and the rules and regulations
of the SEC promulgated thereunder, as from time to time amended.

 

“Selling Expenses” means all underwriting discounts, selling fees or commissions
and stock transfer taxes applicable to any sale of Registrable Securities.

 

“Shelf Registration Statement” has the meaning set forth in Section 2.01(a).

 

“Special Registration” has the meaning set forth in Section 2.02(a).

 

“Stock Issuance Date” has the meaning set forth in Section 4.01.

 

“Trading Day” means (i) a day on which the Common Stock is traded on a Trading
Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not
listed or quoted on a Trading Market (other than the OTC Bulletin Board), a day
on which the Common Stock is traded in the over-the-counter market, as reported
by the OTC Bulletin Board, or (iii) if the Common Stock is not listed or quoted
on any Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the Pink Sheets LLC (or any similar
organization or agency succeeding to its functions of reporting prices);
provided, that, in the event that the Common Stock is not listed or quoted as
set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business
Day.

 

3

 

 

“Trading Market” means whichever of the New York Stock Exchange, the NYSE MKT,
the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
Market or OTC Bulletin Board on which the Common Stock is listed or quoted for
trading on the date in question.

 

“Transfer” means, with respect to any Registrable Securities, (i) when used as a
verb, to sell, assign, dispose of, exchange, pledge, encumber, hypothecate or
otherwise transfer such Registrable Securities or any participation or interest
therein, whether directly or indirectly, or agree or commit to do any of the
foregoing and (ii) when used as a noun, a direct or indirect sale, assignment,
disposition, exchange, pledge, encumbrance, hypothecation, or other transfer of
such Registrable Securities or any participation or interest therein or any
agreement or commitment to do any of the foregoing.

 

“Transfer Agent” means Computershare Trust Company, N.A., or any successor
transfer agent for the Company.

 

“Transferee” means a Person to whom Registrable Securities are Transferred by an
Investor; provided that such Transfer is not made in a registered offering or
pursuant to Rule 144 and that the Transferee executes a Joinder Agreement.

 

“Underwritten Shelf Takedown” has the meaning set forth in Section 2.03(a).

 

“WKSI” means a Well-Known Seasoned Issuer as defined in Rule 405 of the
Securities Act.

 

Section 1.02. Other Definitional and Interpretative Provisions. The words
“hereof”, “herein” and “hereunder” and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. References to Articles, Sections or Exhibits are to Articles, Sections
and Exhibits of this Agreement unless otherwise specified. All Exhibits annexed
hereto or referred to herein are hereby incorporated in and made a part of this
Agreement as if set forth in full herein. Any capitalized term used in any
Exhibit but not otherwise defined therein shall have the meaning as defined in
this Agreement. Any singular term in this Agreement shall be deemed to include
the plural, and any plural term the singular. Whenever the words “include”,
“includes” or “including” are used in this Agreement, they shall be deemed to be
followed by the words “without limitation”, whether or not they are in fact
followed by those words or words of like import. “Writing”, “written” and
comparable terms refer to printing, typing and other means of reproducing words
(including electronic media) in a visible form. References to any agreement or
contract are to that agreement or contract as amended, modified or supplemented
from time to time in accordance with the terms hereof and/or thereof, as
applicable. References to any Person include the successors and permitted
assigns of that Person. References from or through any date mean, unless
otherwise specified, from and including or through and including, respectively.

 

ARTICLE 2 Registration Rights

 

Section 2.01 Registration Statement

 

4

 

 

(a)          On or prior to the Filing Date, the Company shall prepare and file
with the SEC a Registration Statement or, if a Registration Statement is then
effective, a supplement to the Prospectus, in either case covering the resale of
all Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415 (or any successor provision) (the “Shelf Registration
Statement”).

 

(b)          The Company shall use its reasonable best efforts to cause the
Shelf Registration Statement to be declared effective under the Securities Act
as promptly as possible, if the Shelf Registration Statement is not then
effective, but in any event on or prior to the Effectiveness Date, and shall use
its reasonable best efforts to keep the Registration Statement continuously
effective under the Securities Act until the earlier of the date that all
Registrable Securities covered by such Registration Statement have been sold or
can be sold publicly without any volume limitations under Rule 144 (the
“Effectiveness Period”).

 

(c)          Notwithstanding anything in this Agreement to the contrary, the
Company may, by written notice to each Investor, suspend sales under a
Registration Statement, including the Shelf Registration Statement, after the
Effective Date thereof and/or require that each Investor immediately cease the
sale of Registrable Securities pursuant thereto and/or defer the filing of any
subsequent Registration Statement if the Company is engaged in a material
merger, acquisition or sale and the Board of Directors of the Company determines
in good faith, by appropriate resolutions, that, as a result of such activity,
(i) it would be materially detrimental to the Company (other than as relating
solely to the price of the Common Stock) to maintain a Registration Statement at
such time or (ii) it is in the best interests of the Company to suspend sales
under such Registration Statement at such time. Upon receipt of such notice,
each Investor shall immediately discontinue any sales of Registrable Securities
pursuant to such registration until such Investor is advised in writing by the
Company that the current Prospectus or amended Prospectus, as applicable, may be
used. In no event, however, shall this right be exercised to suspend sales
beyond the period during which (in the good faith determination of the Board of
Directors of the Company) the failure to require such suspension would be
materially detrimental to the Company. The Company’s rights under this Section
2.01(c) may be exercised for a period of no more than 15 Trading Days at a time
and not more than two times in any twelve-month (12) period. Immediately after
the end of any suspension period under this Section 2.01(c), the Company shall
take all necessary actions (including filing any required supplemental
Prospectus) to restore the effectiveness of the applicable Registration
Statement and the ability of each Investor to publicly resell its Registrable
Securities pursuant to such effective Registration Statement.

 

Section 2.02         Piggyback Registration.

 

(a)          Whenever the Company proposes to register any of its Common Stock
in connection with an underwritten public offering (whether an offering of
Common Stock by the Company, stockholders of the Company, or both, but other
than in connection with a Special Registration (as defined below)), the Company
will give prompt written notice to the Investors of its intention to effect such
a registration (but in no event less than ten (10) days prior to the anticipated
filing date) and (subject to Section 2.02(b) below) will include in such
registration all

 

5

 

 

Registrable Securities with respect to which the Company has received written
requests for inclusion therein within ten (10) business days after the date of
the Company’s notice (a “Piggyback Registration”). Any Investor that has made
such a written request may withdraw its Registrable Securities from such
Piggyback Registration by giving written notice to the Company and the managing
underwriter, if any, on or before the fifth (5th) business day prior to the
planned effective date of such Piggyback Registration. The Company may terminate
or withdraw any registration under this Section 2.02 prior to the effectiveness
of such registration, whether or not any Investor has elected to include
Registrable Securities in such registration. “Special Registration” means the
registration of equity securities and/or options or other rights in respect
thereof (i) on Form S-4 or Form S-8 (or successor form), (ii) in connection with
an at-the-market offering, (iii) on any other registration form which may not be
used for the registration or qualification for distribution of Registrable
Securities, or (iv) in connection with any employee benefit or dividend
reinvestment plan.

 

(b)          The right of the Investors to participate in a registration
referred to in Section 2.02(a) will be conditioned upon such persons’
participation in such underwriting and the inclusion of such persons’
Registrable Securities in the underwriting, and each such person will (together
with the Company and the other persons distributing their securities through
such underwriting) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company.
If any participating person disapproves of the terms of the underwriting, such
person may elect to withdraw therefrom by written notice to the Company. If the
managing underwriters advise the Company in writing that, in their reasonable
opinion, the number of shares of Common Stock requested to be included in such
offering exceeds the number which can be sold without adversely affecting the
marketability of such offering (including an adverse effect on the per share
offering price), the Company shall include in such Registration Statement or
Prospectus only such number of securities that in the reasonable opinion of such
underwriters can be sold without adversely affecting the marketability of the
offering (including an adverse effect on the per share offering price), which
shares shall be so included in the following order of priority: (i) first, the
shares the Company and/or selling stockholders, as applicable, propose to sell
and (ii) second, shares of the participating Investors pro rata on the basis of
the aggregate number of such shares owned by each participating Investor.

 

Section 2.03         Requests and Demands.

 

(a)          ARCP OP may make three (3) requests to sell all or any portion of
its Registrable Securities in an underwritten offering that is registered
pursuant to a Registration Statement (each, an “Underwritten Shelf Takedown”). A
request (a “Demand”) for an Underwritten Shelf Takedowns shall be made by ARCP
OP by giving written notice to the Company (the “Demand Notice”). Each Demand
Notice shall specify the approximate number of Registrable Securities to be sold
by ARCP OP in the Underwritten Shelf Takedown and the expected price range (net
of underwriting discounts and commissions) of such Underwritten Shelf Takedown.
Within two (2) business days after receipt of any Demand Notice, the Company
shall send written notice of such requested Underwritten Shelf Takedown to each
non-requesting Investor, if any, and shall include in such Underwritten Shelf
Takedown all Registrable Securities with respect to which

 

6

 

 

the Company has received written requests for inclusion therein within five
(5) business days after sending such notice (except that each non-requesting
Investor shall have two (2) business days after receipt of such notice to
request inclusion of Registrable Securities in the Underwritten Shelf Takedown
in the case of a “bought deal”, “registered direct offering” or “overnight
transaction”).

 

(b)          The underwriters in any Underwritten Shelf Takedown shall be
selected by ARCP OP.

 

(c)          If an Investor desires to initiate an offering or sale of all or
part of such Investor’s Registrable Securities that does not constitute an
Underwritten Shelf Takedown (a “Non-Underwritten Shelf Takedown”), such Investor
shall so indicate in a written request delivered to the Company no later than
two (2) business days (or in the event any amendment or supplement to the
Registration Statement or Prospectus is necessary, no later than five (5)
business days) prior to the expected date of such Non-Underwritten Shelf
Takedown, which request shall include (i) the total number of Registrable
Securities expected to be offered and sold in such Non-Underwritten Shelf
Takedown, (ii) the expected plan of distribution of such Non-Underwritten Shelf
Takedown and (iii) the action or actions required (including the timing thereof)
in connection with such Non-Underwritten Shelf Takedown, and, to the extent
necessary, the Company shall file and effect an amendment or supplement to its
Registration Statement or Prospectus for such purpose as soon as practicable.
For the avoidance of doubt, unless otherwise agreed to by the requesting
Investor, a non-requesting Investor shall not have the right to participate in a
Non-Underwritten Shelf Takedown.

 

Section 2.04 Registration Procedures. In connection with the Company’s
registration obligations hereunder, the Company shall:

 

(a)          Not less than three (3) Trading Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment or supplement
thereto, furnish to each Investor copies of all such documents proposed to be
filed, which documents (other than any document that is incorporated or deemed
to be incorporated by reference therein) will be subject to the review of each
Investor. The Company shall reflect in each such document when so filed with the
SEC all reasonable comments regarding the description of the transactions under
the Purchase Agreement, the Investors or the plan of distribution as each
Investor may reasonably and promptly propose no later than two (2) Trading Days
after each Investor has been so furnished with copies of such documents as
aforesaid

 

(b)          (i) Subject to Section 2.01(c), prepare and file with the SEC such
amendments, including post-effective amendments, to each Registration Statement
and the Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective, as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the SEC such
additional Registration Statements in order to register for resale under the
Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424 (or any
successor provision); and (iii) comply in all material respects

 

7

 

 

with the provisions of the Securities Act and the Exchange Act with respect to
the disposition of all Registrable Securities covered by the Registration
Statement during the applicable period in accordance with the intended methods
of disposition by the Investors thereof set forth in the Registration Statement
as so amended or in such Prospectus as so supplemented.

 

(c)           Notify each Investor as promptly as reasonably possible and, if
requested by any Investors, confirm such notice in writing no later than two (2)
Trading Days thereafter, of any of the following events: (i) the SEC issues any
stop order suspending the effectiveness of any Registration Statement or
initiates any proceedings for that purpose; (ii) the Company receives notice of
any suspension of the qualification or exemption from qualification of any
Registrable Securities for sale in any jurisdiction, or the initiation or threat
of any proceeding for such purpose; or (iii) the financial statements included
in any Registration Statement become ineligible for inclusion therein or any
Registration Statement or Prospectus or other document contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

 

(d)          Use its reasonable best efforts to avoid the issuance of or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
any Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, as soon as possible.

 

(e)          Promptly deliver to each Investor, without charge, as many copies
of the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request. The
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by the Investors in connection with the offering and sale of
the Registrable Securities covered by such Prospectus and any amendment or
supplement thereto to the extent permitted by federal and state securities laws
and regulations.

 

(f)           Prior to any public offering of Registrable Securities, use
reasonable best efforts to register or qualify or cooperate with the selling
Investors in connection with the registration or qualification (or exemption
from such registration or qualification) of such Registrable Securities for
offer and sale under the securities or Blue Sky laws of such jurisdictions
within the United States as any Investor requests in writing, to keep each such
registration or qualification (or exemption therefrom) effective for so long as
required, but not to exceed the duration of the Effectiveness Period, and to do
any and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.

 

(g)          Cooperate with the Investors to facilitate the timely preparation
and delivery of certificates or book-entry records, as required by such
Investors, representing Registrable

 

8

 

 

Securities to be delivered to a transferee pursuant to a Registration Statement,
which certificates or records, as applicable, shall be free, to the extent
permitted by the Transaction Documents and under law, of all restrictive
legends, and to enable such certificates to be in such denominations and
registered in such names as any of the Investors may reasonably request.

 

(h)          Upon the occurrence of any event described in Section 2.02(c)(iii),
as promptly as reasonably possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

 

(i)          (A) Cooperate with any reasonable due diligence investigation
undertaken by the Investors, the lead underwriter or underwriters, if any, and
any attorneys or accountants retained by the Investors or the lead underwriter
or underwriters, in connection with the sale of Registrable Securities,
including, without limitation, by making available documents and information;
(B) cause the officers, directors and employees of the Company to supply in all
material respects the information, in each case, reasonably requested by any
such representative, lead underwriter, attorney or accountant in connection with
such Registration Statement, and (C) make the Company’s independent certified
public accountants available for any such lead underwriter’s or underwriters’
due diligence if so requested by counsel to the Underwriters or the Investors;
provided, that, the Company will not deliver or make available to any Investor
material, nonpublic information unless such Investor requests in advance in
writing to receive material, nonpublic information and agrees in writing to keep
such information confidential and not use such information in a manner that
violates applicable securities laws. Make such representations and warranties to
the Investors and the underwriters or agents, if any, in form, substance and
scope as are customarily made by issuers in underwritten public offerings.

 

(j)          Enter into such customary agreements (including underwriting and
indemnification agreements) and take such other actions as the lead underwriter,
if any, may reasonably request in order to facilitate the Registration and
disposition of such Registrable Securities.

 

(k)          In the event of an Underwritten Shelf Takedown, use its reasonable
best efforts to obtain for delivery to the lead underwriter, if any, an opinion
or opinions from counsel for the Company dated the date of the closing under the
underwriting agreement, in form and substance as is customarily given to
underwriters in an underwritten secondary public offering.

 

(l)           In the case of an Underwritten Shelf Takedown, use its reasonable
best efforts to obtain for delivery to the Company and the lead underwriter, if
any, a “comfort” letter from the Company’s independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants in an underwritten secondary public offering.

 

9

 

 

(m)          Cooperate with each Investor and the underwriters, if any, of such
Registrable Securities and their respective counsel in connection with any
filings required to be made with FINRA.

 

(n)          Use its reasonable best efforts to cause all Registrable Securities
covered by the applicable Registration Statement to be listed or quoted on the
Trading Market, if any, on which similar securities issued by the Company are
then listed.

 

(o)          In the case of an Underwritten Shelf Takedown, ensure that two (2)
senior officers of the Company who are reasonably acceptable to ARCP OP (A)
reasonably participate in good faith in the customary “road show” presentations,
which shall be for a period not to exceed two (2) calendar days and other
customary marketing efforts that may be reasonably requested by the lead
underwriter or underwriters in any such Underwritten Shelf Takedown, and (B)
take such actions as the lead underwriter or underwriters or ARCP OP may
reasonably request and that are customary in underwritten public offerings in
order to facilitate the sale of Registrable Securities.

 

(p)          Comply with all rules and regulations of the SEC applicable to the
registration of the Common Stock.

 

(q)          Use its reasonable best efforts to procure the cooperation of the
Transfer Agent in settling any offering or sale of Registrable Securities,
including with respect to the transfer of physical security instruments into
book-entry form in accordance with any procedures reasonably requested by the
Investors or any lead underwriter or underwriters.

 

(r)          It shall be a condition precedent to the obligations of the Company
pursuant to this Agreement with respect to the Registrable Securities of any
Investor that such Investor furnishes to the Company the information reasonably
requested by the Company and such other information regarding itself, the
Registrable Securities and other Common Stock held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities or file a
Prospectus supplement with respect to the Registrable Securities of such
Investor and shall complete and execute such documents in connection with the
foregoing as the Company may reasonably request.

 

(s)          The Company shall comply with all applicable rules and regulations
of the SEC under the Securities Act and the Exchange Act, including, without
limitation, Rule 172 (or any successor provision) under the Securities Act, file
any final Prospectus, including any supplement or amendment thereof, with the
SEC pursuant to Rule 424 (or any successor provision) under the Securities Act,
reasonably promptly inform the Investors in writing if, at any time during the
Effectiveness Period, the Company does not satisfy the conditions specified in
Rule 172 (or any successor provision) and, as a result thereof, the Investors
are required to make available a Prospectus in connection with any disposition
of Registrable Securities and take such other actions as may be reasonably
necessary to facilitate the registration of the Registrable Securities
hereunder. 

 

10

 

 

Section 2.05 Registration Expenses. The Company shall pay all fees and expenses
(other than Selling Expenses) incurred in connection with the performance of or
compliance with Article 2 of this Agreement by the Company, including without
limitation (a) all registration and filing fees and expenses including, without
limitation, those related to filings with the SEC, FINRA, any Trading Market and
in connection with applicable state securities or Blue Sky laws, (b) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities), (c) messenger, telephone and delivery expenses,
(d) fees and disbursements of counsel for the Company, (e) fees and expenses of
all other Persons retained by the Company in connection with the consummation of
the transactions contemplated by this Agreement, including, without limitation,
the expenses associated with the delivery by independent certified public
accountants of any “comfort letters” requested pursuant to the terms hereof, and
(f) all listing fees to be paid by the Company to the Trading Market. All
Selling Expenses incurred in connection with the sale of Registrable Securities
shall be borne by the Investors or other holders selling such Registrable
Securities in proportion to such Investors’ or other holders’ Registrable
Securities sold. Each Investor and other holder of Registrable Securities shall
pay the expenses of their own counsel and other advisers.

 

ARTICLE 3

Indemnification and Contribution

 

Section 3.01. Indemnification by the Company. The Company agrees to indemnify
and hold harmless each Investor beneficially owning any Registrable Securities
covered by a Registration Statement, its officers, directors, employees,
partners and agents, and each Person, if any, who controls such Investor within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any and all losses, claims, damages, liabilities and
expenses (including reasonable expenses of investigation and reasonable
attorneys’ fees and expenses) (collectively, “Damages”) caused by or relating to
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement or Prospectus relating to the Registrable Securities
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) or any preliminary prospectus or free-writing prospectus
(as defined in Rule 405 under the Securities Act), or caused by or relating to
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such Damages are caused by or related to any such untrue
statement or omission or alleged untrue statement or omission so made based upon
information furnished in writing to the Company by such Investor or on such
Investor’s behalf expressly for use therein.

 

Section 3.02 Indemnification by Participating Investors. Each Investor holding
Registrable Securities included in any Registration Statement agrees, severally
but not jointly, to indemnify and hold harmless the Company, its officers,
directors and agents 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 to the same extent as the indemnity from the Company to such Investor
provided in 0, but only with respect to information furnished in writing by such
Investor or on such Investor’s behalf expressly for use in any Registration
Statement or Prospectus relating to the Registrable Securities, or any amendment
or supplement thereto, or any preliminary prospectus or free-writing prospectus.
No Investor shall be liable under this Section

 

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3.02 for any Damages in excess of the net proceeds (after giving effect to any
underwriters discounts and commissions) realized by such Investor in the sale of
Registrable Securities of such Investor to which such Damages relate.

 

Section 3.03. Conduct of Indemnification Proceedings. If any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to this 0, such
Person (an “Indemnified Party”) shall promptly notify the Person against whom
such indemnity may be sought (the “Indemnifying Party”) in writing and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Party, and shall assume the
payment of all fees and expenses, provided that the failure of any Indemnified
Party so to notify the Indemnifying Party shall not relieve the Indemnifying
Party of its obligations hereunder except to the extent that the Indemnifying
Party is actually materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (a) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel, (b) in the
reasonable judgment of such Indemnified Party representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them, including one or more defenses or counterclaims that are
different from or in addition to those available to the Indemnifying Party, or
(c) the Indemnifying Party shall have failed to assume the defense within 30
days of notice pursuant to this 0. It is understood that, in connection with any
proceeding or related proceedings in the same jurisdiction, the Indemnifying
Party shall not be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the Indemnified
Parties. The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent, or if there be a final judgment for the plaintiff, the Indemnifying
Party shall indemnify and hold harmless such Indemnified Parties from and
against any loss or liability (to the extent stated above) by reason of such
settlement or judgment. Without the prior written consent of the Indemnified
Party, no Indemnifying Party shall effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Party is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement (A) includes an unconditional release of such
Indemnified Party from all liability arising out of such proceeding, and (B)
does not include any injunctive or other equitable or non-monetary relief
applicable to or affecting such Indemnified Person.

 

Section 3.04. Contribution. If the indemnification provided for in this Article
3 is unavailable to the Indemnified Parties in respect of any Damages, then each
Indemnifying Party, in lieu of indemnifying the Indemnified Parties, shall
contribute to the amount paid or payable by such Indemnified Party, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements or
omissions that resulted in such Damages as well as any other relevant equitable
considerations.

 

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The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Damages shall be deemed to include,
subject to the limitations set forth in this Agreement, any reasonable
attorneys’ or other reasonable fees or expenses incurred by such party in
connection with any proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this 0 was available to such party in accordance with its terms.

