Exhibit 10.1

EXECUTION VERSION

 

 

PURCHASE AND SALE AGREEMENT

by and between

VEREIT OPERATING PARTNERSHIP, L.P.

and

CCA ACQUISITION, LLC

Dated November 13, 2017

 

 

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Table of Contents

 

ARTICLE I SALE AND PURCHASE OF SHARES    1  

Section 1.1

     Sale and Purchase of the Shares      1  

Section 1.2

     Purchase Price      1  

Section 1.3

     Estimated Adjustment      1  

Section 1.4

     Post-Closing Adjustment      2  

Section 1.5

     Tax Treatment      4   ARTICLE II CLOSING    4  

Section 2.1

     Closing; Closing Date      4  

Section 2.2

     Closing Deliveries      4   ARTICLE III REPRESENTATIONS AND WARRANTIES OF
SELLER    5  

Section 3.1

     Organization of Seller; Authority; Conflicts      6  

Section 3.2

     Organization of the Company; Capitalization      7  

Section 3.3

     Purchased Subsidiaries      7  

Section 3.4

     Books and Records; Financial Statements; Liabilities      8  

Section 3.5

     Absence of Certain Changes      9  

Section 3.6

     Material Contracts      9  

Section 3.7

     Legal Proceedings      10  

Section 3.8

     Compliance with Applicable Laws; Permits      10  

Section 3.9

     Certain Regulatory Matters      10  

Section 3.10

     Taxes      13  

Section 3.11

     Employees      15  

Section 3.12

     Property and Assets; Sufficiency of Assets      16  

Section 3.13

     Intellectual Property      16  

Section 3.14

     Insurance      17  

Section 3.15

     Data Privacy      17  

Section 3.16

     Intercompany Agreements      17  

Section 3.17

     Brokers      18  

Section 3.18

     Certificates      18  

Section 3.19

     Disclaimer of Other Representations and Warranties      18   ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER    19  

Section 4.1

     Organization; Authority; Conflicts      19  

Section 4.2

     Financial Capability      19  

Section 4.3

     Brokers      20  

Section 4.4

     Legal Proceedings      20  

Section 4.5

     Investment      20  

Section 4.6

     Regulatory Status      20  

Section 4.7

     Certificates      21  

Section 4.8

     Inspection; No Other Representations      21   ARTICLE V ADDITIONAL
AGREEMENTS    21  

Section 5.1

     Conduct of the Company Business before the Closing      21  

Section 5.2

     Efforts to Close; Consents and Approvals      24  

 

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Section 5.3

     Access to Information      25  

Section 5.4

     Notifications      26  

Section 5.5

     Confidentiality      26  

Section 5.6

     Publicity      26  

Section 5.7

     Post-Closing Preservation of Books and Records      27  

Section 5.8

     Employment and Benefit Matters      27  

Section 5.9

     Tax Matters      29  

Section 5.10

     Directors’ and Officers’ Indemnification and Insurance      32  

Section 5.11

     Services Agreement      33  

Section 5.12

     No-Shop      34  

Section 5.13

     Pre-Closing Restructuring; Corporate Name      34  

Section 5.14

     Shared Contracts      35  

Section 5.15

     Shared IT Contracts      35  

Section 5.16

     Seller-Developed Software      36  

Section 5.17

     Releases      36  

Section 5.18

     Non-Competition; Non-Solicit and No-Hire      37  

Section 5.19

     Company NLR Board of Directors      38  

Section 5.20

     Intercompany Agreements      38  

Section 5.21

     Insurance; Claims      38  

Section 5.22

     Financing      39   ARTICLE VI CONDITIONS PRECEDENT    39  

Section 6.1

     Conditions to Each Party’s Obligation      39  

Section 6.2

     Conditions to Obligation of Purchaser      40  

Section 6.3

     Conditions to Obligation of Seller      40   ARTICLE VII INDEMNIFICATION   
41  

Section 7.1

     Survival      41  

Section 7.2

     Indemnification by Seller      41  

Section 7.3

     Indemnification by Purchaser      42  

Section 7.4

     Limitations on Indemnification      42  

Section 7.5

     Indemnification Procedures      43  

Section 7.6

     Calculation of Losses      44  

Section 7.7

     Payment      45  

Section 7.8

     Tax Treatment of Indemnity Payments      45  

Section 7.9

     Exclusive Remedy      45   ARTICLE VIII TERMINATION    46  

Section 8.1

     Termination of this Agreement      46  

Section 8.2

     Procedure Upon Termination      46  

Section 8.3

     Effect of Termination      46   ARTICLE IX GENERAL PROVISIONS    47  

Section 9.1

     Expenses      47  

Section 9.2

     Notices      47  

Section 9.3

     Interpretation; Disclosure Schedule      49  

Section 9.4

     Counterparts      49  

 

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Section 9.5

     Entire Agreement; Construction      50  

Section 9.6

     Amendment      50  

Section 9.7

     Waiver      50  

Section 9.8

     Governing Law; Waiver of Jury Trial      50  

Section 9.9

     Severability      50  

Section 9.10

     Assignment      51  

Section 9.11

     No Third Party Beneficiaries      51  

Section 9.12

     Enforcement of Agreement      51  

Section 9.13

     Waiver of Conflicts; Privilege      51  

Section 9.14

     Further Assurances      52  

 

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SCHEDULES

 

Schedule I

     -      Definitions

Schedule II

     -      Disclosure Schedule

Schedule 1.3

     -      Agreed Accounting Principles EXHIBITS     

EXHIBIT A

     -      Services Agreement

 

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PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is entered into as of
November 13, 2017 by and between VEREIT Operating Partnership, L.P., a Delaware
limited partnership (“Seller”), and CCA Acquisition, LLC, a Delaware limited
liability corporation (“Purchaser”). Each of Purchaser and Seller is referred to
herein as a “Party” and collectively as the “Parties.” Capitalized terms used
herein and not otherwise defined have the meanings set forth in Schedule I.

RECITALS

WHEREAS, Seller owns, of record and beneficially, in the aggregate, one hundred
percent (100%) of the issued and outstanding shares of common stock, par value
$0.01 per share, (the “Shares”) of Cole Capital Advisors, Inc., an Arizona
corporation (the “Company”);

WHEREAS, the Company is engaged, either directly or through one or more
Subsidiaries, in the business (the “Company Business”) of sponsoring, managing,
providing services to and distributing interests in non-listed real estate
investment trusts that are registered under the Exchange Act for sale to retail
investors (“NLRs”); and

WHEREAS, Seller desires to sell, transfer, assign, convey and deliver to
Purchaser, and Purchaser desires to purchase, acquire and accept from Seller,
all of the Shares, subject to the terms and conditions set forth in this
Agreement.

NOW, THEREFORE, in order to consummate the transactions contemplated hereby, and
in consideration of the mutual agreements set forth herein and other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I

SALE AND PURCHASE OF SHARES

Section 1.1 Sale and Purchase of the Shares. On the terms and subject to the
conditions of this Agreement, in consideration for the aggregate purchase price
specified in Section 1.2, at the Closing, Seller shall sell to Purchaser, and
Purchaser shall purchase from Seller, the Shares, free and clear of all Liens
other than restrictions on transfer under applicable securities laws.

Section 1.2 Purchase Price. On the terms and subject to the conditions of this
Agreement, in consideration for the Shares, at the Closing, Purchaser shall pay
to Seller an aggregate amount (the “Closing Cash Payment Amount”) equal to
(a) one hundred and twenty million dollars ($120,000,000) (the “Base Purchase
Price”), plus (b) the Estimated Adjustment Amount, as calculated in accordance
with Section 1.3. The Closing Cash Payment Amount, as adjusted pursuant to
Section 1.4, shall be referred to herein as the “Purchase Price.”

Section 1.3 Estimated Adjustment.

(a) No later than three (3) Business Days before the Closing Date, Seller shall
deliver to Purchaser a statement (the “Pre-Closing Statement”), prepared in good
faith and in a manner consistent with the Agreed Accounting Principles, setting
forth an estimate of (i) the Closing Cash (the “Estimated Closing Cash”), (ii)
the Closing Indebtedness (the “Estimated Closing Indebtedness”), (iii) the
amount of the Company Transaction Expenses (the “Estimated Company Transaction
Expenses”),

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(iv) the Closing Working Capital Amount (the “Estimated Closing Working Capital
Amount”) and a schedule detailing the computation thereof, and either the
resulting Closing Working Capital Excess (the “Estimated Closing Working Capital
Excess”) or Closing Working Capital Shortfall (the “Estimated Closing Working
Capital Shortfall”), as the case may be, and (v) the Estimated Adjustment Amount
calculated on the basis of the foregoing, along with reasonable supporting
detail to evidence such calculation.

(b) The “Estimated Adjustment Amount” shall mean an amount equal to the
following:

(i) the Estimated Closing Cash;

(ii) minus the Estimated Closing Indebtedness;

(iii) minus the Estimated Company Transaction Expenses; and

(iv) either plus the Estimated Closing Working Capital Excess or minus the
Estimated Closing Working Capital Shortfall, as the case may be.

(c) To the extent reasonably requested by Purchaser in good faith, Seller shall
give Purchaser and its Representatives reasonable access during normal business
hours to the relevant books and records, personnel and advisors of the Company
and its Subsidiaries in connection with its review of the Pre-Closing Statement.
Seller will review any comments proposed by Purchaser with respect to the
Pre-Closing Statement but shall not be required to accept any changes proposed
by Purchaser. If Seller and Purchaser agree to any changes to any of Estimated
Closing Indebtedness, Estimated Closing Cash, Estimated Company Transaction
Expenses, Estimated Closing Working Capital Excess or Estimated Closing Working
Capital Shortfall, as applicable, the Estimated Adjustment Amount as used in
this Agreement shall be deemed to reflect such changes; provided that, to the
extent any such amounts are unresolved as of the Closing, Seller’s determination
of such estimates shall control.

(d) If the Estimated Adjustment Amount is positive, the Closing Cash Payment
Amount shall be increased dollar-for-dollar by the amount of the Estimated
Adjustment Amount, and if the Estimated Adjustment Amount is negative, the
Closing Cash Payment Amount shall be reduced dollar-for-dollar by the amount of
Estimated Adjustment Amount.

Section 1.4 Post-Closing Adjustment.

(a) As soon as practicable, but in no event more than sixty (60) days, after the
Closing Date, Purchaser shall deliver to Seller (i) an unaudited consolidated
balance sheet of the Company and the Purchased Subsidiaries as of the close of
business on the day immediately preceding the Closing Date (but giving effect to
the Pre-Closing Restructuring) (the “Closing Balance Sheet”) and (ii) a
statement (the “Preliminary Closing Statement”) prepared in good faith and in a
manner consistent with the Agreed Accounting Principles and preparation of the
Pre-Closing Statement, setting forth the calculation of (A) the Closing Cash,
(B) the Closing Indebtedness, (C) the Company Transaction Expenses, (D) the
Closing Working Capital Amount based on the Closing Balance Sheet and either the
resulting Closing Working Capital Excess or Closing Working Capital Shortfall,
as the case may be, and (E) the Estimated Adjustment Amount calculated in
accordance with Section 1.3(b), using the amounts of the Closing Indebtedness,
the Closing Cash, the Company Transaction Expenses and the Closing Working
Capital Excess or Closing Working Capital Shortfall, as applicable, instead of
the respective estimated amounts for each such item, along with reasonable
supporting detail to evidence such calculation.

 

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(b) Seller shall have sixty (60) days to review the Preliminary Closing
Statement from the date of its receipt thereof (the “Review Period”). Seller and
its Representatives shall have reasonable access during normal business hours to
the books and records, personnel and advisors of the Company and the Purchased
Subsidiaries in connection with such review. If Seller objects to any component
of the Preliminary Closing Statement, Seller must deliver a written notice of
objection (the “Objection Notice”) to Purchaser before the expiration of the
Review Period, and a reasonably detailed explanation describing such objections;
provided that the only bases on which an objection may be set forth in the
Objection Notice is that any component of the Preliminary Closing Statement was
not calculated in accordance with this Agreement or there was a mathematical or
other error in calculation. If Seller delivers an Objection Notice to Purchaser
before the expiration of the Review Period as provided in this Section 1.4(b),
Purchaser and Seller shall, for a period of thirty (30) days thereafter (the
“Resolution Period”), attempt in good faith to resolve the matters contained
therein, and any written resolution, signed by each of Purchaser and Seller, as
to any such matter shall be final, binding, conclusive and non-appealable for
all purposes hereunder. If Seller does not deliver an Objection Notice to
Purchaser as provided in this Section 1.4(b) before the expiration of the Review
Period, Seller shall be deemed to have agreed to the Preliminary Closing
Statement in its entirety and the Preliminary Closing Statement shall be final,
binding, conclusive and non-appealable for all purposes hereunder.

(c) If, by the end of the Resolution Period, Purchaser and Seller have not
reached agreement with respect to all disputed matters set forth in the
Objection Notice, then within thirty (30) days thereafter, Purchaser and Seller
shall submit for resolution such matters remaining in dispute to
PricewaterhouseCoopers LLP, or if such firm is unavailable or unwilling to so
serve, to a nationally-recognized independent accounting or financial consulting
firm selected by Seller and reasonably acceptable to Purchaser (the “Neutral
Arbitrator”). The Neutral Arbitrator shall act as an arbitrator to resolve
(based solely on the written presentations of Purchaser and Seller and not on
independent review) only those matters submitted to it in accordance with the
first sentence of this Section 1.4(c). Purchaser and Seller shall direct the
Neutral Arbitrator to render a resolution of all such disputed matters within
thirty (30) days after its engagement or such other period agreed upon in
writing by Purchaser and Seller. In resolving the disputed matters, the Neutral
Arbitrator shall be bound by, and resolve the disputed items in accordance with,
the provisions of this Section 1.4(c) and may not assign a value to any item
greater than the greatest value claimed for such item or less than the smallest
value claimed for such item either by Purchaser in the Preliminary Closing
Statement or by Seller in the Objection Notice. The resolution of the Neutral
Arbitrator shall be set forth in a written statement delivered to Purchaser and
Seller and, absent Fraud, intentional misconduct or arithmetical error, shall be
final, binding, conclusive and non-appealable for all purposes hereunder. The
Preliminary Closing Statement, once modified and/or finally agreed to in
accordance with Section 1.4(b) and/or this Section 1.4(c), shall become the
“Final Statement” and the Estimated Adjustment Amount shall become the “Final
Adjustment Amount”.

(d) All fees and expenses relating to the work performed by the Neutral
Arbitrator shall be allocated equally between Seller, on the one hand, and
Purchaser, on the other hand, and all other costs and expenses incurred by the
Parties in connection with resolving any dispute hereunder before the Neutral
Arbitrator shall be borne by the Party incurring such cost or expense.

(e) Amounts payable pursuant to the determination of the Final Adjustment Amount
on the Final Statement will be paid as follows:

(i) If the Final Adjustment Amount is less than the Estimated Adjustment Amount,
then Seller shall, within three (3) Business Days after the date on which the
Preliminary Closing Statement becomes the Final Statement, pay or cause to be
paid to Purchaser the difference between the Estimated Adjustment Amount and the
Final Adjustment Amount by wire transfer of immediately available funds to the
account or accounts designated in writing by Purchaser at least two (2) Business
Days prior to such payment date.

 

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(ii) If the Final Adjustment Amount is greater than the Estimated Adjustment
Amount, then Purchaser shall, within three (3) Business Days after the date on
which the Preliminary Closing Statement becomes the Final Statement, pay or
cause to be paid to Seller the difference between the Final Adjustment Amount
and the Estimated Adjustment Amount, in the same manner as Seller received the
Closing Cash Payment Amount or in such other manner as Seller may direct in
writing.

(f) Any payments made under this section shall be treated as an adjustment to
the Purchase Price for all U.S. federal and state income tax purposes, and all
Parties shall file all Tax Returns and take all positions for tax purposes
consistent with the foregoing.

(g) If any payment required to be made to a Party under this Agreement is made
after the date on which such payment is due, interest shall accrue on such
amount from (but not including) the due date of the payment to (and including)
the date such payment is actually made at five percent (5.0%) per annum. All
computations of interest pursuant to this Agreement shall be made on the basis
of a year of 365 days, in each case, for the actual number of days from (but not
including) the first day to (and including) the last day occurring in the period
for which such interest is payable.

Section 1.5 Tax Treatment.

(a) All of the consideration payable to Seller pursuant to this Agreement
(which, for the avoidance of doubt, shall not include the Services Agreement)
shall be treated as consideration for the sale of the Shares and each Party
agrees that, for all Tax purposes, the transactions contemplated by this
Agreement will be reported in a manner that is consistent with such treatment
and none of them (nor any of their respective Affiliates) will take any Tax
position inconsistent therewith on any Tax Return or otherwise unless otherwise
required pursuant to a final “determination” within the meaning of
Section 1313(a) of the Code.

ARTICLE II

CLOSING

Section 2.1 Closing; Closing Date. Subject to the terms and conditions of this
Agreement, the closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place at 10:00 a.m., Boston time, at the offices of
Goodwin Procter LLP, 100 Northern Avenue, Boston, MA 02210, no later than two
(2) Business Days following the satisfaction or waiver of all conditions
precedent specified under ARTICLE VI (except for those conditions which by their
terms are to be satisfied at Closing, but subject to the satisfaction or waiver
of such conditions), or on such other date, place and time as Purchaser and
Seller may agree in writing (the “Closing Date”).

Section 2.2 Closing Deliveries.

(a) At the Closing, Seller shall deliver to Purchaser:

(i) evidence of the transfer, reasonably satisfactory to Purchaser, of the
Shares to Purchaser;

 

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(ii) an officer’s certificate, dated as of the Closing Date, duly executed by an
authorized officer of Seller, relating to the satisfaction of the conditions set
forth in Section 6.2(a) and Section 6.2(b);

(iii) duly executed counterparts to the Services Agreement, substantially in the
form attached hereto as Exhibit A (the “Services Agreement”);

(iv) a receipt for the Closing Cash Payment Amount;

(v) a properly completed and executed statement from Seller in accordance with
Treasury Regulations section 1.1445-2(b)(2) certifying that Seller is not a
foreign person;

(vi) resignation letters, effective as of the Closing, from all directors and
officers of the Company and the Purchased Subsidiaries, in each case, in office
immediately before the Closing; and

(vii) duly executed counterparts to a customary property management agreement to
be agreed between the Parties prior to the Closing; and

(viii) evidence, reasonably satisfactory to Purchaser, of the release of the
security interests set forth in Section 2.2(a)(viii) of the Disclosure Schedule.

(b) At the Closing, Purchaser shall deliver to Seller:

(i) the Closing Cash Payment Amount, in accordance with Section 1.2, by wire
transfer in immediately available funds to a bank account designated by Seller
in a written notice to Purchaser at least two (2) Business Days before the
Closing;

(ii) the amount of the unpaid Company Transaction Expenses to the payees thereof
in the amounts set forth in the Pre-Closing Statement by wire transfer of
immediately available funds to the account or accounts designated in writing by
Seller at least two (2) Business Days prior to the Closing Date; and

(iii) an officer’s certificate, dated as of the Closing Date, duly executed by
an authorized officer of Purchaser, relating to the satisfaction of the
conditions set forth in Section 6.3(a) and Section 6.3(b).

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

Subject to (a) the exceptions disclosed in the disclosure schedule delivered by
Seller to Purchaser and attached hereto as Schedule II (the “Disclosure
Schedule”) and the qualifications related thereto set forth in Section 9.3 or
(b) as disclosed in publicly available forms, statements, reports or other
documents relating to Seller or the Company, filed with, or furnished to, as
applicable, the SEC by Seller or VEREIT, Inc. (“VEREIT”) 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), Seller
represents and warrants to Purchaser as follows, in each case, as of the date of
this Agreement and as of the Closing Date unless otherwise specifically set
forth herein:

 

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Section 3.1 Organization of Seller; Authority; Conflicts.

(a) Seller is a limited partnership duly organized, validly existing and in good
standing under the Law of the State of Delaware and has all necessary limited
partnership power and authority to enter into this Agreement and each other
Transaction Document to which it is a party, to carry out its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement by Seller and each
other Transaction Document to which Seller is a party, the performance by Seller
of its obligations hereunder and thereunder and the consummation by Seller of
the transactions contemplated hereby and thereby have been duly authorized by
the board of directors of the general partner of Seller. No other limited
partnership proceedings on the part of Seller are necessary to approve this
Agreement or such other Transaction Documents or to consummate the transactions
contemplated hereby or thereby. This Agreement has been, and, upon its
execution, each other Transaction Document to which Seller is a party shall have
been, duly and validly executed and delivered by Seller, and assuming the due
authorization, execution and delivery by Purchaser, constitutes the valid, legal
and binding agreement of Seller, enforceable against Seller in accordance with
its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, fraudulent conveyance, and
other similar Laws and principles of equity affecting creditors’ rights and
remedies generally (the “General Enforceability Exceptions”).

(b) Except as may result from any facts or circumstances relating solely to
Purchaser or its Affiliates, the execution, delivery and performance by Seller
of this Agreement does not, and the execution, delivery and performance by
Seller of the other Transaction Documents to which Seller is a party will not,
result in (i) a breach or violation of the Governing Documents of Seller, the
Company or its Subsidiaries, (ii) a breach or violation of any Law or Order
applicable to Seller (to the extent related to the Company Business), the
Company or its Subsidiaries or (iii) with or without notice, lapse of time or
both, a breach or violation of, a termination (or right of termination) or
default under, the creation or acceleration of any obligations under, or the
creation of a Lien on any of the assets of the Company or its Subsidiaries
pursuant to, any Contract to which the Company or any of the Purchased
Subsidiaries is a party, other than, in the cases of clauses (ii) and (iii),
where the breach, violation, termination (or right of termination), default,
creation or acceleration would not reasonably be expected to be material to the
Company and the Purchased Subsidiaries (without giving effect to clause (ii) of
the proviso in the definition of such term) (collectively, the “Acquired Pro
Forma Entities”), taken as a whole, or to impair or materially delay Seller’s
ability to consummate the transactions contemplated by this Agreement or the
other Transaction Documents.

(c) No Consent, Permit, Order or declaration of, filing with, or notice to, any
Governmental Authority is required by or with respect to the Company or any of
its Subsidiaries in connection with the execution, delivery and performance by
Seller of this Agreement or the other Transaction Documents and the consummation
of the transactions contemplated hereby and thereby, except for (A) any notices
or filings under the HSR Act, (B) such notices and applications with the
Financial Industry Regulatory Authority (“FINRA”) that are required under FINRA
rules, (C) the Consents, Permits, Orders, declarations, filings or notices set
forth in Section 3.1(c) of the Disclosure Schedule, (D) as may result from any
facts or circumstances relating solely to Purchaser or its Affiliates, or
(E) those that the failure to make or obtain would not reasonably be expected to
be material to the Acquired Pro Forma Entities, taken as a whole, or to impair
or materially delay Seller’s ability to consummate the transactions contemplated
by this Agreement or other Transaction Documents.

 

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(d) Except as may result from any facts or circumstances relating solely to
Purchaser or its Affiliates, the execution, delivery and performance by Seller
of this Agreement does not, and the execution, delivery and performance by
Seller of the other Transaction Documents to which Seller is a party will not,
result in (i) a breach or violation of the Governing Documents of any Company
NLR or any Subsidiary thereof, or (ii) with or without notice, lapse of time or
both, a breach or violation of, a termination (or right of termination) or
default under, the creation or acceleration of any obligations under, or the
creation of a Lien on any of the assets of any Company NLR or any Subsidiary
thereof pursuant to, any Contract to which any Company NLR or any Subsidiary
thereof is a party, other than, in the case of this clause (ii), where the
breach, violation, termination (or right of termination), default, creation or
acceleration would not be reasonably expected to be material to any Company NLR
and such Company NLR’s Subsidiaries, taken as a whole, or to or impair or
materially delay Seller’s ability to consummate the transactions contemplated by
this Agreement or the other Transaction Documents.

Section 3.2 Organization of the Company; Capitalization.

(a) The Company is a corporation duly organized, validly existing and in good
standing under the Law of the State of Arizona. The Company has all necessary
corporate power and authority to carry on its business, including the Company
Business, as now conducted and to own or lease all of its properties and assets,
and is duly licensed or qualified to do business as it is now being conducted 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 where the failure to be so
licensed or qualified, as the case may be, would not reasonably be expected to
be material to the Acquired Pro Forma Entities, taken as a whole.

(b) The authorized capital stock of the Company consists of 100,000 Shares.
10,000 Shares are issued and outstanding as of the date of this Agreement, all
of which are beneficially owned and held of record by Seller, are duly
authorized, validly issued, fully paid and non-assessable, and were not issued
in violation of any preemptive rights, rights of first refusal or similar
rights. The Shares constitute all of the issued and outstanding capital stock of
the Company. Seller is the legal and beneficial owner of the Shares, free and
clear of all Liens. Except for the Shares, there are no (i) other Equity
Interests of the Company, (ii) options, warrants, or other rights to purchase
from the Company any other Equity Interests of the Company, (iii) securities
convertible into or exchangeable for Equity Interests of the Company, or
(iv) other commitments of any kind for the issuance of options, warrants, or
other securities of the Company, in each case, outstanding as of the date of
this Agreement. There are no preemptive rights with respect to the issuance or
sale of any Equity Interests of the Company or any “tag-along”, “drag-along” or
similar rights with respect to such Shares. There are no restrictions on the
transfer of the Company’s Equity Interests other than those arising from federal
and state securities Laws, the transactions contemplated by this Agreement or
the other Transaction Documents.

Section 3.3 Purchased Subsidiaries.

(a) Each Purchased Subsidiary (i) is duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation or
organization, (ii) has all requisite power and authority to carry on its
business as now conducted and to own or lease all of its properties and assets,
and (iii) is duly licensed or qualified to do business as it is now being
conducted 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, in each case, where
the failure to be so licensed or qualified, as the case may be, would not
reasonably be expected to be material to the Acquired Pro Forma Entities, taken
as a whole.

 

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(b) Section 3.3(b) of the Disclosure Schedule sets forth a true and complete
list of each Acquired Pro Forma Entity, together with its respective
jurisdiction of incorporation or organization, as the case may be, and each
jurisdiction in which it is qualified to do business. Subject to the Pre-Closing
Restructuring, the Company owns, directly or indirectly, all of the issued and
outstanding capital stock or other Equity Interests in each Acquired Pro Forma
Entity. All of the outstanding Equity Interests in the Acquired Pro Forma
Entities (i) have been duly authorized and validly issued and (where applicable)
are fully paid and non-assessable and (ii) are free and clear of any and all
Liens. There are no outstanding (x) options, warrants, or other rights to
purchase from any Acquired Pro Forma Entity any other Equity Interests of any
Acquired Pro Forma Entity, (y) securities convertible into or exchangeable for
Equity Interests of any Acquired Pro Forma Entity, or (z) other commitments of
any kind for the issuance of any other Equity Interests of any Acquired Pro
Forma Entity, in each case, outstanding as of the date of this Agreement.

Section 3.4 Books and Records; Financial Statements; Liabilities.

(a) The books and records of the Company are complete in all material respects
and accurately reflect in all material respects the transactions of the Company
and provide the basis for the financial condition, historical financial
performance, assets and liabilities of the Company set forth or reflected in the
(i) Financial Information and (ii) the Pro Forma Base Balance Sheet (other than
in respect of the pro forma adjustments reflected therein). Since January 1,
2014, Seller has maintained the books and records of the Company in a manner
sufficient to comply in all material respects with Applicable Law and Contracts
to which Sellers and their Affiliates are party. Since January 1, 2014, Seller
has not received any written or, to the Knowledge of Seller, oral notice from
any Person alleging any material non-compliance of such books and records of the
Company with Applicable Law. The copies of actions by written consent of the
Company, together with related exhibits or attachments, since January 1, 2014,
have been delivered or made available to Purchaser by means of an electronic
data room or as filed with or furnished to the SEC prior to the date hereof
(collectively, “Made Available”).

(b) Seller has previously Made Available to Purchaser true and complete copies
of the unaudited consolidated balance sheet of the Company and the Purchased
Subsidiaries (as of June 30, 2017, giving pro forma effect to the Pre-Closing
Restructuring, the “Pro Forma Base Balance Sheet”) and the historical financial
performance analysis for the calendar years ended 2014 through 2016 set forth on
page 42 of the Confidential Information Memorandum, dated August 2017, which
represents the Cole Capital segment of VEREIT (the “Financial Information”).
Section 3.4(b) of the Disclosure Schedule contains true and complete copies of
the Pro Forma Base Balance Sheet and page 42 of the Confidential Information
Memorandum, dated August 2017. Except for the absence of financial statement
footnotes and statements of operations, comprehensive income, changes in equity
and cash flows, and subject to normal adjustments (that would not, individually
or in the aggregate, reasonably be expected to be material to the Acquired Pro
Forma Entities, taken as a whole), (i) the Pro Forma Base Balance Sheet has been
prepared in accordance with GAAP consistently applied and fairly presents, in
all material respects, the financial condition of the Acquired Pro Forma
Entities on a consolidated basis and (ii) the Financial Information has been
prepared in accordance with GAAP consistently applied and fairly presents, in
all material respects, the historical financial performance of the Company, in
each case as of the dates thereof for the periods then ended.

(c) Except for (i) Liabilities that are reflected or reserved against on the Pro
Forma Base Balance Sheet, (ii) Liabilities incurred since the date of the Pro
Forma Base Balance Sheet in the ordinary course of business, and
(iii) Liabilities described in the Disclosure Schedule, the Acquired Pro Forma
Entities have no material Liabilities.

 

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(d) The Company maintains a system of internal accounting controls sufficient to
provide reasonable assurance (i) that all transactions are executed in
accordance with management’s general or specific authorizations, (ii) that all
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and (iii) regarding prevention or timely
detection of unauthorized acquisition, use or disposition of assets of the
Company and its Subsidiaries (to the extent related to the Company Business).