 

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this 0 were determined by pro rata allocation or by any other method
of allocation that does not take into account the equitable considerations
referred to in the immediately preceding paragraph. Notwithstanding the
provisions of this 0, no Investor shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the net proceeds actually
received by such Investor from the sale of the Registrable Securities subject to
the proceeding (after giving effect to any underwriters discounts and
commissions) exceeds the amount of any damages that such Investor has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission, except in the case of fraud by such Investor. Each
Investor’s obligation to contribute pursuant to this Section 3.04 is several in
the proportion that the proceeds of the offering received by such Investor bears
to the total proceeds of the offering received by all such Investors and not
joint.

 

No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. The indemnity and
contribution agreements contained in this Article 3 are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.

 

ARTICLE 4
Miscellaneous

 

Section 4.01. Effectiveness of Agreement. The rights and obligations of the
parties under this Agreement shall become effective, if at all, on the date on
which the Company issues to the Investor Common Stock pursuant to either Section
1.2(d)(ii) or Section 1.2(e) of the Purchase Agreement (the “Stock Issuance
Date”).

 

Section 4.02 Binding Effect; Assignability; Benefit. (a) This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective heirs, successors, legal representatives and permitted assigns. Any
Investor that ceases to own beneficially any Registrable Securities and no
longer has the right to receive any Registrable Securities pursuant to the terms
and conditions of the Purchase Agreement shall cease to be bound by the terms

 

13

 

 

hereof (other than (i) the provisions of 0 applicable to such Investor with
respect to any offering of Registrable Securities completed on or before the
date such Investor ceased to own any Registrable Securities, and (ii) this 0).

 

(b)          Neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof shall be assignable by any party
hereto pursuant to any Transfer of Registrable Securities or otherwise, except
that each Investor may assign rights hereunder to any Transferee of such
Investor who executes and deliver to the Company an agreement to be bound by
this Agreement in the form of Exhibit A hereto (a “Joinder Agreement”) and shall
thenceforth be an “Investor”.

 

(c)          Nothing in this Agreement, expressed or implied, is intended to
confer on any Person other than the parties hereto, and their respective heirs,
successors, legal representatives and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.

 

Section 4.03. Notices. All notices, requests and other communications (each, a
“Notice”) to any party shall be in writing and shall be delivered in person,
mailed by certified or registered mail, return receipt requested, or sent by
facsimile transmission,

 

if to the Company to:

 

RCS Capital Corporation
405 Park Avenue, 15th Floor
New York, NY 10022
Attention: James A. Tanaka, General Counsel
Fax: (212) 415-6567

 

14

 

 

with copies to:

 

Duane Morris LLP

30 South 17th Street

Philadelphia, Pennsylvania 19103

Attention: Darrick M. Mix, Esq. and Chad J. Rubin, Esq.

Facsimile: (215) 405-2906

 

and

 

Proskauer Rose LLP
Eleven Times Square
New York, NY 10036

Attention: Peter Fass, Esq. and Steven Lichtenfeld, Esq.
Facsimile: (212) 969-2900

 

if to any Investor, at the address for such Investor listed on the signature
pages below or otherwise provided to the Company as set forth below.

 

Any Notice shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5:00 p.m. in the place of receipt and such day is a
Business Day in the place of receipt. Otherwise, such Notice shall be deemed not
to have been received until the next succeeding Business Day in the place of
receipt. Any Notice sent by facsimile transmission also shall be confirmed by
certified or registered mail, return receipt requested, posted within one
Business Day after the date of the sending of such facsimile transmission, or by
personal delivery, whether courier or otherwise, made within two Business Days
after the date of such facsimile transmission.

 

Any Person that becomes an Investor after the date hereof shall provide its
address and fax number to the Company.

 

Section 4.04. Waiver; Amendment. No provision of this Agreement may be waived
except by an instrument in writing executed by the party against whom the waiver
is to be effective. No provision of this Agreement may be amended or
supplemented other than by an instrument in writing executed by the Company and
the holders of at least 75% of the Registrable Securities held by the parties
hereto at the time of such proposed amendment or modification.

 

Section 4.05. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York, without
regard to the conflicts of laws rules of such state.

 

Section 4.06. Jurisdiction. The parties hereby agree that any suit, action or
proceeding seeking to enforce any provision of, or based on any matter arising
out of or in connection with, this Agreement or the transactions contemplated
hereby shall be brought in any state or federal court in The City of New York,
Borough of Manhattan, so long as one of such courts shall have

 

15

 

 

subject matter jurisdiction over such suit, action or proceeding, and that any
cause of action arising out of this Agreement shall be deemed to have arisen
from a transaction of business in the State of New York, and each of the parties
hereby irrevocably consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
that it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient form. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in 0 shall be deemed effective
service of process on such party.

 

Section 4.07. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

 

Section 4.08. Specific Enforcement. Each party hereto acknowledges that the
remedies at law of the other parties for a breach or threatened breach of this
Agreement would be inadequate and, in recognition of this fact, any party to
this Agreement, without posting any bond or furnishing other security, and in
addition to all other remedies that may be available, shall be entitled to
obtain equitable relief in the form of specific performance, a temporary
restraining order, a temporary or permanent injunction or any other equitable
remedy that may then be available.

 

Section 4.09. Counterparts; Effectiveness. This Agreement may be executed
(including by facsimile transmission) with counterpart signature pages or in any
number of counterparts, each of which shall be deemed to be an original, and all
of which shall, taken together, be considered one and the same agreement, it
being understood that each party need not sign the same counterpart. This
Agreement shall become effective when each party hereto shall have executed and
delivered this Agreement. Until and unless each party has executed and delivered
this Agreement, this Agreement shall have no effect and no party shall have any
right or obligation hereunder (whether by virtue of any other oral or written
agreement or other communication).

 

Section 4.10. Entire Agreement. This Agreement constitutes the entire agreement
and understanding among the parties hereto and supersedes all prior and
contemporaneous agreements and understandings, both oral and written, among the
parties hereto with respect to the subject matter hereof.

 

Section 4.11. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated so long as the
economic or legal substance of the transactions contemplated hereby is

 

16

 

 

not affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner so that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.

 

Section 4.12. Independent Nature of Investors' Obligations and Rights. The
obligations of each Investor hereunder are several and not joint with the
obligations of any other Investor hereunder, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Investor pursuant
hereto or thereto, shall be deemed to constitute the Investors as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement. Each
Investor shall be entitled to protect and enforce its rights, including the
rights arising out of this Agreement, and it shall not be necessary for any
other Investor to be joined as an additional party in any proceeding for such
purpose.

 

Section 4.13. Other Registration Rights. Notwithstanding anything to the
contrary contained in this Agreement, to the extent that any existing
registration rights agreements of the Company so require, the registration
rights of the Investors under this Agreement shall be subordinated to the rights
of the parties to such existing registration rights agreements. From and after
the Stock Issuance Date, the Company shall not enter into any agreement with any
holder or prospective holder of any securities of the Company giving such holder
or prospective holder any registration rights the terms of which have priority
over the registration rights granted to Investors hereunder.

 

[Signature pages follow.]

 

17

 

  

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement or have
caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.

 

  ARC PROPERTIES OPERATING PARTNERSHIP, L.P.       By:       Name:     Title:

 

  RCS CAPITAL CORPORATION       By:       Name:     Title:

 

[Signature Page to Registration Rights Agreement]

 

 

 

  

EXHIBIT A

 

JOINDER TO REGISTRATION RIGHTS AGREEMENT

 

This Joinder Agreement (this “Joinder Agreement”) is made as of the date written
below by the undersigned (the “Joining Party”) in accordance with the
Registration Rights Agreement dated as of [ ], 2014 (as the same may be amended
from time to time, the “Registration Rights Agreement”), among ARC Properties
Operating Partnership, L.P., RCS Capital Corporation and the Investors party
thereto. Capitalized terms used, but not defined, herein shall have the meaning
ascribed to such terms in the Registration Rights Agreement.

 

The Joining Party hereby acknowledges, agrees and confirms that, by its
execution of this Joinder Agreement, the Joining Party shall be deemed to be a
party to the Registration Rights Agreement as of the date hereof as a
“Transferee” of an “Investor” thereto, and shall have all of the rights and
obligations of an “Investor” thereunder as if it had executed the Registration
Rights Agreement. The Joining Party hereby ratifies, as of the date hereof, and
agrees to be bound by, all of the terms, provisions and conditions contained in
the Registration Rights Agreement (including, without limitation, Section 4.02
thereof).

 

IN WITNESS WHEREOF, the undersigned has executed this Joinder Agreement as of
the date written below.

 

Date: ___________ ___, ______

 

  [NAME OF JOINING PARTY]         By:       Name:       Title:              
Address for Notices:              

 

 

 

Exhibit K-1

 

Form of

 

Sub-advisory Agreement

 

between

 

Cole REIT Advisors IV, LLC

 

_______________

 

and

 

[ARCP Sub-advisor]

 

_______________

 

[•] [•], 2014 

 

 

 

  

Table of Contents

 

  Page     Article 1 – Definitions 1     Article 2 – Appointment 2     Article 3
– Duties of the Sub-advisor 3     Article 4 – Authority and Certain Activities
of Sub-advisor 3     Article 5 – Compensation 4           5.1 Acquisition Fees 4
          5.2 Advisory Fees 4           5.3 Disposition Fees 4           5.4
Subordinated Performance Fee 4           5.5 Expense Reimbursements 4        
Article 6 – Allocation of Expense Reimbursements 6           6.1 All Expense
Reimbursements 6           6.2 Quarterly Review of Expenses 6         Article 7
– Advisor’s Responsibilities 6     Article 8 – Relationship of Sub-advisor and
Advisor and their Affiliates; Other Activities of the Advisor and Sub-advisor 6
          8.1 Relationship 6           8.2 Time Commitment 7           8.3
Advisor and Sub-advisor Meetings 7           8.4 Investment Opportunities and
Allocation 7           8.5 Prospectus Guidance 7         Article 9 – Other
Agreements 7     Article 10 – Representations and Warranties 8     Article 11 –
Term and Termination of the Agreement 9           11.1 Term 9           11.2
Termination 9           11.3 Survival upon Termination 10           11.4
Sub-advisor’s Obligations on Termination and Obligations 10         Article 12 –
Assignment 10     Article 13 – Indemnification and Limitation of Liability 11

 

i

 

  

Article 14 – Miscellaneous 11           14.1 Reaffirmation of Advisory Agreement
11           14.2 Notices 11           14.3 Modification 12           14.4
Severability 12           14.5 Construction 12           14.6 Entire Agreement
12           14.7 Waiver 13           14.8 Gender 13           14.9 Titles Not
to Affect Interpretation 13           14.10 Counterparts 13

 

ii

 

  

Sub-advisory Agreement

 

This Sub-advisory Agreement, dated as of [•][•], 2014 (this “Agreement”), is
between, Cole REIT Advisors IV, LLC, a Delaware limited liability company (the
“Advisor”) and [ARCP Sub-advisor] a Delaware limited liability company (the
“Sub-advisor”)(each a “Party” and collectively, the “Parties”).

 

WITNESSETH

 

WHEREAS, Cole Credit Property Trust IV, Inc., a Maryland corporation (the
“Company”) has appointed Advisor as its advisor pursuant to the Advisory
Agreement between the Company and the Advisor, dated as of January 20, 2012, (as
the same may be amended, restated or otherwise modified from time to time in
accordance with its terms, the “Advisory Agreement”);

 

WHEREAS, the Advisor desires to avail itself of the knowledge, experience,
sources of information, advice, assistance and certain facilities available to
the Sub-advisor and to have the Sub-advisor undertake the duties and
responsibilities hereinafter set forth, on behalf of the Advisor, and subject to
the supervision of the Advisor and the Board, all as provided herein; and

 

WHEREAS, the Sub-advisor is willing to undertake such duties and
responsibilities, subject to the supervision of the Advisor and the Board, on
the terms and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the Parties hereto agree as follows:

 

Article 1

 

Definitions

 

Capitalized and other terms that are defined in the Advisory Agreement but not
otherwise defined in this Agreement have the respective meanings ascribed to
such terms in the Advisory Agreement, a copy of which is attached hereto as
Appendix A.

 

The following defined terms used in this Agreement shall have the meanings
specified below:

 

“Advisor” has the meaning set forth in the preamble to this Agreement.

 

“Advisory Agreement” has the meaning set forth in the recitals to this
Agreement.

 

“Affiliate” has the meaning set forth in the Advisory Agreement. For the
avoidance of doubt, none of the Company, the Sub-advisor, any subsidiary of the
Company, any subsidiary of the Sub-advisor and any other Person controlled by,
controlling or under common control with the Sub-advisor shall be an Affiliate
of the Advisor and none of the Company, the Advisor, any subsidiary of the
Company, any

 

1

 

 

subsidiary of the Advisor and any other Person controlled by, controlling or
under common control with the Advisor shall be an Affiliate of the Sub-advisor.

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Company” has the meaning set forth in the recitals to this Agreement.

 

“Investment Allocation Agreement” means that certain investment allocation
agreement, dated the date hereof, among ARC Properties Operating Partnership,
L.P. and the [ARCP Sub-advisors].

 

“Non-Competition Agreement” means that certain non-competition agreement, dated
the date hereof, among ARC Properties Operating Partnership, L.P., RCS Capital
Corporation and certain of ARC Properties Operating Partnership, L.P.’s key
executives.

 

“Notice” has the meaning set forth in Section 14.2 of this Agreement.

 

“Party” has the meaning set forth in the preamble to this Agreement.

 

“Prospectus” means the prospectus dated May 1, 2013, as amended or supplemented
from time to time, filed by the Company pursuant to Rule 424 promulgated under
the Securities Act of 1933, as amended.

 

“Purchase Agreement” means that certain Equity Purchase Agreement, dated as of
September 30, 2014, by and between ARC Properties Operating Partnership, L.P.
and RCS Capital Corporation.

 

“Sub-advisor” has the meaning set forth in the preamble to this Agreement.

 

Article 2

 

Appointment

 

The Advisor, pursuant to its authority to engage a duly qualified and licensed
Person in the performance of its duties under the Advisory Agreement pursuant to
Section 2.02 of the Advisory Agreement, hereby appoints the Sub-advisor to serve
as the Sub-advisor for the Company. The Sub-advisor hereby accepts such
appointment. Subject to the supervision of, the Advisor and the Board, the
Sub-advisor agrees to perform the duties of the Advisor set forth in Sections
2.02(a), (c), (d) (as it relates to the Assets), (e) (as it relates to the
Assets), (f) (as it relates to the Assets), (g), (h), (i), (o), (q) and (s) of
the Advisory Agreement and to assist the Advisor in the performance of the
duties set forth in Section 2.02(l), (m), (p), (r) and (u) of the Advisory
Agreement, all on the terms and subject to the conditions set forth in this
Agreement.

 

2

 

 

Article 3

 

Duties of the Sub-advisor

 

Under the Advisory Agreement, the Advisor is responsible for using its
commercially reasonable best efforts to present to the Company potential
investment opportunities consistent with the investment objectives and policies
of the Company as determined and adopted from time to time by the Board and
managing and supervising the operations and administration of the Company’s
Assets. Consistent with Article 2 hereof and, subject to the Investment
Allocation Agreement, the Sub-advisor undertakes to use commercially reasonable
best efforts to present investment opportunities to the Company consistent with
the investment objectives and policies of the Company as determined and adopted
from time to time by the Board and to manage and supervise the operations and
administration of the Company’s Assets. Subject to the limitations set forth in
this Agreement and the Advisory Agreement, consistent with the provisions of the
Articles of Incorporation and Bylaws and subject to the supervision of the
Advisor and the continuing and exclusive authority of the Board over the
supervision of the Company, the Sub-advisor shall, either directly or by
engaging an Affiliate, perform, and assist the Advisor in the performance of,
the duties under the Advisory Agreement set forth in Article 2 of this
Agreement, which duties are incorporated herein by reference as if fully set
forth herein. In the event that the Sub-advisor engages a third party to perform
the services that the Advisor has engaged Sub-advisor to perform pursuant to
this Agreement, such third party shall be compensated by the Sub-advisor out of
the fees it received pursuant to Article 5 of this Agreement; provided, however
that third-party property management fees payable by tenants of a property,
including amounts payable to affiliates of the Sub-advisor, may be charged to
and paid by such tenant and will not reduce the fees paid to the Sub-advisor.

 

Article 4

 

Authority and Certain Activities of Sub-advisor

 

To the same extent as the Advisor and subject to the supervision of the Advisor
and the Board, the Sub-advisor shall have the authority to enter into contracts
in the name of the Company to the extent set forth in Section 2.02 of the
Advisory Agreement in connection with the performance of its duties under
Article 2, shall have the authority set forth in Section 2.03 of the Advisory
Agreement, shall have the authority to establish and maintain bank accounts as
set forth in Section 2.04 of the Advisory Agreement with respect to the Assets,
shall maintain books and records for the Company with respect to the Assets as
set forth in Section 2.05 of the Advisory Agreement, and shall abide by the
limitations of Section 2.06 of the Advisory Agreement, all of which are
incorporated herein by reference as if fully set forth herein. The Advisor
hereby grants to the Sub-Advisor, to the extent of any proprietary interest the
Advisor or its Affiliates may have in any of the names “Cole” or any derivative
thereof a non-transferable, non-assignable, non-exclusive, royalty-free right
and license to use the name “Cole” or any derivative thereof solely in
connection with providing services hereunder until the expiration or termination
of this Agreement.

 

3

 

 

Article 5

 

Compensation

 

As compensation for the services provided pursuant to this Agreement, the
Advisor shall pay to Sub-advisor, solely out of payments received by Advisor
from the Company under the Advisory Agreement, simultaneously with the payment
by the Company to the Advisor:

 

5.1Acquisition Fees. Acquisition Fees equal to 1.00% of the Contract Purchase
Price of each Asset.

 

5.2Advisory Fees. Advisory Fees calculated according to the following schedule:

 

Average Invested Assets

 

Annualized Fee Rate

      $0 — $2 billion   0.375%       Over $2 billion — $4 billion   0.350%      
Over $4 billion   0.325%

 

The Advisory Fee shall be applied according to the above schedule for each level
of monthly Average Invested Assets, resulting in a blended annualized rate for
fees paid in respect of Average Invested Assets in excess of $2 billion.

 

5.3Disposition Fees. 25% of any Disposition Fees paid to Advisor on the Sale of
a Property.

 

5.4Subordinated Performance Fee. 15% of all Subordinated Performance Fees paid
to the Advisor, in whatever form payable by the Company (i.e., cash, securities
or a promissory note).

 

5.5Expense Reimbursements. Subject to Article 6 of this Agreement and Section
3.04 of the Advisory Agreement, the Advisor shall reimburse Sub-advisor to the
extent the Advisor receives reimbursement from the Company for the following
expenses of the Sub-advisor to the extent they are actually incurred by the
Sub-advisor in connection with the services the Sub-advisor provides pursuant to
this Agreement; provided, however that in each case the reimbursement is
permitted under the Advisory Agreement and Prospectus and such reimbursements
shall be determined consistent with past practice:

 

(A)Acquisition Expenses incurred in connection with the selection and
acquisition of Assets in an amount up to 0.5% of the Contract Purchase Price;

 

(B)The actual cost incurred by the Sub-advisor of goods, services and materials
used by the Company and obtained from Persons not affiliated with the
Sub-advisor,

 

4

 

 

 other than Acquisition Expenses, including property management and leasing
services;

 

(C)Expenses of managing and operating Assets owned by the Company, whether
payable to an Affiliate of the Company or the Sub-advisor, including wages and
salaries and other personnel-related expenses, unless otherwise waived, in whole
or in part, by the Sub-advisor or the Affiliate in its sole discretion, of all
on-site and off-site employees of the Sub-advisor or the Affiliate who are
engaged in the operation, management, maintenance and leasing or access control
of the Asset, or to a non-affiliated Person; and

 

(D)Reimbursement for administrative service expenses of the Sub-advisor,
including all costs and expenses incurred by the Sub-advisor in fulfilling its
duties under the Sub-advisory Agreement, provided, however that the
reimbursement of the Advisor and the Sub-advisor for administrative service
expenses, in each case, shall not be greater than 50% of the amounts permitted
by the Advisory Agreement. Such costs and expenses may include reasonable wages
and salaries and other personnel-related expenses of all employees of the
Sub-advisor or its Affiliates who are engaged in the management, administration
and operations and marketing of the Company and its Assets, with respect to the
Sub-advisor who are engaged in the management, administration and operations of
the Company’s Assets and shall include taxes, insurance and benefits relating to
such employees, and legal, travel and other out-of-pocket expenses which are
directly related to their services provided under this Agreement, provided,
however that the Sub-advisor shall not be reimbursed for salaries and benefits
paid to persons who are executive officers of the Company, nor shall the Company
pay personnel costs in connection with services for which the Advisor or
Sub-advisor receives an Acquisition Fee or Disposition Fee.

 

Notwithstanding anything to the contrary contained in this Article 5:

 

(i)All Acquisition Fees and Acquisition Expenses payable in connection with
those certain Assets separately disclosed in writing prior to the date of the
Purchase Agreement, with respect to which Sub-advisor represents that a purchase
agreement or letter of intent has been executed shall be paid to the Sub-advisor
and the Advisor shall not be entitled to any Acquisition Fees or Acquisition
Expenses with respect to such Assets;

 

(ii)All expenses incurred by the Advisor incurred prior to the date of this
Agreement shall be treated as expenses of the Sub-Advisor for purposes of this
Agreement; and

 

(iii)All expenses incurred by the Sub-advisor under the Interim Sub-advisory
Agreement between the Advisor and a subsidiary of RCS Capital Corporation, shall
be treated as expenses of the Advisor for purposes of this Agreement.

 

5

 

 

Article 6

 

Allocation of Expense Reimbursements

 

6.1All Expense Reimbursements. All expense reimbursements will be apportioned
between the Advisor and Sub-advisor pro rata based on the amount of such expense
reimbursements due each that relate to the period commencing on the later of the
date of this Agreement or the beginning of the applicable quarter to which such
reimbursable expense relates and ending as of the date of the reimbursement;
provided, however that the Sub-advisor shall repay the Advisor its pro rata
share (as so determined) of any Excess Amount that the Advisor is required to
repay the Company pursuant to Section 3.04 of the Advisory Agreement.