Section 3.5 Absence of Certain Changes.

(a) Since June 30, 2017, there has not been (i) any material change in any
method of accounting or accounting practice by the Company or any of the
Purchased Subsidiaries, (ii) (A) any increase in the compensation payable or to
become payable to the Signing Date Company Business Employees (except for
increases in the ordinary course of business) or (B) any establishment,
adoption, entry into or amendment of any collective bargaining, bonus, profit
sharing, thrift, compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any director,
officer or Signing Date Company Business Employee, except to the extent required
by Applicable Law or (iii) any agreement to do any of the items in the foregoing
clauses (i) through (ii).

(b) Since December 31, 2016, (i) the Company and its Subsidiaries have conducted
the Company Business only in the ordinary course of business, (ii) there has not
occurred any Company Material Adverse Effect and (iii) there has not been any
material damage, destruction or other casualty loss with respect to any material
asset or property owned, leased or otherwise used by the Company and the
Purchased Subsidiaries, whether or not covered by insurance.

(c) Since December 31, 2016 and except as disclosed in publicly available forms,
statements, reports or other documents filed with, or furnished to, as
applicable, the SEC by the applicable Company NLR prior to the date of this
Agreement, there has not been any material damage, destruction or other casualty
loss with respect to the assets or properties owned, leased or otherwise used by
any Company NLR or any Subsidiary thereof, whether or not covered by insurance,
except as would not reasonably be expected to be material to any such Company
NLR and such Company NLR’s Subsidiaries, taken as a whole.

(d) Since December 31, 2016, there has not been any claim for indemnification
asserted by any Company NLR against any Advisor (as such term is defined in the
Services Agreement) under any Advisory Agreement (as such term is defined in the
Services Agreement).

Section 3.6 Material Contracts. Section 3.6 of the Disclosure Schedule sets
forth each of the Material Contracts in effect as of the date of this Agreement.
Each such Material Contract is valid and binding on, and enforceable against,
the Company or the applicable Purchased Subsidiary and, to the Knowledge of
Seller and assuming the due authorization, execution and delivery by the other
parties thereto, each such Material Contract is enforceable against each of the
other parties thereto in accordance with its terms, except, in each case, as
enforcement may be limited by the General Enforceability Exceptions. Neither the
Company nor any Purchased Subsidiary, nor, to the Knowledge of Seller, any other
party thereto, is in material breach or violation of, or material default under,
any Material Contract, and no event has occurred that with notice or lapse of
time or both would constitute such violation, breach or default under any
Material Contract, except where, in each case, such breach, violation or default
would not reasonably be expected to be material to the Acquired Pro Forma
Entities, taken as a whole. Except as set forth in Section 3.6 of the Disclosure
Schedule, Seller has Made Available to Purchaser true and complete copies of all
Material Contracts.

 

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Section 3.7 Legal Proceedings. There are no Legal Proceedings pending or, to the
Knowledge of Seller, threatened against the Company or any Purchased Subsidiary
and there is no outstanding Order imposed upon the Company or any Purchased
Subsidiary.

Section 3.8 Compliance with Applicable Laws; Permits.

(a) The Company and the Purchased Subsidiaries are, and since January 1, 2014
have been, in compliance in all material respects with all Applicable Laws.
Except with respect to regulatory matters covered by Section 3.9, no
investigation or review by any Governmental Authority is pending or, to the
Knowledge of Seller, threatened, against the Company or any Purchased
Subsidiary. Since January 1, 2014, the Company has not received any written, or
to the Knowledge of Seller, oral notice or communication of any material
non-compliance with any such Applicable Laws that has not been cured as of the
date of this Agreement.

(b) Each of the Company and the Purchased Subsidiaries has obtained and is in
compliance with all material Permits necessary for the lawful ownership and use
of their respective properties and assets and the conduct of the Company
Business as currently conducted, including real estate brokerage or other
licenses as necessary to perform property management, leasing, acquisition,
disposition and financing coordination services. All such material Permits are
in full force and effect and neither the Company nor any Purchased Subsidiary is
in material violation or breach of any such Permit.

(c) Each of Seller and its Subsidiaries (other than the Acquired Pro Forma
Entities) has obtained and is in compliance with all material Permits necessary
for the performance of their obligations under the Services Agreement, including
real estate brokerage or other licenses as necessary to perform property
management, leasing, acquisition, disposition and financing coordination
services. All such material Permits are in full force and effect and neither
Seller nor any of its Subsidiaries (other than the Acquired Pro Forma Entities)
is in material violation or breach of any such Permit.

(d) Since June 9, 2017, neither the Company nor any of the Purchased
Subsidiaries has provided investment advice (as defined in Dept. of Labor Reg.
Sections 29 C.F.R. 2510.3-21(a)) that is not in compliance with Dept. of Labor
Reg. Sections 29 C.F.R. 2510.3-21(c)(1) (each such regulation, as promulgated on
April 8, 2016 (81 Fed. Reg. 20,997)).

Section 3.9 Certain Regulatory Matters.

(a) Cole Capital Corporation (the “Broker”) is, and has been at all times since
January 1, 2014, registered as a broker-dealer with the SEC under the Exchange
Act, and is, and has been since January 1, 2014, in compliance in all material
respects with the applicable requirements of the Exchange Act and the rules
thereunder, including all applicable net capital requirements and requirements
for the protection of customer funds and securities.

(b) The Broker is, and has been at all times since January 1, 2014 registered,
licensed or qualified as a broker-dealer in each jurisdiction where the conduct
of its business requires such registration, licensing or qualification.

(c) A true and complete copy of the Uniform Application for Broker-Dealer
Registration on Form BD of the Broker on file with the SEC, reflecting all
amendments thereof filed with the Central Registration Depository of FINRA prior
to the date of this Agreement (the “Form BD”) has been Made Available to
Purchaser.

 

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(d) Seller has Made Available to Purchaser true and complete copies of all
examination reports and correspondence with Governmental Authorities related
thereto with respect to any examination of the Company or any of the Purchased
Subsidiaries conducted by any Governmental Authority since January 1, 2014. To
the Knowledge of Seller, any issues raised with respect to any examination of
the Company or any of the Purchased Subsidiaries conducted by any Governmental
Authority prior to such date have been addressed, other than any such issues
that would not, individually or in the aggregate, reasonably be expected to be
material to the Acquired Pro Forma Entities, taken as a whole.

(e) The Broker is, and has been at all times since January 1, 2014, a member of
FINRA and the Securities Investor Protection Corporation (the “SIPC”), and is,
and has been at all times since January 1, 2014, in compliance in all material
respects with all applicable rules and regulations of FINRA and the SIPC, as
well as with the terms of its membership agreement with FINRA, including all net
capital requirements and requirements with respect to the protection of customer
funds and securities. The Company has Made Available to Purchaser prior to the
date of this Agreement a current version of the Broker’s membership agreement
with FINRA, and FINRA has not notified in writing Seller, the Company or the
Broker since January 1, 2014 of any intent to terminate or materially modify
such membership agreement. The Broker (i) is not, and is not required to be, a
member of any domestic or foreign securities broker-dealer self-regulatory
organization other than FINRA and (ii) is duly registered as a broker-dealer
under, and in material compliance with, the Laws of all jurisdictions in which
it is required to be so registered.

(f) The Broker (i) has established, maintains and enforces written compliance,
supervisory and control policies and procedures reasonably designed to ensure
compliance with Applicable Laws, including those relating to anti-money
laundering, advertising, licensing, sales practices, market conduct, maintenance
of net capital, supervision, books and records, risk assessment and continuing
education (the “Compliance Policies”), and (ii) has been and remains in
compliance in all material respects with such Compliance Policies.

(g) Each of the Broker’s officers, employees and independent contractors who is
required to be registered, licensed or qualified with any Governmental Authority
as a registered principal or registered representative is registered, licensed
or qualified as such and no such registration, license or qualification is
currently under an order of suspension, or the person is in the process of being
registered, licensed or qualified as such within the time periods required or
permitted by Applicable Law, except for such failures to be so registered as
would not, individually or in the aggregate, reasonably be expected to be
material to the Acquired Pro Forma Entities, taken as a whole.

(h) Since January 1, 2014, the Broker has not engaged in any activities that
would be a material business change from the business activities enumerated in
any membership agreements or other limitations imposed in connection with its
registrations.

(i) Except for routine examinations conducted by the SEC, FINRA or any other
Governmental Authority in the regular course of the business of the Broker,
neither the Broker nor any of its directors, managers, officers, employees,
registered representatives nor, to the Knowledge of Seller, any “person
associated with” (as such phrase is defined in the Exchange Act) the Broker is
the subject of any unresolved civil or administrative proceedings or any Order
arising under Applicable Laws which, in each case, 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 that are, in each case, currently pending against
the Broker or, to the Knowledge of Seller, threatened against the Broker or
pending or threatened in writing against the other Persons referred to above.
Except as disclosed on the Form BD or Forms U-4 or U-5, neither the Broker nor
any of its directors, managers, officers, employees, registered representatives
or any

 

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“person associated with” the Broker (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
ineligible to serve as a broker or a “person associated with” a broker under
Section 15(b) of the Exchange Act.

(j) Neither the Company nor any of the Purchased Subsidiaries is subject to any
cease-and-desist or other Order or enforcement action issued by, or is 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 since January 1, 2014 has been ordered to pay any
civil penalty by, or is a recipient of any supervisory letter from, or has
adopted a board or manager resolution at the request or suggestion of, any
Governmental Authority that materially restricts the conduct of its business (in
each case, as currently in effect or pending, a “Regulatory Agreement”), nor has
the Company or any of the Purchased Subsidiaries been advised in writing since
January 1, 2014 by any Governmental Authority that it is considering issuing or
requesting any such Regulatory Agreement.

(k) Since January 1, 2014, the Broker has timely filed all reports,
registrations, declarations, notices, statements, and other filings, together
with any amendments and updates required to be made with respect thereto, that
were required to be filed with any Governmental Authority (including the SEC and
FINRA), including all reports, registrations, declarations, notices, statements
and filings required under the Exchange Act, except for such filings which the
failure to make or to make timely would not reasonably be expected to be
material to the Acquired Pro Forma Entities, taken as a whole. As of their
respective dates, all such reports, registrations, declarations, notices,
statements and other filings complied in all material respects with the Laws
enforced or promulgated by the Governmental Authority with which they were
filed. Except for normal examinations conducted in the regular course of the
business of the Broker, to the Knowledge of Seller, no Governmental Authority
has initiated since January 1, 2014 any proceeding or investigation into the
business or operations of the Broker, the Company, or any of their then current
respective employees, agents, brokers or representatives. There is no unresolved
investigation of any suspected violation by any Governmental Authority with
respect to any report or statement relating to any examination of the Broker,
other than any such violations that would not, individually or in the aggregate,
reasonably be expected to be material to the Acquired Pro Forma Entities, taken
as a whole.

(l) To the Knowledge of Seller, there are no unresolved material customer
complaints, including those reportable to FINRA pursuant to FINRA Rule 4530 or
on any Form U-4, which were made since January 1, 2014 against the Broker or any
“person associated with” the Broker. As of the date of this Agreement, no
material customer complaints reportable pursuant to FINRA Rule 4530 or on Form
U-4 are pending or, to the Knowledge of Seller, threatened.

(m) Neither the Company nor any of the Purchased Subsidiaries is registered or
required to be registered as an “investment company” within the meaning of the
Investment Company Act.

(n) Neither the Company nor any of the Purchased Subsidiaries is registered or
required to be registered as an investment adviser under the Investment Advisers
Act of 1940, as amended.

(o) None of the activities of the Broker requires it to be registered as an
exchange or transfer agent, a clearing agency, an alternative trading system, a
government securities dealer, a commodity trading advisor or commodity pool
operator.

 

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(p) Since January 1, 2014, each of the Company NLRs has filed or furnished with
the SEC all forms, reports, schedules, statements and documents (including
exhibits and all other information incorporated therein) that were required to
be filed or furnished by it under the Securities Act or the Exchange Act, as the
case may be, from and after such date (collectively, and as amended, modified or
supplemented since the time of filing, the “NLR SEC Filings”). Each NLR SEC
Filing (i) as of its date, or, if amended or supplemented prior to the date of
this Agreement or the Closing Date, as of the date of the most recent amendment
or supplement thereto (and, in the case of registration statements and proxy
statements, on the dates of effectiveness and the dates of the relevant
meetings, respectively), complied in all material respects as to form with the
requirements of the Securities Act, the Exchange Act or the Sarbanes-Oxley Act
of 2002, as amended, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to the NLR SEC Filings, and (ii) did not,
at the time it was filed or furnished (or became effective), or, if amended or
supplemented prior to the date of this Agreement or the Closing Date, as of the
date of the most recent amendment or supplement thereto, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.

Section 3.10 Taxes.

(a) Each of the Company and the Purchased Subsidiaries has (i) timely filed with
the appropriate Governmental Authority all Tax Returns required by Applicable
Law to be filed by it or with respect to it on or before the date of this
Agreement, taking into account any extensions of the time within which to file
such Tax Returns, and all such Tax Returns are true, correct and complete in all
material respects and (ii) timely paid or deposited all Taxes due and payable by
it.

(b) There are no Liens for Taxes upon any of the assets of the Company or any of
the Purchased Subsidiaries, other than Permitted Liens.

(c) Neither the Company nor any of the Purchased Subsidiaries has received
written notice from a Governmental Authority of a claim concerning any Tax
liability of the Company or any of the Purchased Subsidiaries that has not
already been resolved, and, to the Knowledge of Seller, there are no pending
actions for the assessment or collection of Taxes owed or owing by the Company
or any of the Purchased Subsidiaries.

(d) No closing agreement pursuant to Section 7121 of the Code (or any similar
provision of state, local or foreign Law) has been entered into by or with
respect to the Company or any of the Purchased Subsidiaries.

(e) Neither the Company nor any of the Purchased Subsidiaries (i) is or has been
a member of a group (other than a group the common parent of which is the
Company) filing a consolidated, combined, affiliated, unitary or similar income
Tax Return or (ii) has any liability for Taxes of any Person (other than the
Company, any of the Purchased Subsidiaries, Equity Fund Advisors, Inc., VEREIT
TRS Corp., or DRE Holdings LLC) arising from the application of Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or
non-U.S. Law), as a transferee or successor, or otherwise by operation of Law.

(f) Neither the Company nor any of the Purchased Subsidiaries is a party to or
bound by or has any obligation under any Tax allocation, sharing, indemnity,
reimbursement or similar agreement or arrangement with a party other than the
Company or a Purchased Subsidiary, other than an agreement entered into in the
ordinary course of business the principal purpose of which is not related to
Taxes.

 

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(g) No claim has been made in writing by any Governmental Authority in a
jurisdiction where any of the Company or the Purchased Subsidiaries has not
filed a Tax Return that such Person is or may be subject to Tax by, or required
to file Tax Returns in, such jurisdiction, other than any such claims that have
been fully resolved.

(h) Neither the Company nor any of the Purchased Subsidiaries has participated
in a “listed transaction” within the meaning of Treasury Regulation
Section 1.6011-4(b) (or any similar provision of state, local or non-U.S. Law).

(i) Neither the Company nor any of the Purchased Subsidiaries will be required
to include a material item of income (or exclude a material item of deduction)
in any taxable period (or portion thereof) beginning after the Closing Date as a
result of (i) a change in or incorrect method of accounting occurring prior to
the Closing Date, including adjustments under Section 481(c) of the Code,
(ii) an installment sale or open transaction arising in a taxable period (or
portion thereof) ending on or before the Closing Date, (iii) a prepaid amount
received, or paid, prior to the Closing Date, (iv) a “closing agreement” as
described in Section 7121 of the Code (or any similar provision of state, local
or non-U.S. Law) executed on or prior to the Closing Date, or (v) an election
under Section 108(i) of the Code (or any similar provision of state, local or
non-U.S. Law).

(j) No private letter rulings, technical advice memoranda or similar agreements
or rulings have been entered into or issued by any Taxing Authority with respect
to the Company or any of the Purchased Subsidiaries.

(k) None of the Company or any of the Purchased Subsidiaries has a permanent
establishment (within the meaning of an applicable Tax treaty) or otherwise has
an office or fixed place of business in a country other than the country in
which such Person is organized.

(l) None of the Company or any of the Purchased Subsidiaries has distributed
stock of another Person, or had its stock distributed by another Person, in a
transaction within the two-year period ending on the date of this Agreement that
was purported or intended to be governed in whole or in part by Section 355 or
361 of the Code.

(m) (i) To the Knowledge of Seller, no property of the Company, any Purchased
Subsidiary, any Company NLR or any Subsidiary of any Company NLR was subject to
reassessment by the relevant state or local tax authority as a result of, or in
connection with the acquisition of Cole Real Estate Investments, Inc. on
February 7, 2014 and the acquisition of Cole Holdings Corporation on April 5,
2013, and (ii) to the Knowledge of Seller, no property of the Company, any
Purchased Subsidiary, any Company NLR or any Subsidiary of any Company NLR will
be subject to reassessment by the relevant state tax authority as a result of,
or in connection with the consummation of the transactions contemplated by this
Agreement or by the other Transaction Documents.

(n) (i) To the Knowledge of Seller, no transfer taxes were imposed with respect
to any property of any Company NLR or any Subsidiary of any Company NLR as a
result of, or in connection with, the acquisition of Cole Real Estate
Investments, Inc. on February 7, 2014 and the acquisition of Cole Holdings
Corporation on April 5, 2013, and (ii) to the Knowledge of Seller, no transfer
taxes will be imposed with respect to any property of any Company NLR or any
Subsidiary of any Company NLR as a result of, or in connection with, the
consummation of the transactions contemplated by this Agreement or by the other
Transaction Documents.

 

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Section 3.11 Employees.

(a) As of the date of this Agreement, all employees of the Company and its
Subsidiaries are employed by Equity Fund Advisors, Inc. (“Employer Entity”).
Since January 1, 2014, none of the Company or any of its Subsidiaries (other
than the Employer Entity) has had any employees. Section 3.11(a) of the
Disclosure Schedule lists each Company Business Employee as of the date of this
Agreement (the “Signing Date Company Business Employees”), together with such
employee’s current position, employment start date, current base salary, bonus
paid to such employee with respect to calendar year 2016, and target bonus
opportunity of such employee for 2017.

(b) None of the Company, the Employer Entity or any of the Purchased
Subsidiaries is bound by any Contract with any labor union or like organization,
and to the Knowledge of Seller, there are no activities or proceedings by any
individual or group of individuals, including representatives of any labor
organizations or labor unions, to organize any employees of the Company or the
Purchased Subsidiaries. There are no asserted controversies or labor disputes or
union organization activities pending or, to the Knowledge of Seller,
threatened, between Employer Entity and the employees of the Company or the
Purchased Subsidiaries. Employer Entity has complied in all material respects
with all applicable state and federal equal employment opportunity and other
Laws related to labor, employment and employment practices, terms and conditions
of employment, wages and hours and occupational safety and health with respect
to the Company Business Employees and the employees who would, if the Closing
were to occur on the date of this Agreement, provide any of the services
contemplated under the Services Agreement.

(c) No Company Plan is sponsored by the Company or its Subsidiaries (other than
the Employer Entity). For purposes of this Agreement, “Company Plan” means:
(i) each “employee benefit plan” (as such term is defined in Section 3(3) of
ERISA), whether or not subject to ERISA, that Employer Entity, VEREIT or any
subsidiary thereof (together, the “Plan Entities”) sponsor, participate in, are
parties to or contribute to, or with respect to which any potential liability is
borne by the Company or any of the Purchased Subsidiaries pursuant to the
respective terms thereof; and (ii) each written stock option, stock purchase,
stock appreciation right or other stock or stock-based incentive plan, cash
bonus or incentive compensation arrangement, retirement or deferred compensation
plan, supplemental retirement plan, profit sharing plan, severance plan,
termination or change in control agreement, insurance, medical, welfare, fringe
or other benefits or remuneration of any kind, or employment or consulting
agreement that does not constitute an “employee benefit plan” (as defined in
Section 3(3) of ERISA), that the Plan Entities sponsor, participate in, are
parties to or contribute to, or with respect to which any potential liability is
borne by the Company or any of the Purchased Subsidiaries pursuant to the
respective terms thereof.

(d) The Company has Made Available to Purchaser true and complete written
descriptions of the material terms of the material Company Plans.

(e) Each Company Plan has been operated and administered in all material
respects in compliance with its terms and Applicable Law, including, without
limitation, ERISA and the Code.

(f) None of the execution and delivery of this Agreement or the other
Transaction Documents, any shareholder or other approval of this Agreement or
the other Transaction Documents or the consummation of the transactions
contemplated hereby or thereby would, either alone or in combination with
another event, (i) entitle any Company Business Employee, any current or former
employee of the Company and its Subsidiaries (other than the Employer Entity) or
independent contractor of the Company and its Subsidiaries (other than the
Employer Entity) to severance pay or any material increase in severance pay, or
(ii) accelerate the time of payment or vesting, or materially increase the
amount of compensation due to any such Person.

 

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(g) No severance payment, change of control payment, acceleration of the time of
payment or vesting or any material increase to the amount of compensation due
shall be required to be paid in connection with the transactions contemplated by
this Agreement or otherwise, in each case which would be (as to any period prior
to or after Closing), (i) submitted for reimbursement to the Company NLRs under
any Advisory Agreement or (ii) billed to Recipient (as such term is defined in
the Services Agreement) under the Services Agreement.

Section 3.12 Property and Assets; Sufficiency of Assets.

(a) The Acquired Pro Forma Entities do not own any real property. Section 3.12
of the Disclosure Schedule lists (i) all real estate leases and subleases to
which each of the Acquired Pro Forma Entities is a party (the “Leases”), (ii)
the street address of each parcel of such leased real property, (iii) the
landlord under each Lease, the rental amount currently being paid, and the
expiration of the term of such Lease and (iv) the current use of such leased
real property. None of the Acquired Pro Forma Entities is a sublessor or grantor
under any sublease or other instrument granting to any other Person any right to
the possession, lease, occupancy or enjoyment of the leased real property.

(b) At the Closing, after giving effect to the Pre-Closing Restructuring, the
Acquired Pro Forma Entities, as applicable, will have good and valid title to,
or otherwise have the right to use pursuant to a valid and enforceable lease,
license or similar Contract, all of the assets reflected on the Pro Forma Base
Balance Sheet or acquired after the date of the Pro Forma Base Balance Sheet
(other than assets sold or otherwise disposed of in the ordinary course of
business since the date of the Pro Forma Base Balance Sheet), in each case, free
and clear of any Liens, other than Permitted Liens.

(c) At the Closing, after giving effect to the Pre-Closing Restructuring,
(i) the Acquired Pro Forma Entities and the rights granted under this Agreement
and the Transaction Documents (including the obligation of Seller and its
Affiliates to perform the Initial Services (as such term is defined in the
Services Agreement)), taken as a whole, (A) will constitute all of the assets
that are Related to the Company Business, except (x) those assets that would
not, individually or in the aggregate, reasonably be expected to be material to
the Acquired Pro Forma Entities, taken as a whole and (y) those assets of Seller
and its Affiliates to be used by Seller and its Affiliates in the performance of
the Initial Services and (B) will be sufficient for the Company and the
Purchased Subsidiaries to operate and conduct the Company Business from and
after the Closing in a manner consistent with the manner in which the Company
Business is operated and conducted as of the date hereof, and (ii) subject to
Sections 5.14 and 5.15, none of Seller or its Affiliates will own, lease or
license any asset that is Related to the Company Business, except those assets
of Seller and its Affiliates to be used by Seller and its Affiliates in the
performance of the Initial Services.

Section 3.13 Intellectual Property.

(a) At the Closing, after giving effect to the Pre-Closing Restructuring, the
Acquired Pro Forma Entities will have all rights to use all Intellectual
Property required, necessary or used, in each case, in the Company Business as
operated and conducted as of the date of this Agreement (“Company Business
Intellectual Property”), all of which rights shall survive unchanged following
the consummation of the transactions contemplated by this Agreement.
Section 3.13(a) of the Disclosure Schedule sets forth a true and complete list
of the Company Business Intellectual Property, along with the applicable
application or registration number, the applicable jurisdictions/territories of
each such item, and the name of the owner of such item.

 

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(b) At the Closing, after giving effect to the Pre-Closing Restructuring, the
Acquired Pro Forma Entities, as applicable, will own the Company Business
Intellectual Property purported to be owned by it, free and clear of any Liens,
other than Permitted Liens, and such Company Business Intellectual Property will
be subsisting and, to the Knowledge of Seller, valid and enforceable, and not
subject to any outstanding order, judgment, decree or agreement adversely
affecting the Acquired Pro Forma Entities’ use thereof or rights thereto. Since
January 1, 2014, to the Knowledge of Seller, neither the Company nor any of the
Purchased Subsidiaries has infringed, misappropriated or otherwise violated the
rights of any third party in Intellectual Property. There are no pending or, to
the Knowledge of Seller, threatened written claims, proceedings or actions
(i) alleging that the Company’s or any of the Purchased Subsidiaries’ activities
infringe upon or constitute the unauthorized use of the rights of any third
party in Intellectual Property or (ii) challenging the ownership, use, validity
or enforceability of any Company Business Intellectual Property. To the
Knowledge of Seller, no third party has infringed upon, engaged in the
unauthorized use of, or otherwise violated in any material respect any Company
Business Intellectual Property.

(c) Neither the Company nor any of the Purchased Subsidiaries has granted any
licenses or other rights to third parties to use Company Business Intellectual
Property other than non-exclusive licenses granted in the ordinary course of
business pursuant to standard terms which have been Made Available to Purchaser.
Neither the Company nor any of the Purchased Subsidiaries obtains any material
rights to use third party Company Business Intellectual Property pursuant to
sublicenses or pursuant to cross-licenses, settlement-agreements or other
royalty free agreements.

(d) The IT Assets operate and perform in all material respects in accordance
with their documentation and functional specifications and otherwise as required
in connection with the Company Business. To the Knowledge of Seller, no Person
has gained unauthorized access to the IT Assets. The Company has implemented
reasonable backup and disaster recovery technology.

Section 3.14 Insurance. Until the Closing, the Company and the Purchased
Subsidiaries are covered by the insurance policies described in Section 3.14 of
the Disclosure Schedule. All such policies provide customary coverage for all
normal risks incident to the Company Business and the properties and assets of
the Company and the Purchased Subsidiaries. All such policies are in full force
and effect, all premiums due and payable with respect thereto have been paid,
and, to the Knowledge of Seller, no written notice of cancellation or
termination has been received with respect to any such policy.

Section 3.15 Data Privacy. Each of the Company and the Purchased Subsidiaries is
in material compliance with its privacy policies and with all Applicable Laws
regarding privacy and personal information, including with respect to the
collection, storage, transmission, transfer (including cross-border transfers),
disclosure and use of personally identifiable information. Since January 1,
2014, to the Knowledge of Seller, no Person has gained unauthorized access to,
or misused, any customer or employee personally identifiable information with
respect to the Company or any of the Purchased Subsidiaries.

Section 3.16 Intercompany Agreements. Section 3.16 of the Disclosure Schedule
sets forth a true and complete list of all Intercompany Agreements in effect as
of the date of this Agreement. None of (a) Seller or any of its Affiliates
(other than the Acquired Pro Forma Entities), nor (b) any current or former
executive officer or director of any such Person (i) has any claim against the
Acquired Pro Forma Entities or (ii) owes money or performance of any obligation
to, or is owed money or the performance of any obligation by, the Acquired Pro
Forma Entities (in each case with or without the occurrence of any contingency
or other event), except to the extent related to any Intercompany Agreement.

 

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Section 3.17 Brokers. Except for Citigroup Global Markets Inc., no broker,
finder, investment banker or similar intermediary is entitled to any broker’s,
finder’s or similar fee or other commission in connection with this Agreement or
the other Transaction Documents or the transactions contemplated hereby or
thereby based upon arrangements made by or on behalf of Seller, the Company, or
any of its or their respective Subsidiaries.

Section 3.18 Certificates. All statements contained in the certificate delivered
by Seller pursuant to Section 2.2(a)(ii), the second sentence of Section 5.8(i),
the first and second sentences of Section 5.14(a), Section 5.15(a), the first
sentence of Section 5.16(a) and the first sentence of Section 5.21(b) shall be
deemed to be representations and warranties of the Seller pursuant to this
Article III.

Section 3.19 Disclaimer of Other Representations and Warranties.

(a) NONE OF SELLER, THE COMPANY NOR ANY OF ITS SUBSIDIARIES OR THEIR RESPECTIVE
STOCKHOLDERS, PARTNERS, MEMBERS OR REPRESENTATIVES HAS MADE, AND NONE OF THEM
SHALL BE DEEMED TO HAVE MADE, ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, AT LAW OR IN EQUITY, OF ANY NATURE WHATSOEVER RELATING TO THE SHARES,
THE COMPANY, ITS SUBSIDIARIES, OR THEIR RESPECTIVE BUSINESSES, INCLUDING THE
COMPANY BUSINESS, OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT, INCLUDING WITH RESPECT TO THE PROBABLE SUCCESS OR
PROFITABILITY OF THE COMPANY OR THE COMPANY BUSINESS AFTER THE CLOSING, OTHER
THAN THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS ARTICLE
III. ANY SUCH OTHER REPRESENTATION OR WARRANTY IS HEREBY DISCLAIMED.