 

6.2Quarterly Review of Expenses. Within 45 days of the end of each fiscal
quarter, each Party shall provide the other Party with a detailed description of
such Party’s aggregate Operating Expenses incurred during such fiscal quarter
for the purpose of the Parties’ jointly reviewing such expenses against
applicable caps and limitations set forth in the Advisory Agreement.

 

Article 7

 

Advisor’s Responsibilities

 

The Advisor shall be solely responsible for all services to the Company under
the Advisory Agreement other than the services covered by Article 3 of this
Agreement and shall bear any expenses related thereto required to be borne by
the Advisor or its Affiliates and shall be entitled to reimbursement for all
expenses related thereto, to the extent permitted under the Advisory Agreement
and the Prospectus. The Sub-advisor shall have no responsibility or obligation
in connection with providing such services to the Company or any expenses
related thereto.

 

Article 8

 

Relationship of Sub-advisor and Advisor and their Affiliates;
Other Activities of the Advisor and Sub-advisor

 

8.1Relationship. The Advisor and the Sub-advisor are not partners or joint
venturers with each other, and nothing in this Agreement shall be construed to
make them such partners or joint venturers. Nothing herein contained shall
prevent the Advisor or Sub-advisor from engaging in or earning fees from other
activities, including, without limitation, the rendering of advice to other
Persons (including other REITs) and the management of other programs advised,
sponsored or organized by the Advisor or Sub-advisor, respectively, or any of
their Affiliates. Nor shall this Agreement limit or restrict the right of any
manager, director, officer, member, partner, employee or equityholder of the
Advisor or Sub-advisor or their Affiliates to engage in or earn fees from any
other business or to render services of any kind to any other Person. Each of
the Advisor and the Sub-advisor shall promptly disclose to the Board the
existence of any condition or

 

6

 

 

 circumstance, existing or anticipated, of which it has knowledge, that creates
or which would reasonably result in a conflict of interest between its
obligations to the Company and its obligations to or its interest in any other
Persons. Nothing in this Section 8.1 shall derogate any restrictions imposed
indirectly on the Sub-advisor as set forth in the Non-Competition Agreement.

 

8.2Time Commitment. The Sub-advisor shall, and shall cause its Affiliates and
their respective employees, officers and agents to, devote to the Company such
time as shall be reasonably necessary to conduct the business and affairs of the
Company in an appropriate manner consistent with the terms of this Agreement.
Each Party acknowledges that the other Party and its Affiliates and their
respective employees, officers and agents may also engage in activities
unrelated to the Company and may provide services to Persons other than the
Company or any of its Affiliates.

 

8.3Advisor and Sub-advisor Meetings. The Parties shall meet on a regular basis
(frequency to be determined) to discuss and consult with one another regarding
the Company and its assets and opportunities. The Parties will provide each
other information regarding the operations and acquisitions of the Company as
reasonably requested by the other. Each of Advisor and Sub-advisor shall have
direct access to the books and records of the Company and of each attorney,
accountant, servicer and other contracting party of the Company (except to the
extent such attorney represents either Party with respect to this Agreement).

 

8.4Investment Opportunities and Allocation. Subject to Article 3 of this
Agreement, Sub-advisor’s obligations with respect to offering investment
opportunities to the Company shall be governed by the Investment Allocation
Agreement, which cannot be amended or modified without the written consent of
the Advisor.

 

8.5Prospectus Guidance. Each of the Advisor and Sub-advisor has read and will
abide by the Prospectus with respect to the Company’s investment objectives,
targeted assets and investment restrictions, targeted markets, leverage,
distribution policy, and investor profile except to the extent directed by the
Board.

 

Article 9

 

Other Agreements

 

9.1The Advisor shall not agree to an amendment to the Advisory Agreement or
waive any provision thereof, to the extent that such amendment or waiver would
directly or indirectly reduce the amount payable to the Sub-advisor pursuant to
Article 5 of this Agreement or adversely impact the Sub-advisor’s right to
indemnification under Article 13 of this Agreement without the prior written
consent of the Sub-advisor.

 

9.2The Sub-advisor shall use its commercially reasonable efforts to cooperate
with the Advisor to provide an orderly transfer and transition of services upon
the expiration or earlier termination of this Agreement and shall provide any
and all documents, reports and materials belonging or related to the services
provided to the Advisor hereunder,

  

7

 

 

  including any and all other documents, reports and materials otherwise
belonging or related to the Advisor or the Company. Furthermore, the Sub-advisor
will, whenever and as reasonably requested, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered any documents that may be
necessary to transition efficiently any services covered under this Agreement.

 

9.3The Advisor shall have the right, but not the obligation, upon request and
during normal business hours, to meet with key personnel and/or other executive
level employees of the Sub-advisor on an ongoing and regular basis to provide
feedback and input regarding the performance of the Sub-advisor’s services
hereunder

 

9.4The Sub-advisor shall maintain appropriate records of all its activities
hereunder and shall, at the Advisor’s election, provide copies of such records
to the Company or make such records available for inspection and duplication by
the Company, its counsel, auditors and authorized agents, upon notice from the
Advisor.

 

9.5The Sub-advisor will utilize the Advisor’s accounting system in connection
with performing such duties, or a system mutually agreed to between Advisor and
Sub-advisor.

 

Article 10

 

Representations and Warranties

 

10.1The Advisor and the Sub-advisor each hereby represents and warrants to, and
agrees with, the other as follows:

 

(A)Such Party is duly formed and validly existing under the laws of the
jurisdiction of its organization;

 

(B)Such Party has full power and authority to enter into this Agreement and to
conduct its business to the extent contemplated in this Agreement;

 

(C)This Agreement has been duly authorized, executed and delivered by such Party
and constitutes the valid and legally binding agreement of such Party,
enforceable in accordance with its terms against such Party, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium and other
similar laws relating to creditors’ rights generally, and by general equitable
principles;

 

(D)The execution and delivery of this Agreement by such Party and the
performance of its duties and obligations hereunder do not result in a breach of
any of the terms, conditions or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, credit agreement, note or other evidence
of indebtedness, or any lease or other agreement, or any license, permit,
franchise or certificate to which such Party is a party or by which it is bound
or to which its properties are subject or require any authorization or approval
under or pursuant to any of the

 

8

 

 

  foregoing, or violate any statute, regulation, law, order, writ, injunction,
judgment or decree to which such Party is subject;

 

(E)To the knowledge of such Party, no consent, approval or authorization of, or
filing, registration or qualification with, any court or governmental authority
on the part of such Party is required for the execution and delivery of this
Agreement by such Party and the performance of its obligations and duties
hereunder and such execution, delivery and performance shall not violate any
other agreement to which such Party is bound; and

 

(F)Such Party is duly qualified and licensed to do and perform all acts and
receive all fees as contemplated by this Agreement and the Advisory Agreement.

 

Article 11

 

Term and Termination of the Agreement

 

11.1Term. This Agreement shall have an initial term ending January 20, 2015 and
shall be automatically renewed for an unlimited number of successive one-year
terms upon renewal of the Advisory Agreement. This Agreement shall be
co-terminus with the Advisory Agreement.

 

11.2Termination. Subject to last sentence of Section 11.1:

 

(A)This Agreement may be terminated by the Advisor, if the Sub-advisor
materially breaches this Agreement; provided, however, that the Sub-advisor
shall have 30 calendar days after the receipt of notice of such breach from the
Advisor to cure such breach or, if such material breach is not of a nature that
can be remedied within such period, the Sub-advisor does not diligently take all
reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(B)This Agreement may be terminated by the Advisor, as a result of any fraud,
criminal conduct, gross negligence or willful misconduct by Sub-advisor or any
Affiliate thereof in the performance of their respective duties hereunder;
provided, however, that the Sub-advisor does not cure any such act within 30
calendar days after the receipt of notice of such act (or at such later time as
may be stated in the notice) from the Advisor;

 

(C)This Agreement may be terminated by the Sub-advisor, if the Advisor
materially breaches this Agreement; provided, however, that the Advisor shall
have 30 calendar days after the receipt of notice of such breach from the
Sub-advisor to cure such breach or, if such material breach is not of a nature
that can be remedied within such period, the Advisor does not diligently take
all reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(D)This Agreement may be terminated by the Sub-advisor, as a result of any
fraud, criminal conduct, gross negligence or willful misconduct by the Advisor
or any

 

9

 

 

Affiliate thereof in the performance of their respective duties hereunder or
under the Advisory Agreement; provided, however, that the Advisor does not cure
any such act within 30 calendar days after the receipt of notice of such act (or
at such later time as may be stated in the notice) from the Sub-advisor;

 

(E)This Agreement may be terminated by either Party, if the other Party (1)
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (2) consents to the entry of an order
for relief in an involuntary case under any such law, (3) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) for the other Party or
for any substantial part of its property, or (4) makes any general assignment
for the benefit of creditors under applicable state law; or

 

(F)This Agreement may be terminated by either Party, if: (1) an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect has been commenced against the other Party, and such case
has not been dismissed within 60 days after the commencement thereof; or (2) a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) has been appointed for the other Party or has taken possession of the
other Party or any substantial part of its property, and such appointment has
not been rescinded or such possession has not been relinquished within 60 days
after the occurrence thereof.

 

11.3Survival upon Termination. Notwithstanding anything else that may be to the
contrary herein, the expiration or earlier termination of this Agreement shall
not relieve a party for liability for any breach occurring prior to such
expiration or earlier termination. The provisions of Articles 1, 5, 6, 9, 11, 13
and 14 shall survive termination of this Agreement.

 

11.4Sub-advisor’s Obligations on Termination and Obligations. After termination
of this Agreement, the Sub-advisor shall have the responsibilities to the same
extent as the Advisor as set forth in Section 4.03 of the Advisory Agreement.

 

Article 12

 

Assignment

 

This Agreement shall not be assigned by the Sub-advisor, except that this
Agreement may be assigned by the Sub-advisor to an Affiliate of the Sub-advisor
with the consent of the Advisor, such consent not to be unreasonably withheld,
conditioned or delayed. This Agreement shall not be assigned by the Advisor
without the consent of the Sub-advisor; provided, however, this Agreement may be
assigned without the consent of the Sub-advisor to a permitted assignee of the
Advisor under the Advisory Agreement in connection with such a permitted
assignment of the Advisory Agreement by the Advisor.

 

10

 

 

Article 13

 

Indemnification and Limitation of Liability

 

The Advisor shall indemnify and hold harmless the Sub-advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Sub-advisor becomes subject to or
liable (1) that are related to or a result of the performance of, or failure to
perform, services by the Advisor which are required to be performed by it under
this Agreement or under the Advisory Agreement or (2) by reason of actions or
inactions of the Advisor (except in each case to the extent that such
performance or failure to perform or action or inaction results from any
performance or failure to perform services by Sub-advisor under this Agreement).

 

The Sub-advisor shall indemnify and hold harmless the Advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Advisor becomes subject to or liable,
including as a result of claims asserted against it for breach of or
indemnification under the Advisory Agreement, (1) that are related to or a
result of the performance of, or failure to perform, services by Sub-advisor
under this Agreement or (2) by reason of actions or inactions of the Sub-advisor
or its Affiliates or the Advisor is required to indemnify the Company under
Section 5.02 of the Advisory Agreement as a result of any action or inaction by
Sub-advisor under this Agreement.

 

Article 14

 

Miscellaneous

 

14.1Reaffirmation of Advisory Agreement. Sub-advisor shall use, and shall cause
its Affiliates to use, commercially reasonable best efforts to assist Advisor in
obtaining the reaffirmation or renewal by the Company, or causing the
reaffirmation or renewal by the Company, of the Advisory Agreement.

 

14.2Notices. Any notice, request, demand, approval, consent, waiver or other
communication required or permitted to be given hereunder or to be served upon
any of the Parties hereto (each a “Notice”) shall be in writing and shall be (a)
delivered in person, (b) sent by facsimile transmission (with the original
thereof also contemporaneously given by another method specified in this Section
14.2), (c) sent by a nationally-recognized overnight courier service, or (d)
sent by certified or registered mail (postage prepaid, return receipt
requested), to the address of such Party set forth herein.

 
To the Advisor: 

Cole REIT Advisors V, LLC

2555 E. Camelback Road, Suite 400

 

11

 

 

Phoenix, Arizona 85016
Attention: President

 

with a copy to (which shall not constitute Notice):

 

Duane Morris LLP
30 South 17th Street
Philadelphia, Pennsylvania 19103
Attention: Darrick M. Mix, Esq. and Chad J. Rubin, Esq.
Facsimile: (215) 405-2906 

To the Sub-advisor:

[ARCP Sub-advisor]
405 Park Avenue, 15th Floor
New York, New York 10022
Attention: Richard Silfen

 

with a copy to (which shall not constitute Notice):

 

Weil, Gotshal and Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Michael Aiello, Esq. and Matthew Gilroy, Esq.

Facsimile: (212) 310-8007

 

Either Party may at any time give Notice in writing to the other Party of a
change in its address for the purposes of this Section 14.2. Each Notice shall
be deemed given and effective upon receipt (or refusal of receipt).

 

14.3Modification. This Agreement shall not be amended, supplemented, changed,
modified, terminated or discharged, in whole or in part, except by an instrument
in writing signed by both Parties hereto, or their respective successors or
permitted assigns.

 

14.4Severability. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

 

14.5Construction. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect, without regard to the principles of conflicts of laws thereof.

 

14.6Entire Agreement. This Agreement contains the entire agreement and
understanding between the Parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject

 

12

 

 

 matter hereof. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms hereof.
In all events, nothing contained herein shall be read, construed, interpreted or
applied in any manner that prevents or hinders the Company from qualifying as a
real estate investment trust under Section 856(c) of the Code.

 

14.7Waiver. Neither the failure nor any delay on the part of a Party to exercise
any right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or privilege preclude any other or further exercise of the same or of any
other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed
by the Party asserted to have granted such waiver.

 

14.8Gender. Words used herein regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
requires.

 

14.9Titles Not to Affect Interpretation. The titles of Articles and Sections
contained in this Agreement are for convenience only, and they neither form a
part of this Agreement nor are they to be used in the construction or
interpretation hereof.

 

14.10Counterparts. This Agreement may be executed with counterpart signature
pages or in any number of counterparts, each of which shall be deemed to be an
original as against any Party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterpart signature pages or counterparts
hereof, individually or taken together, shall bear the signatures of all of the
Parties reflected hereon as the signatories.

 

[The remainder of this page is intentionally left blank.

Signature page follows.]

 

13

 

  

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date and year first above written.

 

  Cole REIT Advisors IV, LLC       By:     Name:         [ARCP Sub-advisor]    
  By:     Name:

  

Signature Page to Sub-advisory Agreement between Cole REIT Advisors IV, LLC and
[Name of ARCP Sub-advisor]

 

 

 

 

Exhibit K-2

 

Form of

 

Sub-advisory Agreement

 

between

 

Cole REIT Advisors V, LLC

 

_______________

 

and

 

[ARCP Sub-advisor]

 

_______________

 

[•] [•], 2014 

 

 

 

 

Table of Contents

 

    Page       Article 1 – Definitions 1     Article 2 – Appointment 2    
Article 3 – Duties of the Sub-advisor 3     Article 4 – Authority and Certain
Activities of Sub-advisor 3     Article 5 – Compensation 4       5.1 Acquisition
Fees 4       5.2 Advisory Fees 4       5.3 Disposition Fees 4       5.4
Subordinated Performance Fee 4       5.5 Expense Reimbursements 4       Article
6 – Allocation of Expense Reimbursements 6       6.1 O&O Expense Reimbursements
6       6.2 All Other Expense Reimbursements 6       6.3 Quarterly Review of
Expenses 6       Article 7 – Advisor’s Responsibilities 7     Article 8 –
Relationship of Sub-advisor and Advisor and their Affiliates; Other Activities
of the Advisor and Sub-advisor 7       8.1 Relationship 7       8.2 Time
Commitment 7       8.3 Advisor and Sub-advisor Meetings 7       8.4 Investment
Opportunities and Allocation 8       8.5 Prospectus Guidance 8       Article 9 –
Other Agreements 8     Article 10 – Representations and Warranties 9     Article
11 – Term and Termination of the Agreement 9       11.1 Term 9       11.2
Termination 10       11.3 Survival upon Termination 11       11.4 Sub-advisor’s
Obligations on Termination and Obligations 11       Article 12 – Assignment 11

 

i

 

  

Article 13 – Indemnification and Limitation of Liability 11     Article 14 –
Miscellaneous 12       14.1 Reaffirmation of Advisory Agreement 12       14.2
Notices 12       14.3 Modification 13       14.4 Severability 13       14.5
Construction 13       14.6 Entire Agreement 13       14.7 Waiver 13       14.8
Gender 13       14.9 Titles Not to Affect Interpretation 14       14.10
Counterparts 14

  

ii

 

 

Sub-advisory Agreement

 

This Sub-advisory Agreement, dated as of [•], 2014 (this “Agreement”), is
between, Cole REIT AdvisorS V, LLC, a Delaware limited liability company (the
“Advisor”) and [ARCP Sub-advisor] a Delaware limited liability company (the
“Sub-advisor”)(each a “Party” and collectively, the “Parties”).

 

WITNESSETH

 

WHEREAS, Cole Credit Property Trust V, Inc., a Maryland corporation (the
“Company”) has appointed Advisor as its advisor pursuant to the Advisory
Agreement between the Company and the Advisor, dated as of March 17, 2014 (as
the same may be amended, restated or otherwise modified from time to time in
accordance with its terms, the “Advisory Agreement”);

 

WHEREAS, the Advisor desires to avail itself of the knowledge, experience,
sources of information, advice, assistance and certain facilities available to
the Sub-advisor and to have the Sub-advisor undertake the duties and
responsibilities hereinafter set forth, on behalf of the Advisor, and subject to
the supervision of the Advisor and the Board, all as provided herein; and

 

WHEREAS, the Sub-advisor is willing to undertake such duties and
responsibilities, subject to the supervision of the Advisor and the Board, on
the terms and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the Parties hereto agree as follows:

 

Article 1

 

Definitions

 

Capitalized and other terms that are defined in the Advisory Agreement but not
otherwise defined in this Agreement have the respective meanings ascribed to
such terms in the Advisory Agreement, a copy of which is attached hereto as
Appendix A.

 

The following defined terms used in this Agreement shall have the meanings
specified below:

 

“Advisor” has the meaning set forth in the preamble to this Agreement.

 

“Advisory Agreement” has the meaning set forth in the recitals to this
Agreement.

 

“Affiliate” has the meaning set forth in the Advisory Agreement. For the
avoidance of doubt, none of the Company, the Sub-advisor, any subsidiary of the
Company, any subsidiary of the Sub-advisor and any other Person controlled by,
controlling or under common control with the Sub-advisor shall be an Affiliate
of the Advisor and none of the Company, the Advisor, any

 

1

 

  

subsidiary of the Company, any subsidiary of the Advisor and any other Person
controlled by, controlling or under common control with the Advisor shall be an
Affiliate of the Sub-advisor.

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Company” has the meaning set forth in the recitals to this Agreement.

 

“Investment Allocation Agreement” means that certain investment allocation
agreement, dated the date hereof, among ARC Properties Operating Partnership,
L.P. and the [ARCP Sub-advisors].

 

“Non-Competition Agreement” means that certain non-competition agreement, dated
the date hereof, among ARC Properties Operating Partnership, L.P., RCS Capital
Corporation and certain of ARC Properties Operating Partnership, L.P.’s key
executives.

 

“Notice” has the meaning set forth in Section 14.2 of this Agreement.

 

“Party” has the meaning set forth in the preamble to this Agreement.

 

“Prospectus” means the prospectus dated March 17, 2014, as amended or
supplemented from time to time, filed by the Company pursuant to Rule 424
promulgated under the Securities Act of 1933, as amended.

 

“Purchase Agreement” means that certain Equity Purchase Agreement, dated as of
September 30, 2014, by and between ARC Properties Operating Partnership, L.P.
and RCS Capital Corporation.

 

“Sub-advisor” has the meaning set forth in the preamble to this Agreement.

 

Article 2

 

Appointment

 

The Advisor, pursuant to its authority to engage a duly qualified and licensed
Person in the performance of its duties under the Advisory Agreement pursuant to
Section 2.02 of the Advisory Agreement, hereby appoints the Sub-advisor to serve
as the Sub-advisor for the Company. The Sub-advisor hereby accepts such
appointment. Subject to the supervision of, the Advisor and the Board, the
Sub-advisor agrees to perform the duties of the Advisor set forth in Sections
2.02(a), (c), (d) (as it relates to the Assets), (e) (as it relates to the
Assets), (f) (as it relates to the Assets), (g), (h), (i), (o), (q) and (s) of
the Advisory Agreement and to assist the Advisor in the performance of the
duties set forth in Section 2.02(l), (m), (p), (r), (u) and (v) of the Advisory
Agreement, all on the terms and subject to the conditions set forth in this
Agreement.

 

2

 

  

Article 3

 

Duties of the Sub-advisor

 

Under the Advisory Agreement, the Advisor is responsible for using its
commercially reasonable best efforts to present to the Company potential
investment opportunities consistent with the investment objectives and policies
of the Company as determined and adopted from time to time by the Board and
managing and supervising the operations and administration of the Company’s
Assets. Consistent with Article 2 hereof and, subject to the Investment
Allocation Agreement, the Sub-advisor undertakes to use commercially reasonable
best efforts to present investment opportunities to the Company consistent with
the investment objectives and policies of the Company as determined and adopted
from time to time by the Board and to manage and supervise the operations and
administration of the Company’s Assets. Subject to the limitations set forth in
this Agreement and the Advisory Agreement, consistent with the provisions of the
Articles of Incorporation and Bylaws and subject to the supervision of the
Advisor and the continuing and exclusive authority of the Board over the
supervision of the Company, the Sub-advisor shall, either directly or by
engaging an Affiliate, perform, and assist the Advisor in the performance of,
the duties under the Advisory Agreement set forth in Article 2 of this
Agreement, which duties are incorporated herein by reference as if fully set
forth herein. In the event that the Sub-advisor engages a third party to perform
the services that the Advisor has engaged Sub-advisor to perform pursuant to
this Agreement, such third party shall be compensated by the Sub-advisor out of
the fees it received pursuant to Article 5 of this Agreement; provided, however
that third-party property management fees payable by tenants of a property,
including amounts payable to affiliates of the Sub-advisor, may be charged to
and paid by such tenant and will not reduce the fees paid to the Sub-advisor.

 

Article 4

 

Authority and Certain Activities of Sub-advisor

 

To the same extent as the Advisor and subject to the supervision of the Advisor
and the Board, the Sub-advisor shall have the authority to enter into contracts
in the name of the Company to the extent set forth in Section 2.02 of the
Advisory Agreement in connection with the performance of its duties under
Article 2, shall have the authority set forth in Section 2.03 of the Advisory
Agreement, shall have the authority to establish and maintain bank accounts as
set forth in Section 2.04 of the Advisory Agreement with respect to the Assets,
shall maintain books and records for the Company with respect to the Assets as
set forth in Section 2.05 of the Advisory Agreement, and shall abide by the
limitations of Section 2.06 of the Advisory Agreement, all of which are
incorporated herein by reference as if fully set forth herein. The Advisor
hereby grants to the Sub-Advisor, to the extent of any proprietary interest the
Advisor or its Affiliates may have in any of the names “Cole” or any derivative
thereof a non-transferable, non-assignable, non-exclusive, royalty-free right
and license to use the name “Cole” or any derivative thereof solely in
connection with providing services hereunder until the expiration or termination
of this Agreement.

 

3

 

 

Article 5

 

Compensation

 

As compensation for the services provided pursuant to this Agreement, the
Advisor shall pay to Sub-advisor, solely out of payments received by Advisor
from the Company under the Advisory Agreement, simultaneously with the payment
by the Company to the Advisor:

 

5.1Acquisition Fees. Acquisition Fees equal to 1.00% of the Contract Purchase
Price of each Asset.

 

5.2Advisory Fees. Advisory Fees calculated according to the following schedule:

 

Average Invested Assets  Annualized Fee Rate        $0 — $2 billion   0.375%   
    Over $2 billion — $4 billion   0.350%        Over $4 billion   0.325%

 

The Advisory Fee shall be applied according to the above schedule for each level
of monthly Average Invested Assets, resulting in a blended annualized rate for
fees paid in respect of Average Invested Assets in excess of $2 billion.

 

5.3Disposition Fees. 25% of any Disposition Fees paid to Advisor on the Sale of
a Property.

 

5.4Subordinated Performance Fee. 15% of all Subordinated Performance Fees paid
to the Advisor, in whatever form payable by the Company (i.e., cash, securities
or a promissory note).

 

5.5Expense Reimbursements. Subject to Article 6 of this Agreement and Section
3.04 of the Advisory Agreement, the Advisor shall reimburse Sub-advisor to the
extent the Advisor receives reimbursement from the Company for the following
expenses of the Sub-advisor to the extent they are actually incurred by the
Sub-advisor in connection with the services the Sub-advisor provides pursuant to
this Agreement; provided, however that in each case the reimbursement is
permitted under the Advisory Agreement and Prospectus and such reimbursements
shall be determined consistent with past practice:

 

(A)Acquisition Expenses (excluding Insourced Acquisition Expenses) incurred in
connection with the selection and acquisition of Assets in an amount up to 0.5%
of the Contract Purchase Price and Insourced Acquisition Expenses, subject to
the limitations set forth in Section 3.01(e) of the Advisory Agreement;

 

4

 

  

(B)The actual cost incurred by the Sub-advisor of goods, services and materials
used by the Company and obtained from Persons not affiliated with the
Sub-advisor, other than Acquisition Expenses, including property management and
leasing services;

 

(C)Expenses of managing and operating Assets owned by the Company, whether
payable to an Affiliate of the Company or the Sub-advisor, including wages and
salaries and other personnel-related expenses, unless otherwise waived, in whole
or in part, by the Sub-advisor or the Affiliate in its sole discretion, of all
on-site and off-site employees of the Sub-advisor or the Affiliate who are
engaged in the operation, management, maintenance and leasing or access control
of the Asset, or to a non-affiliated Person;

 

(D)Reimbursement for administrative service expenses of the Sub-advisor,
including all costs and expenses incurred by the Sub-advisor in fulfilling its
duties under the Sub-advisory Agreement, provided, however that the
reimbursement of the Advisor and the Sub-advisor for administrative service
expenses, in each case, shall not be greater than 50% of the amounts permitted
by the Advisory Agreement. Such costs and expenses may include reasonable wages
and salaries and other personnel-related expenses of all employees of the
Sub-advisor or its Affiliates who are engaged in the management, administration
and operations and marketing of the Company and its Assets, with respect to the
Sub-advisor who are engaged in the management, administration and operations of
the Company’s Assets and shall include taxes, insurance and benefits relating to
such employees, and legal, travel and other out-of-pocket expenses which are
directly related to their services provided under this Agreement, provided,
however that the Sub-advisor shall not be reimbursed for salaries and benefits
paid to persons who are executive officers of the Company, nor shall the Company
pay personnel costs in connection with services for which the Advisor or
Sub-advisor receives an Acquisition Fee or Disposition Fee; and

 

(E)To the extent that the Sub-advisor or its Affiliates are requested and
authorized in writing to provide any services in connection with the formation
of the Company and the qualification and registration of an Offering, and the
marketing and distribution of Shares, the Sub-advisor shall, subject to Section
6.1, be entitled to reimbursement out of reimbursements paid by the Company to
the Advisor for Organization and Offering Expenses.

 

Notwithstanding anything to the contrary contained in this Article 5:

 

(i)All Acquisition Fees and Acquisition Expenses payable in connection with
those certain Assets separately disclosed in writing prior to the date of the
Purchase Agreement, with respect to which Sub-advisor represents that a purchase
agreement or letter of intent has been executed shall be paid to the Sub-advisor
and the Advisor shall not be entitled to any Acquisition Fees or Acquisition
Expenses with respect to such Assets;

 

5

 

  

(ii)All expenses incurred by the Advisor incurred prior to the date of this
Agreement shall be treated as expenses of the Sub-Advisor for purposes of this
Agreement; and

 

(iii)All expenses incurred by the Sub-advisor under the Interim Sub-advisory
Agreement between the Advisor and a subsidiary of RCS Capital Corporation, shall
be treated as expenses of the Advisor for purposes of this Agreement.

 

Article 6

 

Allocation of Expense Reimbursements

 

6.1O&O Expense Reimbursements. All Organization and Offering Expense
reimbursements received from the Company, to the extent that they are less than
the full amount of Organization and Offering Expense reimbursements due to the
Advisor and the Sub-advisor, will be apportioned between the Advisor and
Sub-advisor pro rata based on the amount of such Organization and Offering
Expenses reimbursements due each that relate to the period commencing on the
date of this Agreement and ending as of the date of the reimbursement; provided,
however that within 50 days after the end of the month in which the Offering
terminates, the Sub-advisor shall reimburse the Advisor the Sub-advisor’s pro
rata share of reimbursements to the Company by the Advisor (based on its pro
rata share of reimbursements received from the Company as so determined)
pursuant to Section 3.02(a) of the Advisory Agreement for Organization and
Offering Expenses reimbursed by the Company to the extent that such
reimbursements by the Company exceed 2.0% of the Gross Proceeds raised in the
completed Offering.

 

6.2All Other Expense Reimbursements. All expense reimbursements will be
apportioned between the Advisor and Sub-advisor pro rata based on the amount of
such expense reimbursements due each that relate to the period commencing on the
later of the date of this Agreement or the beginning of the applicable quarter
to which such reimbursable expense relates and ending as of the date of the
reimbursement; provided, however that the Sub-advisor shall repay the Advisor
its pro rata share (as so determined) of any Excess Amount that the Advisor is
required to repay the Company pursuant to Section 3.04 of the Advisory
Agreement.

 

6.3Quarterly Review of Expenses. Within 45 days of the end of each fiscal
quarter, each Party shall provide the other Party with a detailed description of
such Party’s aggregate Organization and Offering Expenses and aggregate
Operating Expenses incurred during such fiscal quarter for the purpose of the
Parties’ jointly reviewing such expenses against applicable caps and limitations
set forth in the Advisory Agreement.

 

6

 

  

Article 7

 

Advisor’s Responsibilities

 

The Advisor shall be solely responsible for all services to the Company under
the Advisory Agreement other than the services covered by Article 3 of this
Agreement and shall bear any expenses related thereto required to be borne by
the Advisor or its Affiliates and shall be entitled to reimbursement for all
expenses related thereto, to the extent permitted under the Advisory Agreement
and the Prospectus. The Sub-advisor shall have no responsibility or obligation
in connection with providing such services to the Company or any expenses
related thereto.

 

Article 8

 

Relationship of Sub-advisor and Advisor and their Affiliates;

Other Activities of the Advisor and Sub-advisor

 

8.1Relationship. The Advisor and the Sub-advisor are not partners or joint
venturers with each other, and nothing in this Agreement shall be construed to
make them such partners or joint venturers. Nothing herein contained shall
prevent the Advisor or Sub-advisor from engaging in or earning fees from other
activities, including, without limitation, the rendering of advice to other
Persons (including other REITs) and the management of other programs advised,
sponsored or organized by the Advisor or Sub-advisor, respectively, or any of
their Affiliates. Nor shall this Agreement limit or restrict the right of any
manager, director, officer, member, partner, employee or equityholder of the
Advisor or Sub-advisor or their Affiliates to engage in or earn fees from any
other business or to render services of any kind to any other Person. Each of
the Advisor and the Sub-advisor shall promptly disclose to the Board the
existence of any condition or circumstance, existing or anticipated, of which it
has knowledge, that creates or which would reasonably result in a conflict of
interest between its obligations to the Company and its obligations to or its
interest in any other Persons. Nothing in this Section 8.1 shall derogate any
restrictions imposed indirectly on the Sub-advisor as set forth in the
Non-Competition Agreement.

 

8.2Time Commitment. The Sub-advisor shall, and shall cause its Affiliates and
their respective employees, officers and agents to, devote to the Company such
time as shall be reasonably necessary to conduct the business and affairs of the
Company in an appropriate manner consistent with the terms of this Agreement.
Each Party acknowledges that the other Party and its Affiliates and their
respective employees, officers and agents may also engage in activities
unrelated to the Company and may provide services to Persons other than the
Company or any of its Affiliates.

 

8.3Advisor and Sub-advisor Meetings. The Parties shall meet on a regular basis
(frequency to be determined) to discuss and consult with one another regarding
the Company and its assets and opportunities. The Parties will provide each
other information regarding the operations and acquisitions of the Company as
reasonably requested by the other. Each of Advisor and Sub-advisor shall have
direct access to the

 

7

 

  

books and records of the Company and of each attorney, accountant, servicer and
other contracting party of the Company (except to the extent such attorney
represents either Party with respect to this Agreement).

 

8.4Investment Opportunities and Allocation. Subject to Article 3 of this
Agreement, Sub-advisor’s obligations with respect to offering investment
opportunities to the Company shall be governed by the Investment Allocation
Agreement, which cannot be amended or modified without the written consent of
the Advisor.

 

8.5Prospectus Guidance. Each of the Advisor and Sub-advisor has read and will
abide by the Prospectus with respect to the Company’s investment objectives,
targeted assets and investment restrictions, targeted markets, leverage,
distribution policy, and investor profile except to the extent directed by the
Board.

 

Article 9

 

Other Agreements

 

9.1The Advisor shall not agree to an amendment to the Advisory Agreement or
waive any provision thereof, to the extent that such amendment or waiver would
directly or indirectly reduce the amount payable to the Sub-advisor pursuant to
Article 5 of this Agreement or adversely impact the Sub-advisor’s right to
indemnification under Article 13 of this Agreement without the prior written
consent of the Sub-advisor.

 

9.2The Sub-advisor shall use its commercially reasonable efforts to cooperate
with the Advisor to provide an orderly transfer and transition of services upon
the expiration or earlier termination of this Agreement and shall provide any
and all documents, reports and materials belonging or related to the services
provided to the Advisor hereunder, including any and all other documents,
reports and materials otherwise belonging or related to the Advisor or the
Company. Furthermore, the Sub-advisor will, whenever and as reasonably
requested, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered any documents that may be necessary to transition
efficiently any services covered under this Agreement.

 

9.3The Advisor shall have the right, but not the obligation, upon request and
during normal business hours, to meet with key personnel and/or other executive
level employees of the Sub-advisor on an ongoing and regular basis to provide
feedback and input regarding the performance of the Sub-advisor’s services
hereunder

 

9.4The Sub-advisor shall maintain appropriate records of all its activities
hereunder and shall, at the Advisor’s election, provide copies of such records
to the Company or make such records available for inspection and duplication by
the Company, its counsel, auditors and authorized agents, upon notice from the
Advisor.

 

9.5The Sub-advisor will utilize the Advisor’s accounting system in connection
with performing such duties, or a system mutually agreed to between Advisor and
Sub-advisor.

 

8

 

  

Article 10

 

Representations and Warranties

 

10.1The Advisor and the Sub-advisor each hereby represents and warrants to, and
agrees with, the other as follows:

 

(A)Such Party is duly formed and validly existing under the laws of the
jurisdiction of its organization;

 

(B)Such Party has full power and authority to enter into this Agreement and to
conduct its business to the extent contemplated in this Agreement;

 

(C)This Agreement has been duly authorized, executed and delivered by such Party
and constitutes the valid and legally binding agreement of such Party,
enforceable in accordance with its terms against such Party, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium and other
similar laws relating to creditors’ rights generally, and by general equitable
principles;

 

(D)The execution and delivery of this Agreement by such Party and the
performance of its duties and obligations hereunder do not result in a breach of
any of the terms, conditions or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, credit agreement, note or other evidence
of indebtedness, or any lease or other agreement, or any license, permit,
franchise or certificate to which such Party is a party or by which it is bound
or to which its properties are subject or require any authorization or approval
under or pursuant to any of the foregoing, or violate any statute, regulation,
law, order, writ, injunction, judgment or decree to which such Party is subject;

 

(E)To the knowledge of such Party, no consent, approval or authorization of, or
filing, registration or qualification with, any court or governmental authority
on the part of such Party is required for the execution and delivery of this
Agreement by such Party and the performance of its obligations and duties
hereunder and such execution, delivery and performance shall not violate any
other agreement to which such Party is bound; and

 

(F)Such Party is duly qualified and licensed to do and perform all acts and
receive all fees as contemplated by this Agreement and the Advisory Agreement.

 

Article 11

 

Term and Termination of the Agreement

 

11.1Term. This Agreement shall have an initial term ending March 17, 2015 and
shall be automatically renewed for an unlimited number of successive one-year
terms upon renewal of the Advisory Agreement. This Agreement shall be
co-terminus with the Advisory Agreement.

 

9

 

  

11.2Termination. Subject to last sentence of Section 11.1:

 

(A)This Agreement may be terminated by the Advisor, if the Sub-advisor
materially breaches this Agreement; provided, however, that the Sub-advisor
shall have 30 calendar days after the receipt of notice of such breach from the
Advisor to cure such breach or, if such material breach is not of a nature that
can be remedied within such period, the Sub-advisor does not diligently take all
reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(B)This Agreement may be terminated by the Advisor, as a result of any fraud,
criminal conduct, gross negligence or willful misconduct by Sub-advisor or any
Affiliate thereof in the performance of their respective duties hereunder;
provided, however, that the Sub-advisor does not cure any such act within 30
calendar days after the receipt of notice of such act (or at such later time as
may be stated in the notice) from the Advisor;

 

(C)This Agreement may be terminated by the Sub-advisor, if the Advisor
materially breaches this Agreement; provided, however, that the Advisor shall
have 30 calendar days after the receipt of notice of such breach from the
Sub-advisor to cure such breach or, if such material breach is not of a nature
that can be remedied within such period, the Advisor does not diligently take
all reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(D)This Agreement may be terminated by the Sub-advisor, as a result of any
fraud, criminal conduct, gross negligence or willful misconduct by the Advisor
or any Affiliate thereof in the performance of their respective duties hereunder
or under the Advisory Agreement; provided, however, that the Advisor does not
cure any such act within 30 calendar days after the receipt of notice of such
act (or at such later time as may be stated in the notice) from the Sub-advisor;

 

(E)This Agreement may be terminated by either Party, if the other Party (1)
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (2) consents to the entry of an order
for relief in an involuntary case under any such law, (3) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) for the other Party or
for any substantial part of its property, or (4) makes any general assignment
for the benefit of creditors under applicable state law; or

 

(F)This Agreement may be terminated by either Party, if: (1) an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect has been commenced against the other Party, and such case
has not been dismissed within 60 days after the commencement thereof; or (2) a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) has been appointed for the other Party or has taken possession of the
other Party or any substantial part of its property, and such appointment has
not been rescinded or

 

10

 

  

such possession has not been relinquished within 60 days after the occurrence
thereof.

 

11.3Survival upon Termination. Notwithstanding anything else that may be to the
contrary herein, the expiration or earlier termination of this Agreement shall
not relieve a party for liability for any breach occurring prior to such
expiration or earlier termination. The provisions of Articles 1, 5, 6, 9, 11, 13
and 14 shall survive termination of this Agreement.

 

11.4Sub-advisor’s Obligations on Termination and Obligations. After termination
of this Agreement, the Sub-advisor shall have the responsibilities to the same
extent as the Advisor as set forth in Section 4.03 of the Advisory Agreement.

 

Article 12

 

Assignment

 

This Agreement shall not be assigned by the Sub-advisor, except that this
Agreement may be assigned by the Sub-advisor to an Affiliate of the Sub-advisor
with the consent of the Advisor, such consent not to be unreasonably withheld,
conditioned or delayed. This Agreement shall not be assigned by the Advisor
without the consent of the Sub-advisor; provided, however, this Agreement may be
assigned without the consent of the Sub-advisor to a permitted assignee of the
Advisor under the Advisory Agreement in connection with such a permitted
assignment of the Advisory Agreement by the Advisor.

 

Article 13

 

Indemnification and Limitation of Liability

 

The Advisor shall indemnify and hold harmless the Sub-advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Sub-advisor becomes subject to or
liable (1) that are related to or a result of the performance of, or failure to
perform, services by the Advisor which are required to be performed by it under
this Agreement or under the Advisory Agreement or (2) by reason of actions or
inactions of the Advisor (except in each case to the extent that such
performance or failure to perform or action or inaction results from any
performance or failure to perform services by Sub-advisor under this Agreement).

 

The Sub-advisor shall indemnify and hold harmless the Advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Advisor becomes subject to or liable,
including as a result of claims asserted against it for breach of or
indemnification under the Advisory Agreement, (1) that are related to or a
result of the performance of, or failure to perform, services

 

11

 

  

by Sub-advisor under this Agreement or (2) by reason of actions or inactions of
the Sub-advisor or its Affiliates or the Advisor is required to indemnify the
Company under Section 5.02 of the Advisory Agreement as a result of any action
or inaction by Sub-advisor under this Agreement.

 

Article 14

 

Miscellaneous

 

14.1Reaffirmation of Advisory Agreement. Sub-advisor shall use, and shall cause
its Affiliates to use, commercially reasonable best efforts to assist Advisor in
obtaining the reaffirmation or renewal by the Company, or causing the
reaffirmation or renewal by the Company, of the Advisory Agreement.

 

14.2Notices. Any notice, request, demand, approval, consent, waiver or other
communication required or permitted to be given hereunder or to be served upon
any of the Parties hereto (each a “Notice”) shall be in writing and shall be (a)
delivered in person, (b) sent by facsimile transmission (with the original
thereof also contemporaneously given by another method specified in this Section
14.2), (c) sent by a nationally-recognized overnight courier service, or (d)
sent by certified or registered mail (postage prepaid, return receipt
requested), to the address of such Party set forth herein.

 

To the Advisor:

 

Cole REIT Advisors V, LLC

2325 E. Camelback Road, Suite 1100

Phoenix, Arizona 85016

Attention: President

 

with a copy to (which shall not constitute Notice):

 

Duane Morris LLP

30 South 17th Street

Philadelphia, Pennsylvania 19103

Attention: Darrick M. Mix, Esq. and Chad J. Rubin, Esq.

Facsimile: (215) 405-2906

 

To the Sub-advisor:

 

[ARCP Sub-advisor]

405 Park Avenue, 15th Floor

New York, New York 10022

Attention: Richard Silfen

 

with a copy to (which shall not constitute Notice):

 

Weil, Gotshal and Manges LLP

 

12

 

  

767 Fifth Avenue

New York, New York 10153

Attention: Michael Aiello, Esq. and Matthew Gilroy, Esq.

Facsimile: (212) 310-8007

 

Either Party may at any time give Notice in writing to the other Party of a
change in its address for the purposes of this Section 14.2. Each Notice shall
be deemed given and effective upon receipt (or refusal of receipt).

 

14.3Modification. This Agreement shall not be amended, supplemented, changed,
modified, terminated or discharged, in whole or in part, except by an instrument
in writing signed by both Parties hereto, or their respective successors or
permitted assigns.

 

14.4Severability. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

 

14.5Construction. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect, without regard to the principles of conflicts of laws thereof.

 

14.6Entire Agreement. This Agreement contains the entire agreement and
understanding between the Parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. In all events, nothing contained
herein shall be read, construed, interpreted or applied in any manner that
prevents or hinders the Company from qualifying as a real estate investment
trust under Section 856(c) of the Code.

 

14.7Waiver. Neither the failure nor any delay on the part of a Party to exercise
any right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or privilege preclude any other or further exercise of the same or of any
other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed
by the Party asserted to have granted such waiver.

 

14.8Gender. Words used herein regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
requires.

 

13

 

  

14.9Titles Not to Affect Interpretation. The titles of Articles and Sections
contained in this Agreement are for convenience only, and they neither form a
part of this Agreement nor are they to be used in the construction or
interpretation hereof.

 

14.10Counterparts. This Agreement may be executed with counterpart signature
pages or in any number of counterparts, each of which shall be deemed to be an
original as against any Party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterpart signature pages or counterparts
hereof, individually or taken together, shall bear the signatures of all of the
Parties reflected hereon as the signatories.

 

[The remainder of this page is intentionally left blank.

Signature page follows.] 

 

14

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date and year first above written.