(b) Without limiting the generality of Section 3.19(a), none of Seller, the
Company, or any other Person (including any stockholder, partner, member or
Representative of the Company or any Subsidiary) has made, and none of them
shall be deemed to have made, any express or implied representation or warranty,
either written or oral, in the materials relating to the business of the Company
and its Subsidiaries Made Available to Purchaser and its Representatives,
including due diligence materials, all versions of the Company’s Confidential
Information Memorandum or any presentation of the business of the Company and
its Subsidiaries by management of the Company or others in connection with the
transactions contemplated by this Agreement, and no statement contained in any
of such materials or made in any such presentation shall be deemed a
representation or warranty hereunder or otherwise or deemed to be relied upon by
Purchaser in executing, delivering and performing this Agreement and the
transactions contemplated hereby. It is expressly understood that any estimates,
forecasts, projections, budgets or other predictions, any data, any financial
information or any memoranda or offering materials or presentations, including
but not limited to any offering memorandum or similar materials Made Available
by the Company and its Representatives, are not and shall not be deemed to be or
to include representations or warranties of Seller or the Company, and are not
and shall not be deemed to be relied upon by Purchaser in executing and
delivering this Agreement and the other Transaction Documents and performing the
transactions contemplated hereby and thereby.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Seller as follows, in each case, as
of the date of this Agreement and as of the Closing Date unless otherwise
specifically set forth herein:

Section 4.1 Organization; Authority; Conflicts.

(a) Purchaser is a limited liability company duly organized and validly existing
under the Laws of the State of Delaware, has all necessary limited liability
company power and authority to carry on its business as now conducted and to own
or lease and operate its properties and assets, and is duly qualified to do
business as a foreign entity under the Laws of each jurisdiction where such
qualification is necessary, except where the failure to be so qualified would
not impair or delay the ability of Purchaser to carry out its obligations under,
and to consummate the transactions contemplated by, this Agreement and the other
Transaction Documents.

(b) Purchaser has all necessary power and authority to enter into this Agreement
and the other Transaction Documents to which it is or will be a party and to
carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement by Purchaser and each other Transaction Document to which Purchaser is
or will be a party, the performance by Purchaser of its obligations hereunder
and thereunder and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by Purchaser, and no other actions
or proceedings on the part of Purchaser are or will be necessary to authorize
the transactions contemplated by this Agreement or the other Transaction
Documents. This Agreement has been, and, upon their execution, each other
Transaction Document to which Purchaser is or will be a party shall have been,
duly and validly executed and delivered by Purchaser and, assuming the due
authorization, execution and delivery by Seller, constitute the valid, legal and
binding agreements of Purchaser enforceable against Purchaser in accordance with
their respective terms and conditions, except as enforcement may be limited by
the General Enforceability Exceptions.

(c) The execution, delivery and performance by Purchaser of this Agreement does
not, and the execution, delivery and performance by Purchaser of the other
Transaction Documents to which Purchaser is or will be a party will not, result
in any violation of or default under, or give rise to a right of termination
under, (i) the Governing Documents of Purchaser; (ii) any Law or Order
applicable to Purchaser or any of its Subsidiaries; or (iii) any Contract to
which Purchaser is a party, other than, in the cases of clauses (ii) and (iii),
where the violation, default or right of termination would not impair or delay
the ability of Purchaser to carry out its obligations under, and to consummate
the transactions contemplated by this Agreement and the other Transaction
Documents. No Consent, Permit, Order or declaration of, filing with, or notice
to, any Governmental Authority is required by or with respect to Purchaser or
any of its Affiliates in connection with the execution, delivery and performance
by Purchaser of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby, except for
such filings as may be required under the HSR Act.

Section 4.2 Financial Capability. Purchaser has available as of the date of this
Agreement and will have available as of the Closing, sufficient funds to be able
to pay the Base Purchase Price (including the full Closing Cash Payment Amount,
Closing Indebtedness, Closing Cash and the Closing Company Transaction Expenses)
and any expenses incurred by Purchaser in connection with the transactions
contemplated by this Agreement. On or prior to the date of this Agreement,
Purchaser has delivered to Seller a fully executed copy of the Loan Agreement,
dated as of the date of this Agreement, between Purchaser and the lender thereto
(“Lender”) including all exhibits, schedules, annexes, attachments and
amendments thereto (collectively, the “Loan Agreement”). Pursuant to, and
subject to the terms and conditions of, the Loan Agreement, Lender has committed
to make a loan to Purchaser in the aggregate principal amount set forth therein
(the “Loan”). As of the date of this Agreement, the Loan Agreement has not been
amended, restated or otherwise modified or waived, and the respective agreements
and obligations contained in the Loan Agreement have not been withdrawn,
rescinded, terminated, amended, restated or otherwise modified in any respect.
Except for the Loan Agreement, there are no side letters or other Contracts or
arrangements or understandings to which Lender, Purchaser

 

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or any of their Affiliates is a party related to the making of the full amount
of the Loan. The Loan Agreement is in full force and effect and constitutes the
legal, valid and binding obligation of Lender and Purchaser, enforceable in
accordance with its terms against Lender and Purchaser. There are no conditions
precedent related to the making of the full amount of the Loan pursuant to the
Loan Agreement, other than as expressly set forth therein. Neither Purchaser nor
Lender is in breach or violation of, or default under, the Loan Agreement, no
event has occurred that with notice or lapse of time or both would constitute
such violation, breach or default under the Loan Agreement or would result in a
failure to satisfy any condition precedent, in each case, on the part of
Purchaser or Lender under the Loan Agreement, and Purchaser does not have any
reason to believe that the full amount of the Loan will not be available to
Purchaser on the Closing Date.

Section 4.3 Brokers. No broker, finder or similar intermediary is entitled to
any broker’s, finder’s or similar fee or other commission in connection with
this Agreement or the other Transaction Documents or the transactions
contemplated hereby or thereby based upon arrangements made by or on behalf of
Purchaser.

Section 4.4 Legal Proceedings. There are no Legal Proceedings pending or, to the
Knowledge of Purchaser, threatened in writing, against or affecting Purchaser or
any of its Affiliates that challenge the validity or enforceability of this
Agreement, seek to enjoin or prohibit consummation of, or seek other equitable
relief with respect to, the transactions contemplated by this Agreement or that
would impair or delay the ability of Purchaser to carry out its obligations
under, and to consummate the transactions contemplated by this Agreement and the
other Transaction Documents. There is no Order imposed upon Purchaser that would
impair or delay the ability of Purchaser to carry out its obligations under, and
to consummate the transactions contemplated by, this Agreement and the other
Transaction Documents.

Section 4.5 Investment. Purchaser is acquiring the Shares hereunder for
investment, solely for Purchaser’s own account and not with a view to, or for
resale in connection with, any distribution or other disposition thereof in
violation of the Securities Act of 1933, as amended (the “Securities Act”), or
any applicable state securities law. Purchaser acknowledges that none of the
Shares may be resold in the absence of registration, or the availability of an
exemption from such registration, under the Securities Act or any applicable
state securities law. Purchaser is an “accredited investor” as defined in Rule
501 promulgated under the Securities Act and has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Shares. Purchaser has had access to sufficient
information regarding the Company and each Subsidiary and their respective
businesses and conditions to make an informed decision to purchase the Shares.

Section 4.6 Regulatory Status.

(a) None of Purchaser or any of its Affiliates or, to the Knowledge of
Purchaser, any of the “persons associated with” (as defined in the Exchange Act)
any of them, is or has engaged in any conduct that would reasonably be expected
to be a basis for denial, suspension or revocation of registration of a broker
or a person associated with a broker under Section 15(b) of the Exchange Act or
that will, after the Closing, be required to be reported in the Company’s Form
BD, and there is no Legal Proceeding pending or, to the Knowledge of Purchaser,
threatened by any Governmental Authority which would result in any such
ineligibility or disqualification.

(b) To the Knowledge of Purchaser, none of the principals of CIM Group, LLC is
or has been subject to any material regulatory disciplinary or other compliance
action by a Governmental Authority.

 

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(c) As of the date of this Agreement, neither Purchaser nor any of its
Affiliates is subject to any event that would (i) immediately after the Closing,
require the Broker to answer in the affirmative any of the questions in Items
11A-11I of SEC Form BD or (b) require CIM Investment Advisors to answer in the
affirmative any of the questions in Item 11 of SEC Form ADV.

Section 4.7 Certificates. All statements contained in the certificate delivered
by Purchaser pursuant to Section 2.2(b)(iii) shall be deemed to be
representations and warranties of the Purchaser pursuant to this ARTICLE IV.

Section 4.8 Inspection; No Other Representations. Purchaser is an informed and
sophisticated Person, and has engaged expert advisors experienced in the
evaluation and acquisition of companies such as the Company and its Subsidiaries
as contemplated by this Agreement. Purchaser has undertaken such investigation
and has been provided with and has evaluated such documents and information as
it has deemed necessary to enable it to make an informed and intelligent
decision with respect to the execution, delivery and performance of this
Agreement and the transactions contemplated by this Agreement. Purchaser has
received all materials relating to the business of the Company and the Purchased
Subsidiaries that it has requested, and has been afforded the opportunity to
obtain any additional information necessary to verify the accuracy of any such
information or of any representation or warranty made by Seller hereunder or
otherwise, to evaluate the merits of the transactions contemplated by this
Agreement. Purchaser acknowledges that Seller has given it access to the key
employees, documents and facilities of the Company and the Purchased
Subsidiaries. Seller has answered, and/or has caused the Company and its and
their Representatives to answer, to Purchaser’s satisfaction all inquiries that
Purchaser or its Representatives have made concerning the business of the
Company and its Subsidiaries or otherwise relating to the transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing, Purchaser acknowledges that (a) none of Seller, the Company, its
Subsidiaries or any of their respective Representatives makes any representation
or warranty with respect to (i) any projections, estimates, budgets or forecasts
Made Available to Purchaser of future revenues, future results of operations (or
any component thereof), future cash flows or future financial condition (or any
component thereof) of the Company and its Subsidiaries or the future business
and operations of the Company and its Subsidiaries or (ii) any other information
or documents Made Available to Purchaser or its counsel, accountants or advisors
with respect to the Company, any of its Subsidiaries or any of their respective
businesses, assets, liabilities or operations, except as expressly set forth in
ARTICLE III, and (b) Purchaser has not relied and will not rely upon any of the
information described in subclauses (i) and (ii) of clause (a) above or any
other information, representation or warranty, except those representations or
warranties set forth in ARTICLE III, in negotiating, executing and delivering
this Agreement and the other Transaction Documents and performing the
transactions contemplated hereby and thereby. Purchaser understands and agrees
that it is acquiring the Shares based upon Purchaser’s own inspection,
examination and determination of all matters related thereto, and without
reliance upon any express or implied representations or warranties of any
nature, whether in writing, orally or otherwise, made by or on behalf of or
imputed to Seller, the Company, any of its Subsidiaries, except for the
representations and warranties expressly set forth in ARTICLE III.

ARTICLE V

ADDITIONAL AGREEMENTS

Section 5.1 Conduct of the Company Business before the Closing.

(a) From the date of this Agreement until the Closing, except as (x) expressly
contemplated or permitted by this Agreement, including Section 5.13 and as set
forth in Section 5.1 and Section 5.13 of the Disclosure Schedule, (y) required
by a Governmental Authority, or (z) consented to in writing by

 

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Purchaser (which consent shall not be unreasonably withheld, conditioned or
delayed), Seller will cause the Company and its Subsidiaries to carry on the
Company Business in the ordinary course, use their commercially reasonable
efforts to maintain and preserve the goodwill and material relationships of the
Company with Governmental Authorities, clients, employees, creditors, lenders
and business associates, and not do any of the following with respect to the
Company or any of the Purchased Subsidiaries (provided, that Sections 5.1(a)(i),
(ii), (iii), (v), (vi), (vii), (ix), (xiv), (xvii), (xviii) and (xix)) hereof
shall apply only with respect to the Acquired Pro Forma Entities):

(i) amend its Governing Documents;

(ii) adopt a plan or agreement of complete or partial liquidation or
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization;

(iii) acquire assets outside of the ordinary course of business from any other
Person in any transaction or series of related transactions;

(iv) make or authorize any capital expenditure in excess of $37,500 in the
aggregate with respect to the Company Business;

(v) (A) split, combine, subdivide, redeem or in any way reclassify any of its
Equity Interests or change or agree to change in any manner the rights of its
Equity Interests or liquidate or dissolve or (B) declare a distribution on or in
respect of its Equity Interests that is not paid in full prior to the Closing
Date;

(vi) issue, sell, pledge, dispose of, grant, transfer, encumber, redeem or
acquire, or authorize the issuance, sale, pledge, disposition, grant, transfer,
encumbrance, redemption or acquisition of, any shares of its capital stock or
other Equity Interests, or securities convertible or exchangeable into or
exercisable for any shares of such capital stock, or any options, warrants or
other rights of any kind to acquire any shares of such capital stock or such
convertible or exchangeable securities;

(vii) form any Subsidiary, acquire any Equity Interest in any other Person or
enter into any joint venture, partnership or similar arrangement;

(viii) incur or create any material Lien on any assets of the Company or any of
the Purchased Subsidiaries other than Permitted Liens;

(ix) (A) incur, create, assume or otherwise become liable for any Indebtedness,
(B) enter into any letter of credit or similar credit support arrangement on
behalf of any Person, (C) lend money or make capital contributions or advances
to, or make investments in, any Person or (D) cancel any debts or waive any
claims or rights;

(x) except as required by Applicable Law, make any material change in its
financial accounting, accounts receivable, accounts payable or cash management
methods, practices or policies or procedures, or fail to manage working capital
in the ordinary course of business, including (i) taking (or omitting to take)
any action that would have the effect of accelerating revenues, accelerating
cash receipts or accelerating the collection of accounts receivable to
pre-Closing periods that would otherwise be expected to take place or be
incurred in post-Closing periods, or (ii) taking (or omitting to take) any
action that would have the effect of delaying or postponing the payment of any
accounts payable to post-Closing periods that would otherwise be expected to be
paid in pre-Closing periods;

 

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(xi) sell, transfer, lease, offer to sell, abandon or make any other disposition
of any of its material assets that are Related to the Company Business, other
than the disposition of obsolete assets in the ordinary course of business;

(xii) materially amend, materially modify or terminate any Material Contract or
adopt or enter into any Contract that would have been a Material Contract had it
been in effect on the date of this Agreement, other than (A) an automatic
renewal of any such Material Contract, (B) renewal of any such Material Contract
on substantially similar terms or (C) entry into a new Material Contract in the
ordinary course of business;

(xiii) solely with respect to the Company Business Employees, (A) take any
action to increase the compensation, bonus, severance, pension or other benefits
of such Company Business Employees, other than to the extent required under any
contractual arrangement in effect as of the date of this Agreement or by
Applicable Law, (B) grant any new awards, or amend or modify the terms of any
outstanding awards, under any Company Plan, (C) take any action to accelerate
the vesting or lapsing of restrictions or payment, or fund or in any other way
secure the payment, of compensation or benefits under any Company Plan,
(D) change any actuarial or other assumptions used to calculate funding
obligations with respect to any Company Plan that is required by Applicable Law
to be funded or change the manner in which contributions to such plans are made
or the basis on which such contributions are determined, except as may be
required by GAAP, (E) forgive any loans or issue any loans (other than routine
travel advances issued in the ordinary course of business) to any Company
Business Employee, or (F) terminate the employment of any Company Business
Employee other than for cause;

(xiv) hire any individual who will be an employee or independent contractor (who
is a natural person) of the Company or any of the Purchased Subsidiaries as of
the Closing Date;

(xv) become a party to, establish, adopt, amend, commence participation in or
terminate any collective bargaining agreement or other agreement with a labor
union, works council or similar organization to which the Company or any of the
Purchased Subsidiaries would be a party as of the Closing Date;

(xvi) transfer, assign or grant any license or sublicense of any right under or
with respect to any Intellectual Property or Material Contract relating to
Intellectual Property;

(xvii) enter into a new line of business, materially change the operations or
business plan for any existing line of business or abandon or discontinue any
existing line of business;

(xviii) enter into, amend or modify any Intercompany Agreement, except as
contemplated by Section 5.13 (provided, that this clause (xviii) will not
prevent the Company or any of the Purchased Subsidiaries from allocating costs
among such entities and other Affiliates of Seller in the ordinary course of
business);

(xix) make any new or change any existing material Tax election, or settle or
compromise any material Tax liability;

(xx) initiate, settle or compromise any Legal Proceeding or threatened Legal
Proceeding, other than settlements (A) solely for cash paid in full prior to the
Closing Date and (B) by any Purchased Subsidiary that is not an Acquired Pro
Forma Entity, to the extent such settlement would not, or would not reasonably
be expected to, restrict in any material respect the Company Business or the
ability of Seller or its Affiliates to provide services under the Services
Agreement;

 

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(xxi) permit the net working capital of the Broker to fall below the minimum net
capital amount required by Rule 15c3-1 under the Exchange Act;

(xxii) establish, form, market or sponsor any new funds, joint ventures or NLRs
or other pooled investment vehicles, other than any such activities engaged in
by any Purchased Subsidiary that is not an Acquired Pro Forma Entity (subject to
the restrictions set forth in Section 5.18); or

(xxiii) agree, authorize or commit to do any of the foregoing.

(b) Nothing in Section 5.1(a) is intended to give Purchaser the right to control
or direct the operations of the Company, its Subsidiaries or the Company
Business prior to the Closing. Prior to the Closing, Seller shall have the right
to exercise, subject to Section 5.1(a), complete control and supervision over
the Company and the Company Business, including the ability to manage and
operate the Company NLRs, including, for the avoidance of doubt, taking action
on behalf of any Company NLR or any other pooled investment vehicle in place as
of the date of this Agreement in its capacity as an advisor or service provider
to such Company NLR or other pooled investment vehicle, and none of Purchaser,
any of its Affiliates or its or their respective successors or assigns will
provide, directly or indirectly, any directions, orders, advice, aid, assistance
or information to any director, officer, or employee of Seller or the Company,
except as specifically contemplated or permitted by this ARTICLE V or as
otherwise consented to in writing in advance by an executive officer of Seller.

(c) Upon request of Purchaser at least ten (10) Business Days prior to Closing,
Seller shall, with respect to each Company NLR, cause the transfer on or before
the Closing to the applicable Advisor of the Equity Interests in such Company
NLR held by Seller or its Affiliate representing the Equity Interests received
in the “Initial Investment” (as such term is defined in the applicable Advisory
Agreement) with respect to such Company NLR, for an amount in cash equal to the
Initial Investment and to be paid by Purchaser together with the Closing Cash
Payment Amount at Closing.

Section 5.2 Efforts to Close; Consents and Approvals.

(a) From the date of this Agreement through the Closing, subject to the terms
and conditions of this Agreement, Seller and Purchaser shall use their
respective commercially reasonable efforts to take, or cause to be taken, all
actions, and do, or cause to be done, and to assist and cooperate with each
other to do, all things necessary, proper, or advisable (subject to Applicable
Law) to consummate the transactions contemplated by this Agreement and the other
Transaction Documents as promptly as practicable, including (i) the preparation
and filing of all forms, registrations and notices that are necessary or
advisable to be filed with or renewed by any Governmental Authority or third
party to consummate the transactions contemplated by this Agreement; (ii) the
taking of such actions as are necessary, proper, or advisable to obtain any
requisite Consents, Orders or Permits by any Governmental Authority or third
party; and (iii) the taking of such actions as are necessary, proper, or
advisable to fulfill all the conditions to the Parties’ obligation to close set
forth in ARTICLE VI; provided, however, that nothing in this Agreement shall
require, or be construed to require, Purchaser or any of its Affiliates to take
any other action under this Section 5.2 if the United States Department of
Justice or the United States Federal Trade Commission authorizes its staff to
seek a preliminary injunction or restraining order to enjoin consummation of the
transactions contemplated by this Agreement.

 

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(b) Without limiting the generality of Section 5.2(a), Purchaser and Seller
shall make, or shall cause to be made, any necessary filings (i) under the HSR
Act, and any similar non-US competition notifications that Seller and Purchaser
mutually agree are reasonably necessary, within ten (10) Business Days after the
date of this Agreement and, upon the request of Seller, Purchaser and Seller
shall seek early termination of the waiting period under the HSR Act and, if
applicable, shall seek early termination of any applicable waiting period under
each such non-US Law and (ii) with FINRA as required under applicable rules of
FINRA, including NASD Rule 1017. The Continuing Membership Application (the
“CMA”) of the Broker filed under NASD Rule 1017 shall include (i) all necessary
information regarding the proposed conversion of the Broker from a corporation
to a limited liability company and (ii) if Purchaser’s plan to cause certain
personnel of the Purchaser and its Affiliates to become associated persons of
the Broker would result in an increase in the number of associated persons of
the Broker involved in sales in excess of the limit in NASD Rule IM-1011-1, such
information (to be provided by Purchaser) regarding the Broker’s expansion and
the additional associated persons as FINRA reasonably requests.

(c) Further, and without limiting the generality of the other provisions of this
Section 5.2, prior to the Closing, subject to Applicable Law, each Party will
promptly (i) furnish to the other Party such necessary information and
reasonable assistance as such other Party may request in connection with the
foregoing, and (ii) consult with the other Party with respect to, provide the
other Party any necessary information with respect to, and provide the other
Party (or its counsel) with copies of, all filings (except for any confidential
portions thereof) made by such Party with any Governmental Authority or any
other information (except for any confidential portions thereof) supplied by
such Party to a Governmental Authority in connection with this Agreement and the
transactions contemplated by this Agreement. Each Party will promptly provide
the other Party with copies of any communication received by such Party from any
Governmental Authority regarding any of the transactions contemplated by this
Agreement (except for any confidential portions thereof). If either Party or
Affiliate thereof receives a request for information or documentary material
from any such Governmental Authority with respect to any of the transactions
contemplated by this Agreement, then such Party will endeavor in good faith to
make, or cause to be made, as soon as reasonably practicable and after
consultation with the other Party, an appropriate response in compliance with
such request. Each Party will advise the other Party promptly of any
communication received by such Party from any Governmental Authority regarding
any of the transactions contemplated by this Agreement, and of any
understandings, undertakings, or agreements (oral or written) such Party
proposes to make or enter into with any Governmental Authority in connection
with the transactions contemplated by this Agreement.

Section 5.3 Access to Information.

(a) Between the date of this Agreement and the Closing, subject to the other
provisions of this Section 5.3, Seller shall provide Purchaser and its
Representatives with such information and data regarding any employees, assets
or liabilities Related to the Company Business, including the books and records
and employees of the Company and the Purchased Subsidiaries, the Company
Business Employees and the other employees of the Company and its Subsidiaries
that are to provide the services under the Services Agreement, and such other
information, Contracts and properties Related to the Company Business as may be
reasonably requested in connection with this Agreement and the other Transaction
Documents and the transactions contemplated hereby and thereby. Such access
shall occur only during normal business hours upon reasonable advance notice by
Purchaser to Seller and under the supervision of the Company’s personnel and
shall be conducted in a manner that does not unreasonably interfere with the
conduct of the Company’s business.

 

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(b) Notwithstanding the obligations contained in Section 5.3(a), Seller shall
not be required to disclose information (i) where such access or disclosure
would jeopardize the attorney-client privilege of Seller, the Company or its
Subsidiaries or violate any Applicable Law or Contract, (ii) with respect to
bids, the identity of any bidder, confidentiality or non-disclosure agreements,
letters of intent, expressions of interest or other proposals received in
connection with transactions comparable to those contemplated by this Agreement
or any information or analysis relating to any such communications and (iii) the
disclosure of which would require Consent of a counterparty under the relevant
Contract (provided that Seller and Purchaser shall collaborate in good faith to
make alternative arrangements to allow for such access or disclosure in a manner
that does not result in requiring the Consent of such counterparty), and neither
Purchaser nor any of its Representatives shall have any contact before the
Closing, with any employee of the Company or its Subsidiaries, and, with respect
to the Company or its Subsidiaries or the transactions contemplated by this
Agreement only, with any actual or potential investor, any agent, broker,
partner, lessor, lender, vendor, customer, supplier or consultant of the Company
or any of its Subsidiaries, except, in each case, with Seller’s express prior
written approval and under such conditions as Seller may reasonably require. All
requests by Purchaser or its Representatives for access or information shall be
submitted or directed exclusively to an individual or individuals to be
designated in writing by Seller. The auditors and accountants of Seller or any
of its Affiliates shall not be obligated to make any work papers available to
any Person except in accordance with such auditors’ and accountants’ normal
disclosure procedures and then only after such Person has signed a customary
agreement relating to such access to work papers in form and substance
reasonably acceptable to such auditors or accountants.

(c) All information provided or accessed under this Section 5.3 shall be subject
to the terms of the Non-Disclosure and Confidentiality Agreement.

Section 5.4 Notifications. Each Party shall keep the other Party reasonably
apprised of the status of the matters relating to the completion of the
transactions contemplated by this Agreement and the other Transaction Documents,
including with respect to the matters relating to the satisfaction of the
closing conditions of the other Party set forth in ARTICLE VI. Prior to the
Closing Date, upon discovery, each Party shall promptly notify the other Party
if such Party or any of its Affiliates obtains knowledge that the
representations and warranties of such Party set forth in this Agreement are not
true and correct in all material respects.

Section 5.5 Confidentiality. Purchaser acknowledges that the information Made
Available to it in connection with this Agreement and the transactions
contemplated by this Agreement is subject to the terms of the letter agreement
by and between VEREIT and CIM Group Acquisitions, LLC, dated August 3, 2017 (the
“Non-Disclosure and Confidentiality Agreement”), the terms of which are
incorporated herein by reference. Effective upon, and only upon, the Closing,
the Non-Disclosure and Confidentiality Agreement shall terminate. In the event
that this Agreement is terminated without the Closing having occurred, however,
the Non-Disclosure and Confidentiality Agreement shall continue in full force
and effect in accordance with its terms.

Section 5.6 Publicity. The Parties will not, and will use their respective
reasonable best efforts to cause their Representatives not to, disclose to any
Person (other than its Representatives) any of the contents of this Agreement
other than as required by Applicable Law and upon prior notice to the other
Party. Neither Purchaser (without the consent of Seller) nor the Company and
Seller (without the consent of Purchaser) will issue any press release or other
public statement related to this Agreement or the transactions contemplated by
this Agreement except to the extent that such Party reasonably determines, after
consultation with outside legal counsel, such action to be required by
Applicable Law or by the rules of any applicable self-regulatory organization,
in which event such Party will, to the extent reasonably practicable, consult
with the other and allow reasonable time for comment on such press release or
public announcement in advance of its issuance. Nothing herein or in the
Non-Disclosure and Confidentiality Agreement shall be deemed to prevent Seller
or Purchaser from disclosing the existence or terms of this Agreement or the
transactions contemplated hereby in connection with seeking Consents, Orders or
Permits as may be required by this Agreement.

 

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Section 5.7 Post-Closing Preservation of Books and Records. For a period of
seven (7) years after the Closing, Purchaser shall (a) retain the books and
records (including personnel files) of the Company and the Purchased
Subsidiaries relating to periods before the Closing in accordance with the
document retention policies of Purchaser and its Affiliates, (b) upon reasonable
notice, afford Seller reasonable access (including the right to make copies) to
such books and records and (c) subject to customary confidentiality protections,
in connection with the preparation of Tax Returns, financial statements,
Governmental Authority reporting obligations or relevant Legal Proceedings or
for other bona fide business purposes (each of the foregoing permitted bases for
access, a “Permitted Purpose”), and upon reasonable prior notice, Purchaser
shall, and shall cause each of its Affiliates and their respective
Representatives to, make available to Seller and its Representatives and their
respective Affiliates, on reasonable notice, during normal business hours, those
employees of the Company and the Purchased Subsidiaries whose assistance,
expertise, testimony, notes or recollections or presence may be necessary to
assist Seller, its Representatives or their respective Affiliates in connection
with its inquiries for any Permitted Purpose; provided, however, that in the
case of clauses (a), (b) and (c), such access or investigation shall not
unreasonably interfere with the business or operations of Purchaser or any of
its Affiliates, and Purchaser or any of its Affiliates shall not be required to
take any action to the extent that such action would constitute a waiver of the
attorney-client or other privilege, provided that, Seller and Purchaser shall
collaborate in good faith to make alternative arrangements to allow for such
access or investigation in a manner that does not result in a waiver of any such
privilege.

Section 5.8 Employment and Benefit Matters.

(a) Subject to the completion of its ordinary course regulatory and investor
disclosure/reporting due diligence, at least 30 days prior to the Closing with
respect to Signing Date Company Business Employees (or later as may be agreed by
Seller and Purchaser), or at any time prior to Closing with respect to Company
Business Employees other than Signing Date Company Business Employees (subject
to Section 5.8(e)), Purchaser intends to offer or to cause one or more of its
Affiliates to offer employment to each Company Business Employee in accordance
with this Agreement on the terms and conditions contemplated by Section 5.8(b).
Upon acceptance of such offer, each Company Business Employee will become an
employee of the Purchaser or such Affiliate effective on the Closing Date or,
for any such Company Business Employee who is not actively employed on the
Closing Date (including those on military leave with veteran’s reemployment
rights under federal Law, leave under the Family Medical Leave Act of 1993,
approved personal leave or short-term or long-term disability leave), upon such
Company Business Employee’s return from such leave, within six months of the
Closing, and provided such Company Business Employee’s return to work is within
the reservation of employment period and in accordance with the terms of such
leave (each, a “Transferred Employee”). Seller shall be solely responsible for
any payments or benefits that may become payable to any Company Business
Employee who does not become a Transferred Employee because such Company
Business Employee does not accept an offer made in accordance with this
Section 5.8(a) to transfer employment or otherwise.

(b) The Employer Entity shall, immediately prior to the Closing Date, in respect
of the 2017 calendar year, to the extent not previously paid, pay bonuses to the
Transferred Employees based on target performance. Purchaser shall, in respect
of the 2018 calendar year, to the extent the Closing does not take place in the
2017 calendar year, pay bonuses to the Transferred Employees, to the extent
accrued as a current liability on the Final Statement, at the regularly
scheduled time for payment of bonuses to Purchaser’s employees generally with
respect to the 2018 calendar year. Purchaser shall, for the period commencing on
the Closing Date and ending on the first anniversary of the Closing Date, for
each Transferred Employee, provide or cause to be provided (i) base salary and
annual cash incentive

 

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opportunities (excluding equity and long-term incentive compensation), which
are, in the aggregate, substantially similar to those in effect for such
Transferred Employee as of the Closing Date and (ii) retirement benefits, and
health and welfare benefits for such Transferred Employee which are, in the
aggregate, substantially comparable to those that are made available to
similarly situated employees of Purchaser and its Affiliates (except that the
amount of the 401(k) plan employer matching contribution for such Transferred
Employees shall be adjusted such that the contribution amount is no less
favorable than the amount provided under Seller’s 401(k) plan).

(c) As of the Closing Date, each Transferred Employee will be immediately
eligible to participate in any compensation and benefit plans and arrangements
of Purchaser or any of its Affiliates (and Purchaser will waive any applicable
waiting period). With respect to any employee benefit plans and arrangements of
Purchaser or any of its Affiliates in which the Transferred Employees are
eligible to participate, such Transferred Employees will not receive service
credit for vesting, benefit accrual or level of benefit. To the extent that any
Transferred Employee participates in any health or other group welfare benefit
plan of Purchaser or any such Affiliate following the Closing Date, Purchaser
shall use commercially reasonable efforts to cause (i) any pre-existing
conditions or limitations, eligibility waiting periods or required physical
examinations under any health or similar welfare plan of Purchaser or any such
Affiliate to be waived with respect to the Transferred Employees and their
eligible dependents, and (ii) any deductibles paid by any such Transferred
Employee under any of the Company’s health plans in the plan year in which the
Closing Date occurs to be credited towards deductibles under the health plans of
Purchaser or any such Affiliate of Purchaser.

(d) With respect to accrued but unused vacation time (including paid time off,
sick pay and any similar entitlements) to which any Transferred Employee is
entitled pursuant to the vacation policy applicable to such Transferred Employee
immediately prior to the Closing (collectively, “Accrued Vacation”), Seller
shall remain liable for such Accrued Vacation and, prior to Closing, shall pay
in cash to each Company Business Employee who will become a Transferred Employee
the aggregate value attributable to such Accrued Vacation at the then current
base salary or wage rate, as applicable.

(e) Prior to making any written or oral communications to any Company Business
Employees pertaining to compensation or benefit matters that are affected by the
transactions contemplated by this Agreement or by the other Transaction
Documents, the Company shall provide Purchaser with a copy of the intended
communication, Purchaser shall have a reasonable period of time to review and
comment on the communication, and the Company shall consider any such comments
in good faith. Any offer of employment to any Company Business Employee other
than a Signing Date Company Business Employee shall be effected only after
consultation with Seller regarding reasonable requirements as to timing and
method for purposes of avoiding or mitigating disruption to Seller’s and its
Affiliates’ business.

(f) Seller shall, or shall cause the Employer Entity to, provide any required
notice under the WARN Act or any similar state or local Law triggered by, or to
otherwise comply with the WARN Act with respect to, any “plant closing” or “mass
layoff” (as defined in the WARN Act) or group termination or similar event
affecting employees of the Employer Entity occurring prior to and after the
Closing.

(g) This Section 5.8 shall be binding upon and inure solely to the benefit of
each of the Parties, and nothing in this Section 5.8, express or implied, shall
confer upon any other Person any rights or remedies of any nature whatsoever.
Nothing contained herein, express or implied, shall be construed to
(i) establish, amend or modify any employee benefit plans of the Company and the
Purchased Subsidiaries or Purchaser and its Subsidiaries or (ii) prevent
Purchaser from amending or terminating any of its compensation and benefit plans
and arrangements in accordance with their terms.

 

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The Parties acknowledge and agree that the terms set forth in this Section 5.8
shall not create any right in any Company Business Employee or any other Person
to any continued employment with the Company, the Purchased Subsidiaries,
Purchaser, or any of their respective Affiliates, or to any compensation or
benefits of any nature or kind whatsoever. Nothing in this Agreement shall be
deemed to confer upon any Person (nor any beneficiary thereof) any rights under
or with respect to any employee benefit plans of Purchaser, including any plan,
program or arrangement described in or contemplated by this Agreement, and each
Person (and any beneficiary thereof) shall be entitled to look only to the
express terms of any such plan, program or arrangement for his or her rights
thereunder.

(h) Within ten (10) days of the date of this Agreement, Purchaser shall provide
to Seller a list of employees (other than the Signing Date Company Business
Employees) for whom it is considering making an offer of employment. Within ten
(10) days of Purchaser delivering such list to Seller, Seller shall deliver to
Purchaser Section 5.8(i) of the Disclosure Schedule, which shall describe, with
respect to any such employee, (i) all of the information with respect to such
employee as required by the second sentence of Section 3.11(a), (ii) whether,
with respect to any such employee, any of the representations and warranties set
forth in Section 3.5(a) shall be inaccurate or untrue if such employee was a
Signing Date Company Business Employee thereunder and (iii) whether any
additional Contracts would constitute a Material Contract under clause (k) of
the definition of such term if any such employee was a Signing Date Company
Business Employee thereunder.

Section 5.9 Tax Matters.

(a) Transfer Taxes. Notwithstanding anything herein to the contrary, Purchaser
and Seller each shall pay, when due, fifty percent (50%) of all transfer Taxes
imposed with respect to property of the Company or any Purchased Subsidiary, and
all documentary, sales, use, stamp, registration and other similar Taxes, and
all conveyance fees, recording charges and other fees and charges (including any
penalties, interest and filing expenses) incurred in connection with the
consummation of the transactions contemplated by this Agreement. Each of
Purchaser and Seller shall indemnify the other for their respective shares of
such Taxes and shall cooperate with each other in the filing of all necessary
Tax Returns and other documentation with respect to such Taxes, fees and
charges.

(b) Tax Returns.

(i) Seller shall have the right to elect to cause to be prepared all Tax Returns
of the Company or any of the Subsidiaries for all Tax periods ending on or
before the Closing Date (“Pre-Closing Tax Returns”), by providing prior notice
to Purchaser and the Company at least two months before the due date of such a
Tax Return (not including extensions). Such Tax Returns shall be prepared in a
manner consistent with past practice, provided that (i) no election to waive a
carryback of net operating losses under Section 172(b)(3) of the Code shall be
made, (ii) the Company and its Subsidiaries shall elect under Revenue Procedure
2011-29, 2011-18 IRB to treat 70% of any success-based fees (including any
amounts paid to Citigroup Global Markets, Inc.) as amounts that did not
facilitate the transactions described in this Agreement and therefore treat 70%
of such costs as deductible on the Pre-Closing Tax Returns, and (iii) the
Company shall deduct on its Pre-Closing Tax Returns any compensatory payments
made in connection with the transactions contemplated by this Agreement and any
deductible expenses incurred in connection with the transactions contemplated by
this Agreement, in either case that are economically borne by Seller, to the
extent permitted by Applicable Law. If Seller has elected to prepare such Tax
Returns, Seller shall provide Purchaser drafts of the Pre-Closing Tax Returns at
least thirty (30) days before the filing of such Tax Returns for Purchaser’s
review and approval (such approval not to be unreasonably withheld, conditioned
or delayed). If Seller has not elected to prepare such Tax Returns, Purchaser
shall prepare such Tax Returns consistent with past practice and the

 

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provisions of this Section 5.9(b), and shall provide such Tax Returns to Seller
for its review and approval at least thirty (30) days before filing (such
approval not to be unreasonably withheld, conditioned or delayed). In the event
of a dispute with respect to such Tax Returns, such dispute will be referred to
and resolved by the Neutral Arbitrator. The determination of the Neutral
Arbitrator shall be binding on the Parties. All fees and expenses relating to
the work performed by the Neutral Arbitrator shall be borne by the Party that
loses the dispute. Purchaser shall cause all Pre-Closing Tax Returns to be
timely filed, provided that if Seller has elected to prepare a Pre-Closing Tax
Return but does not provide a draft of such Tax Return to Purchaser at least
thirty (30) days before the due date of such Tax Return (including any
extensions then in effect), Purchaser shall be entitled to prepare and file such
Tax Return without Seller’s approval (but otherwise in accordance with this
Section 5.9(b)(i)). Seller shall pay the amount of any Taxes shown as due on
each Pre-Closing Tax Return prepared in accordance with this Section 5.9(b)(i),
less any amount of Tax liabilities taken into account in the Closing Working
Capital Amount that is included in the Tax liability shown as due on such
Pre-Closing Tax Return, to the relevant Taxing Authority or to Purchaser no
later than five (5) days prior to the due date of such Pre-Closing Tax Return.

(ii) Purchaser shall prepare or cause to be prepared any Tax Returns of the
Company and any of the Subsidiaries for all Tax periods that begin on or before
and end after the Closing Date (all such Tax Returns, the “Straddle Returns”).
Purchaser shall provide drafts of such Straddle Returns to Seller for its review
and approval at least thirty (30) days before filing. The Parties shall
negotiate in good faith to resolve any disputes over such Straddle Returns for
thirty (30) days. Any disputes over Straddle Returns that cannot be resolved
through negotiations between Purchaser and Seller shall be taken to the Neutral
Arbitrator. The determination of the Neutral Arbitrator shall be binding on the
Parties. All fees and expenses relating to the work performed by the Neutral
Arbitrator shall be borne by the Party that loses the dispute.

(iii) Except as provided in any settlement with a Taxing Authority entered into
in accordance with Section 5.9(c), (A) All Parties shall treat the Pre-Closing
Restructuring as is provided in Section 5.13 of the Disclosure Schedule, all Tax
Returns (including the Company’s Tax Returns) shall be filed consistent
therewith and all Parties shall take all positions for Tax purposes consistent
therewith, (B) all Parties shall value the assets distributed to Seller in the
Pre-Closing Restructuring at no more than the values shown in
Section 5.9(b)(iii) of the Disclosure Schedule, as adjusted for any change in
the cash, prepaid expenses, amounts due from the NLRs or Seller, deposits, or
net accounts receivable and reduced by the amount of any depreciation (as
determined for U.S. federal income tax purposes) of the furniture, fixtures, and
equipment of Equity Fund Advisors, LLC, DRE Holdings, LLC, and VEREIT TRS Corp.
between the date hereof and the date of the Pre-Closing Restructuring and
(C) all Tax Returns (including the Company’s Tax Returns) shall be filed
consistently therewith and all Parties shall take all positions for Tax purposes
consistent therewith.

(c) Seller shall have the right to control and Purchaser shall have the right to
participate in (at its own expense), any audit, litigation or other proceeding
with respect to Taxes and Tax Returns of the Company or any of the Subsidiaries
for which Seller could be obligated to indemnify Purchaser under this Agreement
or that relate to a Tax refund or credit for which Seller is entitled to under
this Agreement (a “Pre-Closing Tax Contest”); provided, however, that Seller
shall not settle or compromise any such Pre-Closing Tax Contest without
Purchaser’s prior written consent, which is not to be unreasonably withheld,
conditioned or delayed, provided that if (i) such settlement or compromise would
not have the effect of materially increasing a Tax liability of the Company or
the Subsidiaries that is not indemnifiable by Seller hereunder and
(ii) Purchaser does not consent to such settlement, then the Tax liability
arising from the ultimate settlement of such Pre-Closing Tax Contest shall not
be an

 

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Indemnified Tax to the extent such Tax liability is greater than the Tax
liability that would have arisen from the settlement to which Purchaser did not
consent. Purchaser shall provide Seller with prompt notice of any written
inquiries by a Taxing Authority relating to a Pre-Closing Tax Contest within
five (5) Business Days of the receipt of such notice. Seller may elect to
control such Pre-Closing Tax Contest by notifying Purchaser of such election in
writing within five (5) Business Days of the receipt of Purchaser’s notice of
such Pre-Closing Tax Contest. If Seller does not so elect to control such
Pre-Closing Tax Contest then Purchaser shall control such matter, provided in
such case that (x) Seller shall have the right to participate in any such matter
and (y) Purchaser shall keep Seller reasonably informed of the details and
status of such matter (including providing Seller with copies of all written
correspondence regarding such matter). Purchaser shall not settle any such
proceedings without the written consent of Seller (not to be unreasonably
withheld, conditioned or delayed) if such settlement or compromise would
reasonably be expected to materially adversely affect Seller. In the event of
any conflict between the provisions of this Section 5.9(c) and Section 7.5, this
Section 5.9(c) shall control.

(d) Seller and Purchaser shall cooperate fully, as and to the extent reasonably
requested by the other Party, in connection with the filing of any Tax Returns
for the Company and the Subsidiaries, the filing and prosecution of any Tax
claims, and any audit, litigation or other proceeding with respect to Taxes of
the Company or any of the Subsidiaries. Such cooperation shall include making
employees available on a mutually convenient basis to provide assistance in the
preparation of the Pre-Closing Tax Returns and additional information and
explanation of any material provided hereunder.

(e) Purchaser shall cause the Tax year of the Company to close as of the end of
the Closing Date for U.S. federal income tax purposes, and Purchaser shall not
take any action, or permit any action to be taken, that would prevent the tax
year of the Company from ending for state, local and foreign income tax purposes
at the end of the day on the Closing Date.

(f) Except as required by Applicable Law (as determined by Purchaser in its
reasonable discretion), without the prior written consent of Seller (such
consent not to be unreasonably withheld, conditioned or delayed), Purchaser
shall not take any of the following actions (or cause the Company or any
Subsidiary to take any of the following actions) (A) amend or permit any Company
or any Subsidiary to amend any Tax Return or surrender any right to claim a
refund of Taxes for any Pre-Closing Tax Period, (B) file or permit the Company
or any Subsidiary to file a Tax Return, with respect to any Pre-Closing Tax
Period, in any jurisdiction in which such entity did not file such Tax Return
prior to the Closing, (C) extend or waive, or cause to be extended or waived, or
permit the Company or any Subsidiaries to extend or waive, any statute of
limitations or other period for the assessment of any Tax or deficiency related
to a Pre-Closing Tax Period, (D) make or change any material Tax election or
accounting method or practice that has retroactive effect to any Pre-Closing Tax
Period for the Company or any Subsidiary, (E) make an election pursuant to
Section 336(e) or Section 338 of the Code with respect to the transactions
contemplated by this Agreement or (F) initiate any voluntary disclosure or other
communication with any Taxing Authority relating to any actual or potential Tax
payment or Tax Return filing obligation of any Company or any of its
Subsidiaries for any Pre-Closing Tax Period.

(g) For the portion of the Closing Date after the time of Closing, other than
transactions expressly contemplated by this Agreement, Purchaser shall cause the
Company and the Subsidiaries to carry on its business only in the ordinary
course in the same manner as heretofore conducted.

(h) Any Tax refunds (or credits for overpayment) of the Company or its
Subsidiaries in respect of a Pre-Closing Tax Period shall be paid to Seller
within five (5) days of receipt by Purchaser or its Affiliates (including the
Company and its Subsidiaries) net of any costs incurred by Purchaser, the
Company or its Subsidiaries in obtaining such refunds or credits, except to the
extent that such refunds are

 

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attributable to the carryback of losses arising in a Post-Closing Tax Period or
an amount taken into account in the Closing Working Capital Amount. Purchaser
shall cause any overpayments in Tax of the Company and its Subsidiaries in
respect of Pre-Closing Tax Periods to be paid in the form of a cash refund, and
shall elect to do so, unless otherwise not permitted under law or if Seller is
not entitled to such a refund under this Section 5.9(h). Purchaser shall, if
Seller so requests and at Seller’s expense, reasonably cooperate with Seller in
filing any amended returns or taking such other steps as may be necessary for
obtaining any refund or claiming any tax credits to which Seller is entitled
under this Section 5.9(h).

(i) In the case of any tax period including, but not ending on, the Closing Date
(“Straddle Period”), the amount of Taxes allocable to the portion of the
Straddle Period ending on the Closing Date shall be deemed (i) in the case of
any Tax that is imposed on a periodic basis (such as real or personal property
Taxes) to be (A) the amount of such Tax (or refund or credit of such Tax) for
the entire period multiplied by (B) a fraction, the numerator of which is the
number of calendar days in the portion of the Straddle Period ending on the
Closing Date and the denominator of which is the number of calendar days in the
entire relevant Straddle Period and (ii) in the case of any Tax not described in
clause (i) above (such as franchise Taxes, payroll or withholding Taxes, Taxes
that are based upon or measured by income, receipts or occupancy or imposed in
connection with any sale or other transfer or assignment of property (whether
real or personal, tangible or intangible)), to be the amount of any such Taxes
that would be payable if the taxable year ended as of the close of business on
the Closing Date (and for such purposes, the taxable period of any partnership
or other pass-through entity, or any non-U.S. entity in which such Person holds
a beneficial interest, directly or indirectly, shall be deemed to terminate at
such time); provided, however, that exemptions, allowances or deductions that
are calculated on an annual basis (such as the deductions for depreciation and
real estate taxes) will be apportioned between the Pre-Closing Tax Period and
the Post-Closing Tax Period in a manner consistent with the methodology
described in clause (i) hereof.

Section 5.10 Directors’ and Officers’ Indemnification and Insurance.

(a) From and after the Closing, the Company shall, to the fullest extent
permitted under the Governing Documents of the Company and/or any director,
manager or officer indemnification agreement (each, an “Indemnification
Agreement”), in each case, as in effect as of the date of this Agreement and set
forth in Section 5.10 of the Disclosure Schedule, indemnify and hold harmless
the present and former directors, managers and officers of the Company and each
of the Purchased Subsidiaries (each, an “Insured Party”) against all costs and
expenses (including reasonable attorneys’ fees), judgments, fines, losses,
claims, damages, liabilities and settlement amounts paid in connection with any
Legal Proceeding based on the fact that such Insured Party is or was a director,
officer or manager of the Company or any of the Purchased Subsidiaries and
arising out of or pertaining to any action or omission occurring at or prior to
the Closing (including the transactions contemplated by this Agreement and other
Transaction Documents) and shall pay any expenses in advance of the final
disposition of such action or proceeding to each Insured Party to the fullest
extent permitted under the Governing Documents of the Company and/or any
Indemnification Agreement, in each case, as in effect as of the date of this
Agreement, upon receipt from the Insured Party for whom expenses are paid of any
undertaking to repay such amounts to the extent required under such Governing
Documents of the Company or Indemnification Agreement, as applicable; provided,
that notwithstanding the indemnification obligations of the Company to the
Insured Parties pursuant to this Section 5.10(a), nothing in this
Section 5.10(a) shall limit in any manner the ability of any Purchaser
Indemnified Party to assert or recover amounts spent by the Purchaser in respect
of such obligations as Losses under Article VII in accordance with the terms
thereof. In the event of any such Legal Proceeding, Purchaser and the Company
shall have the right, at their sole option and expense and to the extent
permissible under the applicable Indemnification Agreement, to defend against,
negotiate, settle or otherwise control any such

 

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matter. The Company shall not be liable for any settlement effected without its
prior written consent (which consent shall not be unreasonably withheld,
conditioned or delayed). The Company shall not be obligated pursuant to this
Section 5.10 to pay the fees and expenses of more than one counsel for all
Insured Parties per jurisdiction in any single action unless a conflict of
interest precludes the effective representation of more than one Insured Party
with respect to the applicable Legal Proceeding. Purchaser hereby acknowledges
that present and former directors, officers and managers of the Insured Parties
may have certain rights to indemnification, advancement of expenses and/or
insurance in addition to the Governing Documents of the Company and the
Indemnification Agreements. From and after the Closing, Purchaser hereby agrees
that the Company is the indemnitor of first resort (i.e., its obligations to the
Insured Parties are primary and any obligation of any secondary indemnitors to
advance expenses or to provide indemnification for the same expenses or
liabilities incurred by the Insured Parties are secondary).

(b) Prior to the Closing, Seller shall cause the Company to purchase directors’
and officers’ liability insurance coverage for the Company and the Purchased
Subsidiaries and their respective directors, officers and employees, which shall
provide such insured Persons with coverage with respect to any actual or alleged
act, error or omission by such Person occurring at or prior to the Closing,
including the transactions contemplated by this Agreement and other Transaction
Documents, for a period of six (6) years following the Closing with terms not
materially less favorable on the whole to, such insured Persons than the
directors’ and officers’ liability insurance coverage presently maintained by or
on behalf thereof (the “Tail Policy”); provided, that prior to the Closing the
Company may also purchase, or the Seller may also cause the Company to purchase,
errors and omissions and/or professional liability insurance or other
“claims-made” coverages for such insured Persons with respect to any actual or
alleged act, error or omission by them occurring at or prior to the Closing,
including the transactions contemplated by this Agreement, for a period of six
(6) years following the Closing of not less than the existing coverage under,
and have other terms not materially less favorable on the whole to such insured
Persons than the errors and omissions and/or professional liability insurance or
other “claims-made” coverages presently maintained by or on behalf thereof (the
“Other Policies”); provided, further, that in no event shall the aggregate
premium for the Tail Policy exceed $800,000, it being understood, however, that
if the aggregate premium amount for the Tail Policy exceeds such amount, the
Company may obtain a Tail Policy with the greatest coverage as may be
commercially available for a cost not exceeding such amount; provided, further,
that, for the avoidance of doubt, such cost in obtaining such Tail Policy or
Other Policies shall be incurred by the Company and shall constitute a reduction
in the Closing Cash. Following the Closing, Purchaser shall cause the Company
and each of the Purchased Subsidiaries to refrain from taking any act that would
reasonably be expected to cause such coverage to cease to remain in full force
and effect.

(c) Each Person to whom this Section 5.10 applies shall be a third-party
beneficiary of this Section 5.10. The provisions of this Section 5.10 are
intended to be for the benefit of each Insured Party and his heirs. The
obligations under this Section 5.10 shall not be terminated or modified in such
a manner as to adversely affect any such Person without his or her written
consent.

(d) After the Closing, in the event Purchaser or the Company or any of the
Purchased Subsidiaries (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any Person, then, and in each such case, to the
extent necessary, Purchaser shall cause a proper provision to be made so that
the successors and assigns of Purchaser or the Company or any of their
respective Subsidiaries assume the obligations set forth in this Section 5.10.

Section 5.11 Services Agreement. At the Closing, Seller and the Company shall
enter into the Services Agreement.

 

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Section 5.12 No-Shop. From the date of this Agreement until the earlier of the
termination of this Agreement pursuant to Section 8.1 and the Closing, Seller
shall, and shall cause the Company and its Subsidiaries and each of their
respective Representatives to, cease any and all existing activities,
discussions or negotiations with any Person other than Purchaser with respect
to, and to deal exclusively with Purchaser and its designated Affiliates and
Representatives regarding, any and all acquisitions of, and investments in, the
Company and its Subsidiaries, whether by way of merger, consolidation or other
business combination with any other Person, purchase or exchange of equity
interests, purchase of assets (other than purchases of assets in the ordinary
course) or otherwise (an “Alternative Transaction”) and, without the prior
consent of Purchaser, Seller shall not, and shall cause the Subsidiaries and the
Company Representatives not to, and each Seller shall, and shall cause its
Representatives not to:

(a) solicit, initiate or otherwise engage in any negotiations, discussions or
other communications with any other Person relating to any Alternative
Transaction;

(b) provide information or documentation to any other Person with respect to the
Company or any of the Purchased Subsidiaries or any of their respective
businesses or assets in respect of any Alternative Transaction; or

(c) consummate any Alternative Transaction or enter into any Contract with any
other Person with respect to any Alternative Transaction.

Section 5.13 Pre-Closing Restructuring; Corporate Name.

(a) Prior to the Closing, Seller shall, and shall cause its Affiliates to,
undertake the transactions described in Section 5.13 of the Disclosure Schedule
(the “Pre-Closing Restructuring”). Purchaser shall, and shall cause its
Affiliates to, cooperate reasonably and in good faith with Seller with respect
to the Pre-Closing Restructuring. If, following the Closing, (a) Seller
determines that any assets that should not have been transferred in the
Pre-Closing Restructuring were so transferred or that any liabilities that
should have been transferred and assumed in the Pre-Closing Restructuring were
not so transferred and assumed, or (b) Purchaser determines that any assets that
should have been transferred to the Company and the Purchased Subsidiaries in
the Pre-Closing Restructuring were not so transferred or that any liabilities
that should not have been transferred and assumed in the Pre-Closing
Restructuring were so transferred and assumed, Purchaser and Seller shall
cooperate in good faith to determine if such assets are held, or such
liabilities were assumed, by the wrong party and, if the Parties mutually so
determine, they shall effect the transfer of such asset to, or the assumption of
such liability by, the appropriate party or its designee as soon as reasonably
practicable and for no consideration other than as contemplated by Sections 5.14
and 5.15.

(b) Purchaser hereby acknowledges and agrees that, following the Closing,
nothing herein shall restrict the Property-Owning VEREIT Subsidiaries whose
corporate names contain the name “Cole” (together with all variations thereof)
(the “Corporate Name”), to use their respective Corporate Names in conducting
their business as currently conducted; provided, that to the extent any
Property-Owning VEREIT Subsidiary disposes of its real property or such entity
is disposed of or engages in any financing or re-financing or other transaction
that would provide a commercially reasonable opportunity to change the name of
such Property-Owning VEREIT Subsidiary, Seller shall change, or cause to be
changed, such name so as not to use the Corporate Name. From and after the
Closing, except with respect to the Property-Owning VEREIT Subsidiaries as
addressed above, Seller (i) shall, where and as promptly as practicable, change
the name of any Affiliate of Seller that contains the Corporate Name to remove
any reference to such Corporate Name, to the extent such name change would not
cause unreasonable expense to Seller and (ii) shall not otherwise use the
Corporate Name in the conduct of its business.

 

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(c) With respect to each property-owning Subsidiary of each Company NLR, prior
to the Closing the Parties shall cooperate to replace the “springing member” of
the board of directors of each such entity.

Section 5.14 Shared Contracts.

(a) Seller represents and warrants that Section 5.14(a) of the Disclosure
Schedule sets forth true and complete list of all material Shared Contracts as
of the date of this Agreement. Within twenty-five (25) days after the date of
this Agreement, Seller shall deliver to Purchaser a supplement to Section 5.14
of the Disclosure Schedule setting forth a list of all Shared Contracts, which
Seller represents and warrants shall be true and complete. From and after the
date of this Agreement until the Closing, Seller shall, and shall cause its
Affiliates to, use their commercially reasonable efforts to cause the Company
and the Purchased Subsidiaries to enter into a separate Contract (which may
consist of amendments to existing Shared Contracts) with the appropriate
counterparty or counterparties to each Shared Contract, resulting in the Company
and the Purchased Subsidiaries having rights and obligations with respect to
such Shared Contracts substantially similar to those set forth in the applicable
Shared Contract, taking into account quantitative and any other differences
between the Company and the Purchased Subsidiaries and Seller and its Affiliates
(other than the Company and the Purchased Subsidiaries); provided, that in the
event that a Contract cannot be obtained on substantially similar terms as those
set forth in the applicable Shared Contract, including as it may relate to
price, Seller shall notify Purchaser of such fact, and, after receiving the
consent of Purchaser (not to be unreasonably withheld, conditioned or delayed),
may cause (and shall cause if Purchaser so directs) the Company or the
applicable Purchased Subsidiary to enter into a Contract with such other terms
as are agreed with such counterparty or counterparties at such time. Any
one-time license or similar fee in connection with entering into such new
Contract shall be allocated equally between the Purchaser and the Seller.

(b) To the extent that Seller and Purchaser are unable to complete the actions
contemplated by Section 5.14(a) with respect to any such Shared Contract prior
to the Closing, from and after the Closing, Seller shall, and shall cause its
Affiliates to, use commercially reasonable efforts and cooperate with Purchaser
and its Affiliates (including facilitating introductions to Seller’s existing
significant vendors) to make such Shared Contract, or the benefits thereof,
available to the Company and the Purchased Subsidiaries pursuant to mutually
agreed arrangements between Seller and Purchaser by which, in compliance with
Applicable Law and without resulting in any breach of such Shared Contract, the
Company or the applicable Purchased Subsidiaries will receive the benefits of
such Shared Contract, and shall assume the Liabilities under or in respect of
such Shared Contract, in each case to the extent Related to the Company
Business, until the first to occur of (i) the date of expiration of such Shared
Contract, (ii) the termination of such Shared Contract in accordance with its
terms (provided that Seller shall not, and shall cause its Affiliates not to,
terminate any such Shared Contract other than for cause prior to the first
anniversary of the Closing Date, without the prior written consent of Purchaser
(not to be unreasonably conditioned, withheld or delayed)) and (iii) the first
anniversary of the Closing Date.

Section 5.15 Shared IT Contracts.

(a) Seller represents and warrants that Section 5.15(a) of the Disclosure
Schedule sets forth a true and complete list of all Shared IT Contracts as well
as a corresponding true and complete list of all Software that constitutes
material Company Business Intellectual Property and is licensed or otherwise
made available under such Shared IT Contract.

 

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(b) From and after the date of this Agreement, Seller shall, and shall cause its
Affiliates to, jointly with Purchaser, use their commercially reasonable efforts
to allocate each Shared IT Contract between the Parties, as set forth on
Section 5.15(a) of the Disclosure Schedule, in compliance with Applicable Law
and without resulting in any material breach of such IT Shared Contract.