 

  Cole REIT Advisors V, Inc.       By:     Name:       [ARCP Sub-advisor]      
By:     Name:

 

Signature Page to Sub-advisory Agreement between Cole REIT Advisors V, LLC and
[ARCP Sub-advisor]

  

 

 

 

Exhibit K-3

 

Form of

 

Sub-advisory Agreement

 

between

 

Cole Corporate Income Advisors, LLC

 

_______________

 

and

 

[ARCP Sub-advisor]

 

_______________

 

[•] [•], 2014

  

 

 

 

Table of Contents

 

    Page       Article 1 – Definitions 1     Article 2 – Appointment 2    
Article 3 – Duties of the Sub-advisor 3     Article 4 – Authority and Certain
Activities of Sub-advisor 3     Article 5 – Compensation 4       5.1 Acquisition
Fees 4       5.2 Advisory Fees 4       5.3 Disposition Fees 4       5.4
Subordinated Performance Fee 4       5.5 Expense Reimbursements 4       Article
6 – Allocation of Expense Reimbursements 6       6.1 Expense Reimbursements 6  
    6.2

Quarterly Review of Expenses

6       Article 7 – Advisor’s Responsibilities 7     Article 8 – Relationship of
Sub-advisor and Advisor and their Affiliates; Other Activities of the Advisor
and Sub-advisor 7       8.1 Relationship 7       8.2 Time Commitment 7       8.3
Advisor and Sub-advisor Meetings 7       8.4 Investment Opportunities and
Allocation 7       8.5 Prospectus Guidance 8       Article 9 – Other Agreements
8     Article 10 – Representations and Warranties 9     Article 11 – Term and
Termination of the Agreement 9       11.1 Term 10       11.2 Termination 10    
  11.3 Survival upon Termination 11       11.4 Sub-advisor’s Obligations on
Termination and Obligations 11       Article 12 – Assignment 11     Article 13 –
Indemnification and Limitation of Liability 11

 

i

 

  

Article 14 – Miscellaneous 12       14.1 Reaffirmation of Advisory Agreement 12
      14.2 Notices 12       14.3 Modification 13       14.4 Severability 13    
  14.5 Construction 13       14.6 Entire Agreement 13       14.7 Waiver 13      
14.8 Gender 14       14.9 Titles Not to Affect Interpretation 14       14.10
Counterparts 14

  

ii

 

 

Sub-advisory Agreement

 

This Sub-advisory Agreement, dated as of [•], 2014 (this “Agreement”), is
between, Cole Corporate Income Advisors, LLC, a Delaware limited liability
company (the “Advisor”) and [ARCP Sub-advisor] a Delaware limited liability
company (the “Sub-advisor”)(each a “Party” and collectively, the “Parties”).

 

WITNESSETH

 

WHEREAS, Cole Corporate Income Trust, Inc., a Maryland corporation (the
“Company”) has appointed Advisor as its advisor pursuant to the Advisory
Agreement between the Company and the Advisor, dated as of January 18, 2011 (as
the same may be amended, restated or otherwise modified from time to time in
accordance with its terms, the “Advisory Agreement”);

 

WHEREAS, the Advisor desires to avail itself of the knowledge, experience,
sources of information, advice, assistance and certain facilities available to
the Sub-advisor and to have the Sub-advisor undertake the duties and
responsibilities hereinafter set forth, on behalf of the Advisor, and subject to
the supervision of the Advisor and the Board, all as provided herein; and

 

WHEREAS, the Sub-advisor is willing to undertake such duties and
responsibilities, subject to the supervision of the Advisor and the Board, on
the terms and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the Parties hereto agree as follows:

 

Article 1

 

Definitions

 

Capitalized and other terms that are defined in the Advisory Agreement but not
otherwise defined in this Agreement have the respective meanings ascribed to
such terms in the Advisory Agreement, a copy of which is attached hereto as
Appendix A.

 

The following defined terms used in this Agreement shall have the meanings
specified below:

 

“Advisor” has the meaning set forth in the preamble to this Agreement.

 

“Advisory Agreement” has the meaning set forth in the recitals to this
Agreement.

 

“Affiliate” has the meaning set forth in the Advisory Agreement. For the
avoidance of doubt, none of the Company, the Sub-advisor, any subsidiary of the
Company, any subsidiary of the Sub-advisor and any other Person controlled by,

 

1

 

  

controlling or under common control with the Sub-advisor shall be an Affiliate
of the Advisor and none of the Company, the Advisor, any subsidiary of the
Company, any subsidiary of the Advisor and any other Person controlled by,
controlling or under common control with the Advisor shall be an Affiliate of
the Sub-advisor.

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Company” has the meaning set forth in the recitals to this Agreement.

 

“Investment Allocation Agreement” means that certain investment allocation
agreement, dated the date hereof, among ARC Properties Operating Partnership,
L.P. and the [ARCP Sub-advisors].

 

“Non-Competition Agreement” means that certain non-competition agreement, dated
the date hereof, among ARC Properties Operating Partnership, L.P., RCS Capital
Corporation and certain of ARC Properties Operating Partnership, L.P.’s key
executives.

 

“Notice” has the meaning set forth in Section 14.2 of this Agreement.

 

“Party” has the meaning set forth in the preamble to this Agreement.

 

“Prospectus” means the prospectus dated May 1, 2013, as amended or supplemented
from time to time, filed by the Company pursuant to Rule 424 promulgated under
the Securities Act of 1933, as amended.

 

“Purchase Agreement” means that certain Equity Purchase Agreement, dated as of
September 30, 2014, by and between ARC Properties Operating Partnership, L.P.
and RCS Capital Corporation.

 

“SIR Transaction” means the transaction announced in the Company’s press release
dated September 2, 2014 and filed as Exhibit 99.1 to the Company’s current
report on Form 8-K, filed with the U.S. Securities and Exchange Commission on
September 2, 2014.

 

“Sub-advisor” has the meaning set forth in the preamble to this Agreement.

 

Article 2

 

Appointment

 

The Advisor, pursuant to its authority to engage a duly qualified and licensed
Person in the performance of its duties under the Advisory Agreement pursuant to
Section 2.02 of the Advisory Agreement, hereby appoints the Sub-advisor to serve
as the Sub-advisor for the Company. The Sub-advisor hereby accepts such
appointment. Subject to the supervision of, the Advisor and the Board, the
Sub-advisor agrees to perform the duties of the Advisor set forth in Sections
2.02(a), (c), (d) (as it relates to the Assets), (e) (as it relates to the
Assets), (f) (as it relates to the Assets), (g), (h), (i), (o), (q)

 

2

 

  

and (s) of the Advisory Agreement and to assist the Advisor in the performance
of the duties set forth in Section 2.02(l), (m), (p), (r) and (u) of the
Advisory Agreement, all on the terms and subject to the conditions set forth in
this Agreement.

 

Article 3

 

Duties of the Sub-advisor

 

Under the Advisory Agreement, the Advisor is responsible for using its
commercially reasonable best efforts to present to the Company potential
investment opportunities consistent with the investment objectives and policies
of the Company as determined and adopted from time to time by the Board and
managing and supervising the operations and administration of the Company’s
Assets. Consistent with Article 2 hereof and, subject to the Investment
Allocation Agreement, the Sub-advisor undertakes to use commercially reasonable
best efforts to present investment opportunities to the Company consistent with
the investment objectives and policies of the Company as determined and adopted
from time to time by the Board and to manage and supervise the operations and
administration of the Company’s Assets. Subject to the limitations set forth in
this Agreement and the Advisory Agreement, consistent with the provisions of the
Articles of Incorporation and Bylaws and subject to the supervision of the
Advisor and the continuing and exclusive authority of the Board over the
supervision of the Company, the Sub-advisor shall, either directly or by
engaging an Affiliate, perform, and assist the Advisor in the performance of,
the duties under the Advisory Agreement set forth in Article 2 of this
Agreement, which duties are incorporated herein by reference as if fully set
forth herein. In the event that the Sub-advisor engages a third party to perform
the services that the Advisor has engaged Sub-advisor to perform pursuant to
this Agreement, such third party shall be compensated by the Sub-advisor out of
the fees it received pursuant to Article 5 of this Agreement; provided, however
that third-party property management fees payable by tenants of a property,
including amounts payable to affiliates of the Sub-advisor, may be charged to
and paid by such tenant and will not reduce the fees paid to the Sub-advisor.

 

Article 4

 

Authority and Certain Activities of Sub-advisor

 

To the same extent as the Advisor and subject to the supervision of the Advisor
and the Board, the Sub-advisor shall have the authority to enter into contracts
in the name of the Company to the extent set forth in Section 2.02 of the
Advisory Agreement in connection with the performance of its duties under
Article 2, shall have the authority set forth in Section 2.03 of the Advisory
Agreement, shall have the authority to establish and maintain bank accounts as
set forth in Section 2.04 of the Advisory Agreement with respect to the Assets,
shall maintain books and records for the Company with respect to the Assets as
set forth in Section 2.05 of the Advisory Agreement, and shall abide by the
limitations of Section 2.06 of the Advisory Agreement, all of which are
incorporated herein by reference as if fully set forth herein. The Advisor
hereby grants to the Sub-

 

3

 

  

Advisor, to the extent of any proprietary interest the Advisor or its Affiliates
may have in any of the names “Cole” or any derivative thereof a
non-transferable, non-assignable, non-exclusive, royalty-free right and license
to use the name “Cole” or any derivative thereof solely in connection with
providing services hereunder until the expiration or termination of this
Agreement.

 

Article 5

 

Compensation

 

As compensation for the services provided pursuant to this Agreement, the
Advisor shall pay to Sub-advisor, solely out of payments received by Advisor
from the Company under the Advisory Agreement, simultaneously with the payment
by the Company to the Advisor:

 

5.1Acquisition Fees. Acquisition Fees equal to 1.00% of the Contract Purchase
Price of each Asset.

 

5.2Advisory Fees. Advisory Fees calculated according to the following schedule:

 

Average Invested Assets  Annualized Fee Rate        $0 — $2 billion   0.375%   
    Over $2 billion — $4 billion   0.350%        Over $4 billion   0.325%

 

The Advisory Fee shall be applied according to the above schedule for each level
of monthly Average Invested Assets, resulting in a blended annualized rate for
fees paid in respect of Average Invested Assets in excess of $2 billion.

 

5.3Disposition Fees. 25% of any Disposition Fees paid to Advisor on the Sale of
a Property, except that the Sub-advisor is entitled to 100% of any Disposition
Fees payable to the Advisor in connection with the SIR Transaction.

 

5.4Subordinated Performance Fee. 15% of all Subordinated Performance Fees paid
to the Advisor, in whatever form payable by the Company (i.e., cash, securities
or a promissory note), except that the Sub-advisor is entitled to 100% of any
Subordinated Performance Fees payable to the Advisor in connection with the SIR
Transaction.

 

5.5Expense Reimbursements. Subject to Article 6 of this Agreement and Section
3.04 of the Advisory Agreement, the Advisor shall reimburse Sub-advisor to the

 

4

 

  

extent the Advisor receives reimbursement from the Company for the following
expenses of the Sub-advisor to the extent they are actually incurred by the
Sub-advisor in connection with the services the Sub-advisor provides pursuant to
this Agreement; provided, however that in each case the reimbursement is
permitted under the Advisory Agreement and Prospectus and such reimbursements
shall be determined consistent with past practice:

 

(A)Acquisition Expenses incurred in connection with the selection and
acquisition of Assets in an amount up to 0.5% of the Contract Purchase Price;

 

(B)The actual cost incurred by the Sub-advisor of goods, services and materials
used by the Company and obtained from Persons not affiliated with the
Sub-advisor, other than Acquisition Expenses, including property management and
leasing services;

 

(C)Expenses of managing and operating Assets owned by the Company, whether
payable to an Affiliate of the Company or the Sub-advisor, including wages and
salaries and other personnel-related expenses, unless otherwise waived, in whole
or in part, by the Sub-advisor or the Affiliate in its sole discretion, of all
on-site and off-site employees of the Sub-advisor or the Affiliate who are
engaged in the operation, management, maintenance and leasing or access control
of the Asset, or to a non-affiliated Person; and

 

(D)Reimbursement for administrative service expenses of the Sub-advisor,
including all costs and expenses incurred by the Sub-advisor in fulfilling its
duties under the Sub-advisory Agreement, provided, however that the
reimbursement of the Advisor and the Sub-advisor for administrative service
expenses, in each case, shall not be greater than 50% of the amounts permitted
by the Advisory Agreement. Such costs and expenses may include reasonable wages
and salaries and other personnel-related expenses of all employees of the
Sub-advisor or its Affiliates who are engaged in the management, administration
and operations and marketing of the Company and its Assets, with respect to the
Sub-advisor who are engaged in the management, administration and operations of
the Company’s Assets and shall include taxes, insurance and benefits relating to
such employees, and legal, travel and other out-of-pocket expenses which are
directly related to their services provided under this Agreement, provided,
however that the Sub-advisor shall not be reimbursed for salaries and benefits
paid to persons who are executive officers of the Company, nor shall the Company
pay personnel costs in connection with services for which the Advisor or
Sub-advisor receives an Acquisition Fee or Disposition Fee.

 

Notwithstanding anything to the contrary contained in this Article 5:

 

5

 

  

(i)All Acquisition Fees and Acquisition Expenses payable in connection with
those certain Assets separately disclosed in writing prior to the date of the
Purchase Agreement, with respect to which Sub-advisor represents that a purchase
agreement or letter of intent has been executed shall be paid to the Sub-advisor
and the Advisor shall not be entitled to any Acquisition Fees or Acquisition
Expenses with respect to such Assets;

 

(ii)All expenses incurred by the Advisor incurred prior to the date of this
Agreement shall be treated as expenses of the Sub-Advisor for purposes of this
Agreement; and

 

(iii)All expenses incurred by the Sub-advisor under the Interim Sub-advisory
Agreement between the Advisor and a subsidiary of RCS Capital Corporation, shall
be treated as expenses of the Advisor for purposes of this Agreement.

 

Article 6

 

Allocation of Expense Reimbursements

 

6.1Expense Reimbursements. All expense reimbursements will be apportioned
between the Advisor and Sub-advisor pro rata based on the amount of such expense
reimbursements due each that relate to the period commencing on the later of the
date of this Agreement or the beginning of the applicable quarter to which such
reimbursable expense relates and ending as of the date of the reimbursement;
provided, however that the Sub-advisor shall repay the Advisor its pro rata
share (as so determined) of any Excess Amount that the Advisor is required to
repay the Company pursuant to Section 3.04 of the Advisory Agreement.

 

6.2Quarterly Review of Expenses. Within 45 days of the end of each fiscal
quarter, each Party shall provide the other Party with a detailed description of
such Party’s aggregate Operating Expenses incurred during such fiscal quarter
for the purpose of the Parties’ jointly reviewing such expenses against
applicable caps and limitations set forth in the Advisory Agreement.

 

Article 7

 

Advisor’s Responsibilities

 

The Advisor shall be solely responsible for all services to the Company under
the Advisory Agreement other than the services covered by Article 3 of this
Agreement and shall bear any expenses related thereto required to be borne by
the Advisor or its Affiliates and shall be entitled to reimbursement for all
expenses related thereto, to the extent permitted under the Advisory Agreement
and the Prospectus. The Sub-advisor

 

6

 

  

shall have no responsibility or obligation in connection with providing such
services to the Company or any expenses related thereto.

 

Article 8

 

Relationship of Sub-advisor and Advisor and their Affiliates;

Other Activities of the Advisor and Sub-advisor

 

8.1Relationship. The Advisor and the Sub-advisor are not partners or joint
venturers with each other, and nothing in this Agreement shall be construed to
make them such partners or joint venturers. Nothing herein contained shall
prevent the Advisor or Sub-advisor from engaging in or earning fees from other
activities, including, without limitation, the rendering of advice to other
Persons (including other REITs) and the management of other programs advised,
sponsored or organized by the Advisor or Sub-advisor, respectively, or any of
their Affiliates. Nor shall this Agreement limit or restrict the right of any
manager, director, officer, member, partner, employee or equityholder of the
Advisor or Sub-advisor or their Affiliates to engage in or earn fees from any
other business or to render services of any kind to any other Person. Each of
the Advisor and the Sub-advisor shall promptly disclose to the Board the
existence of any condition or circumstance, existing or anticipated, of which it
has knowledge, that creates or which would reasonably result in a conflict of
interest between its obligations to the Company and its obligations to or its
interest in any other Persons. Nothing in this Section 8.1 shall derogate any
restrictions imposed indirectly on the Sub-advisor as set forth in the
Non-Competition Agreement.

 

8.2Time Commitment. The Sub-advisor shall, and shall cause its Affiliates and
their respective employees, officers and agents to, devote to the Company such
time as shall be reasonably necessary to conduct the business and affairs of the
Company in an appropriate manner consistent with the terms of this Agreement.
Each Party acknowledges that the other Party and its Affiliates and their
respective employees, officers and agents may also engage in activities
unrelated to the Company and may provide services to Persons other than the
Company or any of its Affiliates.

 

8.3Advisor and Sub-advisor Meetings. The Parties shall meet on a regular basis
(frequency to be determined) to discuss and consult with one another regarding
the Company and its assets and opportunities. The Parties will provide each
other information regarding the operations and acquisitions of the Company as
reasonably requested by the other. Each of Advisor and Sub-advisor shall have
direct access to the books and records of the Company and of each attorney,
accountant, servicer and other contracting party of the Company (except to the
extent such attorney represents either Party with respect to this Agreement).

 

8.4Investment Opportunities and Allocation. Subject to Article 3 of this
Agreement, Sub-advisor’s obligations with respect to offering investment
opportunities to the Company shall be governed by the Investment Allocation

 

7

 

  

Agreement, which cannot be amended or modified without the written consent of
the Advisor.

 

8.5Prospectus Guidance. Each of the Advisor and Sub-advisor has read and will
abide by the Prospectus with respect to the Company’s investment objectives,
targeted assets and investment restrictions, targeted markets, leverage,
distribution policy, and investor profile except to the extent directed by the
Board.

 

Article 9

 

Other Agreements

 

9.1The Advisor shall not agree to an amendment to the Advisory Agreement or
waive any provision thereof, to the extent that such amendment or waiver would
directly or indirectly reduce the amount payable to the Sub-advisor pursuant to
Article 5 of this Agreement or adversely impact the Sub-advisor’s right to
indemnification under Article 13 of this Agreement without the prior written
consent of the Sub-advisor.

 

9.2The Sub-advisor shall use its commercially reasonable efforts to cooperate
with the Advisor to provide an orderly transfer and transition of services upon
the expiration or earlier termination of this Agreement and shall provide any
and all documents, reports and materials belonging or related to the services
provided to the Advisor hereunder, including any and all other documents,
reports and materials otherwise belonging or related to the Advisor or the
Company. Furthermore, the Sub-advisor will, whenever and as reasonably
requested, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered any documents that may be necessary to transition
efficiently any services covered under this Agreement.

 

9.3The Advisor shall have the right, but not the obligation, upon request and
during normal business hours, to meet with key personnel and/or other executive
level employees of the Sub-advisor on an ongoing and regular basis to provide
feedback and input regarding the performance of the Sub-advisor’s services
hereunder

 

9.4The Sub-advisor shall maintain appropriate records of all its activities
hereunder and shall, at the Advisor’s election, provide copies of such records
to the Company or make such records available for inspection and duplication by
the Company, its counsel, auditors and authorized agents, upon notice from the
Advisor.

 

9.5The Sub-advisor will utilize the Advisor’s accounting system in connection
with performing such duties, or a system mutually agreed to between Advisor and
Sub-advisor.

 

8

 

  

Article 10

 

Representations and Warranties

 

10.1The Advisor and the Sub-advisor each hereby represents and warrants to, and
agrees with, the other as follows:

 

(A)Such Party is duly formed and validly existing under the laws of the
jurisdiction of its organization;

 

(B)Such Party has full power and authority to enter into this Agreement and to
conduct its business to the extent contemplated in this Agreement;

 

(C)This Agreement has been duly authorized, executed and delivered by such Party
and constitutes the valid and legally binding agreement of such Party,
enforceable in accordance with its terms against such Party, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium and other
similar laws relating to creditors’ rights generally, and by general equitable
principles;

 

(D)The execution and delivery of this Agreement by such Party and the
performance of its duties and obligations hereunder do not result in a breach of
any of the terms, conditions or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, credit agreement, note or other evidence
of indebtedness, or any lease or other agreement, or any license, permit,
franchise or certificate to which such Party is a party or by which it is bound
or to which its properties are subject or require any authorization or approval
under or pursuant to any of the foregoing, or violate any statute, regulation,
law, order, writ, injunction, judgment or decree to which such Party is subject;

 

(E)To the knowledge of such Party, no consent, approval or authorization of, or
filing, registration or qualification with, any court or governmental authority
on the part of such Party is required for the execution and delivery of this
Agreement by such Party and the performance of its obligations and duties
hereunder and such execution, delivery and performance shall not violate any
other agreement to which such Party is bound; and

 

(F)Such Party is duly qualified and licensed to do and perform all acts and
receive all fees as contemplated by this Agreement and the Advisory Agreement.

 

Article 11

 

Term and Termination of the Agreement

  

9

 

  

11.1Term. This Agreement shall have an initial term ending January 18, 2015 and
shall be automatically renewed for an unlimited number of successive one-year
terms upon renewal of the Advisory Agreement. This Agreement shall be
co-terminus with the Advisory Agreement.

 

11.2Termination. Subject to last sentence of Section 11.1:

 

(A)This Agreement may be terminated by the Advisor, if the Sub-advisor
materially breaches this Agreement; provided, however, that the Sub-advisor
shall have 30 calendar days after the receipt of notice of such breach from the
Advisor to cure such breach or, if such material breach is not of a nature that
can be remedied within such period, the Sub-advisor does not diligently take all
reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(B)This Agreement may be terminated by the Advisor, as a result of any fraud,
criminal conduct, gross negligence or willful misconduct by Sub-advisor or any
Affiliate thereof in the performance of their respective duties hereunder;
provided, however, that the Sub-advisor does not cure any such act within 30
calendar days after the receipt of notice of such act (or at such later time as
may be stated in the notice) from the Advisor;

 

(C)This Agreement may be terminated by the Sub-advisor, if the Advisor
materially breaches this Agreement; provided, however, that the Advisor shall
have 30 calendar days after the receipt of notice of such breach from the
Sub-advisor to cure such breach or, if such material breach is not of a nature
that can be remedied within such period, the Advisor does not diligently take
all reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(D)This Agreement may be terminated by the Sub-advisor, as a result of any
fraud, criminal conduct, gross negligence or willful misconduct by the Advisor
or any Affiliate thereof in the performance of their respective duties hereunder
or under the Advisory Agreement; provided, however, that the Advisor does not
cure any such act within 30 calendar days after the receipt of notice of such
act (or at such later time as may be stated in the notice) from the Sub-advisor;

 

(E)This Agreement may be terminated by either Party, if the other Party (1)
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (2) consents to the entry of an order
for relief in an involuntary case under any such law, (3) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) for the other Party or
for any substantial part of its property, or (4) makes any general assignment
for the benefit of creditors under applicable state law; or

 

10

 

  

(F)This Agreement may be terminated by either Party, if: (1) an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect has been commenced against the other Party, and such case
has not been dismissed within 60 days after the commencement thereof; or (2) a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) has been appointed for the other Party or has taken possession of the
other Party or any substantial part of its property, and such appointment has
not been rescinded or such possession has not been relinquished within 60 days
after the occurrence thereof.

 

11.3Survival upon Termination. Notwithstanding anything else that may be to the
contrary herein, the expiration or earlier termination of this Agreement shall
not relieve a party for liability for any breach occurring prior to such
expiration or earlier termination. The provisions of Articles 1, 5, 6, 9, 11, 13
and 14 shall survive termination of this Agreement.

 

11.4Sub-advisor’s Obligations on Termination and Obligations. After termination
of this Agreement, the Sub-advisor shall have the responsibilities to the same
extent as the Advisor as set forth in Section 4.03 of the Advisory Agreement.

 

Article 12

 

Assignment

 

This Agreement shall not be assigned by the Sub-advisor, except that this
Agreement may be assigned by the Sub-advisor to an Affiliate of the Sub-advisor
with the consent of the Advisor, such consent not to be unreasonably withheld,
conditioned or delayed. This Agreement shall not be assigned by the Advisor
without the consent of the Sub-advisor; provided, however, this Agreement may be
assigned without the consent of the Sub-advisor to a permitted assignee of the
Advisor under the Advisory Agreement in connection with such a permitted
assignment of the Advisory Agreement by the Advisor.

 

Article 13

 

Indemnification and Limitation of Liability

 

The Advisor shall indemnify and hold harmless the Sub-advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Sub-advisor becomes subject to or
liable (1) that are related to or a result of the performance of, or failure to
perform, services by the Advisor which are required to be performed by it under
this Agreement or under the Advisory Agreement or (2) by reason of actions or
inactions of the Advisor (except in each case to the extent that such
performance or failure to perform or action or inaction results from any
performance or failure to perform services by Sub-advisor under this Agreement).

 

11

 

  

The Sub-advisor shall indemnify and hold harmless the Advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Advisor becomes subject to or liable,
including as a result of claims asserted against it for breach of or
indemnification under the Advisory Agreement, (1) that are related to or a
result of the performance of, or failure to perform, services by Sub-advisor
under this Agreement or (2) by reason of actions or inactions of the Sub-advisor
or its Affiliates or the Advisor is required to indemnify the Company under
Section 5.02 of the Advisory Agreement as a result of any action or inaction by
Sub-advisor under this Agreement.

 

Article 14

 

Miscellaneous

 

14.1Reaffirmation of Advisory Agreement. Sub-advisor shall use, and shall cause
its Affiliates to use, commercially reasonable best efforts to assist Advisor in
obtaining the reaffirmation or renewal by the Company, or causing the
reaffirmation or renewal by the Company, of the Advisory Agreement.

 

14.2Notices. Any notice, request, demand, approval, consent, waiver or other
communication required or permitted to be given hereunder or to be served upon
any of the Parties hereto (each a “Notice”) shall be in writing and shall be (a)
delivered in person, (b) sent by facsimile transmission (with the original
thereof also contemporaneously given by another method specified in this Section
14.2), (c) sent by a nationally-recognized overnight courier service, or (d)
sent by certified or registered mail (postage prepaid, return receipt
requested), to the address of such Party set forth herein.

 

To the Advisor:

 

Cole Corporate Income Advisors, LLC

2555 E. Camelback Road, Suite 400

Phoenix, Arizona 85016

Attention: President

 

with a copy to (which shall not constitute Notice):

 

Duane Morris LLP

30 South 17th Street

Philadelphia, Pennsylvania 19103

Attention: Darrick M. Mix, Esq. and Chad J. Rubin, Esq.

Facsimile: (215) 405-2906

 

12

 

  

To the Sub-advisor:

 

[ARCP Sub-advisor]

405 Park Avenue, 15th Floor

New York, New York 10022

Attention: Richard Silfen

 

with a copy to (which shall not constitute Notice):

 

Weil, Gotshal and Manges LLP

767 Fifth Avenue

New York, New York 10153

Attention: Michael Aiello, Esq. and Matthew Gilroy, Esq.

Facsimile: (212) 310-8007

 

Either Party may at any time give Notice in writing to the other Party of a
change in its address for the purposes of this Section 14.2. Each Notice shall
be deemed given and effective upon receipt (or refusal of receipt).

 

14.3Modification. This Agreement shall not be amended, supplemented, changed,
modified, terminated or discharged, in whole or in part, except by an instrument
in writing signed by both Parties hereto, or their respective successors or
permitted assigns.

 

14.4Severability. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

 

14.5Construction. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect, without regard to the principles of conflicts of laws thereof.

 

14.6Entire Agreement. This Agreement contains the entire agreement and
understanding between the Parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. In all events, nothing contained
herein shall be read, construed, interpreted or applied in any manner that
prevents or hinders the Company from qualifying as a real estate investment
trust under Section 856(c) of the Code.

 

14.7Waiver. Neither the failure nor any delay on the part of a Party to exercise
any right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or

 

13

 

  

privilege preclude any other or further exercise of the same or of any other
right, remedy, power or privilege, nor shall any waiver of any right, remedy,
power or privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any other occurrence. No
waiver shall be effective unless it is in writing and is signed by the Party
asserted to have granted such waiver.

 

14.8Gender. Words used herein regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
requires.

 

14.9Titles Not to Affect Interpretation. The titles of Articles and Sections
contained in this Agreement are for convenience only, and they neither form a
part of this Agreement nor are they to be used in the construction or
interpretation hereof.

 

14.10Counterparts. This Agreement may be executed with counterpart signature
pages or in any number of counterparts, each of which shall be deemed to be an
original as against any Party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterpart signature pages or counterparts
hereof, individually or taken together, shall bear the signatures of all of the
Parties reflected hereon as the signatories.

 

[The remainder of this page is intentionally left blank.

Signature page follows.] 

 

14

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date and year first above written.

 

 

  Cole Corporate Income Advisors, LLC       By:     Name:       [ARCP
Sub-advisor]       By:     Name:

    

Signature Page to Sub-advisory Agreement between Cole Corporate Income Advisors,
LLC and [ARCP Sub-advisor] 

 

 

 

 

Exhibit K-4

 

Form of

 

Sub-advisory Agreement

 

between

 

Cole Corporate Income Advisors II, LLC

 

_______________

 

and

 

[ARCP Sub-advisor]

 

_______________

 

[•] [•], 2014 

 

 

 

 

Table of Contents

 

    Page       Article 1 – Definitions 1     Article 2 – Appointment 2    
Article 3 – Duties of the Sub-advisor 2     Article 4 – Authority and Certain
Activities of Sub-advisor 3     Article 5 – Compensation 3     5.1 Acquisition
Fees 4       5.2 Advisory Fees 4       5.3 Disposition Fees 4       5.4
Subordinated Performance Fee 4       5.5 Expense Reimbursements 4       Article
6 – Allocation of Expense Reimbursements 5     6.1 O&O Expense Reimbursements 6
      6.2 All Other Expense Reimbursements 6       6.3 Quarterly Review of
Expenses 6       Article 7 – Advisor’s Responsibilities 6       Article 8 –
Relationship of Sub-advisor and their Affiliates; Other Activities of the
Advisor and Sub-advisor 6     8.1 Relationship 7       8.2 Time Commitment 7    
  8.3 Advisor and Sub-advisor Meetings 7       8.4 Investment Opportunities and
Allocation 7       8.5 Prospectus Guidance 7       Article 9 – Other Agreements
8     Article 10 – Representations and Warranties 8     Article 11 – Term and
Termination of the Agreement 9     11.1 Term 9       11.2 Termination 9      
11.3 Survival upon Termination 10       11.4 Sub-advisor’s Obligations on
Termination and Obligations 10       Article 12 – Assignment 11

 

i

 

  

Article 13 – Indemnification and Limitation of Liability 11       Article 14 –
Miscellaneous 12     14.1 Reaffirmation of Advisory Agreement 12       14.2
Notices 12       14.3 Modification 13       14.4 Severability 13       14.5
Construction 13       14.6 Entire Agreement 13       14.7 Waiver 13       14.8
Gender 13       14.9 Titles Not to Affect Interpretation 13       14.10
Counterparts 13

  

ii

 

 

Sub-advisory Agreement

 

This Sub-advisory Agreement, dated as of [•], 2014 (this “Agreement”), is
between, Cole Corporate Income Advisors II, LLC, a Delaware limited liability
company (the “Advisor”) and [ARCP Sub-advisor] a Delaware limited liability
company (the “Sub-advisor”)(each a “Party” and collectively, the “Parties”).

 

WITNESSETH

 

WHEREAS, Cole Office & Industrial REIT (CCIT II), Inc., a Maryland corporation
(the “Company”) has appointed Advisor as its advisor pursuant to the Advisory
Agreement between the Company and the Advisor, dated as of August 27, 2013 (as
the same may be amended, restated or otherwise modified from time to time in
accordance with its terms, the “Advisory Agreement”);

 

WHEREAS, the Advisor desires to avail itself of the knowledge, experience,
sources of information, advice, assistance and certain facilities available to
the Sub-advisor and to have the Sub-advisor undertake the duties and
responsibilities hereinafter set forth, on behalf of the Advisor, and subject to
the supervision of the Advisor and the Board, all as provided herein; and

 

WHEREAS, the Sub-advisor is willing to undertake such duties and
responsibilities, subject to the supervision of the Advisor and the Board, on
the terms and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the Parties hereto agree as follows:

 

Article 1

 

Definitions

 

Capitalized and other terms that are defined in the Advisory Agreement but not
otherwise defined in this Agreement have the respective meanings ascribed to
such terms in the Advisory Agreement, a copy of which is attached hereto as
Appendix A.

 

The following defined terms used in this Agreement shall have the meanings
specified below:

 

“Advisor” has the meaning set forth in the preamble to this Agreement.

 

“Advisory Agreement” has the meaning set forth in the recitals to this
Agreement.

 

“Affiliate” has the meaning set forth in the Advisory Agreement. For the
avoidance of doubt, none of the Company, the Sub-advisor, any subsidiary of the
Company, any subsidiary of the Sub-advisor and any other Person controlled by,
controlling or under common control with the Sub-advisor shall be an Affiliate
of the Advisor and none of the Company, the Advisor, any subsidiary of the
Company, any subsidiary of the Advisor and any other Person controlled by,
controlling or under common control with the Advisor shall be an Affiliate of
the Sub-advisor.

 

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“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Company” has the meaning set forth in the recitals to this Agreement.

 

“Investment Allocation Agreement” means that certain investment allocation
agreement, dated the date hereof, among ARC Properties Operating Partnership,
L.P. and the [ARCP Sub-advisors].

 

“Non-Competition Agreement” means that certain non-competition agreement, dated
the date hereof, among ARC Properties Operating Partnership, L.P., RCS Capital
Corporation and certain of ARC Properties Operating Partnership, L.P.’s key
executives.

 

“Notice” has the meaning set forth in Section 14.2 of this Agreement.

 

“Party” has the meaning set forth in the preamble to this Agreement.

 

“Prospectus” means the prospectus dated September 17, 2013, as amended or
supplemented from time to time, filed by the Company pursuant to Rule 424
promulgated under the Securities Act of 1933, as amended.

 

“Purchase Agreement” means that certain Equity Purchase Agreement, dated as of
September 30, 2014, by and between ARC Properties Operating Partnership, L.P.
and RCS Capital Corporation.

 

“Sub-advisor” has the meaning set forth in the preamble to this Agreement.

 

Article 2

 

Appointment

 

The Advisor, pursuant to its authority to engage a duly qualified and licensed
Person in the performance of its duties under the Advisory Agreement pursuant to
Section 2.02 of the Advisory Agreement, hereby appoints the Sub-advisor to serve
as the Sub-advisor for the Company. The Sub-advisor hereby accepts such
appointment. Subject to the supervision of, the Advisor and the Board, the
Sub-advisor agrees to perform the duties of the Advisor set forth in Sections
2.02(a), (c), (d) (as it relates to the Assets), (e) (as it relates to the
Assets), (f) (as it relates to the Assets), (g), (h), (i), (o), (q) and (s) of
the Advisory Agreement and to assist the Advisor in the performance of the
duties set forth in Section 2.02(l), (m), (p), (r) and (u) of the Advisory
Agreement, all on the terms and subject to the conditions set forth in this
Agreement.

 

Article 3

 

Duties of the Sub-advisor

 

Under the Advisory Agreement, the Advisor is responsible for using its
commercially reasonable best efforts to present to the Company potential
investment opportunities consistent

 

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with the investment objectives and policies of the Company as determined and
adopted from time to time by the Board and managing and supervising the
operations and administration of the Company’s Assets. Consistent with Article 2
hereof and, subject to the Investment Allocation Agreement, the Sub-advisor
undertakes to use commercially reasonable best efforts to present investment
opportunities to the Company consistent with the investment objectives and
policies of the Company as determined and adopted from time to time by the Board
and to manage and supervise the operations and administration of the Company’s
Assets. Subject to the limitations set forth in this Agreement and the Advisory
Agreement, consistent with the provisions of the Articles of Incorporation and
Bylaws and subject to the supervision of the Advisor and the continuing and
exclusive authority of the Board over the supervision of the Company, the
Sub-advisor shall, either directly or by engaging an Affiliate, perform, and
assist the Advisor in the performance of, the duties under the Advisory
Agreement set forth in Article 2 of this Agreement, which duties are
incorporated herein by reference as if fully set forth herein. In the event that
the Sub-advisor engages a third party to perform the services that the Advisor
has engaged Sub-advisor to perform pursuant to this Agreement, such third party
shall be compensated by the Sub-advisor out of the fees it received pursuant to
Article 5 of this Agreement; provided, however that third-party property
management fees payable by tenants of a property, including amounts payable to
affiliates of the Sub-advisor, may be charged to and paid by such tenant and
will not reduce the fees paid to the Sub-advisor.

 

Article 4

 

Authority and Certain Activities of Sub-advisor

 

To the same extent as the Advisor and subject to the supervision of the Advisor
and the Board, the Sub-advisor shall have the authority to enter into contracts
in the name of the Company to the extent set forth in Section 2.02 of the
Advisory Agreement in connection with the performance of its duties under
Article 2, shall have the authority set forth in Section 2.03 of the Advisory
Agreement, shall have the authority to establish and maintain bank accounts as
set forth in Section 2.04 of the Advisory Agreement with respect to the Assets,
shall maintain books and records for the Company with respect to the Assets as
set forth in Section 2.05 of the Advisory Agreement, and shall abide by the
limitations of Section 2.06 of the Advisory Agreement, all of which are
incorporated herein by reference as if fully set forth herein. The Advisor
hereby grants to the Sub-Advisor, to the extent of any proprietary interest the
Advisor or its Affiliates may have in any of the names “Cole” or any derivative
thereof a non-transferable, non-assignable, non-exclusive, royalty-free right
and license to use the name “Cole” or any derivative thereof solely in
connection with providing services hereunder until the expiration or termination
of this Agreement.

 

Article 5

 

Compensation

 

As compensation for the services provided pursuant to this Agreement, the
Advisor shall pay to Sub-advisor, solely out of payments received by Advisor
from the Company under the Advisory Agreement, simultaneously with the payment
by the Company to the Advisor:

 

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5.1Acquisition Fees. Acquisition Fees equal to 1.00% of the Contract Purchase
Price of each Asset.

 

5.2Advisory Fees. Advisory Fees calculated according to the following schedule:

 

Average Invested Assets  Annualized Fee Rate        $0 — $2 billion   0.375%   
    Over $2 billion — $4 billion   0.350%        Over $4 billion   0.325%

 

The Advisory Fee shall be applied according to the above schedule for each level
of monthly Average Invested Assets, resulting in a blended annualized rate for
fees paid in respect of Average Invested Assets in excess of $2 billion.

 

5.3Disposition Fees. 25% of any Disposition Fees paid to Advisor on the Sale of
a Property.

 

5.4Subordinated Performance Fee. 15% of all Subordinated Performance Fees paid
to the Advisor, in whatever form payable by the Company (i.e., cash, securities
or a promissory note).

 

5.5Expense Reimbursements. Subject to Article 6 of this Agreement and Section
3.04 of the Advisory Agreement, the Advisor shall reimburse Sub-advisor to the
extent the Advisor receives reimbursement from the Company for the following
expenses of the Sub-advisor to the extent they are actually incurred by the
Sub-advisor in connection with the services the Sub-advisor provides pursuant to
this Agreement; provided, however that in each case the reimbursement is
permitted under the Advisory Agreement and Prospectus and such reimbursements
shall be determined consistent with past practice:

 

(A)Acquisition Expenses incurred in connection with the selection and
acquisition of Assets in an amount up to 0.5% of the Contract Purchase Price;

 

(B)The actual cost incurred by the Sub-advisor of goods, services and materials
used by the Company and obtained from Persons not affiliated with the
Sub-advisor, other than Acquisition Expenses, including property management and
leasing services;

 

(C)Expenses of managing and operating Assets owned by the Company, whether
payable to an Affiliate of the Company or the Sub-advisor, including wages and
salaries and other personnel-related expenses, unless otherwise waived, in whole
or in part, by the Sub-advisor or the Affiliate in its sole discretion, of all
on-site and off-site employees of the Sub-advisor or the Affiliate who are
engaged in the

 

4

 

  

operation, management, maintenance and leasing or access control of the Asset,
or to a non-affiliated Person;

 

(D)Reimbursement for administrative service expenses of the Sub-advisor,
including all costs and expenses incurred by the Sub-advisor in fulfilling its
duties under the Sub-advisory Agreement, provided, however that the
reimbursement of the Advisor and the Sub-advisor for administrative service
expenses, in each case, shall not be greater than 50% of the amounts permitted
by the Advisory Agreement. Such costs and expenses may include reasonable wages
and salaries and other personnel-related expenses of all employees of the
Sub-advisor or its Affiliates who are engaged in the management, administration
and operations and marketing of the Company and its Assets, with respect to the
Sub-advisor who are engaged in the management, administration and operations of
the Company’s Assets and shall include taxes, insurance and benefits relating to
such employees, and legal, travel and other out-of-pocket expenses which are
directly related to their services provided under this Agreement, provided,
however that the Sub-advisor shall not be reimbursed for salaries and benefits
paid to persons who are executive officers of the Company, nor shall the Company
pay personnel costs in connection with services for which the Advisor or
Sub-advisor receives an Acquisition Fee or Disposition Fee; and

 

(E)To the extent that the Sub-advisor or its Affiliates are requested and
authorized in writing to provide any services in connection with the formation
of the Company and the qualification and registration of an Offering, and the
marketing and distribution of Shares, the Sub-advisor shall, subject to Section
6.1, be entitled to reimbursement out of reimbursements paid by the Company to
the Advisor for Organization and Offering Expenses.

 

Notwithstanding anything to the contrary contained in this Article 5:

 

(i)All Acquisition Fees and Acquisition Expenses payable in connection with
those certain Assets separately disclosed in writing prior to the date of the
Purchase Agreement, with respect to which Sub-advisor represents that a purchase
agreement or letter of intent has been executed shall be paid to the Sub-advisor
and the Advisor shall not be entitled to any Acquisition Fees or Acquisition
Expenses with respect to such Assets;

 

(ii)All expenses incurred by the Advisor incurred prior to the date of this
Agreement shall be treated as expenses of the Sub-Advisor for purposes of this
Agreement; and

 

(iii)All expenses incurred by the Sub-advisor under the Interim Sub-advisory
Agreement between the Advisor and a subsidiary of RCS Capital Corporation, shall
be treated as expenses of the Advisor for purposes of this Agreement.

 

 

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Article 6  

Allocation of Expense Reimbursements

 

6.1O&O Expense Reimbursements. All Organization and Offering Expense
reimbursements received from the Company, to the extent that they are less than
the full amount of Organization and Offering Expense reimbursements due to the
Advisor and the Sub-advisor, will be apportioned between the Advisor and
Sub-advisor pro rata based on the amount of such Organization and Offering
Expenses reimbursements due each that relate to the period commencing on the
date of this Agreement and ending as of the date of the reimbursement; provided,
however that within 50 days after the end of the month in which the Offering
terminates, the Sub-advisor shall reimburse the Advisor the Sub-advisor’s pro
rata share of reimbursements to the Company by the Advisor (based on its pro
rata share of reimbursements received from the Company as so determined)
pursuant to Section 3.02(a) of the Advisory Agreement for Organization and
Offering Expenses reimbursed by the Company to the extent that such
reimbursements by the Company exceed 2.0% of the Gross Proceeds raised in the
completed Offering.

 

6.2All Other Expense Reimbursements. All expense reimbursements will be
apportioned between the Advisor and Sub-advisor pro rata based on the amount of
such expense reimbursements due each that relate to the period commencing on the
later of the date of this Agreement or the beginning of the applicable quarter
to which such reimbursable expense relates and ending as of the date of the
reimbursement; provided, however that the Sub-advisor shall repay the Advisor
its pro rata share (as so determined) of any Excess Amount that the Advisor is
required to repay the Company pursuant to Section 3.04 of the Advisory
Agreement.

 

6.3Quarterly Review of Expenses. Within 45 days of the end of each fiscal
quarter, each Party shall provide the other Party with a detailed description of
such Party’s aggregate Organization and Offering Expenses and aggregate
Operating Expenses incurred during such fiscal quarter for the purpose of the
Parties’ jointly reviewing such expenses against applicable caps and limitations
set forth in the Advisory Agreement.