(c) After the Closing, with respect to all Software that constitutes Company
Business Intellectual Property and is licensed or otherwise made available under
a Shared IT Contract, Seller shall, and shall cause its Affiliates to use such
Software on behalf of the Company and the Purchased Subsidiaries in performing
their obligations under the Services Agreement, and make available to the
Company and the Purchased Subsidiaries, solely as and to the extent requested by
Purchaser, all Software applicable to the Company and the Purchased Subsidiaries
(in the form made available by the applicable counterparty to such Shared IT
Contract) and all available data, data compilations and collections of data
applicable to the Company and the Purchased Subsidiaries that constitute or are
generated by or in connection with such Software, in each case until the date of
expiration or termination of such Shared IT Contract in accordance with its
terms, provided that Seller shall use commercially reasonable efforts to
continue to renew each such Shared IT Contract pursuant to substantially similar
terms in the event such Shared IT Contract would otherwise earlier expire, other
than with the prior written consent of Purchaser to such non-renewal. After the
Closing, to the extent any data applicable to the Company is commingled with
data applicable to Seller, Seller will use commercially reasonable efforts to
segregate the data applicable to the Company and will provide the data
applicable to Company in the format used by the counterparty or, if the Parties
mutually agree otherwise, in such other format. Notwithstanding the foregoing,
solely as to the period of time prior to the allocation of a Shared IT Contract,
Seller and its Affiliates shall only be required to use commercially reasonable
efforts to perform their obligations under this Section 5.15(c) with respect to
such Shared IT Contract.

Section 5.16 Seller-Developed Software.

(a) Section 5.16(a) of the Disclosure Schedule sets forth a true and complete
list of all Software that constitutes Company Business Intellectual Property
owned by Seller and its controlled Affiliates (“Seller-Developed Software”);
provided that Seller-Developed Software shall not include any Software to the
extent ownership thereof is transferred to the Company and the Purchased
Subsidiaries pursuant to the Pre-Closing Restructuring. Seller, on behalf of
itself and its controlled Affiliates, hereby grants Purchaser and each of its
Affiliates a non-exclusive, transferable (only in connection with the sale of
all or any substantial portion of any business of Purchaser or any of its
Affiliates), sublicensable (only in connection with the sale of all or any
substantial portion of any business of Purchaser or any of its Affiliates, or in
connection with the performance of services for or on behalf of Purchaser or any
of its Affiliates), perpetual, irrevocable, worldwide, fully-paid and
royalty-free license to use and exploit the Seller-Developed Software in the
operation of the businesses of Purchaser or any of its Affiliates.

(b) Seller shall deliver the Seller-Developed Software as mutually agreed-upon
by the Parties. All Seller-Developed Software shall be delivered electronically
to the extent feasible. All Seller-Developed Software consisting of Software
shall be delivered in both source code and object code form, to the extent
reasonably available to Seller. All source code transferred to Purchaser shall
be delivered along with all developer notes, annotations, release notes and
other materials related to the use or modification of such source code.

Section 5.17 Releases.

(a) Effective as of the Closing, Seller, on behalf of itself and its controlled
Affiliates, hereby releases, remises and forever discharges any and all rights
and Losses of any type that it or any of its controlled Affiliates has had, now
has or might now or hereafter have against the Company and the

 

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Purchased Subsidiaries, and each of their respective individual, joint or
mutual, past, present and future Representatives, successors and assigns (a
“Seller Releasee”) arising at or before the Closing, except for rights and
Losses arising under this Agreement, the Services Agreement and any other
Transaction Documents or other agreements entered into pursuant hereto or
thereto, including with respect to Fraud or as provided by Article VII,
Section 1.4 and Section 9.12 (collectively, the “Seller Released Claims”).
Seller, for itself and its controlled Affiliates, hereby irrevocably covenants
to refrain from, directly or indirectly, asserting any claim or demand, or
commencing, instituting or causing to be commenced or voluntarily aiding, any
Legal Proceeding against any Seller Releasee, based upon any Seller Released
Claim.

(b) Effective as of the Closing, the Company, on behalf of itself and the
Purchased Subsidiaries, hereby releases, remises and forever discharges any and
all rights and Losses of any type that they have had, now have or might now or
hereafter have against Seller and its Affiliates, and each of their respective
individual, joint or mutual, past, present and future Representatives,
successors and assigns (a “Purchaser Releasee”) arising at or before the
Closing, except for rights and Losses arising under this Agreement, the Services
Agreement and any other Transaction Documents or other agreements entered into
pursuant hereto or thereto, including with respect to Fraud or as provided by
Article VII, Section 1.4 and Section 9.12 (collectively, the “Purchaser Released
Claims”). The Company, on behalf of itself and the Purchased Subsidiaries,
hereby irrevocably covenants to refrain from, directly or indirectly, asserting
any claim or demand, or commencing, instituting or causing to be commenced or
voluntarily aiding, any Legal Proceeding against any Purchaser Releasee, based
upon any Purchaser Released Claim.

(c) The Parties acknowledge that this Section 5.16(a) is not an admission of
liability or of the accuracy of any alleged fact or claim. The Parties expressly
agree that this Section 5.16(a) shall not be construed as an admission in any
proceeding as evidence of or an admission by either party of any violation or
wrongdoing.

Section 5.18 Non-Competition; Non-Solicit and No-Hire.

(a) For a period of five (5) years following the Closing Date, Seller and its
Subsidiaries shall not, without the prior written consent of Purchaser, engage
in the Company Business or in the retail distribution of net lease or other real
estate investment products, excluding the distribution of Equity Interests of
VEREIT that are not distributed to retail investors through the broker-dealer
channel (the “Restricted Activity”).

(b) For a period of five (5) years following the Closing Date, Seller shall not,
and shall cause its Subsidiaries not to, without the prior written consent of
Purchaser, directly or indirectly, solicit for employment, employ or retain the
services of (i) any Transferred Employee or (ii) any other employee of Purchaser
or its Affiliates (regardless of when such employee was hired by Purchaser or
such Affiliate); provided, that the foregoing shall not prohibit (A) general
solicitations (including by third party recruiter contacts) or advertisements of
employment (or hiring as a result thereof) not specifically directed at such
persons or (B) solicitation or hiring six months after the cessation of the
employee’s employment with Purchaser or any of its Affiliates.

(c) Except pursuant to, and in accordance with the terms and conditions of, the
Services Agreement, Seller shall not, and shall cause its Subsidiaries not to,
provide any services to the Company NLRs.

(d) For a period of two (2) years following the Closing Date, except as
expressly provided in this Agreement, Purchaser shall not, and shall cause its
Subsidiaries not to, without the prior

 

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written consent of Seller, directly or indirectly, solicit for employment,
employ or retain the services of any person who is an employee of Seller or its
Affiliates; provided, that the foregoing shall not prohibit (A) general
solicitations (including by third party recruiter contacts) or advertisements of
employment (or hiring as a result thereof) not specifically directed at such
persons or (B) solicitation or hiring six months after the cessation of the
employee’s employment with Seller or any of its Affiliates.

(e) The parties hereto acknowledge that the covenants set forth in this
Section 5.18 are an essential element of this Agreement and that, but for these
covenants, the Parties hereto would not have entered into this Agreement. The
Parties acknowledge that this Section 5.18 constitutes an independent covenant
and shall not be affected by performance or nonperformance of any other
provision of this Agreement or any other document contemplated by this
Agreement.

(f) Each party acknowledges that the restrictive covenants set forth in this
Section 5.18, including the geographic scope and duration of such covenants, are
necessary in order to protect and maintain the proprietary interests and other
legitimate business interests of the other party and its Affiliates, and that
any violation thereof could result in irreparable injury to the other party and
its Affiliates that could not be readily ascertainable or compensable in terms
of money, and therefore the other party and its Affiliates shall be entitled to
seek from any court of competent jurisdiction temporary, preliminary and
permanent injunctive relief as well as damages, which rights shall be cumulative
and in addition to any other rights or remedies to which it may entitled.

Section 5.19 Company NLR Board of Directors. With respect to each Company NLR,
prior to the Closing, Seller shall, and shall cause its Subsidiaries to, in each
case, subject to Applicable Laws and consistent with the provisions of the
applicable Governing Documents (including, regarding the requirements for
independent directors and the filling of vacancies), recommend to each board of
directors of each Company NLR (each, the “Board”) that the Board: (i) except in
the case of Cole Credit Property Trust IV, Inc., take all necessary action to
expand the size of such Board by two members and (ii) appoint the two
(2) individuals designated by Purchaser to Seller, at least one of whom shall
qualify as an Independent Director (as defined in the applicable Governing
Documents of the respective Company NLR) to fill such newly created vacancies on
such Board, in each case, to be effective following the Closing.

Section 5.20 Intercompany Agreements. Except as set forth in Section 5.20 of the
Disclosure Schedule and excluding the Transaction Documents and all other
arrangements entered into pursuant hereto or in connection with this Agreement,
Seller will cause any Intercompany Agreements to be terminated as of the
Closing.

Section 5.21 Insurance; Claims.

(a) Seller and each of its Affiliates (including the Company and the Purchased
Subsidiaries) will keep each of their respective insurance policies in effect as
of the date hereof in full force and effect until the Closing to the extent
Related to the Company Business. As of the Closing, the Company and the
Purchased Subsidiaries shall cease to be insured by Seller’s or its Affiliates’
insurance policies to the extent such insurance policies cover the Company and
the Purchased Subsidiaries. With respect to any open claim against Seller’s
insurance policies relating to the Company and the Purchased Subsidiaries prior
to the Closing Date, Seller agrees to remit to Purchaser any net proceeds
realized from such claim under such insurance policies (after deducting any
out-of-pocket costs and expenses incurred by Seller and its Affiliates before
the Closing in respect of such claim or the related matters) upon full and final
settlement of such claim with the underlying insurer(s); provided that with
respect to any net proceeds realized from any claim arising out of or relating
to the matters set forth on Section 3.7 of the Disclosure Schedule, Seller shall
only be obligated to remit fifty percent (50%) of such net proceeds.

 

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(b) Section 5.21(b) of the Disclosure Schedule sets forth a true and complete
list of each directors’ and officers’ liability insurance policy currently held
by the Company NLRs and their Subsidiaries (the “D&O Policies”) and each such
D&O Policy’s expiration date. Seller and its Affiliates shall cause the Company
or any applicable Subsidiary to maintain each such D&O Policy until the Closing.

(c) If after the Closing the Company or any of its Subsidiaries is awarded any
amounts (such as attorneys’ fees) in connection with the matters set forth on
Section 3.7 of the Disclosure Schedule, all such amounts (after taking into
account Seller’s indemnification obligations under this Agreement with respect
to such matters) shall be promptly remitted to Seller.

Section 5.22 Financing.

(a) Through the Closing, Purchaser shall maintain the Loan Agreement in full
force and effect and Purchaser shall enforce in all material respects its rights
under the Loan Agreement. Subject to the terms and conditions set forth in the
Loan Agreement, Purchaser shall on the Closing Date cause Lender to make the
Loan pursuant to the Loan Agreement (including, to the extent Lender breaches
its obligations under the Loan Agreement, taking any necessary enforcement
action against Lender to cause Lender to make the Loan in accordance with the
Loan Agreement).

(b) Without the prior written consent of Seller, before the Closing, Purchaser
will not agree to, permit, or otherwise consent to, (i) any amendment of,
supplement or modification to, or waiver under, the Loan Agreement or (ii) any
waiver of any remedy under the Loan Agreement, in each case, in any manner that
would (1) reduce the aggregate amount of proceeds of the Loan, (2) amend or add
any conditions precedent to the making of the Loan or (3) otherwise reasonably
be expected to delay or prevent the closing of the transactions contemplated by
this Agreement or make the funding of the Loan less likely to occur.

(c) Purchaser acknowledges and agrees that obtaining the proceeds of the Loan is
not a condition to the consummation of the transactions contemplated by this
Agreement. For the avoidance of doubt, if the Loan has not been made pursuant to
the Loan Agreement, Purchaser shall continue to be obligated, prior to any
termination of this Agreement pursuant to Section 8.1 and subject to the
satisfaction or waiver of the conditions set forth in Sections 6.1 and 6.2, to
consummate the other transactions contemplated by this Agreement.

ARTICLE VI

CONDITIONS PRECEDENT

Section 6.1 Conditions to Each Party’s Obligation. The respective obligation of
each Party to effect the transactions contemplated by this Agreement is subject
to the satisfaction or waiver at or before the Closing of the following
conditions:

(a) Government Approvals. (i) Any waiting period (including any extension
thereof) applicable to the consummation of the transactions contemplated by this
Agreement under the HSR Act shall have expired or shall have been terminated and
(ii) FINRA shall have delivered to the Broker its approval of the CMA; provided,
however, that the Parties may agree to proceed to a Closing without FINRA
approval if more than 30 days have passed from the date of submission of the
CMA.

 

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(b) No Injunctions or Restraints; Illegality. No Order prohibiting or
restraining the consummation of the transactions contemplated by this Agreement
or the other Transaction Documents shall be in effect. No Law shall have been
enacted, entered, promulgated or enforced by any Governmental Authority which
prohibits, restricts or makes illegal the consummation of the transactions
contemplated by this Agreement or the other Transaction Documents.

(c) Other Consents. Each of the Persons listed in Section 3.1(d) of the
Disclosure Schedule shall have provided its Consent to the transactions
contemplated by this Agreement.

Section 6.2 Conditions to Obligation of Purchaser. The obligation of Purchaser
to effect the transactions contemplated by this Agreement is subject to the
satisfaction, or waiver by Purchaser, at or before the Closing, of the following
conditions:

(a) Representations and Warranties. (i) Each of the representations and
warranties of Seller set forth in Section 3.1(a) (Organization of Seller;
Authority), Section 3.2 (Organization of the Company; Capitalization),
Section 3.3 (Purchased Subsidiaries) and Section 3.17 (Brokers) (collectively,
the “Seller Fundamental Representations”) shall be true and correct in all
respects as of the Closing Date as if made on such date (except to the extent
such representations and warranties speak as of a specified date, in which case
such representations and warranties shall be true and correct as of such date),
except for failures to be so true and correct as of such date that are de
minimis and (ii) all of the other representations and warranties of Seller in
ARTICLE III shall be true and correct as of the Closing Date as if made on such
date (except to the extent such representations and warranties speak as of a
specified date, in which case such representations and warranties shall be true
and correct as of such date), except for failures to be so true and correct as
of such date that would not reasonably be expected to have a Company Material
Adverse Effect; provided, however, that for purposes of satisfaction of the
condition in this clause (ii), no effect shall be given to any qualifications or
exceptions regarding materiality or material adverse effect or similar
qualifications in such representations and warranties.

(b) Covenants. Seller shall have performed in all material respects all
covenants and agreements required to be performed by it under this Agreement
before the Closing.

(c) Deliverables. Purchaser shall have received all items required to be
delivered to Purchaser pursuant to Section 2.2(a) at or prior to the Closing.

(d) Pre-Closing Restructuring. The Pre-Closing Restructuring shall have been
consummated.

Section 6.3 Conditions to Obligation of Seller. The obligation of Seller to
effect the transactions contemplated by this Agreement is subject to the
satisfaction, or waiver by Seller, at or before the Closing, of the following
conditions:

(a) Representations and Warranties. (i) Each of the representations and
warranties of Purchaser set forth in Section 4.1(a) (Organization),
Section 4.1(b) (Authority) and Section 4.3 (Brokers) (collectively, the
“Purchaser Fundamental Representations”) shall be true and correct in all
respects as of the Closing Date as if made on such date (except to the extent
such representations and warranties speak as of a specified date, in which case
such representations and warranties shall be true and correct as of such date),
except for failures to be so true and correct as of such date that are de
minimis and (ii) all of the other representations and warranties of Purchaser in
ARTICLE IV shall be true and correct as of the Closing Date as if made on such
date (except to the extent such representations and warranties speak as of a
specified date, in which case such representations and warranties shall be true
and correct as of such date), except for failures to be so true and correct as
of such date that would not impair or delay the ability

 

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of Purchaser to carry out its obligations under, and to consummate the
transactions contemplated by this Agreement and the other Transaction Documents;
provided, however, that for purposes of satisfaction of the condition in this
clause (ii), no effect shall be given to any qualifications or exceptions
regarding materiality or material adverse effect or similar qualifications in
such representations and warranties.

(b) Covenants. Purchaser shall have performed in all material respects all
covenants and agreements required to be performed by it under this Agreement
before the Closing.

(c) Deliverables. Seller shall have received all items required to be delivered
to Seller pursuant to Section 2.2(b) at or prior to the Closing.

ARTICLE VII

INDEMNIFICATION

Section 7.1 Survival. The representations and warranties of the Parties
contained in this Agreement shall survive until the date that is eighteen
(18) calendar months after the Closing Date; provided, however, that (a) the
Seller Fundamental Representations and the Purchaser Fundamental Representations
shall survive indefinitely, (b) the representations and warranties contained in
Section 3.10 (Taxes) and Seller’s obligation to indemnify for Indemnified Taxes
shall survive until the date that is sixty (60) days after the expiration of the
applicable statute of limitations, (c) the Compliance Representations shall
survive until the date that is thirty-six (36) calendar months after the Closing
Date and (d) any claim for Losses that is properly asserted in writing pursuant
to this ARTICLE VII before the expiration of the applicable survival period
shall survive until such claim is finally resolved and satisfied. The covenants
and other agreements contained in this Agreement which by their terms are
required to be wholly performed on or before the Closing shall not survive the
Closing Date and the covenants and other agreements contained in this Agreement
which by their terms require to be performed in whole or in part following the
Closing Date shall survive for the period provided in such covenants and
agreements, if any, or until fully performed. For purposes of this Article VII,
any qualification or references to “Company Material Adverse Effect,”
materiality or similar qualification contained in any representation or warranty
shall be disregarded for purposes of determining the amount of any Loss
indemnifiable hereunder caused by a breach of any such representation or
warranty.

Section 7.2 Indemnification by Seller. From and after the Closing, subject to
Section 7.4 and the other provisions of this ARTICLE VII, Seller hereby agrees
to indemnify, defend and hold harmless Purchaser and its directors, officers,
members, partners, shareholders, employees, agents, attorneys, accountants,
representatives and Affiliates (collectively, the “Purchaser Indemnified
Parties”) from and against any and all losses, Liabilities, claims, damages and
expenses, including reasonable attorneys’ fees and expenses, (individually, a
“Loss” and, collectively, “Losses”) actually suffered or incurred by a Purchaser
Indemnified Party after the Closing to the extent arising out of or attributable
to:

(a) any failure of any of the representations or warranties made or deemed made
by Seller in ARTICLE III of this Agreement to be true and correct;

(b) any breach of or failure to perform any covenant or agreement made by Seller
in this Agreement;

(c) any Indemnified Taxes;

(d) the Pre-Closing Restructuring; or

 

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(e) the matters set forth in Section 7.2(e) of the Disclosure Schedule.

Section 7.3 Indemnification by Purchaser. From and after the Closing, subject to
Section 7.4 and the other provisions of this ARTICLE VII, Purchaser hereby
agrees to indemnify, defend and hold harmless Seller and its directors,
officers, members, partners, shareholders, employees, agents, attorneys,
accountants, representatives and Affiliates (collectively, the “Seller
Indemnified Parties”) from and against any and all Losses actually suffered or
incurred by a Seller Indemnified Party after the Closing to the extent arising
out of or attributable to:

(a) any failure of any of the representations or warranties made or deemed made
by Purchaser in ARTICLE IV of this Agreement to be true and correct; or

(b) any breach of or failure to perform any covenant or agreement made by
Purchaser in this Agreement.

Section 7.4 Limitations on Indemnification.

(a) With respect to any Losses claimed by the Purchaser Indemnified Parties or
Seller Indemnified Parties pursuant to Sections 7.2(a) or 7.3(a), as applicable,
only, (i) no Losses may be claimed by the Purchaser Indemnified Parties or
Seller Indemnified Parties other than Losses in excess of $37,500 (the “De
Minimis Amount”) resulting from any single claim or series of related claims
arising out of the same facts, events or circumstances (nor shall such Loss in
the amount of less than the De Minimis Amount, together with all other Losses
resulting from the same facts, events or circumstances, be applied to or
considered for purposes of calculating the Basket Amount as described in clause
(ii) below), (ii) neither Seller nor Purchaser, as applicable, shall have any
indemnification obligations for Losses under this ARTICLE VII unless and until
the aggregate amount of all such Losses exceeds an amount equal to one million
dollars ($1,000,000) (the “Basket Amount”); provided, that from and after such
time as the total amount of Losses actually incurred by the Purchaser
Indemnified Parties or Seller Indemnified Parties, as applicable, under this
ARTICLE VII exceeds the Basket Amount, Seller or Purchaser, as applicable, shall
be liable only for the amount that exceeds the Basket Amount and (iii) in no
event shall the aggregate indemnification to be paid by Seller or Purchaser, as
applicable, pursuant to this ARTICLE VII (other than claims based on the Seller
Fundamental Representations or the representations and warranties contained in
Section 3.10 (Taxes)) exceed fifteen million dollars ($15,000,000); provided
that the foregoing limitation in clause (iii) shall not apply with respect to
any Losses based upon or resulting from any inaccuracy in or breach of any
Compliance Representations, which shall be limited, when combined with the
aggregate indemnification to be paid by Seller for Losses claimed by the
Purchaser Indemnified Parties pursuant to Section 7.2(a) (other than for claims
based on Seller Fundamental Representations or the representations and
warranties contained in Section 3.10 (Taxes)), to an amount equal to twenty-five
million dollars ($25,000,000); provided, further that the foregoing limitations
set forth in clauses (i), (ii) and (iii) above shall not apply to any Losses
based upon or resulting from any inaccuracy in or breach of any Seller
Fundamental Representation or Purchaser Fundamental Representation or the
representations and warranties contained in Section 3.10 (Taxes).
Notwithstanding anything to the contrary contained in this Agreement, the
aggregate liability of Seller pursuant to this Agreement shall under no
circumstances exceed the total amount of proceeds received by Seller under this
Agreement.

(b) Notwithstanding anything to the contrary contained in this Agreement, but
without limiting any remedies of Purchaser in respect of Fraud, no breach of any
representation, warranty, covenant or agreement contained herein shall give rise
to any right on the part of any Purchaser Indemnified Party or any Seller
Indemnified Party, after the consummation of the transactions contemplated
hereby, to rescind this Agreement or any of the transactions contemplated
hereby.

 

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(c) Other than with respect to a breach of a representation in Section 3.10(e),
Section 3.10(f), Section 3.10(g), Section 3.10(i), Section 3.10(j) or
Section 3.10(l), any indemnification hereunder for Losses with respect to Taxes
or Tax matters shall be limited solely to Taxes incurred in Pre-Closing Tax
Periods. In the event Seller has an obligation hereunder to indemnify a
Purchaser Indemnified Party for Losses with respect to Taxes or Tax matters as a
result of the direct or indirect distributions of any intangible assets to the
extent the value thereof is attributable to the Services Agreement, such
obligation shall be reduced as provided in Section 5.9(b)(iii) of the Disclosure
Schedule.

Section 7.5 Indemnification Procedures.

(a) In the event that indemnification is sought under this ARTICLE VII (an
“Indemnification Claim”) in connection with (i) any action, suit or proceeding
that may be instituted or (ii) any claim that may be asserted, in any such case,
by any Person not a party to this Agreement, the Party seeking indemnification
hereunder (the “Indemnified Party”) shall promptly cause written notice of the
assertion of such Indemnification Claim to be delivered to the Party from whom
indemnification hereunder is sought (the “Indemnifying Party”) before the
expiration of the applicable survival period set forth in Section 7.1; provided,
however, that no delay on the part of the Indemnified Party in giving any such
notice shall relieve the Indemnifying Party of any indemnification obligation
hereunder unless the Indemnifying Party is prejudiced by such delay. The
Indemnifying Party shall have the right, at its sole option and expense (which
expenses shall not be applied against any indemnity limitation herein), with
counsel reasonably satisfactory to the Indemnified Party, to defend against,
negotiate, settle or otherwise control any Indemnification Claim unless the
Indemnified Party has notified the Indemnifying Party in such notice that such
Indemnification Claim seeks an injunction or other equitable relief against the
Indemnified Party, or the monetary damages sought in connection with such
Indemnification Claim exceed the amount of Indemnifying Party’s indemnification
obligations pursuant to this ARTICLE VII, in which case the Indemnified Party
shall have the right to defend against, negotiate, settle or otherwise control
such Indemnification Claim. If the Indemnifying Party has the right to elect,
and so elects, to defend against, negotiate, settle or otherwise control any
such Indemnification Claim, it shall within thirty (30) days (or sooner, if the
nature of the Indemnification Claim so requires) (the “Dispute Period”) notify
the Indemnified Party of its intent to do so. If the Indemnifying Party (i) does
not, within the Dispute Period, elect to defend against, negotiate, settle or
otherwise control an Indemnification Claim, (ii) is not entitled to defend the
third party claim as a result of the Indemnified Party’s election to defend the
Indemnification Claim as provided in the second sentence of this Section 7.5(a)
or (iii) after assuming the defense of an Indemnification Claim, fails to take
reasonable steps necessary to defend diligently such Indemnification Claim
within ten (10) days after receiving written notice from the Indemnified Party
to the effect that the Indemnifying Party has so failed, the Indemnified Party
shall have the right but not the obligation to assume its own defense, it being
understood that the Indemnified Party’s right to indemnification shall not be
adversely affected by assuming the defense of such Indemnification Claim. If the
Indemnifying Party assumes the defense of such Indemnification Claim, the
Indemnified Party shall have the right to employ separate counsel (selected in
its reasonable discretion) and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of the Indemnified
Party unless (x) the employment of such counsel shall have been specifically
authorized in writing by the Indemnifying Party, (y) the named parties to the
Indemnification Claim (including any impleaded parties) include both the
Indemnified Party and the Indemnifying Party, and the Indemnified Party has been
advised by outside counsel that a reasonable likelihood exists that
representation by counsel to the Indemnifying Party of both the Indemnifying
Party and such Indemnified Party may present such counsel with an actual
conflict of interest or (z) the Indemnified Party assumes the defense of an
Indemnification Claim after the Indemnifying Party has failed to diligently
pursue such claim it has assumed, as provided in the fourth sentence of this
Section 7.5(a), it being understood that the Indemnifying Party shall not, in
connection with any one action or separate but similar actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than

 

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one separate firm of attorneys. The Indemnified Party shall cooperate with the
Indemnifying Party in such defense and make available to the Indemnifying Party,
at the Indemnifying Party’s expense, all witnesses, pertinent records, materials
and information in the Indemnified Party’s possession or under such Indemnified
Party’s control relating thereto (or in the possession or control of any of its
Affiliates or its or their Representatives) as is reasonably required by the
Indemnifying Party or its counsel; provided, that the Indemnified Party will not
be required to furnish any such information which would (in the reasonable
judgment of the Indemnified Party upon advice of counsel) be reasonably likely
to (A) waive any privileges, including the attorney-client privilege or
(B) breach any duty of confidentiality owed to any person (whether such duty
arises contractually, statutorily or otherwise) or violate any Applicable Law
(provided, that the Indemnified Party shall use reasonable best efforts to
obtain any required Consents and take such other reasonable action (such as the
entry into a joint defense agreement or other arrangement to avoid loss of
attorney-client privilege) to permit such access).

(b) If the Indemnifying Party assumes the defense of any Indemnification Claim,
the Indemnifying Party shall not, without the prior written consent of the
Indemnified Party, enter into any settlement or compromise or consent to the
entry of any judgment with respect to such Indemnification Claim if such
settlement, compromise or judgment (A) involves a finding or admission of
wrongdoing by the Indemnified Party or any of its Affiliates, (B) does not
include an unconditional written release by the claimant or plaintiff of the
Indemnified Party from all liability in respect of such Indemnification Claim or
(C) imposes equitable remedies or any obligation on the Indemnified Party other
than solely the payment of money damages for which the Indemnified Party will be
indemnified hereunder (it being understood that the Indemnifying Party shall
have the right to settle any Indemnification Claim that satisfies the foregoing
criteria). If the Indemnified Party elects to direct the defense of any such
Indemnification Claim, the Indemnified Party shall not pay, or permit to be
paid, any part of such Indemnification Claim unless the Indemnifying Party
consents (such consent not to be unreasonably withheld, conditioned or delayed)
in writing to such payment or the Indemnifying Party withdraws from the defense
of such Indemnification Claim or a final judgment from which no appeal may be
taken by or on behalf of the Indemnifying Party is entered against such
Indemnified Party for such Indemnification Claim. The Indemnified Party shall
not admit any liability with respect to, or settle, compromise, forgo appeal
with respect to or discharge any Indemnification Claim without the Indemnifying
Party’s prior written consent.

(c) In the event that an Indemnified Party wishes to assert a claim against an
Indemnifying Party, which claim does not involve an action, suit, proceeding or
claim by a third party not party to this Agreement, such Indemnified Party shall
promptly assert such Indemnification Claim by sending written notice to the
Indemnifying Party describing in reasonable detail the nature of such claim and
the Indemnified Party’s estimate of the amount of Losses attributable to such
claim; provided, however, that no delay on the part of the Indemnified Party in
giving any such notice shall relieve the Indemnifying Party of any
indemnification obligation hereunder unless the Indemnifying Party is prejudiced
by such delay. The Indemnifying Party shall have a period of forty-five
(45) days within which to respond to such claim. If the Indemnifying Party does
not respond within such forty-five (45) day period, the Indemnifying Party will
be deemed to have accepted the claim. If the Indemnifying Party rejects all or
any part of the claim, the Indemnified Party shall be free to seek enforcement
of its rights to indemnification under this Agreement with respect to such
claim.

Section 7.6 Calculation of Losses.

(a) Any liability for any Loss will be determined without duplication of
recovery by reason of the state of facts giving rise to such Loss constituting a
breach of more than one representation, warranty, covenant, or agreement of this
Agreement.

 

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(b) The amount of any Losses for which indemnification is provided under this
ARTICLE VII shall be (i) net of any amounts actually recovered by the
Indemnified Party under insurance policies, third party indemnification
obligations, or otherwise with respect to such Losses, net of any deductible or
other expense incurred by the Indemnified Party in obtaining such recovery; and
(ii) reduced by the value of any Tax benefits actually realized by the
Indemnified Party to the extent the claim for which indemnification is sought
gives rise to a deductible loss, credit or expense. If an insurance or other
recovery is obtained by Purchaser, the Company or one of their Subsidiaries,
then a refund equal to the aggregate amount of the net recovery shall be
promptly delivered to Seller upon receipt. To the extent any proceeds are
received after a Purchaser Indemnified Party has been indemnified for the
applicable Loss, Purchaser shall pay or cause to be paid such amounts to the
Indemnifying Parties.