 

Article 7

 

Advisor’s Responsibilities

 

The Advisor shall be solely responsible for all services to the Company under
the Advisory Agreement other than the services covered by Article 3 of this
Agreement and shall bear any expenses related thereto required to be borne by
the Advisor or its Affiliates and shall be entitled to reimbursement for all
expenses related thereto, to the extent permitted under the Advisory Agreement
and the Prospectus. The Sub-advisor shall have no responsibility or obligation
in connection with providing such services to the Company or any expenses
related thereto.

 

6

 

 

Article 8

 

Relationship of Sub-advisor and Advisor and their Affiliates;

Other Activities of the Advisor and Sub-advisor

 

  

8.1Relationship. The Advisor and the Sub-advisor are not partners or joint
venturers with each other, and nothing in this Agreement shall be construed to
make them such partners or joint venturers. Nothing herein contained shall
prevent the Advisor or Sub-advisor from engaging in or earning fees from other
activities, including, without limitation, the rendering of advice to other
Persons (including other REITs) and the management of other programs advised,
sponsored or organized by the Advisor or Sub-advisor, respectively, or any of
their Affiliates. Nor shall this Agreement limit or restrict the right of any
manager, director, officer, member, partner, employee or equityholder of the
Advisor or Sub-advisor or their Affiliates to engage in or earn fees from any
other business or to render services of any kind to any other Person. Each of
the Advisor and the Sub-advisor shall promptly disclose to the Board the
existence of any condition or circumstance, existing or anticipated, of which it
has knowledge, that creates or which would reasonably result in a conflict of
interest between its obligations to the Company and its obligations to or its
interest in any other Persons. Nothing in this Section 8.1 shall derogate any
restrictions imposed indirectly on the Sub-advisor as set forth in the
Non-Competition Agreement.

 

8.2Time Commitment. The Sub-advisor shall, and shall cause its Affiliates and
their respective employees, officers and agents to, devote to the Company such
time as shall be reasonably necessary to conduct the business and affairs of the
Company in an appropriate manner consistent with the terms of this Agreement.
Each Party acknowledges that the other Party and its Affiliates and their
respective employees, officers and agents may also engage in activities
unrelated to the Company and may provide services to Persons other than the
Company or any of its Affiliates.

 

8.3Advisor and Sub-advisor Meetings. The Parties shall meet on a regular basis
(frequency to be determined) to discuss and consult with one another regarding
the Company and its assets and opportunities. The Parties will provide each
other information regarding the operations and acquisitions of the Company as
reasonably requested by the other. Each of Advisor and Sub-advisor shall have
direct access to the books and records of the Company and of each attorney,
accountant, servicer and other contracting party of the Company (except to the
extent such attorney represents either Party with respect to this Agreement).

 

8.4Investment Opportunities and Allocation. Subject to Article 3 of this
Agreement, Sub-advisor’s obligations with respect to offering investment
opportunities to the Company shall be governed by the Investment Allocation
Agreement, which cannot be amended or modified without the written consent of
the Advisor.

 

8.5Prospectus Guidance. Each of the Advisor and Sub-advisor has read and will
abide by the Prospectus with respect to the Company’s investment objectives,
targeted assets and investment restrictions, targeted markets, leverage,
distribution policy, and investor profile except to the extent directed by the
Board.

 

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Article 9

 

Other Agreements

 

9.1The Advisor shall not agree to an amendment to the Advisory Agreement or
waive any provision thereof, to the extent that such amendment or waiver would
directly or indirectly reduce the amount payable to the Sub-advisor pursuant to
Article 5 of this Agreement or adversely impact the Sub-advisor’s right to
indemnification under Article 13 of this Agreement without the prior written
consent of the Sub-advisor.

 

9.2The Sub-advisor shall use its commercially reasonable efforts to cooperate
with the Advisor to provide an orderly transfer and transition of services upon
the expiration or earlier termination of this Agreement and shall provide any
and all documents, reports and materials belonging or related to the services
provided to the Advisor hereunder, including any and all other documents,
reports and materials otherwise belonging or related to the Advisor or the
Company. Furthermore, the Sub-advisor will, whenever and as reasonably
requested, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered any documents that may be necessary to transition
efficiently any services covered under this Agreement.

 

9.3The Advisor shall have the right, but not the obligation, upon request and
during normal business hours, to meet with key personnel and/or other executive
level employees of the Sub-advisor on an ongoing and regular basis to provide
feedback and input regarding the performance of the Sub-advisor’s services
hereunder

 

9.4The Sub-advisor shall maintain appropriate records of all its activities
hereunder and shall, at the Advisor’s election, provide copies of such records
to the Company or make such records available for inspection and duplication by
the Company, its counsel, auditors and authorized agents, upon notice from the
Advisor.

 

9.5The Sub-advisor will utilize the Advisor’s accounting system in connection
with performing such duties, or a system mutually agreed to between Advisor and
Sub-advisor.

 

Article 10

 

Representations and Warranties

 

10.1The Advisor and the Sub-advisor each hereby represents and warrants to, and
agrees with, the other as follows:

 

(A)Such Party is duly formed and validly existing under the laws of the
jurisdiction of its organization;

 

(B)Such Party has full power and authority to enter into this Agreement and to
conduct its business to the extent contemplated in this Agreement;

 

8

 

  

(C)This Agreement has been duly authorized, executed and delivered by such Party
and constitutes the valid and legally binding agreement of such Party,
enforceable in accordance with its terms against such Party, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium and other
similar laws relating to creditors’ rights generally, and by general equitable
principles;

 

(D)The execution and delivery of this Agreement by such Party and the
performance of its duties and obligations hereunder do not result in a breach of
any of the terms, conditions or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, credit agreement, note or other evidence
of indebtedness, or any lease or other agreement, or any license, permit,
franchise or certificate to which such Party is a party or by which it is bound
or to which its properties are subject or require any authorization or approval
under or pursuant to any of the foregoing, or violate any statute, regulation,
law, order, writ, injunction, judgment or decree to which such Party is subject;

 

(E)To the knowledge of such Party, no consent, approval or authorization of, or
filing, registration or qualification with, any court or governmental authority
on the part of such Party is required for the execution and delivery of this
Agreement by such Party and the performance of its obligations and duties
hereunder and such execution, delivery and performance shall not violate any
other agreement to which such Party is bound; and

 

(F)Such Party is duly qualified and licensed to do and perform all acts and
receive all fees as contemplated by this Agreement and the Advisory Agreement.

 

Article 11

 

Term and Termination of the Agreement

 

11.1Term. This Agreement shall have an initial term ending August 27, 2015 and
shall be automatically renewed for an unlimited number of successive one-year
terms upon renewal of the Advisory Agreement. This Agreement shall be
co-terminus with the Advisory Agreement.

 

11.2Termination. Subject to last sentence of Section 11.1:

 

(A)This Agreement may be terminated by the Advisor, if the Sub-advisor
materially breaches this Agreement; provided, however, that the Sub-advisor
shall have 30 calendar days after the receipt of notice of such breach from the
Advisor to cure such breach or, if such material breach is not of a nature that
can be remedied within such period, the Sub-advisor does not diligently take all
reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(B)This Agreement may be terminated by the Advisor, as a result of any fraud,
criminal conduct, gross negligence or willful misconduct by Sub-advisor or any
Affiliate thereof in the performance of their respective duties hereunder;

 

9

 

  

provided, however, that the Sub-advisor does not cure any such act within 30
calendar days after the receipt of notice of such act (or at such later time as
may be stated in the notice) from the Advisor;

 

(C)This Agreement may be terminated by the Sub-advisor, if the Advisor
materially breaches this Agreement; provided, however, that the Advisor shall
have 30 calendar days after the receipt of notice of such breach from the
Sub-advisor to cure such breach or, if such material breach is not of a nature
that can be remedied within such period, the Advisor does not diligently take
all reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(D)This Agreement may be terminated by the Sub-advisor, as a result of any
fraud, criminal conduct, gross negligence or willful misconduct by the Advisor
or any Affiliate thereof in the performance of their respective duties hereunder
or under the Advisory Agreement; provided, however, that the Advisor does not
cure any such act within 30 calendar days after the receipt of notice of such
act (or at such later time as may be stated in the notice) from the Sub-advisor;

 

(E)This Agreement may be terminated by either Party, if the other Party (1)
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (2) consents to the entry of an order
for relief in an involuntary case under any such law, (3) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) for the other Party or
for any substantial part of its property, or (4) makes any general assignment
for the benefit of creditors under applicable state law;

 

(F)This Agreement may be terminated by either Party, if: (1) an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect has been commenced against the other Party, and such case
has not been dismissed within 60 days after the commencement thereof; or (2) a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) has been appointed for the other Party or has taken possession of the
other Party or any substantial part of its property, and such appointment has
not been rescinded or such possession has not been relinquished within 60 days
after the occurrence thereof.

 

11.3Survival upon Termination. Notwithstanding anything else that may be to the
contrary herein, the expiration or earlier termination of this Agreement shall
not relieve a party for liability for any breach occurring prior to such
expiration or earlier termination. The provisions of Articles 1, 5, 6, 9, 11, 13
and 14 shall survive termination of this Agreement.

 

11.4Sub-advisor’s Obligations on Termination and Obligations. After termination
of this Agreement, the Sub-advisor shall have the responsibilities to the same
extent as the Advisor as set forth in Section 4.03 of the Advisory Agreement.

 

10

 

  

Article 12

 

Assignment

 

This Agreement shall not be assigned by the Sub-advisor, except that this
Agreement may be assigned by the Sub-advisor to an Affiliate of the Sub-advisor
with the consent of the Advisor, such consent not to be unreasonably withheld,
conditioned or delayed. This Agreement shall not be assigned by the Advisor
without the consent of the Sub-advisor; provided, however, this Agreement may be
assigned without the consent of the Sub-advisor to a permitted assignee of the
Advisor under the Advisory Agreement in connection with such a permitted
assignment of the Advisory Agreement by the Advisor.

 

Article 13

 

Indemnification and Limitation of Liability

 

The Advisor shall indemnify and hold harmless the Sub-advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Sub-advisor becomes subject to or
liable (1) that are related to or a result of the performance of, or failure to
perform, services by the Advisor which are required to be performed by it under
this Agreement or under the Advisory Agreement or (2) by reason of actions or
inactions of the Advisor (except in each case to the extent that such
performance or failure to perform or action or inaction results from any
performance or failure to perform services by Sub-advisor under this Agreement).

 

The Sub-advisor shall indemnify and hold harmless the Advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Advisor becomes subject to or liable,
including as a result of claims asserted against it for breach of or
indemnification under the Advisory Agreement, (1) that are related to or a
result of the performance of, or failure to perform, services by Sub-advisor
under this Agreement or (2) by reason of actions or inactions of the Sub-advisor
or its Affiliates or the Advisor is required to indemnify the Company under
Section 5.02 of the Advisory Agreement as a result of any action or inaction by
Sub-advisor under this Agreement.

 

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Article 14

 

Miscellaneous

 

14.1Reaffirmation of Advisory Agreement. Sub-advisor shall use, and shall cause
its Affiliates to use, commercially reasonable best efforts to assist Advisor in
obtaining the reaffirmation or renewal by the Company, or causing the
reaffirmation or renewal by the Company, of the Advisory Agreement.

 

14.2Notices. Any notice, request, demand, approval, consent, waiver or other
communication required or permitted to be given hereunder or to be served upon
any of the Parties hereto (each a “Notice”) shall be in writing and shall be (a)
delivered in person, (b) sent by facsimile transmission (with the original
thereof also contemporaneously given by another method specified in this Section
14.2), (c) sent by a nationally-recognized overnight courier service, or (d)
sent by certified or registered mail (postage prepaid, return receipt
requested), to the address of such Party set forth herein.

 

To the Advisor:

 

Cole Corporate Income Advisors II, LLC

2325 E. Camelback Road, Suite 1100

Phoenix, Arizona 85016

Attention: President

 

with a copy to (which shall not constitute Notice):

 

Duane Morris LLP

30 South 17th Street

Philadelphia, Pennsylvania 19103

Attention: Darrick M. Mix, Esq. and Chad J. Rubin, Esq.

Facsimile: (215) 405-2906

 

To the Sub-advisor:

 

[ARCP Sub-advisor]

405 Park Avenue, 15th Floor

New York, New York 10022

Attention: Richard Silfen

 

with a copy to (which shall not constitute Notice):

 

Weil, Gotshal and Manges LLP

767 Fifth Avenue

New York, New York 10153

Attention: Michael Aiello, Esq. and Matthew Gilroy, Esq.

Facsimile: (212) 310-8007

 

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Either Party may at any time give Notice in writing to the other Party of a
change in its address for the purposes of this Section 14.2. Each Notice shall
be deemed given and effective upon receipt (or refusal of receipt).

 

14.3Modification. This Agreement shall not be amended, supplemented, changed,
modified, terminated or discharged, in whole or in part, except by an instrument
in writing signed by both Parties hereto, or their respective successors or
permitted assigns.

 

14.4Severability. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

 

14.5Construction. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect, without regard to the principles of conflicts of laws thereof.

 

14.6Entire Agreement. This Agreement contains the entire agreement and
understanding between the Parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. In all events, nothing contained
herein shall be read, construed, interpreted or applied in any manner that
prevents or hinders the Company from qualifying as a real estate investment
trust under Section 856(c) of the Code.

 

14.7Waiver. Neither the failure nor any delay on the part of a Party to exercise
any right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or privilege preclude any other or further exercise of the same or of any
other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed
by the Party asserted to have granted such waiver.

 

14.8Gender. Words used herein regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
requires.

 

14.9Titles Not to Affect Interpretation. The titles of Articles and Sections
contained in this Agreement are for convenience only, and they neither form a
part of this Agreement nor are they to be used in the construction or
interpretation hereof.

 

14.10Counterparts. This Agreement may be executed with counterpart signature
pages or in any number of counterparts, each of which shall be deemed to be an
original as against

 

13

 

  

any Party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterpart signature pages or counterparts hereof, individually or
taken together, shall bear the signatures of all of the Parties reflected hereon
as the signatories.

 

[The remainder of this page is intentionally left blank.

Signature page follows.] 

 

14

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date and year first above written.

  

  Cole Corporate Income Advisors II, LLC       By:     Name:       [ARCP
Sub-advisor]       By:     Name:

  

Signature Page to Sub-advisory Agreement between Cole Corporate Income Advisors
II, LLC
and [ARCP Sub-advisor] 

 

 

 

 

 

Exhibit K-5

 

Form of

 

Sub-advisory Agreement

 

between

 

Cole Real Estate Income Strategy (Daily NAV) Advisors, LLC

 

_______________

 

and

 

[ARCP Sub-advisor]

 

_______________

 

[•] [•], 2014 

 

 

 

 

Table of Contents

 

    Page       Article 1 – Definitions 1     Article 2 – Appointment 2    
Article 3 – Duties of the Sub-advisor 3     Article 4 – Authority and Certain
Activities of Sub-advisor 3     Article 5 – Compensation 4       5.1 Fees 4    
  5.2 Expense Reimbursements 4       Article 6 – Allocation of Expense
Reimbursements 6     6.1 O&O Expense Reimbursements 6       6.2 All Other
Expense Reimbursements 6       6.3 Review of Expenses 6       Article 7 –
Advisor’s Responsibilities 7     Article 8 – Relationship of Sub-advisor and
Advisor and their Affiliates; Other Activities of the Advisor and Sub-advisor 7
      8.1 Relationship 7       8.2 Time Commitment 7       8.3 Advisor and
Sub-advisor Meetings 8       8.4 Investment Opportunities and Allocation 8      
8.5 Prospectus Guidance 8       Article 9 – Other Agreements 8     Article 10 –
Representations and Warranties 9       Article 11 – Term and Termination of the
Agreement 10       11.1 Term 10       11.2 Termination 10       11.3 Survival
upon Termination 11       11.4 Sub-advisor’s Obligations on Termination and
Obligations 11       Article 12 – Assignment 11     Article 13 – Indemnification
and Limitation of Liability 11     Article 14 – Miscellaneous 12       14.1
Reaffirmation of Advisory Agreement 12

 

i

 

  

14.2 Notices 12       14.3 Modification 13       14.4 Severability 13       14.5
Construction 13       14.6 Entire Agreement 13       14.7 Waiver 14       14.8
Gender 14       14.9 Titles Not to Affect Interpretation 14       14.10
Counterparts 14

  

ii

 

 

Sub-advisory Agreement

 

This Sub-advisory Agreement, dated as of [•], 2014 (this “Agreement”), is
between, Cole Real Estate Income Strategy (Daily NAV) Advisors, LLC, a Delaware
limited liability company (the “Advisor”) and [ARCP Sub-Advisor] a Delaware
limited liability company (the “Sub-advisor”)(each a “Party” and collectively,
the “Parties”).

 

WITNESSETH

 

WHEREAS, Cole Real Estate Income Strategy (Daily NAV), Inc., a Maryland
corporation (the “Company”) has appointed Advisor as its advisor pursuant to the
Amended and Restated Advisory Agreement between the Company, Cole Real Estate
Income Strategy (Daily NAV) Operating Partnership, LP, and the Advisor, dated as
of August 26, 2013 (as the same may be amended, restated or otherwise modified
from time to time in accordance with its terms, the “Advisory Agreement”);

 

WHEREAS, the Advisor desires to avail itself of the knowledge, experience,
sources of information, advice, assistance and certain facilities available to
the Sub-advisor and to have the Sub-advisor undertake the duties and
responsibilities hereinafter set forth, on behalf of the Advisor, and subject to
the supervision of the Advisor and the Board, all as provided herein; and

 

WHEREAS, the Sub-advisor is willing to undertake such duties and
responsibilities, subject to the supervision of the Advisor and the Board, on
the terms and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the Parties hereto agree as follows:

 

Article 1

 

Definitions

 

Capitalized and other terms that are defined in the Advisory Agreement but not
otherwise defined in this Agreement have the respective meanings ascribed to
such terms in the Advisory Agreement, a copy of which is attached hereto as
Appendix A.

 

The following defined terms used in this Agreement shall have the meanings
specified below:

 

“Advisor” has the meaning set forth in the preamble to this Agreement.

 

“Advisory Agreement” has the meaning set forth in the recitals to this
Agreement.

 

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“Affiliate” has the meaning set forth in the Advisory Agreement. For the
avoidance of doubt, none of the Company, the Sub-advisor, any subsidiary of the
Company, any subsidiary of the Sub-advisor and any other Person controlled by,
controlling or under common control with the Sub-advisor shall be an Affiliate
of the Advisor and none of the Company, the Advisor, any subsidiary of the
Company, any subsidiary of the Advisor and any other Person controlled by,
controlling or under common control with the Advisor shall be an Affiliate of
the Sub-advisor.

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Company” has the meaning set forth in the recitals to this Agreement.

 

“Investment Allocation Agreement” means that certain investment allocation
agreement, dated the date hereof, among ARC Properties Operating Partnership,
L.P. and the [ARCP Sub-advisors].

 

“Non-Competition Agreement” means that certain non-competition agreement, dated
the date hereof, among ARC Properties Operating Partnership, L.P., RCS Capital
Corporation and certain of ARC Properties Operating Partnership, L.P.’s key
executives.

 

“Notice” has the meaning set forth in Section 14.2 of this Agreement.

 

“Party” has the meaning set forth in the preamble to this Agreement.

 

“Prospectus” means the prospectus dated May 28, 2014, as amended or supplemented
from time to time, filed by the Company pursuant to Rule 424 promulgated under
the Securities Act of 1933, as amended.

 

“Purchase Agreement” means that certain Equity Purchase Agreement, dated as of
September 30, 2014, by and between ARC Properties Operating Partnership, L.P.
and RCS Capital Corporation.

 

“Sub-advisor” has the meaning set forth in the preamble to this Agreement.

 

Article 2

 

Appointment

 

The Advisor, pursuant to its authority to engage a duly qualified and licensed
Person in the performance of its duties under the Advisory Agreement pursuant to
Section 2.02 of the Advisory Agreement, hereby appoints the Sub-advisor to serve
as the Sub-advisor for the Company. The Sub-advisor hereby accepts such
appointment. Subject to the supervision of, the Advisor and the Board, the
Sub-advisor agrees to perform the duties of the Advisor set forth in Sections
2.02(a), (b), (e) (as it relates to the Assets), (f) , (g) (as it relates to the
Assets), (h) (as it relates to the Assets), (j), (m), (s), (u), (w), (x) and (z)
of the Advisory Agreement and to assist the Advisor in the performance of the
duties set forth in Section 2.02(k), (p), (q), (r), (v) and (y) of the

 

2

 

  

Advisory Agreement, all on the terms and subject to the conditions set forth in
this Agreement.

 

Article 3

 

Duties of the Sub-advisor

 

Under the Advisory Agreement, the Advisor is responsible for using its
commercially reasonable best efforts to present to the Company potential
investment opportunities consistent with the investment objectives and policies
of the Company as determined and adopted from time to time by the Board and
managing and supervising the operations and administration of the Company’s
Assets. Consistent with Article 2 hereof and, subject to the Investment
Allocation Agreement, the Sub-advisor undertakes to use commercially reasonable
best efforts to present investment opportunities to the Company consistent with
the investment objectives and policies of the Company as determined and adopted
from time to time by the Board and to manage and supervise the operations and
administration of the Company’s Assets. Subject to the limitations set forth in
this Agreement and the Advisory Agreement, consistent with the provisions of the
Articles of Incorporation and Bylaws and subject to the supervision of the
Advisor and the continuing and exclusive authority of the Board over the
supervision of the Company, the Sub-advisor shall, either directly or by
engaging an Affiliate, perform, and assist the Advisor in the performance of,
the duties under the Advisory Agreement set forth in Article 2 of this
Agreement, which duties are incorporated herein by reference as if fully set
forth herein. In the event that the Sub-advisor engages a third party to perform
the services that the Advisor has engaged Sub-advisor to perform pursuant to
this Agreement, such third party shall be compensated by the Sub-advisor out of
the fees it received pursuant to Article 5 of this Agreement; provided, however
that third-party property management fees payable by tenants of a property,
including amounts payable to affiliates of the Sub-advisor, may be charged to
and paid by such tenant and will not reduce the fees paid to the Sub-advisor.