(c) Notwithstanding anything to the contrary elsewhere in this Agreement,
neither Party shall, in any event, be liable to any other Person for any Losses
pursuant to this ARTICLE VII to the extent such Losses constitute speculative,
indirect, special or punitive damages (except if and only to the extent any such
damages are awarded against an Indemnified Party pursuant to a third party
claim).

(d) Notwithstanding anything to the contrary elsewhere in this Agreement, the
Purchaser Indemnified Parties are not entitled to indemnification pursuant to
this ARTICLE VII to the extent that any matter, amount, item of other fact for
which they are seeking indemnification hereunder was included in the
determination of the Final Adjustment Amount for purposes of determining
adjustments to the Purchase Price under this Agreement (nor shall such Losses be
applied to or considered for purposes of calculating the aggregate amount of
Purchaser Indemnified Parties’ Losses for purposes of calculation of the De
Minimis Amount or the Basket Amount).

Section 7.7 Payment. The Indemnifying Party shall pay or cause to be paid all
amounts payable pursuant to this ARTICLE VII, in immediately available funds, to
an account specified by the Indemnified Party following receipt from an
Indemnified Party of a bill, together with all accompanying reasonably detailed
supporting documentation, for a Loss that is the subject of indemnification
hereunder, unless the Indemnifying Party in good faith disputes the Loss, in
which event it shall so notify the Indemnified Party. In any event, the
Indemnifying Party shall pay to the Indemnified Party the amount of any Loss for
which it is liable hereunder, in immediately available funds, to an account
specified by the Indemnified Party no later than three (3) days following any
Final Determination of such Loss and the Indemnifying Party’s liability
therefor. A “Final Determination” shall exist when (a) the parties to the
dispute have reached an agreement in writing, (b) a court of competent
jurisdiction shall have entered a final and non-appealable Order or judgment or
(c) an arbitration or like panel shall have rendered a final non-appealable
determination with respect to disputes the Parties have agreed to submit
thereto.

Section 7.8 Tax Treatment of Indemnity Payments. The Parties agree to treat any
indemnity payment made pursuant to this ARTICLE VII as an adjustment to the
Purchase Price for federal, state, local and foreign income tax purposes to the
extent permitted by Applicable Law.

Section 7.9 Exclusive Remedy. The Parties agree that after the Closing, except
with respect to matters set forth in Section 1.4, and other than as provided in
Section 9.12 or with respect to claims for Fraud, the sole and exclusive
remedies of the Purchaser Indemnified Parties and the Seller Indemnified Parties
for any Losses based upon, arising out of or otherwise in respect of the matters
set forth in this Agreement and the Transaction Documents are the
indemnification obligations of the Parties set forth in this ARTICLE VII. Except
as provided in the immediately preceding sentence, to the maximum extent
permitted by Applicable Law, Purchaser, on behalf of itself and each Purchaser
Indemnified Party, hereby waives all other rights and remedies with respect to
any matter in any way relating to this Agreement or arising in connection
herewith, whether under Applicable Law or otherwise.

 

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ARTICLE VIII

TERMINATION

Section 8.1 Termination of this Agreement. This Agreement may be terminated
before the Closing as follows:

(a) at the election of Seller or Purchaser on or after the close of business on
March 31, 2018 (the “Termination Date”), if the Closing shall not have occurred
by the close of business on such date; provided, however, that the terminating
Party is not then in breach in any respect of any of its obligations hereunder
so as to cause the failure of the Closing to occur on or before the Termination
Date; or

(b) by mutual written consent of Seller and Purchaser; or

(c) by either Purchaser or Seller if a Governmental Authority shall have issued
a non-appealable final Order or enacted or enforced any Applicable Law in final
form, in either case, permanently restraining or prohibiting the consummation of
the transactions contemplated by this Agreement; provided, however, that the
terminating Party is not then in material breach of any provision of this
Agreement resulting in such Order; or

(d) by Purchaser, upon a material breach of any representation, warranty,
covenant or agreement of Seller set forth in this Agreement such that the
conditions set forth in Section 6.2(a) or Section 6.2(b) would not be satisfied
and such breach is incapable of being cured or, if curable, is not cured within
the earlier of (i) thirty (30) days after written notice thereof is given by
Purchaser to Seller or (ii) the Termination Date; provided, however, that
Purchaser is not then in material breach of this Agreement so as to cause any of
the applicable conditions set forth in ARTICLE VII not to be satisfied; or

(e) by Seller, upon a material breach of any representation, warranty, covenant
or agreement of Purchaser set forth in this Agreement such that the conditions
set forth in Section 6.3(a) or Section 6.3(b) would not be satisfied and such
breach is incapable of being cured or if curable, is not cured within the
earlier of (i) thirty (30) days after written notice thereof is given by Seller
to Purchaser or (ii) the Termination Date; provided, however, that Seller is not
then in material breach of this Agreement so as to cause any of the applicable
conditions set forth in ARTICLE VII not to be satisfied.

Section 8.2 Procedure Upon Termination. Either Party desiring to terminate this
Agreement pursuant to Section 8.1 shall give written notice of such termination
to the other Party, and this Agreement shall terminate, and the transactions
contemplated by this Agreement shall be abandoned, without further action by
either Party.

Section 8.3 Effect of Termination.

(a) In the event that this Agreement is terminated by Seller pursuant to
Section 8.1(e), Purchaser shall pay to Seller all of the reasonable
out-of-pocket expenses incurred by Seller and its Affiliates or on their behalf,
whether paid or payable, in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement and the
Transaction Documents and all other matters related hereto (including all fees
and expenses of legal counsel, investment bankers, accountants and other
advisors of Seller and its Affiliates) (the “Seller Expenses”). In the event
that this Agreement is terminated by Purchaser pursuant to Section 8.1(d),
Seller shall pay to Purchaser all of the reasonable out-of-pocket expenses
incurred by Purchaser and its Affiliates or on their behalf, whether

 

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paid or payable, in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement and the
Transaction Documents and all other matters related hereto (including all fees
and expenses of legal counsel, investment bankers, accountants and other
advisors of Purchaser and its Affiliates) (the “Purchaser Expenses”). Purchaser
or Seller, as applicable shall reimburse the other Party for such Seller
Expenses or Purchaser Expenses, as applicable, on the later of (i) the day that
is three (3) Business Days after the date of termination of this Agreement and
(ii) the day that is three (3) Business Days after the delivery of documentation
of such Seller Expenses or Purchaser Expenses, as applicable, by wire transfer
in immediately available funds to a bank account designated by Seller or
Purchaser, as applicable in a written notice to the other Party for such
purposes. The Parties acknowledge that the foregoing Seller Expense or Purchaser
Expense reimbursement, as applicable, is an integral part of this Agreement and
is in addition to any other remedy that may be available to Seller or Purchaser,
as applicable, whether under this Agreement or otherwise, and that, without
these agreements, the Parties would not enter into this Agreement. Each of the
Parties acknowledges that the Seller Expense or Purchaser Expense reimbursement,
as applicable, is not a penalty, but rather a reasonable amount that will
compensate Seller or Purchaser, as applicable, for the efforts and resources
expended and opportunities foregone while negotiating this Agreement and in
reliance on this Agreement and on the expectation of the consummation of the
transactions contemplated hereby.

(b) In the event that this Agreement is terminated in accordance with
Section 8.1 and Section 8.2, then, except as otherwise set forth in this ARTICLE
VIII, Seller and Purchaser shall be relieved of their respective duties and
obligations arising under this Agreement after the date of such termination, and
such termination shall be without liability to Seller or Purchaser; provided,
however, that no such termination shall relieve either Party from liability for
any willful breach of this Agreement or Fraud by such Party before the date of
termination; and provided, further, that the obligations of the Parties set
forth in this Section 8.3, Section 5.5 (Confidentiality), Section 5.6
(Publicity) and in ARTICLE IX shall survive any such termination and shall be
enforceable hereunder.

ARTICLE IX

GENERAL PROVISIONS

Section 9.1 Expenses. Except as otherwise expressly provided in this Agreement,
all costs and expenses, including fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement and the
transactions contemplated by this Agreement and the other Transaction Documents
shall be the responsibility of the Party incurring such costs and expenses,
whether or not the Closing shall have occurred; provided, however, that
Purchaser shall be responsible for all filing and other fees payable in
connection with any filings or submissions under the HSR Act and any comparable
foreign Laws and the submission of the CMA to FINRA, in each case, other than
Seller’s and the Company’s attorneys’ and accountants’ fees and expenses;
provided, further that the fees and expenses charged by third party lenders in
connection with Seller’s obtaining Consents from such third party lenders shall
be allocated equally between Seller and Purchaser.

Section 9.2 Notices. All notices, requests, demands and other communications
made under or by reasons of this Agreement shall be in writing and shall be
deemed given and received (a) if delivered in person, on the date delivered,
(b) if transmitted by facsimile, on the date sent if sent by facsimile before
5:00 p.m. on a Business Day at the location of receipt and otherwise the next
following Business Day, (c) if delivered by an express courier, on the next
Business Day after mailing or (d) if transmitted by e-mail, on the date received
if received before 5:00 p.m. on a Business Day at the location of receipt and
otherwise the next following Business Day, to the Parties at the following
addresses (or at such other address for a Party as is specified to the other
Party by like notice):

 

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  (i) if to Purchaser or, following Closing, the Company:

CIM Group, LLC

4700 Wilshire Boulevard

Los Angeles, California 90010

Attention: Nicholas V. Morosoff

Fax: (323) 734-1833

Email: nmorosoff@cimgroup.com

and

CIM Group, LLC

4700 Wilshire Boulevard

Los Angeles, California 90010

Attention: General Counsel

Fax: (323) 734-1833

Email: generalcounsel@cimgroup.com

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

Sullivan & Cromwell LLP

1888 Century Park East, Suite 2100

Los Angeles, CA 90067

Attn.: Patrick S. Brown

Fax: 310-712-8800

Email: brownp@sullcrom.com

 

  (ii) if to Seller:

VEREIT Operating Partnership, L.P.

c/o VEREIT, Inc.

5 Bryant Park, 23rd Floor

New York, NY 10018

Phone: (646) 601-7117

Attn: Lauren Goldberg

Email: lgoldberg@vereit.com

and

VEREIT Operating Partnership, L.P.

2325 East Camelback Road

Suite 1100

Phoenix, AZ 85016

Phone: (602) 778-6000

Attn: Michael Bartolotta

Email: mbartolotta@vereit.com

 

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

Goodwin Procter LLP

100 Northern Avenue

Boston, MA 02210

Attn.: Gilbert G. Menna and Thomas J. LaFond

Fax: 617-801-8710

         617-649-1475

Email: GMenna@goodwinlaw.com;

          TLaFond@goodwinlaw.com

Section 9.3 Interpretation; Disclosure Schedule.

(a) When a reference is made in this Agreement to “Articles,” “Sections,” or
“Exhibits,” such reference shall be to an article of, a section of, or an
exhibit 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 terms
“hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to
this entire Agreement, including the Schedules and Exhibits hereto. The word
“or” shall not be exclusive and shall mean “and/or”. The word “will” shall have
the same meaning as the word “shall” and vice versa. The term “ordinary course
of business” shall be deemed to be followed by the words “consistent with past
practice.” The terms defined in the singular have a comparable meaning when used
in the plural, and vice versa, and references herein to any gender includes each
other gender. References to “written” or “in writing” include in electronic
form. All references to “$” or dollars shall be deemed references to United
States dollars. All references to Applicable Laws are deemed to refer to such
Laws as amended, modified, supplemented or replaced from time to time or as
superseded by comparable successor provisions, and, in the case of any statute,
include any rules and regulations promulgated under such statute, but, in each
case, as in effect at the time of the relevant event. Unless expressly stated
herein to the contrary, references to any agreement, instrument or other
document mean such agreement, instrument or document as amended or modified and
as in effect from time to time in accordance with the terms thereof. Any
reference to “days” means calendar days unless Business Days are expressly
specified.

(b) The Disclosure Schedule and any other schedules, annexes and exhibits
attached to this Agreement shall be construed with and as an integral part of
this Agreement to the same extent as if the same had been set forth verbatim
herein. Any capitalized terms used in any exhibit or schedule or in the
Disclosure Schedule but not otherwise defined therein shall be defined as set
forth in this Agreement. The Disclosure Schedule discloses items or information
with specific reference to the particular section or subsection of this
Agreement to which the items or information in such Disclosure Schedule relates;
provided, however, that any items or information set forth in any section or
subsection of the Disclosure Schedule pertaining to representations, warranties
and covenants made by or with respect to Seller and its Affiliates shall be
deemed to apply to each other section or subsection of the Disclosure Schedule
to the extent that it is reasonably apparent on its face that such items or
information are relevant to such other section or subsection of the Disclosure
Schedule. Inclusion of any items or information in the Disclosure Schedule items
shall not be deemed to be an acknowledgement or representation that such items
are material, to establish any standard of materiality or to define further the
meaning of such terms for purposes of this Agreement; provided that nothing in
the Disclosure Schedule is intended to broaden the scope of any representation
or warranty of Seller made herein.

Section 9.4 Counterparts. This Agreement may be executed in two (2) or more
counterparts (including by facsimile or other electronic transmission), 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.

 

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Section 9.5 Entire Agreement; Construction. This Agreement (including the
Disclosure Schedule, schedules, annexes and exhibits hereto and the other
agreements and instruments referred to herein), together with the other
Transaction Documents, constitutes the entire agreement and supersede all prior
agreements and understandings, both written and oral, between the Parties with
respect to the subject matter of this Agreement. The Parties have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the Parties and no presumption or burden
of proof shall arise favoring or disfavoring either Party by virtue of the
authorship of any of the provisions of this Agreement.

Section 9.6 Amendment. This Agreement may be amended, restated, supplemented or
otherwise modified only by a written instrument signed by Purchaser and Seller.

Section 9.7 Waiver. At any time before the Closing, Purchaser may, with respect
to Seller, and Seller may, with respect to Purchaser: (a) extend the time for
the performance of any of its obligations or other acts; (b) waive any
inaccuracies in its representations and warranties contained herein or in any
document delivered pursuant hereto; or (c) waive compliance with any of its
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the Party granting the
waiver. No failure on the part of either Party to exercise, and no delay in
exercising, any right, power or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of such right, power or
remedy by such Party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.

Section 9.8 Governing Law; Waiver of Jury Trial. This Agreement shall be
governed by and construed in accordance with the Laws of the State of Delaware
without regard to principles of conflict of laws. Each of the Parties:
(a) consents to the exclusive personal jurisdiction of the state and federal
courts sitting in the State of New York in any action or proceeding arising out
of or relating to this Agreement or the transactions contemplated by this
Agreement or the other Transaction Documents; (b) agrees that all claims in
respect of such action or proceeding may be heard and determined in any such
court; (c) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court; and
(d) agrees not to bring any action or proceeding arising out of or relating to
this Agreement or the other Transaction Documents or the transactions
contemplated hereby or thereby in any other court. Each of the Parties waives
any defense of inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety or other security that might be required
of any other Party with respect thereto. To the extent permitted by Applicable
Law, either Party may make service on the other Party by sending or delivering a
copy of the process to the Party to be served at the address and in the manner
provided for the giving of notices in Section 9.2. Nothing in this Section 9.8,
however, shall affect the right of either Party to serve legal process in any
other manner permitted by Applicable Law. PURCHASER AND SELLER HEREBY
IRREVOCABLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OF PURCHASER OR
SELLER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF
AND THEREOF.

Section 9.9 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and

 

50

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provisions of this Agreement or affecting the validity or enforceability of any
of the terms or provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.

Section 9.10 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by either of the Parties without the
prior written consent of Purchaser and Seller; provided, that Purchaser may
assign this Agreement to any of its Affiliates (unless doing so would restrict
or materially delay the consummation of the transactions contemplated by this
Agreement); provided, however, that no such assignment shall in any manner
limit, affect or relieve Purchaser’s obligations hereunder; and provided,
further, that such rights shall be automatically assigned back to Purchaser, if
such Affiliate ceases to be an Affiliate of Purchaser. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective, heirs, successors and permitted
assigns.

Section 9.11 No Third Party Beneficiaries. Except as otherwise specifically set
forth in Section 5.10 (which shall be to the benefit of the Persons set forth
therein), this Agreement is for the sole benefit of the Parties and their
permitted assigns, and nothing herein expressed or implied shall give or be
construed to give any Person, other than the Parties and such permitted assigns,
any legal or equitable rights hereunder. All references herein to the
enforceability of agreements with third parties, the existence or non-existence
of third party rights, the absence of breaches or defaults by third parties, or
similar matters or statements, are intended only to allocate rights and risks
between the Parties and are not intended to be admissions against interest, give
rise to any inference or proof of accuracy, be admissible against either Party
by any third party, or give rise to any claim or benefit to any third party.

Section 9.12 Enforcement of Agreement. The Parties agree that irreparable damage
may occur if any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached. It is
accordingly agreed that the Parties will be entitled, without the posting of a
bond, to seek an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement, this
being in addition to (a) any other remedy to which they are entitled hereunder,
at law or in equity, before the Closing, or (b) any other remedy to which they
are entitled hereunder after the Closing. In the event that any action or
proceeding should be brought in equity to enforce the provisions of this
Agreement, no Party shall allege, and each Party hereby waives the defense, that
there is an adequate remedy at law. In the event that any Party is required to
commence litigation to seek enforcement of this Section 9.12, and prevails in
such litigation, it shall be entitled to receive, in addition to any other
relief granted to it, all reasonable expenses (including attorneys’ fees) which
it has incurred in enforcing its rights hereunder.

Section 9.13 Waiver of Conflicts; Privilege.

(a) Each of the Parties acknowledges and agrees that Goodwin Procter LLP
(“Goodwin”) has acted as counsel to Seller, the Company and its Subsidiaries in
connection with the negotiation of this Agreement and consummation of the
transactions contemplated hereby.

(b) Purchaser hereby consents and agrees to, and agrees to cause the Company and
the Purchased Subsidiaries to consent and agree to, Goodwin representing Seller
after the Closing, including with respect to disputes in which the interests of
Seller may be directly adverse to Purchaser and its Subsidiaries (including the
Company and the Purchased Subsidiaries following the Closing). Purchaser further
consents and agrees to, and agrees to cause the Company and the Purchased
Subsidiaries to consent and agree to, the communication by Goodwin to Seller in
connection with any such representation of any fact known to Goodwin arising by
reason of Goodwin’s prior representation of Seller, the Company and its
Subsidiaries.

 

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(c) In connection with the foregoing, Purchaser hereby irrevocably waives and
agrees not to assert, and agrees to cause the Company and the Purchased
Subsidiaries to irrevocably waive and not to assert, any conflict of interest
arising from or in connection with Goodwin’s representation of Seller or the
Company and its Subsidiaries before and after the Closing.

(d) Purchaser further agrees, on behalf of itself and, after the Closing, on
behalf of the Company and the Purchased Subsidiaries, that all communications in
any form or format whatsoever between or among Goodwin, on the one hand, and
Seller, the Company and its Subsidiaries, or any of their respective
Representatives, on the other hand, that relate in any way to the negotiation,
documentation and consummation of the transactions contemplated by this
Agreement or any dispute arising under this Agreement (collectively, the
“Privileged Communications”) shall be deemed to be attorney-client privileged
and that the Privileged Communications and the expectation of client confidence
relating thereto belong solely to Seller, shall be controlled by Seller and
shall not pass to or be claimed by Purchaser, the Company or any of the
Purchased Subsidiaries.

(e) Notwithstanding the foregoing, in the event that a dispute arises between
Purchaser, the Company or the Purchased Subsidiaries, on the one hand, and a
third party other than Seller, on the other hand, Purchaser, the Company or the
Purchased Subsidiaries may assert the attorney-client privilege to prevent the
disclosure of the Privileged Communications to such third party; provided,
however, that none of Purchaser, the Company or the Purchased Subsidiaries may
waive such privilege without the prior written consent of Seller. In the event
that Purchaser, the Company or any of the Purchased Subsidiaries is legally
required by Order or otherwise to access or obtain a copy of all or a portion of
the Privileged Communications, Purchaser shall immediately notify Seller in
writing (which notice shall make specific reference to this Section 9.13) so
that Seller can seek a protective order, and Purchaser agrees to use reasonable
best efforts to assist therewith.

(f) To the extent that files or other materials maintained by Goodwin constitute
property of its clients, only Seller shall hold such property rights, and
Goodwin shall have no duty to reveal or disclose any such files or other
materials or any Privileged Communications.

(g) Purchaser agrees that it will not, and that it will cause the Company and
the Purchased Subsidiaries not to, (i) access or use the Privileged
Communications, including by way of review of any electronic data,
communications or other information, or by seeking to have Seller waive the
attorney-client or other privilege, or by otherwise asserting that Purchaser,
the Company or any of the Purchased Subsidiaries has the right to waive the
attorney-client or other privilege or (ii) seek to obtain the Privileged
Communications from Goodwin.

Section 9.14 Further Assurances. Subject to the conditions of this Agreement,
from and after the Closing, without additional consideration, each of the
parties hereto will (or, if appropriate, cause their Affiliates to) execute and
deliver, or cause to be executed and delivered, such further documents and other
instruments and take, or cause to be taken, such other action as may be
reasonably necessary to make effective the transactions contemplated by this
Agreement and the Transaction Documents.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the Parties have caused this Purchase and Sale Agreement to
be executed and delivered as of the date first above written.

 

PURCHASER: CCA Acquisition, LLC By:  

/s/ Richard Ressler

Name: Richard Ressler Title: Vice President SELLER: VEREIT Operating
Partnership, L.P. By:  

/s/ Glenn J. Rufrano

Name: Glenn J. Rufrano Title: Chief Executive Officer

[Signature Page to Purchase and Sale Agreement]

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Schedule I

Definitions

In addition to any other definitions contained in this Agreement, the following
words, terms and phrases shall have the following meanings when used in this
Agreement.

“Accrued Vacation” is defined in Section 5.8(d).

“Acquired Pro Forma Entities” is defined in Section 3.1(b).

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person, and the term “control” (including
the terms “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting
securities, by Contract or otherwise; provided, that the Company NLRs shall not
be considered Affiliates of the Company or any of its Subsidiaries.

“Agreed Accounting Principles” means GAAP and the accounting principles,
practices, policies and methodologies set forth on Schedule 1.3, consistent with
past practice.

“Agreement” is defined in the preamble.

“Alternative Transaction” is defined in Section 5.12.

“Applicable Law” means any Law as to which the Governmental Authority that
enacted or promulgated such Law or Laws has jurisdiction over such Person or its
Affiliates, directors, officers, employees, properties, assets or business.

“Base Purchase Price” is defined in Section 1.2.

“Basket Amount” is defined in Section 7.4.

“Board” is defined in Section 5.19.

“Broker” is defined in Section 3.9.

“Business Day” means any day of the year on which national banking institutions
in New York, NY or Los Angeles, CA are opened to the public for conducting
business and are not required or authorized to close.

“Cash” means, as of a specified time, the aggregate amount of all cash and cash
equivalents of the Company and the Purchased Subsidiaries as of such time,
determined in accordance with the Agreed Accounting Principles.

“Change of Control Payment” is defined in the definition of “Material Contract”
in this Schedule I.

“Closing” is defined in Section 2.1.

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“Closing Balance Sheet” is defined in Section 1.4(a).

“Closing Cash” means the aggregate amount of Cash of the Company and the
Purchased Subsidiaries determined as of 12:01 a.m. Los Angeles time on the
Closing Date and in accordance with the Agreed Accounting Principles; provided,
however, that “Closing Cash” shall be pro forma of the Pre-Closing Restructuring
to the extent that all or a portion of the Pre-Closing Restructuring has not by
such time occurred and shall not include (i) any amounts included in the
calculation of Closing Working Capital Amount, (ii) any amounts used to repay
Indebtedness or to pay Company Transaction Expenses or (iii) any amounts used to
make distributions or intercompany payments (other than between the Company and
its Subsidiaries) on the Closing Date.

“Closing Cash Payment Amount” is defined in Section 1.2.

“Closing Date” is defined in Section 2.1.

“Closing Indebtedness” means all outstanding Indebtedness of the Company and the
Purchased Subsidiaries determined as of 12:01 a.m. Los Angeles time on the
Closing Date and in accordance with the Agreed Accounting Principles; provided,
however, that “Closing Indebtedness” shall be pro forma of the Pre-Closing
Restructuring to the extent that all or a portion of the Pre-Closing
Restructuring has not by such time occurred and shall not include any
Indebtedness included in the calculation of Closing Working Capital Amount.

“Closing Working Capital Amount” means the amount by which (i) Current Assets
exceed (ii) Current Liabilities, in each case, determined as of 12:01 a.m. Los
Angeles time the Closing Date and in accordance with the Agreed Accounting
Principles.

“Closing Working Capital Shortfall” means the amount, if any, by which the
Closing Working Capital Amount (as finally determined in accordance with
Section 1.4) is below zero.

“Closing Working Capital Excess” means the amount, if any, by which the Closing
Working Capital Amount (as finally determined in accordance with Section 1.4)
exceeds zero.

“CMA” is defined in Section 5.2(b).

“Code” means the Internal Revenue Code of 1986, as amended, including any
successor law thereto.

“Company” is defined in the recitals to this Agreement.

“Company Business” is defined in the recitals to this Agreement.

“Company Business Employees” means (i) each employee listed on Section 3.11(a)
of the Disclosure Schedule and (ii) each other employee who provides services to
the Company or the Purchased Subsidiaries identified by Purchaser to Seller
after the date of this Agreement and prior to the Closing.

“Company Business Intellectual Property” is defined in Section 3.13(a).

“Company Material Adverse Effect” means (i) any fact, condition, change, effect,
event or occurrence (including, for the avoidance of doubt, any fact, condition,
change, effect, event or occurrence with respect to any Company NLR) that
individually or in the aggregate has, or would reasonably be

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expected to have an adverse effect that is material to the business, assets,
financial condition, or results of operations of the Company and the Purchased
Subsidiaries, taken as a whole, including (x) any termination of, or a written
statement of intent to terminate, any Advisory Agreement and (y) any written
statement of intent by any Board of a Company NLR not to honor the appointment
to such Board of the individuals employed by an Affiliate of Purchaser and
previously designated by Purchaser pursuant to Section 5.19 or not to honor its
commitment to consider in good faith and appoint to such Board the Independent
Director (as defined in the Governing Documents of such Company NLR) proposed by
such Affiliate of Purchaser; provided, that “Company Material Adverse Effect”
shall not include any event, occurrence, fact, condition or change, either alone
or in a combination, directly or indirectly, arising out of or attributable to:
(A) any changes, conditions or effects in economies or securities or financial
markets in general; (B) changes, conditions or effects that generally affect the
industry in which the Company and the Purchased Subsidiaries operate; (C) any
change, effect or circumstance resulting from an action expressly required by
this Agreement or for which Purchaser provides its prior written consent;
(D) the effect of any changes in or modifications to Applicable Law or
accounting rules, including GAAP, or the interpretation or enforcement thereof;
(E) the willingness of broker-dealers to market Company NLR securities as a
result of the entry into or the announcement, pendency or performance of this
Agreement or the other Transaction Documents, including the identity of
Purchaser and its Affiliates or their plans and intentions with respect to the
Acquired Pro Forma Entities; (F) conditions caused by acts of terrorism or war
(whether or not declared) or any natural or man-made disaster or other acts of
God; or (G) the failure by the Company and the Purchased Subsidiaries to meet
any internal or industry estimates, expectations, projections or budgets for any
period (provided that the underlying causes of such failures shall not be
excluded); provided, however, that to the extent any fact, condition, change,
effect, event or occurrence referred to in the foregoing clauses (A), (B), (D)
or (F) has a materially disproportionate effect on the Company and the Purchased
Subsidiaries, as a whole, relative to other companies in the industry in which
the Company and the Purchased Subsidiaries operate, then in such case only the
incremental disproportionate materially adverse impact may be taken into account
in determining whether a “Company Material Adverse Effect” has occurred or would
reasonably be expected to occur or (ii) any fact, condition, change, effect,
event or occurrence that has, or would reasonably be expected to have an adverse
effect on the ability of Seller to consummate the transactions contemplated by
this Agreement or the other Transaction Documents on a timely basis and to
perform its obligations hereunder and thereunder.

“Company NLR” means an NLR that is sponsored and advised by the Company or a
Purchased Subsidiary.

“Company Plan” is defined in Section 3.11(c).

“Company Transaction Expenses” means the unpaid obligations, fees and expenses
incurred by or on behalf of the Company, any of the Purchased Subsidiaries,
Seller or VEREIT (together, the “Responsible Entities”) or that are payable by
the Responsible Entities (whether due prior, on or after the Closing) in
connection with the transactions contemplated by this Agreement or the
Transaction Documents (except for the Services Agreement), including (i) fees
and expenses of legal counsel, investment bankers, accountants and other
advisors, (ii)(x) transaction bonuses, severance payments, change of control
payments, excise tax gross-up payments, retention payments, stay bonuses,
payments with respect to stock appreciation rights, dividend equivalent payments
or other payments that arise as a result of the consummation of the transactions
contemplated by this Agreement and the employer portion of any FICA and other
payroll Taxes payable in respect thereto, and (y) any unpaid severance
obligations or other termination payments resulting from terminations of
employment on or before the Closing, (iii) except as set forth in Section 9.1,
all fees and expenses associated with obtaining approvals, consents and waivers
and (iv) any broker’s fees incurred or payable by or on behalf of the
Responsible Entities.

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“Compliance Policies” is defined in Section 3.9(f).

“Compliance Representations” means the representations and warranties set forth
in the third sentence of Section 3.6 (Material Contracts) (solely as it relates
to a default by the Company or any Purchased Subsidiary), Section 3.8
(Compliance with Applicable Laws; Permits), Section 3.9 (Certain Regulatory
Matters) (other than paragraph (p) thereof), the last sentence of
Section 3.11(b) (Employees), the second and third sentence of Section 3.13(b)
(Intellectual Property) and the first sentence of Section 3.15 (Data Privacy).

“Consent” means any approval, consent, ratification, permission, waiver or
authorization from any Person other than any Governmental Authority.

“Contract” means any legally binding oral or written agreement, contract,
obligation, promise, commitment or undertaking.

“Corporate Name” is defined in Section 5.13(b).

“Current Assets” means the aggregate amount of all current assets of the Company
and the Purchased Subsidiaries, calculated on a consolidated basis and in
accordance with the Agreed Accounting Principles; provided, that for purposes of
calculating the Estimated Closing Working Capital Amount and the Closing Working
Capital Amount, Current Assets shall be determined pro forma of the Pre-Closing
Restructuring to the extent that all or a portion of the Pre-Closing
Restructuring has not by such time occurred.

“Current Liabilities” means the aggregate amount of all current liabilities of
the Company and the Purchased Subsidiaries, calculated on a consolidated basis
and in accordance with the Agreed Accounting Principles; provided, that for the
purposes of calculating the Estimated Closing Working Capital Amount and the
Closing Working Capital Amount, Current Liabilities shall be determined pro
forma of the Pre-Closing Restructuring to the extent that all or a portion of
the Pre-Closing Restructuring has not by such time occurred, and shall exclude
any liabilities of the Company or the Purchased Subsidiaries resulting from or
attributable to any action taken on the Closing Date by or on behalf of
Purchaser or any of its Affiliates, including any equity or debt financing
sourced by Purchaser or any of its Affiliates.

“D&O Policies” is defined in Section 5.21(b).

“De Minimis Amount” is defined in Section 7.4(a).

“Disclosure Schedule” is defined in the preamble to ARTICLE III.

“Dispute Period” is defined in Section 7.5.

“Employer Entity” is defined in Section 3.11(a).

“Equity Interests” means shares, limited liability company interests,
partnership interests, membership units or interests, equity interests, phantom
equity, equity appreciation rights, dividend equivalent, profit participation
rights, voting rights or similar securities, or any restricted equity units.

“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as
amended.

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“Estimated Adjustment Amount” is defined in Section 1.3(b). For the avoidance of
doubt, the Estimated Adjustment Amount may be positive, negative or zero.

“Estimated Closing Cash” is defined in Section 1.3(a).

“Estimated Closing Indebtedness” is defined in Section 1.3(a).

“Estimated Closing Working Capital Amount” is defined in Section 1.3(a).

“Estimated Closing Working Capital Excess” is defined in Section 1.3(a).

“Estimated Closing Working Capital Shortfall” is defined in Section 1.3(a).

“Estimated Company Transaction Expenses” is defined in Section 1.3(a).

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

“Final Adjustment Amount” is defined in Section 1.4(c). For the avoidance of
doubt, the Final Adjustment Amount may be positive, negative or zero.

“Final Determination” is defined in Section 7.7.

“Final Statement” is defined in Section 1.4.

“Financial Information” is defined in Section 3.4.

“FINRA” is defined in Section 3.1(c).

“Form BD” is defined in Section 3.9(c).

“Fraud” means with respect to a Person, an actual and intentional fraud
requiring a misrepresentation of a material fact, or a concealment of a material
fact, by such Person; provided, that such actual and intentional fraud shall
only be deemed to exist if such Person (i) had actual knowledge (as opposed to
imputed or constructive knowledge) of a misrepresentation or concealment of such
fact(s) by such Person made herein and (ii) actually intended to deceive the
Person to which such misrepresentation or concealment of such fact was made.

“GAAP” means generally accepted accounting principles in the United States in
effect as of the applicable date, consistently applied.

“General Enforceability Exceptions” is defined in Section 3.1.

“Goodwin” is defined in Section 9.13.

“Governing Documents” means with respect to any particular entity, (i) if a
corporation, the articles or certificate of incorporation and the bylaws (or
similar organizational documents for any entity organized or existing in any
non-U.S. jurisdiction), (ii) if a limited partnership, the limited partnership
agreement and the articles or certificate of limited partnership (or similar
organizational documents for any entity organized or existing in any non-U.S.
jurisdiction), (iii) if a limited liability company, the articles of
organization or certificate of formation and the limited liability company
agreement or operating agreement (or similar organizational documents for any
entity organized or existing in any

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non-U.S. jurisdiction), (iv) if any other type of entity (including any non-U.S.
entity), the formation or organizational documents and the governing documents,
(v) all equityholders’ agreements, voting agreements, voting trust agreements,
joint venture agreements, or registration rights agreements, and (vi) any
amendment or supplement to any of the foregoing.

“Governmental Authority” means any federal, state, local or foreign government
or political subdivision thereof, or any agency or instrumentality of such
government or political subdivision, including the SEC, and FINRA or any other
self-regulatory organization or non-governmental regulatory authority or
quasi-governmental authority (to the extent that the rules, regulations or
Orders of such organization or authority have the force of Law or that is
charged with the supervision or regulation of brokers, dealers, securities
underwriting or trading, stock exchanges, commodities exchanges, insurance
companies or agents, investment companies or investment advisers, or to the
jurisdiction of which the Company is otherwise subject), or any arbitrator,
court or tribunal of competent jurisdiction, and any self-regulatory
organization.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

“Indebtedness” means, without duplication, and determined in accordance with the
Agreed Accounting Principles, any and all liabilities, debts, obligations of the
Company and the Purchased Subsidiaries (i) for borrowed money (including any
principal, premium, accrued and unpaid interest, related expenses, prepayment
penalties, commitment and other fees, reimbursements, indemnities and all other
amounts payable in connection therewith), whether secured or unsecured, and
obligations evidenced by bonds, debentures, notes or similar debt instruments,
(ii) all obligations of the type referred to in clause (i) above of other
Persons for the payment of which the Company or the Purchased Subsidiaries is
responsible or liable, as obligor, guarantor, surety or otherwise, including any
guarantee of such obligations, (iii) liabilities for the deferred purchase price
of any property, (iv) liabilities in respect of any lease of (or other
arrangements conveying the right to use) real or personal property, or a
combination thereof, which liabilities are required to be classified and
accounted for under the Agreed Accounting Principles as capital leases and
(v) liabilities for the reimbursement of any obligor on any letter of credit,
banker’s acceptance or similar credit transaction issued to the extent of the
obligation secured; provided, however, that in no event shall Indebtedness
include, or be deemed to include, (a) any obligations, indebtedness or
liabilities of the Company or any of the Purchased Subsidiaries resulting from
any action taken on the Closing Date by or on behalf of Purchaser or any of its
Affiliates, including any equity or debt financing sourced by Purchaser or any
of its Affiliates, (b) any obligations, indebtedness or liabilities that are the
obligation of Purchaser or any of its Affiliates pursuant to the terms of this
Agreement, or (c) any liabilities of the Company or any of the Purchased
Subsidiaries that are included in the Final Statement as a Current Liability and
used in determining the Closing Working Capital Amount.

“Indemnification Agreement” is defined in Section 5.10.

“Indemnification Claim” is defined in Section 7.5.

“Indemnified Party” is defined in Section 7.5.

“Indemnified Taxes” means (i) any Taxes of the Company or the Purchased
Subsidiaries (or for which the Company or the Purchased Subsidiaries are
liable) (x) incurred in Pre-Closing Tax Periods, except to the extent such Taxes
are taken into account in the calculation of the Closing Working Capital Amount
as finally determined or (y) as a result of any intercompany transactions or any
excess loss account described in Treasury Regulations under Section 1502 of the
Code (or any similar provision of state, local or foreign Law) executed or
created prior to the Closing and (ii) any liability for Taxes of Equity Fund
Advisors, Inc., VEREIT TRS Corp. or DRE Holdings LLC arising from the
application of Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or non-U.S. Law), as a transferee or successor, or otherwise by
operation of Law.

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“Indemnifying Party” is defined in Section 7.5.

“Insured Party” is defined in Section 5.10.

“Intellectual Property” means all (i) inventions or discoveries, whether
patentable or not, and all patents, registrations, invention disclosures and
applications therefor, including continuations, divisionals,
continuations-in-part, or reissues of patent applications, and patents issuing
thereon; (ii) trademarks, service marks, trade names, service names, brand
names, trade dress rights, logos, internet domain names, corporate names, logos,
symbols and other indicia of origin, together with the goodwill associated with
any of the foregoing and symbolized thereby, and all applications, registrations
and renewals thereof; (iii) copyrights and registrations and applications
therefor, published and unpublished works of authorship, whether copyrightable
or not, mask work rights, and all renewals, extensions, restorations and
revisions thereof (including, for the avoidance of doubt, Software);
(iv) confidential information, trade secrets and know-how, including processes,
schematics, business methods, formulae, drawings, prototypes, models, designs,
customer lists and supplier lists; and (v) all other intellectual property or
proprietary rights.

“Intercompany Agreement” means any Contract between or among (i) (A) Seller or
any of its Affiliates (other than the Company or any of the Purchased
Subsidiaries) or (B) any current or former officer, director or management
employee of, or equityholder of, any such Person described in the immediately
preceding clause (A) (or, to the Knowledge of Seller, any family member of any
of the foregoing) on the one hand, and (ii) the Company or any of the Purchased
Subsidiaries, on the other hand, in each case, other than any ordinary course
employment agreements, offer letters or director agreements. Intercompany
Agreements shall not include any Shared Contract, Shared IT Contract,
Transaction Document or, for the avoidance of doubt, any Contract solely between
or among the Company or any of the Purchased Subsidiaries, on the one hand, and
the Company or any other Purchased Subsidiary, as applicable, on the other hand.

“Investment Company Act” means the Investment Company Act of 1940, as the same
may be amended from time to time, and any successor to such Act.

“IRS” means the Internal Revenue Service.

“IT Assets” means the Company’s and its Subsidiaries’ computers, Software,
servers, workstations, routers, hubs, switches, data communications lines, and
all other information technology equipment, and all associated documentation, in
each case to the extent used in the Company Business.

“Knowledge of Purchaser” means the actual knowledge, after reasonable inquiry,
of any of the persons listed in Section I(a) of the Disclosure Schedule.

“Knowledge of Seller” means the actual knowledge, after reasonable inquiry, of
any of the persons listed in Section I(b) of the Disclosure Schedule.

“Law” means any and all statutes, laws, ordinances, rules, regulations, Orders,
Permits, case law and other rules of law enacted, promulgated or issued by any
Governmental Authority.

“Lease” is defined in Section 3.12(a).

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“Legal Proceeding” means any action, claim (including any cross-claim or
counter-claim), suit, litigation, arbitration, proceeding (including any civil,
criminal, administrative, investigative or appellate proceeding), hearing,
audit, examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Authority or any
arbitrator or arbitration panel.

“Lender” is defined in Section 4.2.

“Liabilities” means any liabilities, obligations or commitments of any nature
whatsoever, asserted or unasserted, known or unknown, absolute or contingent,
accrued or unaccrued, matured or unmatured or otherwise, whether or not required
to be disclosed.

“Lien” means any mortgage, pledge, security interest, encumbrance, lien
(statutory or other) or conditional sale agreement.

“Loan” is defined in Section 4.2.

“Loan Agreement” is defined in Section 4.2.

“Loss” is defined in Section 7.2.

“Made Available” is defined in Section 3.4.

“Material Contract” means any Contract to which the Company or any of the
Purchased Subsidiaries is a party, and which has not terminated, in each case,
as of the date of this Agreement, of the type listed below (and which, in the
case of any entity that is a Purchased Subsidiary solely by reason of clause
(ii) of the proviso of the definition of such term, is Related to the Company
Business):

(a) any Contract for the provision of investment advisory or investment
management services;

(b) any distribution or dealer-manager Contract;

(c) any material Contract with any registered broker-dealer;

(d) any joint venture, partnership, limited liability company other similar
Contract to which the Company or any of the Purchased Subsidiaries is a party;

(e) any Contract that requires the Company or any of the Purchased Subsidiaries,
or any successor to, or acquiror of, the Company or any of the Purchased
Subsidiaries, to make any payment to another Person as a result of a change of
control of the Company or any of the Purchased Subsidiaries (a “Change of
Control Payment”) or gives another Person a right to receive or elect to receive
a Change of Control Payment;

(f) any Contract relating to the acquisition, disposition or lease by the
Company or any of the Purchased Subsidiaries of any Person, business or material
assets;

(g) each agreement of the Company or any of the Purchased Subsidiaries with
respect to material Intellectual Property, including agreements involving
Software (other than license agreements for computer Software that is generally
available to the public in the retail marketplace, for which the licenses are
not exclusive);

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(h) any Lease;

(i) any Contract relating to any third party Indebtedness of the Company or any
of the Purchased Subsidiaries;

(j) any Contract that (i) provides for earn-outs or other similar contingent
obligations; (ii) provides for a “clawback” or similar undertaking;
(iii) contains covenants limiting the freedom of the Company or any
Representative (or, after the Closing, Purchaser or its Affiliates) thereof to
(A) compete in any line of business, in any geographic region or with any Person
or (B) solicit, hire or provide any services to any employee or prospective
client or other Person; (iv) requires the Company to deal exclusively with any
Person or that requires any Person to deal exclusively with the Company;
(v) provides for a grant by the Company of a “most favored nation” status in any
material respect to a third party or (vi) that could require the disposition of
any material asset or line of business of the Company or the Purchased
Subsidiaries (or, after the Closing, Purchaser or its Affiliates);

(k) any Contract for the employment or engagement on a full-time or part-time
basis (A) of a person who will serve as a director or executive officer of the
Company or any Purchased Subsidiary; (B) of a Signing Date Company Business
Employee providing target annual cash compensation in excess of $500,000; or
(C) providing for the payment of any cash compensation or benefits to a Signing
Date Company Business Employee upon or in connection the consummation of the
transactions contemplated by this Agreement or the other Transaction Documents
(including any such payments subject to further conditions), in each case, that
is not terminable at will by the Company without liability for any penalty or
severance payment (other than any liability or obligation imposed by a statute);

(l) each Contract with current or former officers, directors or employees of the
Company or any of the Purchased Subsidiaries, in each case that provides for any
unsatisfied compensation obligation;

(m) each Contract between the Company and any Governmental Authority;

(n) each Contract providing for indemnification by the Company or any of the
Purchased Subsidiaries of any Person, except for non-material Contracts entered
into in the ordinary course of business; and

(o) any Contract not covered by (a)-(n) above to which the Company or a
Purchased Subsidiary is a party (i) involving annual expenditures in excess of
$250,000 or (ii) not cancellable by the Company or such Purchased Subsidiary
upon 60 days’ notice or less without penalty or other payment.

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

“Neutral Arbitrator” is defined in Section 1.4.

“NLR” is defined in the recitals to this Agreement.

“NLR SEC Filings” is defined in Section 3.9(p).

“Non-Disclosure and Confidentiality Agreement” is defined in Section 5.5.

“Objection Notice” is defined in Section 1.4.

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“Order” means a judgment, order, writ, injunction, decree, award or ruling that
a Governmental Authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered.

“Other Policies” is defined in Section 5.10(b).

“Parties” is defined in the preamble.

“Permits” means all licenses, registrations, franchises, permits, orders,
approvals, qualifications, exemptions, consents and authorizations of a
Governmental Authority.

“Permitted Liens” means (i) liens for Taxes not yet delinquent or being
contested in good faith by appropriate procedures; (ii) mechanics, carriers’,
workmen’s, repairmen’s or other like liens arising or incurred in the ordinary
course of business; (iii) easements, rights of way, zoning ordinances and other
similar encumbrances affecting the real property leases; and (iv) liens arising
under original purchase price conditional sales contracts and equipment leases
with third parties entered into in the ordinary course of business.

“Permitted Purpose” is defined in Section 5.7.

“Person” means any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Authority or other entity, including a
“person” as defined in Section 13(d)(3) of the Securities Exchange Act.

“Plan Entities” is defined in Section 3.11(c).

“Post-Closing Tax Period” means any tax period (or portion thereof) beginning on
or after the day after the Closing Date.

“Pre-Closing Restructuring” is defined in Section 5.13.

“Pre-Closing Statement” is defined in Section 1.3(a).

“Pre-Closing Tax Contest” is defined in Section 5.9.

“Pre-Closing Tax Period” means any tax period ending on or before the Closing
Date and the portion of any Straddle Period ending on the Closing Date.

“Pre-Closing Tax Returns” is defined in Section 5.9.

“Preliminary Closing Statement” is defined in Section 1.4.

“Privileged Communications” is defined in Section 9.13.

“Pro Forma Base Balance Sheet” is defined in Section 3.4.

“Property-Owning VEREIT Subsidiary” means each Subsidiary of VEREIT formed
solely for the purpose of, and which currently engages and is intended to engage
solely in the business of, holding interests in real property.

“Purchase Price” is defined in Section 1.2.

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“Purchased Subsidiary” means each Subsidiary of the Company other than Equity
Fund Advisors, Inc., DRE Holdings, LLC, Cole Collateralized Senior Notes, LLC,
Cole Collateralized Senior Notes II, LLC, Cole Collateralized Senior Notes III,
LLC, Cole Collateralized Senior Notes IV, LLC, Cole DST Advisors, LLC and VEREIT
TRS Corp and any Subsidiary of each of the foregoing entities; provided that
except as otherwise expressly provided in this Agreement, for purposes of
interpreting Article III (other than Section 3.10), Section 5.1, Section 5.3 and
the definitions of “Company Material Adverse Effect” or “Material Contracts,”
(i) each of the foregoing entities shall be deemed to have the assets and
liabilities that will be held or assumed by such entity as a result of the
Pre-Closing Restructuring and (ii) the term “Purchased Subsidiary” shall also
include any other Subsidiary of the Company, but only to the extent such
Subsidiary has engaged in the Company Business, is engaging in the Company
Business or is contemplated to continue to engage in the Company Business
pursuant to the Services Agreement, in each case as relevant to the
representation, covenant or definition in question.

“Purchaser” is defined in the preamble.

“Purchaser Expenses” is defined in Section 8.3.

“Purchaser Fundamental Representations” is defined in Section 6.3(a).

“Purchaser Indemnified Parties” is defined in Section 7.2.

“Purchaser Released Claims” is defined in Section 5.17(b).

“Purchaser Releasee” is defined in Section 5.17(b).

“Regulatory Agreement” is defined in Section 3.9(j).

“Related to the Company Business” means required, necessary or used in the
Company Business as operated and conducted as of the date of this Agreement,
other than any assets or rights of the Company NLRs.

“Representative” means, with respect to any Person, any manager, member, general
or limited partner, equityholder, officer, director, employee, agent, Affiliate,
advisor, consultant, accountant, external auditor, or attorney of such Person.

“Resolution Period” is defined in Section 1.4.

“Responsible Entities” is defined in the definition of “Company Transaction
Expenses” in this Schedule I.

“Restricted Activity” is defined in Section 5.18(a).

“Review Period” is defined in Section 1.4.

“SEC” means the Securities and Exchange Commission and any successor thereto.

“Securities Act” is defined in Section 4.5.

“Seller” is defined in the preamble and shall include, for purposes of Article
III, any predecessor of Seller.

“Seller-Developed Software” is defined in Section 5.15(a).

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“Seller Expenses” is defined in Section 8.3.

“Seller Fundamental Representations” is defined in Section 6.2(a).

“Seller Indemnified Parties” is defined in Section 7.3.

“Seller Released Claims” is defined in Section 5.17(a).

“Seller Releasee” is defined in Section 5.17(a).

“Services Agreement” is defined in Section 2.2(a)(iii).

“Shared Contract” means each Contract of Seller or its Affiliates (other than
any Intercompany Agreement or Shared IT Contract) (i) that is Related to the
Company Business but to which none of the Company or any of the Purchased
Subsidiaries is a party or (ii) that is Related to the Company Business to which
each of (A) Seller or its Affiliates (other than the Company or a Purchased
Subsidiary), (B) the Company or one of the Purchased Subsidiaries and (C) any
Person not set forth in clauses (A) or (B) is a party, in each case,
(1) involving annual expenditures in excess of $250,000 or (2) not cancelable by
Seller or its Affiliates (in the case of a Shared Contract described in clause
(i) of this definition) or the Company or such Purchased Subsidiary (in the case
of a Contract described in clause (ii) of this definition) upon 60-days’ notice
or less without penalty or other payment.

“Shared IT Contract” means each Contract of Seller or its Affiliates (other than
any Intercompany Agreement) (i) under which Software Related to the Company
Business is licensed to Seller or any of its Affiliates, but to which none of
the Company or any of the Purchased Subsidiaries is a party or (ii) under which
Software Related to the Company Business is licensed to Seller or any of its
Affiliates to which each of (A) Seller or its Affiliates (other than the Company
or a Purchased Subsidiary), (B) the Company or one of the Purchased Subsidiaries
and (C) any Person not set forth in clauses (A) or (B) is a party.

“Shares” is defined in the recitals to this Agreement.

“Signing Date Company Business Employees” is defined in Section 3.11(a).

“SIPC” is defined in Section 3.9(e).

“Software” means all source code and object code (whether embodied in software,
middleware, firmware, software-as-a-service, or otherwise), APIs, user
interfaces, architecture documentation, databases, data compilations and
collections of data.

“Straddle Period” is defined in Section 5.9(i).

“Straddle Returns” is defined in Section 5.9(b)(ii).

“Subsidiary” of a Person means a Person in which the first Person, directly or
indirectly, owns a controlling equity interest.

“Tail Policy” is defined in Section 5.10(b).

“Tax” means any tax (including any income tax, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
capital stock, franchise, profits, capital

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gains tax, value-added tax, sales tax, property tax, withholding tax, social
security (or similar) or unemployment, and any related charge or amount
(including any fine, penalty, interest, or addition to tax)), imposed, assessed,
or collected by or under the authority of any Taxing Authority.

“Tax Return” means any return, declaration, report, claim for refund,
information return or statement or other document relating to Taxes that is
filed or required to be filed with any Taxing Authority, including any schedule
or attachment thereto, and including any amendments thereof.

“Taxing Authority” means any U.S. or non-U.S. federal, national, state,
provincial, county, or municipal or other local government, any subdivision,
agency, commission, or authority thereof, or any quasi-governmental body
exercising any taxing authority or any other authority exercising Tax regulatory
authority.

“Termination Date” is defined in Section 8.1(a).

“Transaction Documents” means this Agreement and the Services Agreement.

“Transferred Employee” is defined in Section 5.8(a).

“VEREIT” is defined in the preamble to ARTICLE III.

“WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988,
as amended from time to time, including the rules and regulations promulgated
thereunder, and any similar state or local Law.

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Schedule 1.3

Agreed Accounting Principles

For purposes of the Agreement, “Agreed Accounting Principles” means GAAP;
provided, that Current Liabilities shall be calculated to include
compensation-related accruals with respect to the Transferred Employees as if
such employees were employed by the Company or a Purchased Subsidiary.

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Exhibit A

Services Agreement

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SERVICES AGREEMENT

THIS SERVICES AGREEMENT, dated as of [•], 2017 (this “Agreement”), is made and
entered into by and between VEREIT Operating Partnership, L.P., a Delaware
limited partnership (“Provider”), and Cole Capital Advisors, Inc., an Arizona
corporation (“Recipient”). In this Agreement, Provider and Recipient are
sometimes referred to individually as a “Party” and collectively as the
“Parties.”

RECITALS:

WHEREAS, pursuant to advisory agreements entered into by and between certain
Subsidiaries of Recipient (the “Advisors”) and the Named NLRs, including those
agreements currently in effect as listed on Schedule A hereto (the “Advisory
Agreements”; provided, that Provider’s rights and obligations hereunder will not
be amended or altered by any amendment to any Advisory Agreement entered into
after the date of this Agreement without Provider’s prior written consent), such
Advisors and their Affiliates provide certain advisory and management services
to the Named NLRs;

WHEREAS, Provider and CCA Acquisition, LLC, a Delaware limited liability company
(“Purchaser”), have entered into that certain Purchase and Sale Agreement, dated
as of November 13, 2017 (as the same may be amended from time to time, the
“Purchase and Sale Agreement”), pursuant to which Purchaser agreed to acquire
all of the issued and outstanding shares of common stock, par value $0.01 per
share, of Cole Capital Advisors, Inc., the predecessor of Recipient; and

WHEREAS, pursuant to the Purchase and Sale Agreement, Provider agreed, and
agreed to cause its relevant Affiliate, as applicable, and Purchaser agreed, and
agreed to cause the Recipient or its other relevant Affiliate, as applicable, to
enter into this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the respective covenants
and agreements set forth in this Agreement and the consummation of the
transactions contemplated by the Purchase and Sale Agreement, and intending to
be legally bound by this Agreement, the Parties agree as follows:

1. Definitions; Interpretation. Capitalized terms used but not defined herein
shall have the meanings assigned to them in the Purchase and Sale Agreement.
When a reference is made in this Agreement to “Sections,” “Exhibits” or
“Schedules,” such reference shall be to a section of, or an exhibit or schedule
to, this Agreement unless otherwise indicated. The 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 terms “hereof,” “herein,”
“hereby,” “hereto,” and derivative or similar words refer to this entire
Agreement, including the Exhibits and Schedules hereto. The word “or” shall not
be exclusive and shall mean “and/or”. The word “will” shall have the same
meaning as the word “shall” and vice versa. The term “ordinary course of
business” shall be deemed to be followed by the words “consistent with past
practice.” The terms defined in the singular have a comparable meaning when used
in the plural, and vice versa, and references

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herein to any gender includes each other gender. References to “written” or “in
writing” include in electronic form. All references to “$” or dollars shall be
deemed references to United States dollars. All references to Applicable Laws
are deemed to refer to such Laws as amended, modified, supplemented or replaced
from time to time or as superseded by comparable successor provisions, and, in
the case of any statute, include any rules and regulations promulgated under
such statute, but, in each case, as in effect at the time of the relevant event.
Unless expressly stated herein to the contrary, references to any agreement,
instrument or other document mean such agreement, instrument or document as
amended or modified and as in effect from time to time in accordance with the
terms thereof. Any reference to “days” means calendar days unless Business Days
are expressly specified.

2. Description of Services.

Initial Services. Subject to the terms and provisions of this Agreement,
Provider will, or will cause one or more of its Affiliates to, provide to
Recipient or one or more of its Affiliates from the Closing Date until the
Initial Period End Date (the “Initial Period”), any and all services that
Provider or its Affiliates performed or caused to be performed prior to the
Closing, so as to ensure that Recipient, its Subsidiaries and the Named NLRs
continue to operate during the Initial Period substantially in the same manner
as Recipient, its Subsidiaries and the Named NLRs operated prior to the Closing
(the “Historical Services”), including (i) those services for the benefit of the
Named NLRs under the Advisory Agreements, including those related to the
administration of such Advisory Agreements, in each case which are not Fee-Based
Reimbursable Services, (ii) those services for the benefit of the Named NLRs
under the Advisory Agreements which are Fee-Based Reimbursable Services and
(iii) any services for the benefit of, or related to the administration of, the
Advisor entities and the broker-dealer business of Recipient (collectively, the
“Initial Services”); provided, that the Initial Services shall not include any
such services to the extent that they are to be performed by any Transferred
Employees (or the replacements thereof) and, with respect to strategic
oversight, by employees of Recipient or its Affiliates, during the Initial
Period; provided, further that, for the avoidance of doubt, the Initial Services
shall include the provision of property and liability insurance or any services
related thereto with respect to the Named NLRs and their Subsidiaries. Schedule
2(a) sets forth an illustrative example listing each department which performed
such Initial Services during the Lookback Period and specifying whether it is
anticipated that the services performed by such department will be the sole
responsibility of either Provider and its Affiliates or Recipient and its
Affiliates, or shared between Provider, Recipient and their respective
Affiliates, during the Initial Period; provided, that such Schedule 2(a) is for
illustration only and shall not be binding and in the event of a dispute or
discrepancy between such Schedule 2(a) and the terms of this Section 2(a), the
terms of this Section 2(a) shall control. For purposes of this Agreement, the
“Initial Period End Date,” with respect to any Initial Service, shall be the
date that is the later of (i) 90 days after either Party provides written notice
to the other Party that it shall terminate such Initial Service (provided, that
Provider may not provide such written notice prior to January 1, 2019) and
(ii) the date of the last filing (other than Tax returns) with the SEC, FINRA or
other Governmental Authority in respect of the 2018 fiscal year for a Named NLR.

Additional Services. Subject to the terms and provisions of this Agreement,
Provider will, or will cause one or more of its Affiliates to, provide to
Recipient or one or more of its Affiliates, for the term of this Agreement,
(i) any services as may be reasonably (including

 

-2-

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as to any deadlines) requested from time to time by Recipient to transition the
Initial Services to Recipient and its Affiliates and/or assist Recipient and its
Affiliates in building systems, processes, tools and infrastructure necessary to
allow Recipient and its Affiliates to directly provide services similar to the
Initial Services, whether or not on behalf of a Named NLR (the “Consulting
Services”), on thirty (30) days’ written notice to Provider and
(ii) macro-economic and financial research and insights regarding the general
real estate environment in the U.S. and specific market information for the net
lease space (the “Research Services,” and together with the Initial Services and
the Consulting Services, the “Services”)) (which research and insights, for the
avoidance of doubt, shall not entitle Provider to any Reimbursement Fees
pursuant to Section 7).