 

Article 4

 

Authority and Certain Activities of Sub-advisor

 

To the same extent as the Advisor and subject to the supervision of the Advisor
and the Board, the Sub-advisor shall have the authority to enter into contracts
in the name of the Company to the extent set forth in Section 2.02 of the
Advisory Agreement in connection with the performance of its duties under
Article 2, shall have the authority set forth in Section 2.03 of the Advisory
Agreement, shall have the authority to establish and maintain bank accounts as
set forth in Section 2.04 of the Advisory Agreement with respect to the Assets,
shall maintain books and records for the Company with respect to the Assets as
set forth in Section 2.05 of the Advisory Agreement, and shall abide by the
limitations of Section 2.06 of the Advisory Agreement, all of which are
incorporated herein by reference as if fully set forth herein. The Advisor
hereby grants to the Sub-Advisor, to the extent of any proprietary interest the
Advisor or its Affiliates may have in

 

3

 

  

any of the names “Cole” or any derivative thereof a non-transferable,
non-assignable, non-exclusive, royalty-free right and license to use the name
“Cole” or any derivative thereof solely in connection with providing services
hereunder until the expiration or termination of this Agreement.

 

Article 5

 

Compensation

 

As compensation for the services provided pursuant to this Agreement, the
Advisor shall pay to Sub-advisor, solely out of payments received by Advisor
from the Company under the Advisory Agreement, simultaneously with the payment
by the Company to the Advisor:

 

5.1Fees. 50% of any Fees paid to the Advisor pursuant to Section 3.01 in
whatever form payable by the Company; provided, however that, during the
calendar month and calendar year in which this Agreement is executed, the
Sub-Advisor shall be entitled to 100% of the Advisory Fee and 100% Performance
Fee for such calendar month and calendar year, respectively, prorated for the
number of days elapsed since the beginning of such month and year until the date
hereof and 50% of the balance of the Advisory Fee and Performance fee payable
for such month and year after subtracting such prorated amount from the total
Advisory Fee and Performance Fee payable.

 

5.2Expense Reimbursements. Subject to Article 6 of this Agreement and Section
3.04 of the Advisory Agreement, the Advisor shall reimburse Sub-advisor to the
extent the Advisor receives reimbursement from the Company for the following
expenses of the Sub-advisor to the extent they are actually incurred by the
Sub-advisor in connection with the services the Sub-advisor provides pursuant to
this Agreement; provided, however that in each case the reimbursement is
permitted under the Advisory Agreement and Prospectus and such reimbursements
shall be determined consistent with past practice:

 

(A)Acquisition Expenses incurred in connection with the selection and
acquisition of Assets in an amount up to 0.5% of the Contract Purchase Price,
including such expenses incurred related to assets pursued or considered but not
ultimately acquired by the Company, subject to limitations set forth in the
Advisory Agreement and the Articles of Incorporation;

 

(B)The actual cost incurred by the Sub-advisor of goods, services and materials
used by the Company and obtained from Persons not affiliated with the
Sub-advisor, other than Acquisition Expenses, including property management and
leasing services;

 

4

 

  

(C)Expenses of managing and operating Assets and Other Investments owned by the
Company, whether payable to an Affiliate of the Company or the Sub-advisor,
including wages and salaries and other personnel-related expenses, unless
otherwise waived, in whole or in part, by the Sub-advisor or the Affiliate in
its sole discretion, of all on-site and off-site employees of the Sub-advisor or
the Affiliate who are engaged in the operation, management, maintenance and
leasing or access control of the Asset, or to a non-affiliated Person;

 

(D)Reimbursement for administrative service expenses of the Sub-advisor,
including all costs and expenses incurred by the Sub-advisor in fulfilling its
duties under the Sub-advisory Agreement, provided, however that the
reimbursement of the Advisor and the Sub-advisor for administrative service
expenses, in each case, shall not be greater than 50% of the amounts permitted
by the Advisory Agreement. Such costs and expenses may include reasonable wages
and salaries and other personnel-related expenses of all employees of the
Sub-advisor or its Affiliates who are engaged in the management, administration
and operations and marketing of the Company and its Assets, with respect to the
Sub-advisor who are engaged in the management, administration and operations of
the Company’s Assets and shall include taxes, insurance and benefits relating to
such employees, and legal, travel and other out-of-pocket expenses which are
directly related to their services provided under this Agreement, provided,
however that the Sub-advisor shall not be reimbursed for salaries and benefits
paid to persons who are executive officers of the Company, nor shall the Company
pay personnel costs in connection with services for which the Advisor or
Sub-advisor receives an Acquisition Fee or Disposition Fee; and

 

(E)To the extent that the Sub-advisor or its Affiliates are requested and
authorized in writing to provide any services in connection with the formation
of the Company and the qualification and registration of an Offering, and the
marketing and distribution of Shares, the Sub-advisor shall, subject to Section
6.1, be entitled to reimbursement out of reimbursements paid by the Company to
the Advisor for Organization and Offering Expenses.

 

Notwithstanding anything to the contrary contained in this Article 5:

 

(i)All Acquisition Fees and Acquisition Expenses payable in connection with
those certain Assets separately disclosed in writing prior to the date of the
Purchase Agreement, with respect to which Sub-advisor represents that a purchase
agreement or letter of intent has been executed shall be paid to the Sub-advisor
and the Advisor shall not be entitled to any Acquisition Fees or Acquisition
Expenses with respect to such Assets;

 

5

 

  

(ii)All expenses incurred by the Advisor incurred prior to the date of this
Agreement shall be treated as expenses of the Sub-Advisor for purposes of this
Agreement; and

 

(iii)All expenses incurred by the Sub-advisor under the Interim Sub-advisory
Agreement between the Advisor and a subsidiary of RCS Capital Corporation, shall
be treated as expenses of the Advisor for purposes of this Agreement.

 

Article 6

 

Allocation of Expense Reimbursements

 

6.1O&O Expense Reimbursements. All Organization and Offering Expense
reimbursements received from the Company, to the extent that they are less than
the full amount of Organization and Offering Expense reimbursements due to the
Advisor and the Sub-advisor, will be apportioned between the Advisor and
Sub-advisor pro rata based on the amount of such Organization and Offering
Expenses reimbursements due each that relate to the period commencing on the
date of this Agreement and ending as of the date of the reimbursement; provided,
however that within 50 days after the end of the month in which the Offering
terminates, the Sub-advisor shall reimburse the Advisor the Sub-advisor’s pro
rata share of reimbursements to the Company by the Advisor (based on its pro
rata share of reimbursements received from the Company as so determined)
pursuant to Section 3.02(a) of the Advisory Agreement for Organization and
Offering Expenses reimbursed by the Company to the extent that such
reimbursements by the Company exceed 15.0% of the Gross Proceeds raised in the
completed Offering.

 

6.2All Other Expense Reimbursements. All expense reimbursements will be
apportioned between the Advisor and Sub-advisor pro rata based on the amount of
such expense reimbursements due each that relate to the period commencing on the
later of the date of this Agreement or the beginning of the applicable quarter
to which such reimbursable expense relates and ending as of the date of the
reimbursement; provided, however that the Sub-advisor shall repay the Advisor
its pro rata share (as so determined) of any Excess Amount that the Advisor is
required to repay the Company pursuant to Section 3.04 of the Advisory
Agreement.

 

6.3Review of Expenses. Within 35 days of the end of each month in the case of
expenses other than Organization and Offering Expenses and 10 days of the end of
each month in the case of Organization and Offering Expenses, each Party shall
provide the other Party with a detailed statement of such Party’s aggregate
expenses (including a specific statement of Operating Expenses) other than
Organization and Offering Expenses and a statement of such Party’s aggregate
Organization and Offering Expenses, respectively, incurred during such month for
the purpose of the Parties’ jointly reviewing such expenses against applicable

 

6

 

  

caps and limitations set forth in the Advisory Agreement and preparing the
statements required under Section 3.04(c) and (d) of the Advisory Agreement.

 

Article 7

 

Advisor’s Responsibilities

 

The Advisor shall be solely responsible for all services to the Company under
the Advisory Agreement other than the services covered by Article 3 of this
Agreement and shall bear any expenses related thereto required to be borne by
the Advisor or its Affiliates and shall be entitled to reimbursement for all
expenses related thereto, to the extent permitted under the Advisory Agreement
and the Prospectus. The Sub-advisor shall have no responsibility or obligation
in connection with providing such services to the Company or any expenses
related thereto.

 

Article 8

 

Relationship of Sub-advisor and Advisor and their Affiliates;

Other Activities of the Advisor and Sub-advisor

 

8.1Relationship. The Advisor and the Sub-advisor are not partners or joint
venturers with each other, and nothing in this Agreement shall be construed to
make them such partners or joint venturers. Nothing herein contained shall
prevent the Advisor or Sub-advisor from engaging in or earning fees from other
activities, including, without limitation, the rendering of advice to other
Persons (including other REITs) and the management of other programs advised,
sponsored or organized by the Advisor or Sub-advisor, respectively, or any of
their Affiliates. Nor shall this Agreement limit or restrict the right of any
manager, director, officer, member, partner, employee or equityholder of the
Advisor or Sub-advisor or their Affiliates to engage in or earn fees from any
other business or to render services of any kind to any other Person. Each of
the Advisor and the Sub-advisor shall promptly disclose to the Board the
existence of any condition or circumstance, existing or anticipated, of which it
has knowledge, that creates or which would reasonably result in a conflict of
interest between its obligations to the Company and its obligations to or its
interest in any other Persons. Nothing in this Section 8.1 shall derogate any
restrictions imposed indirectly on the Sub-advisor as set forth in the
Non-Competition Agreement.

 

8.2Time Commitment. The Sub-advisor shall, and shall cause its Affiliates and
their respective employees, officers and agents to, devote to the Company such
time as shall be reasonably necessary to conduct the business and affairs of the
Company in an appropriate manner consistent with the terms of this Agreement.
Each Party acknowledges that the other Party and its Affiliates and their
respective employees, officers and agents may also engage in activities
unrelated to the Company and may provide services to Persons other than the
Company or any of its Affiliates.

 

7

 

  

8.3Advisor and Sub-advisor Meetings. The Parties shall meet on a regular basis
(frequency to be determined) to discuss and consult with one another regarding
the Company and its assets and opportunities. The Parties will provide each
other information regarding the operations and acquisitions of the Company as
reasonably requested by the other. Each of Advisor and Sub-advisor shall have
direct access to the books and records of the Company and of each attorney,
accountant, servicer and other contracting party of the Company (except to the
extent such attorney represents either Party with respect to this Agreement).

 

8.4Investment Opportunities and Allocation. Subject to Article 3 of this
Agreement, Sub-advisor’s obligations with respect to offering investment
opportunities to the Company shall be governed by the Investment Allocation
Agreement, which cannot be amended or modified without the written consent of
the Advisor.

 

8.5Prospectus Guidance. Each of the Advisor and Sub-advisor has read and will
abide by the Prospectus with respect to the Company’s investment objectives,
targeted assets and investment restrictions, targeted markets, leverage,
distribution policy, and investor profile except to the extent directed by the
Board.

 

Article 9

 

Other Agreements

 

9.1The Advisor shall not agree to any amendment to the Advisory Agreement or
waive any provision thereof without the prior written consent of the
Sub-advisor.

 

9.2The Sub-advisor shall use its commercially reasonable efforts to cooperate
with the Advisor to provide an orderly transfer and transition of services upon
the expiration or earlier termination of this Agreement and shall provide any
and all documents, reports and materials belonging or related to the services
provided to the Advisor hereunder, including any and all other documents,
reports and materials otherwise belonging or related to the Advisor or the
Company. Furthermore, the Sub-advisor will, whenever and as reasonably
requested, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered any documents that may be necessary to transition
efficiently any services covered under this Agreement.

 

9.3The Advisor shall have the right, but not the obligation, upon request and
during normal business hours, to meet with key personnel and/or other executive
level employees of the Sub-advisor on an ongoing and regular basis to provide
feedback and input regarding the performance of the Sub-advisor’s services
hereunder

 

9.4The Sub-advisor shall maintain appropriate records of all its activities
hereunder and shall, at the Advisor’s election, provide copies of such records
to the Company or make such records available for inspection and duplication by
the

 

8

 

  

Company, its counsel, auditors and authorized agents, upon notice from the
Advisor.

 

9.5The Sub-advisor will utilize the Advisor’s accounting system in connection
with performing such duties, or a system mutually agreed to between Advisor and
Sub-advisor.

 

Article 10

 

Representations and Warranties

 

10.1The Advisor and the Sub-advisor each hereby represents and warrants to, and
agrees with, the other as follows:

 

(A)Such Party is duly formed and validly existing under the laws of the
jurisdiction of its organization;

 

(B)Such Party has full power and authority to enter into this Agreement and to
conduct its business to the extent contemplated in this Agreement;

 

(C)This Agreement has been duly authorized, executed and delivered by such Party
and constitutes the valid and legally binding agreement of such Party,
enforceable in accordance with its terms against such Party, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium and other
similar laws relating to creditors’ rights generally, and by general equitable
principles;

 

(D)The execution and delivery of this Agreement by such Party and the
performance of its duties and obligations hereunder do not result in a breach of
any of the terms, conditions or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, credit agreement, note or other evidence
of indebtedness, or any lease or other agreement, or any license, permit,
franchise or certificate to which such Party is a party or by which it is bound
or to which its properties are subject or require any authorization or approval
under or pursuant to any of the foregoing, or violate any statute, regulation,
law, order, writ, injunction, judgment or decree to which such Party is subject;

 

(E)To the knowledge of such Party, no consent, approval or authorization of, or
filing, registration or qualification with, any court or governmental authority
on the part of such Party is required for the execution and delivery of this
Agreement by such Party and the performance of its obligations and duties
hereunder and such execution, delivery and performance shall not violate any
other agreement to which such Party is bound; and

 

9

 

  

(F)Such Party is duly qualified and licensed to do and perform all acts and
receive all fees as contemplated by this Agreement and the Advisory Agreement.

 

Article 11

 

Term and Termination of the Agreement

 

11.1Term. This Agreement shall have an initial term ending November 30, 2014 and
shall be automatically renewed for an unlimited number of successive one-year
terms upon renewal of the Advisory Agreement. This Agreement shall be
co-terminus with the Advisory Agreement.

 

11.2Termination. Subject to last sentence of Section 11.1:

 

(A)This Agreement may be terminated by the Advisor, if the Sub-advisor
materially breaches this Agreement; provided, however, that the Sub-advisor
shall have 30 calendar days after the receipt of notice of such breach from the
Advisor to cure such breach or, if such material breach is not of a nature that
can be remedied within such period, the Sub-advisor does not diligently take all
reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(B)This Agreement may be terminated by the Advisor, as a result of any fraud,
criminal conduct, gross negligence or willful misconduct by Sub-advisor or any
Affiliate thereof in the performance of their respective duties hereunder;
provided, however, that the Sub-advisor does not cure any such act within 30
calendar days after the receipt of notice of such act (or at such later time as
may be stated in the notice) from the Advisor;

 

(C)This Agreement may be terminated by the Sub-advisor, if the Advisor
materially breaches this Agreement; provided, however, that the Advisor shall
have 30 calendar days after the receipt of notice of such breach from the
Sub-advisor to cure such breach or, if such material breach is not of a nature
that can be remedied within such period, the Advisor does not diligently take
all reasonable steps to cure such breach and does not cure such breach within 60
days;

 

(D)This Agreement may be terminated by the Sub-advisor, as a result of any
fraud, criminal conduct, gross negligence or willful misconduct by the Advisor
or any Affiliate thereof in the performance of their respective duties hereunder
or under the Advisory Agreement; provided, however, that the Advisor does not
cure any such act within 30 calendar days after the receipt of notice of such
act (or at such later time as may be stated in the notice) from the Sub-advisor;

 

10

 

  

(E)This Agreement may be terminated by either Party, if the other Party (1)
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (2) consents to the entry of an order
for relief in an involuntary case under any such law, (3) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) for the other Party or
for any substantial part of its property, or (4) makes any general assignment
for the benefit of creditors under applicable state law; or

 

(F)This Agreement may be terminated by either Party, if: (1) an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect has been commenced against the other Party, and such case
has not been dismissed within 60 days after the commencement thereof; or (2) a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) has been appointed for the other Party or has taken possession of the
other Party or any substantial part of its property, and such appointment has
not been rescinded or such possession has not been relinquished within 60 days
after the occurrence thereof.

 

11.3Survival upon Termination. Notwithstanding anything else that may be to the
contrary herein, the expiration or earlier termination of this Agreement shall
not relieve a party for liability for any breach occurring prior to such
expiration or earlier termination. The provisions of Articles 1, 5, 6, 9, 11, 13
and 14 shall survive termination of this Agreement.

 

11.4Sub-advisor’s Obligations on Termination and Obligations. After termination
of this Agreement, the Sub-advisor shall have the responsibilities to the same
extent as the Advisor as set forth in Section 4.03 of the Advisory Agreement.

 

Article 12

 

Assignment

 

This Agreement shall not be assigned by the Sub-advisor, except that this
Agreement may be assigned by the Sub-advisor to an Affiliate of the Sub-advisor
with the consent of the Advisor, such consent not to be unreasonably withheld,
conditioned or delayed. This Agreement shall not be assigned by the Advisor
without the consent of the Sub-advisor; provided, however, this Agreement may be
assigned without the consent of the Sub-advisor to a permitted assignee of the
Advisor under the Advisory Agreement in connection with such a permitted
assignment of the Advisory Agreement by the Advisor.

 

Article 13

 

Indemnification and Limitation of Liability

 

The Advisor shall indemnify and hold harmless the Sub-advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including,

 

11

 

  

without limitation, reasonable attorneys’ fees and other legal fees and
expenses), judgments, fines, settlements, and other amounts arising from any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Sub-advisor becomes subject to or
liable (1) that are related to or a result of the performance of, or failure to
perform, services by the Advisor which are required to be performed by it under
this Agreement or under the Advisory Agreement or (2) by reason of actions or
inactions of the Advisor (except in each case to the extent that such
performance or failure to perform or action or inaction results from any
performance or failure to perform services by Sub-advisor under this Agreement).

 

The Sub-advisor shall indemnify and hold harmless the Advisor from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorneys’ fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that the Advisor becomes subject to or liable,
including as a result of claims asserted against it for breach of or
indemnification under the Advisory Agreement, (1) that are related to or a
result of the performance of, or failure to perform, services by Sub-advisor
under this Agreement or (2) by reason of actions or inactions of the Sub-advisor
or its Affiliates or the Advisor is required to indemnify the Company or Cole
Real Estate Income Strategy (Daily NAV) Operating Partnership, LP under Section
5.02 of the Advisory Agreement as a result of any action or inaction by
Sub-advisor under this Agreement.

 

Article 14

 

Miscellaneous

 

14.1Reaffirmation of Advisory Agreement. Sub-advisor shall use, and shall cause
its Affiliates to use, commercially reasonable best efforts to assist Advisor in
obtaining the reaffirmation or renewal by the Company, or causing the
reaffirmation or renewal by the Company, of the Advisory Agreement.

 

14.2Notices. Any notice, request, demand, approval, consent, waiver or other
communication required or permitted to be given hereunder or to be served upon
any of the Parties hereto (each a “Notice”) shall be in writing and shall be (a)
delivered in person, (b) sent by facsimile transmission (with the original
thereof also contemporaneously given by another method specified in this Section
14.2), (c) sent by a nationally-recognized overnight courier service, or (d)
sent by certified or registered mail (postage prepaid, return receipt
requested), to the address of such Party set forth herein.

 

To the Advisor:

 

Cole Real Estate Income Strategy (Daily NAV) Advisors, LLC

2325 E. Camelback Road, Suite 1100

Phoenix, Arizona 85016

 

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Attention: President

 

with a copy to (which shall not constitute Notice):

 

Duane Morris LLP

30 South 17th Street

Philadelphia, Pennsylvania 19103

Attention: Darrick M. Mix, Esq. and Chad J. Rubin, Esq.

Facsimile: (215) 405-2906

 

To the Sub-advisor:

 

[ARCP Sub-advisor]

405 Park Avenue, 15th Floor

New York, New York 10022

Attention: Richard Silfen

 

with a copy to (which shall not constitute Notice):

 

Weil, Gotshal and Manges LLP

767 Fifth Avenue

New York, New York 10153

Attention: Michael Aiello, Esq. and Matthew Gilroy, Esq.

Facsimile: (212) 310-8007

 

Either Party may at any time give Notice in writing to the other Party of a
change in its address for the purposes of this Section 14.2. Each Notice shall
be deemed given and effective upon receipt (or refusal of receipt).

 

14.3Modification. This Agreement shall not be amended, supplemented, changed,
modified, terminated or discharged, in whole or in part, except by an instrument
in writing signed by both Parties hereto, or their respective successors or
permitted assigns.

 

14.4Severability. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

 

14.5Construction. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect, without regard to the principles of conflicts of laws thereof.

 

14.6Entire Agreement. This Agreement contains the entire agreement and
understanding between the Parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature

 

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whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. In all events, nothing contained
herein shall be read, construed, interpreted or applied in any manner that
prevents or hinders the Company from qualifying as a real estate investment
trust under Section 856(c) of the Code.

 

14.7Waiver. Neither the failure nor any delay on the part of a Party to exercise
any right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or privilege preclude any other or further exercise of the same or of any
other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed
by the Party asserted to have granted such waiver.

 

14.8Gender. Words used herein regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
requires.

 

14.9Titles Not to Affect Interpretation. The titles of Articles and Sections
contained in this Agreement are for convenience only, and they neither form a
part of this Agreement nor are they to be used in the construction or
interpretation hereof.

 

14.10Counterparts. This Agreement may be executed with counterpart signature
pages or in any number of counterparts, each of which shall be deemed to be an
original as against any Party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterpart signature pages or counterparts
hereof, individually or taken together, shall bear the signatures of all of the
Parties reflected hereon as the signatories.

 

[The remainder of this page is intentionally left blank.

Signature page follows.]

 

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date and year first above written.

 

 

  Cole Real Estate Income Strategy (Daily NAV) Advisors, LLC       By:     Name:
      [ARCP Sub-advisor]       By:     Name:

  

Signature Page to Sub-advisory Agreement between Cole Real Estate Income
Strategy
(Daily NAV) Advisors, LLC and [ARCP Sub-advisor]