NLR Boards. Except with respect to CCPT IV, Provider shall cause the current
member of the respective boards of directors of each of the Named NLRs who was
appointed thereto by Provider, so long as the same remains employed by Provider
and its Affiliates (or, if such person ceases to be employed by Provider and its
Affiliates, such other Provider designee as may be approved by Recipient, such
approval not to be unreasonably withheld), to (i) seek re-nomination for or, in
the case of a replacement board member between annual shareholder meetings,
appointment to and (ii) stand for re-election or accept such appointment, as the
case may be, to each such board of directors (so long as such member has been
re-nominated by the applicable board(s) of directors) until the 2019 annual
shareholder meeting for each applicable Named NLR, unless such individual is
requested by the then members of the applicable board(s) of directors to resign.

3. Term of Services. Subject to the terms and provisions of Section 2 of this
Agreement, and unless terminated earlier in accordance with Section 11(a), the
obligations of Provider: (i) to provide any Initial Service or cause such
Initial Service to be provided hereunder shall terminate on the earlier of
(x) the Initial Period End Date with respect to such Initial Service and (y) the
date on which Recipient terminates such Service pursuant to Section 11(b) of
this Agreement; (ii) to provide any Consulting Service or cause such Consulting
Service to be provided hereunder shall terminate on the earlier of (x) the date
agreed upon by the Parties in advance of providing such Service or, if no such
termination date is so specified, December 31, 2023 and (y) the date on which
Recipient terminates such Service pursuant to Section 11(b) of this Agreement;
and (iii) to provide any Research Service or cause such Research Service to be
provided hereunder shall terminate on the earlier of (x) December 31, 2023 or,
if on December 31, 2023 there is any positive Carryover Amount, on December 31,
2024 and (y) the Net Revenue Fee End Date (the date on which any Service is
actually terminated is referred to as the “Termination Date” with respect to
such Service).

4. Standard.

(a) Except as otherwise specified in the Schedules, Provider will, or will cause
one or more of its Affiliates to, provide the Services (i) with a level of
quality substantially equivalent to the level of quality such Services were
provided by or for the benefit of Recipient and its Subsidiaries in the ordinary
course of business during the Lookback Period, (ii) subject to Section 6(a),
with personnel devoting substantially the same amount of time to the Initial
Services as they did when performing such services during the Lookback Period
and (iii) in accordance with Applicable Law (including that no Service shall
include, in whole or in part, the

 

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provision of “investment advice” (as defined in Dept. of Labor Reg. Sections 29
C.F.R. 2510.3-21(a)) that is not in compliance with Dept. of Labor Reg. Sections
29 C.F.R. 2510.3-21(c)(1) (each such regulation, as promulgated on April 8, 2016
(81 Fed. Reg. 20,997)) (the “Service Standard”).

(b) 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. Management and Control. On the date of this Agreement, each Party shall
appoint a services program manager (each, a “Program Manager”) to perform the
functions set forth herein. The Program Managers will meet bi-weekly, or more or
less frequently as the Parties shall mutually determine, to monitor and
coordinate the provision of Initial Services with the goal of ensuring based
upon good faith efforts that as between the Services being provided by Recipient
or its Affiliates, on the one hand (whether or not through the service of the
Transferred Employees), and Provider and its Affiliates, on the other hand,
there is no duplication of Historical Services or a gap in the provision of
Historical Services. In addition, the Program Managers will be responsible for
identifying, developing, supervising, and adjusting such processes, guidelines,
specifications, standards and additional terms and conditions as the Parties
agree are necessary to support and satisfy the day-to-day requirements set forth
in this Agreement and to carry out each Party’s obligations hereunder (including
ensuring that Reimbursement Fees are calculated hereunder consistent with
Service Costs), provided that any agreement, understanding or arrangement that
operates or could be deemed to operate to terminate, limit, amend, waive or
otherwise modify any of the Parties’ rights or obligations under this Agreement
shall have no force or effect unless memorialized in writing and signed by each
Party. Each Party may change a Program Manager from time to time upon written
notice to the other Party. As of the date of this Agreement, (i) Recipient’s
Program Manager is [•] and (ii) Provider’s Program Manager is [•].

6. Personnel and Systems Providing the Services.

(c) The Initial Services shall be performed by substantially the original
personnel who performed such Services during the one (1) year period prior to
the date of the Purchase and Sale Agreement (the “Lookback Period”), or by such
other personnel as have been reasonably selected by Provider to replace any
original personnel, as long as the qualifications of the personnel performing
the Initial Services as a whole are substantially consistent with those of the
original personnel.

(d) Subject to Section 6(a), Provider and its Affiliates shall select and manage
their personnel who provide the Services to be performed by each of them
pursuant to this Agreement and shall supervise such personnel in connection with
the performance of such Services. Such personnel shall be qualified, in the
reasonable opinion of Provider, for the tasks to which they are assigned.

(e) Provider shall, and shall cause its Affiliates to, follow the time and cost
allocation methodologies as set forth in Schedule 6(c) with respect to the
Services provided

 

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hereunder or as may otherwise be agreed to in writing between Provider and
Recipient from time to time (such time and cost allocation methodologies, as
modified from time to time, the “Allocation Methodology”).

(f) As reasonably necessary for the purpose of continuing to allocate time,
services and cost (including overhead) in a manner consistent with the
Allocation Methodology, Provider shall (i) (A) permit employees of Recipient or
its Affiliates who are performing any Initial Service to use Provider’s time
allocation system and (B) once Recipient or its Affiliates have their own time
allocation system that is substantially similar in capability to Provider’s time
allocation system, then, to the extent not unreasonably interfering with
Provider’s operations, integrate time and cost entry data for such employees
into Provider’s time and cost allocation process and (ii) continue to facilitate
the billing and reimbursement process with respect to employees of not only
Provider and its Affiliates, but also, to the extent not unreasonably
interfering with Provider’s operations, of Recipient and its Affiliates. Without
limiting the foregoing, so long as Provider or any of its Affiliates are
performing any Services hereunder as to which Reimbursement Fees are payable
under this Agreement, Provider shall maintain, or cause to be maintained, time
and cost allocation process data at a similar level of detail as maintained
during the Lookback Period, and shall provide Recipient and its Affiliates with
a means to access such data in real time (as well as any calculations and
support related thereto) in order to allow both Parties to perform billing and
reimbursement activities consistent with those performed during the Lookback
Period and with the Allocation Methodology.

(g) Subject to Section 4(a), Section 6(c) and Schedule 6(c), Provider may use
contractors, subcontractors, vendors or other third parties under contract with
Provider (collectively, “Subcontractors”) to provide some or all of the Services
in its reasonable discretion and will consult with Recipient and obtain
Recipient’s written consent prior to using new Subcontractors or implementing
new systems, processes, tools and infrastructure to perform, or cause to be
performed, the Services hereunder if using any such new Subcontractor or
implementing any such new system, process, tool or infrastructure would increase
the cost of any Service by more than any de minimis amount or would change, as
to any Service, which category of Reimbursement Fee that Provider is entitled to
receive with respect to such Service pursuant to Section 7. In the event that
Provider uses any Subcontractors to perform any Services, Provider shall remain
responsible for the Services, including obligations to meet the Service
Standard, provided by each Subcontractor to the same extent as if Provider had
performed the Services itself.

(h) During the Initial Period, Provider shall undertake to separate and
re-allocate its personnel performing the Initial Services in the “Property
Accounting” and “Property Management” departments, and any other department to
the extent reasonably practicable, into (i) personnel who are primarily engaging
in providing the Initial Services to Recipient and (ii) personnel who are
primarily engaging in providing services to Provider.

 

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7. Reimbursement Fees.

(i) Reimbursement Fees.

(i) In consideration for the Services that are provided to Recipient or its
Affiliates pursuant to this Agreement which are allocated to the “PCM-Operating”
or “Consulting Services” activities within the “Sponsor Services” category (the
“Above-Cost Services”) pursuant to the Allocation Methodology, Recipient shall
pay to Provider amounts, based on invoices prepared by Provider using Service
Costs multiplied by 1.05 (the “Above-Cost Services Reimbursement Fee”), such
invoices to be sent monthly in accordance with Section 7(b); provided, however,
that Provider shall not bill or invoice Recipient for, and Recipient shall not
be obligated to pay Provider for, any Above-Cost Services that were not approved
in writing by Recipient (based on reasonable estimates provided by Provider) in
advance of such services being provided.

(ii) In consideration for the Fee-Based Reimbursable Services that are provided
to Recipient or its Affiliates pursuant to this Agreement, Recipient shall pay
to Provider amounts, based on invoices prepared by Provider using Service Costs
multiplied by 1.05 (the “Fee-Based NLR Reimbursement Fee”), such invoices to be
sent monthly in accordance with Section 7(b). The Recipient shall not be
obligated to pay to Provider in respect of such Services, for all Named NLRs
(except for INAV), in the aggregate, and on a year-to-date basis determined at
each month-end, amounts in excess of 35% (the “Cap Percentage”) of the
Applicable Fees earned by the applicable Advisors for such period with respect
to such Named NLRs; provided, that with respect to any invoice for Fee-Based NLR
Reimbursement Fees provided by Provider to Recipient pursuant to Section 7(b)
for Fee-Based Reimbursable Services performed during such period, Provider shall
not bill or invoice Recipient for, and Recipient shall not be obligated to pay
Provider, any amounts in excess of (A) the Applicable Fees earned by Recipient
in respect of such Fee-Based Reimbursable Services earned in such period
multiplied by the Cap Percentage, minus (B) any Fee-Based NLR Reimbursement Fee
already paid to Provider in respect of such Fee-Based Reimbursable Services
during such period. Notwithstanding anything in this Agreement to the contrary,
in no event shall any Fee-Based NLR Reimbursement Fee be based on any “Advisory
Fees” (as defined in the applicable Advisory Agreement) or “Performance Fees”
(as defined in the applicable Advisory Agreement) paid by the applicable Named
NLR to the applicable Advisor.

(iii) In consideration for the Services (other than Research Services) that are
provided to Recipient or its Affiliates pursuant to this Agreement and which are
not Fee-Based Reimbursable Services or Above-Cost Services (the “Cost
Services”), Recipient shall pay to Provider amounts, based on invoices prepared
by Provider, using Service Costs (the “Cost Services Reimbursement Fee,” and
together with the Fee-Based NLR Reimbursement Fee and Above-Cost Services
Reimbursement Fee, the “Reimbursement Fees”), such invoices to be sent monthly
in accordance with Section 7(b).

(iv) Notwithstanding anything in this Agreement to the contrary, in no event
shall Provider bill or invoice Recipient for, nor shall

 

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Recipient be obligated to pay to Provider, any Reimbursement Fees for
(w) salaries and benefits paid to persons who are serving as executive officers
of any of the Named NLRs, (x) any services which are allocated to categories
other than to the Named NLRs or “Sponsor Services” categories (e.g., “VEREIT” or
“1031”) pursuant to the Allocation Methodology, (y) any “Sponsor Services,”
other than “PCM-Operating” or “Consulting Service” activities to the extent they
are approved by Recipient in accordance with Section 7(a)(i) or (z) any
severance payment, change of control payment, or acceleration of the time of
payment or vesting of equity based compensation to any employee of Provider or
any of its Affiliates in connection with the transactions contemplated by the
Purchase and Sale Agreement or otherwise, whether payable before, on or after
the date of this Agreement.

(v) For purposes of this Agreement, the term:

(1) “Fee-Based Reimbursable Services” shall mean any Service, the cost of which
(A) is not reimbursable by a Named NLR because the applicable Advisor is
entitled to an “Acquisition Fee” (as defined in the applicable Advisory
Agreement), a “Disposition Fee” (as defined in the applicable Advisory
Agreement) or a “Financing Coordination Fee” (as defined in the applicable
Advisory Agreement) or (B) with respect to CCPT V, is not reimbursable because
the applicable Advisor is entitled to a fixed reimbursement amount for
“Insourced Acquisition Expenses” (as defined in the applicable Advisory
Agreement) in each case in lieu of any expense reimbursement pursuant to the
applicable Advisory Agreement (such fees and fixed reimbursement amounts, the
“Applicable Fees”); provided, that the Parties may mutually agree to add
Applicable Fees with respect to newly-entered into Advisory Agreements with
respect to Named NLRs.

(2) “Service Costs” shall mean actual costs calculated in accordance with the
Allocation Methodology.

Invoicing; Interest. Provider shall invoice Recipient for the Reimbursement Fee
in arrears on a monthly basis in accordance with Schedule 6(c) and including
detail as to the amount payable in respect of each Named NLR. Provider shall
include with each invoice a level of detail consistent with the invoices
provided by Provider or its applicable Affiliate to the Named NLRs during the
Lookback Period. Recipient shall pay each invoice within thirty (30) calendar
days after receipt.

Records; Audit. From the date of this Agreement until one (1) year following the
applicable Termination Date, Provider shall keep electronic copies of the
information reasonably necessary to verify the accuracy of the Reimbursement
Fees required to be paid by Recipient pursuant to this Agreement; provided that
with respect to any Initial Service, Provider shall keep such copies as
necessary for the applicable Advisor to comply with any recordkeeping
obligations under any Advisory Agreement. Recipient may from time to time, upon
reasonable advance notice, review or audit any document, information or matter
relating to Reimbursement Fees required to be paid by Recipient pursuant to this
Agreement through its own staff or

 

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through contractors, agents, auditors or advisers and will ensure that such
persons are bound by a confidentiality provision substantially similar to those
contained in this Agreement. Provider will grant Recipient and its employees,
contractors, agents, auditors and advisers reasonable access during normal
business hours to the facilities, books and records, personnel and accountants
of Provider solely for such purposes.

8. Net Revenue Fees.

(j) Net Revenue Fee. As additional consideration for Provider’s agreement to
provide Services to Recipient pursuant to this Agreement, at the times and
subject to the terms, conditions and further adjustments set forth in this
Section 8, Recipient shall pay to Provider with respect to each Calculation
Period and with respect to the Catch Up Period, an amount (such amount for each
such period, the “Net Revenue Fee” for such period) determined as follows.

(i) with respect to each Calculation Period, an amount equal to (1) the lesser
of (A) the Gross Fee Share Amount for such Calculation Period and (B) the REIT
Cap Amount for such Calculation Period, plus (2) the amount (if any) provided
for under Section 8(b) for such Calculation Period; and

(ii) with respect to the Catch Up Period, an amount equal to the lesser of
(A) the balance of any Carryover Amounts from the final three prior Calculation
Periods and (B) the REIT Cap Amount for the Catch Up Period.

(k) Carryover for payments limited by REIT Cap Amount. If the REIT Cap Amount
for a Calculation Period (referred to in this Section 8(b) as the current
Calculation Period) exceeds the Gross Fee Share Amount for such current
Calculation Period, the Net Revenue Fee for such current Calculation Period
shall be increased to the extent of the sum of any Carryover Amounts from any of
the three prior Calculation Periods, but only to the extent such increases do
not cause the Net Revenue Fee for the current Calculation Period (after taking
into account such increases) to exceed the REIT Cap Amount for such current
Calculation Period. Any increase in the Net Revenue Fee for the current
Calculation Period under this Section 8(b) shall be deemed to come first from
(and reduce) the available Carryover Amount from the third prior Calculation
Period, then from (and reduce) the available Carryover Amount from the second
prior Calculation Period, and then from (and reduce) the available Carryover
Amount from the immediately prior Calculation Period (i.e., Carryover Amounts
shall be used on a “first in, first out basis”).

(l) Aggregate Cap. In no event shall Recipient be obligated to pay to Provider
aggregate Net Revenue Fees in excess of eighty-million dollars ($80,000,000)
(the “Aggregate Cap”) for all Calculation Periods and the Catch Up Period.

(m) Net Revenue Fee Calculation. Recipient will within ten (10) days of the end
of each Quarterly Calculation Period, deliver to Provider a good faith estimate
of the Net Cole Capital Revenue and Other Income attributable to the Named NLRs
from the beginning of the applicable Calculation Period through the end of such
Quarterly Calculation Period together with a calculation of the Gross Fee Share
Amount for such Quarterly Calculation Period based

 

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on such good faith estimate as if the Calculation Period ended with the close of
such quarter. Recipient will within forty-five (45) days of the end of each
Quarterly Calculation Period, deliver to Provider its proposed calculation (the
“Final Gross Fee Calculation”) of the Quarterly Net Revenue Fee.

(n) Disputes. From and after delivery of each Final Gross Fee Calculation with
respect to the last quarter of the applicable Calculation Period, Recipient
shall provide Provider and its authorized representatives with reasonable access
during normal business hours to the books and records, personnel and advisors of
Recipient and its Subsidiaries solely for purposes reasonably related to the
determination of the final Gross Share Fee Amount for such Calculation Period.
For forty-five (45) days following its receipt of such Final Gross Fee
Calculation, Provider shall have the right to object to the calculation of the
Gross Fee Share Amount set forth in such Final Gross Fee Calculation. Any such
objection made by Provider shall be in writing and shall be accompanied by
materials showing in reasonable detail Provider’s basis and support for its
position, as well as the amount in dispute. Provider shall be deemed to have
waived any rights to object to such Final Gross Fee Calculation (and accepted
such Final Gross Fee Calculation in full) unless Provider furnishes its written
objection (an “Objection Notice”), together with reasonably detailed supporting
materials, to Recipient within such forty-five (45)-day period. Recipient and
Provider shall meet to resolve any differences in their respective positions
with respect to such Final Gross Fee Calculation. If Recipient and Provider are
unable to agree on the Final Gross Fee Calculation within thirty (30) days of
Recipient’s receipt of Provider’s Objection Notice, then the Chief Financial
Officer of Recipient and Chief Financial Officer of Provider will communicate in
good faith to resolve the issue. If these individuals cannot resolve all
disputed matters set forth within the Objection Notice within ten (10) Business
Days, then within thirty (30) days thereafter, Provider and Recipient shall
submit for resolution such matters remaining in dispute to a
nationally-recognized independent accounting or financial consulting firm
mutually agreed by Provider and Recipient (the “Neutral Arbitrator”) shall
resolve any remaining disagreements, except to the extent such disagreements
rely on an interpretation of any Law or this Agreement. The Neutral Arbitrator
shall act as an arbitrator to resolve (based solely on the written presentations
of Recipient and Provider and not on independent review) only those matters
submitted to it in accordance with the preceding sentence. Recipient and
Provider shall direct the Neutral Arbitrator to render a resolution of all such
disputed matters within thirty (30) days after its engagement or such other
period agreed upon in writing by Recipient and Provider. In resolving the
disputed matters, the Neutral Arbitrator shall be bound by, and resolve the
disputed items in accordance with, the provisions of this Section 8(e) and may
not assign a value to any item greater than the greatest value claimed for such
item or less than the smallest value claimed for such item either by Recipient
in the Final Gross Fee Calculation or by Provider in the Objection Notice. The
resolution of the Neutral Arbitrator shall be set forth in a written statement
delivered to Recipient and Provider and, absent Fraud, intentional misconduct or
arithmetical error, shall be final, binding, conclusive and non-appealable for
all purposes hereunder. All fees and expenses relating to the work performed by
the Neutral Arbitrator shall be allocated equally between Recipient, on the one
hand, and Provider, on the other hand, and all other costs and expenses incurred
by the Parties in connection with resolving any dispute hereunder before the
Neutral Arbitrator shall be borne by the Party incurring such cost or expense.
For the avoidance of doubt, if Provider fails to timely furnish an Objection
Notice regarding a Final Gross Fee Calculation as provided above, then such
Final Gross Fee Calculation as determined by Recipient shall be binding and
final for purposes of this Agreement.

 

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(o) Timing of Payment. On the tenth (10th) Business Day following (i) the final
resolution (by the Neutral Arbitrator, or as a result of the failure by Provider
to timely furnish an Objection Notice, as applicable) of the Final Gross Fee
Calculation with respect to the last quarter of the applicable Calculation
Period or (ii) the end of the Catch Up Period, and subject to Recipient’s
receipt of the REIT Cap Amount for the applicable Calculation Period or the
Catch Up Period from Provider, Recipient will pay the Net Revenue Fee (if any)
for such Calculation Period or the Catch Up Period by wire transfer of
immediately available funds to a bank account designated in writing by Provider
(such designation to be made at least two Business Days prior to such payment).

(p) Operation of the Business. Subject to the terms of this Agreement and the
Purchase and Sale Agreement, Recipient shall have sole discretion with regard to
all matters relating to the operation of the business of Recipient and its
Subsidiaries. Recipient acknowledges that it is its current intention to
maintain the “Cole” brand and net lease investment products during the term of
this Agreement, subject to the obligation of the Advisors to manage the
operations of each Named NLRs in the best interests of such Named NLR and its
investors. In the event of a sale or other disposition of all or substantially
all of the Company Business (whether through a sale, license or other
disposition of assets or of ownership interests in Recipient or any other
entity, by merger or otherwise), Recipient shall take all actions reasonably
necessary to cause the purchaser related thereto, or any of its Subsidiaries, to
assume or otherwise be bound by the obligations of Recipient set forth in this
Section 8.

(q) No Transfer. The Parties understand and agree that (i) Provider’s contingent
right to receive payment of any Net Revenue Fee hereunder shall not be
represented by any form of certificate or other instrument, is not transferable,
and does not constitute an equity or ownership interest in Recipient or any of
its Affiliates, (ii) Provider shall not have any rights as a securityholder of
Recipient or any of its Affiliates as a result of its contingent right to
receive payment of any Net Revenue Fee hereunder, and (iii) no interest is
payable with respect to any payment of a Net Revenue Fee under this Agreement.

(r) Year End Accrual. For the avoidance of doubt, the Parties acknowledge and
agree that (i) so long as this Agreement has not been previously terminated
under Section 11(a)(ii), Provider’s entitlement to the Net Revenue Fee for a
Calculation Period (or portion thereof), and any Carryover Amount with respect
to such Calculation Period that may become payable in accordance with this
Agreement, shall not require any performance of services by Provider following
the close of such Calculation Period (or portion thereof), and (ii) the
provisions relating to calculation and payment of such Net Revenue Fee following
the close of such Calculation Period (or portion thereof) are purely for
administrative convenience of the Parties.

(s) Delivery of REIT Cap Amount; Interpretation. Within forty-five (45) days of
the end of a Calculation Period or the Catch Up Period, Provider shall deliver
to Recipient its determination of the REIT Cap Amount for such Calculation
Period or the Catch Up Period, and shall certify to Recipient that such REIT Cap
Amount has been reviewed by VEREIT, Inc. and the certified public accountants
that assist VEREIT, Inc. in the preparation of

 

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its U.S. federal income tax returns for such Calculation Period or the Catch Up
Period (the “REIT Accountants”). Provider may not thereafter change the REIT Cap
Amount for such Calculation Period or the Catch Up Period (including as a result
of any adjustments to the amount or character of gross income of VEREIT, Inc. on
audit or otherwise). The Parties acknowledge and agree that the definition of
REIT Cap Amount, related definitions, and the provisions limiting payments to
the applicable REIT Cap Amounts are intended limit the Net Revenue Fees as
necessary (but no more than necessary) so that such fees do not cause VEREIT,
Inc. to fail the income test requirements necessary for qualification as a real
estate investment trust under the Code (a “REIT”), and such provisions shall be
interpreted consistent with such intent. In the event of a change in applicable
law with respect to VEREIT, Inc.’s qualification as a REIT, Recipient agrees to
consider in good faith any modification to the provisions of this Section 8
proposed by Provider in order to preserve VEREIT, Inc.’s status as a REIT.

(t) Definitions. For purposes of this Section 8:

(i) “Calculation Period” means each of the calendar years ending on December 31,
2018, December 31, 2019, December 31, 2020, December 31, 2021, December 31, 2022
and December 31, 2023, as applicable.

(ii) “Carryover Amount” means initially with respect to each Calculation Period
an amount equal to the excess (if any) of the Gross Fee Share Amount for such
Calculation Period over the REIT Cap Amount for such Calculation Period. To the
extent that the Net Revenue Fee for a future Calculation Period is increased
under Section 8(b) on account of the Carryover Amount for a Calculation Period,
the Carryover Amount for such Calculation Period shall be reduced by the amount
of such increase.

(iii) “Catch Up Period” means the calendar year ending December 31, 2024.

(iv) “Gross Fee Share Amount” means with respect to a Calculation Period forty
percent (40%) of the excess of (x) the Net Cole Capital Revenue and Other Income
attributable to the Named NLRs for such Calculation Period minus
(y) seventy-five million dollars ($75,000,000).

(v) “Named NLRs” means, collectively, Cole Credit Property Trust IV, Inc., Cole
Credit Property Trust V, Inc. (“CCPT V”), Cole Credit Property Trust VI, Inc.,
Cole Office & Industrial REIT (CCIT II), Inc., Cole Office & Industrial REIT
(CCIT III), Inc., Cole Anchored Center Trust, Inc., Cole Real Estate Income
Strategy (Daily NAV), Inc. (“INAV”), and any “follow on” net lease fund
sponsored by or managed by, or whose interests are distributed by, Recipient or
its Affiliates.

(vi) “Net Cole Capital Revenue and Other Income” means the following
calculation, prepared in accordance with GAAP consistent with the Financial
Information: (A) “Total Cole Capital Revenues” (which is the sum of (x)
“Offering-related fees and reimbursements,” plus (y) “Transaction

 

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service fees and reimbursements,” plus (z) “Management fees and
reimbursements”), minus (B) “Cole Capital Reallowed fees and commissions,” minus
(C) “Expense reimbursements from managed REITs recorded as revenue,” plus (D)
“Other Income.”

(vii) “REIT Cap Amount” for any Calculation Period or the Catch Up Period means
the maximum amount of the Net Revenue Fee that could be included in Provider’s
gross income for U.S. federal income tax purposes for such Calculation Period or
the Catch Up Period without causing VEREIT, Inc. to fail to meet the
requirements of Sections 856(c)(2) and (3) of the Internal Revenue Code of 1986,
as amended (the “Code”), determined as if (i) such amount did not constitute
Qualifying Income, (ii) Section 856(c)(2) of the Code were modified by replacing
the reference to “95 percent” in the first line thereof with “95.5 percent,” and
(iii) Section 856(c)(3) of the Code were modified by replacing the reference to
“75 percent” in the first line thereof with “75.5 percent.” The REIT Cap Amount
for each Calculation Period or the Catch Up Period shall be determined in the
same manner used by VEREIT, Inc. for purposes of preparing its IRS Form
1120-REIT for such year, shall take into account any amount paid under Section 7
for such Calculation Period, and shall not take into account any amount payable
under Section 12(b) (or that would be payable but for the provisions of
Section 12(c)) for such Calculation Period or the Catch Up Period.

(viii) “Qualifying Income” means income described in Sections 856(c)(2)(A)
through (I) or 856(c)(3)(A) through (I) of the Code.

(ix) “Quarterly Calculation Period” means each calendar quarter of each
Calculation Period.

(u) Termination. Unless terminated earlier in accordance with Section 11(a), the
obligations of each Party pursuant to this Section 8 shall terminate upon the
payment by Recipient to Provider of aggregate Net Revenue Fees in an amount
equal to the Aggregate Cap (such date of termination, the “Net Revenue Fee End
Date”).

9. [Reserved].

10. Independent Contractor. Each of Provider and its Affiliates shall be an
independent contractor with respect to the provision of Services hereunder and
shall have no duties or obligations under this Agreement beyond those expressly
provided for in this Agreement. None of Provider and its Affiliates, on the one
hand, and Recipient and its Affiliates, on the other hand, are partners, joint
venturers, fiduciaries or agents of each other, and nothing contained herein
will create any agency, partnership, joint venture, fiduciary or similar
relationship among them. Neither Party shall have any authority or ability,
except as otherwise expressly provided in writing, to enter into agreements for,
or otherwise to bind, the other Party or its Affiliates. None of the actions
taken by Provider and its Affiliates in connection with this Agreement shall be
deemed to give Recipient or its Affiliates any ownership or other rights in any
assets, properties or rights of Provider or its Affiliates.

 

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11. Termination.

(v) Except as provided in Section 11(d), this Agreement shall terminate with
respect to each Service upon the applicable Termination Date, and in its
entirety on the Termination Date with respect to the last of the Services,
unless terminated earlier by:

(i) the mutual written agreement of the Parties;

(ii) either Party upon the Willful Material Breach, gross negligence or willful
misconduct of the other Party (the “Defaulting Party”) in the performance of its
obligations under this Agreement which, in the case of a Willful Material
Breach, is not cured by the Defaulting Party within thirty (30) calendar days
after written notice of such Willful Material Breach is given by such Party to
the Defaulting Party (or such longer period as may be reasonably necessary to
complete such cure; provided, however, that the Defaulting Party has commenced
to cure such default within such 30-day period and is diligently pursuing the
completion thereof); or

(iii) either Party by written notice given to the other Party if such other
Party shall become insolvent, make an assignment for the benefit of creditors or
shall file for or otherwise become subject to any receivership, reorganization,
liquidation, bankruptcy or other similar proceeding.

(w) Recipient may terminate this Agreement with respect to all or any portion of
any Service being provided to it hereunder other than Research Services (a
“Terminated Service”) by giving written notice of such termination (a “Cut-Off
Notice”) to Provider, in which case the applicable Service shall terminate on
the calendar month end first occurring at least forty-five (45) days after
Provider’s receipt of such Cut-Off Notice. From and after such Termination Date,
neither Party shall have any obligation to provide or pay for the Terminated
Service specified in the Cut-Off Notice, except for any payments for such
Terminated Service owed at such time.

(x) Any termination of this Agreement shall be without prejudice to any rights
and obligations of the Parties that have vested prior to the effective date of
such termination, including the right to payments for Services previously
provided.

(y) Notwithstanding the foregoing, the Parties’ respective obligations with
respect to each of the following shall survive any Termination Date:

(i) any unpaid amounts for services provided prior to the effective date of
termination under Section 7 (Reimbursement Fees);

(ii) Section 8 (Net Revenue Fees),

(iii) Section 12 (Indemnification),

(iv) Section 22 (Confidentiality),

 

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(v) Section 24 (Taxes), and

(vi) Section 25 (Employees);

provided, that notwithstanding anything in this Agreement to the contrary, upon
a termination of this Agreement by Recipient pursuant to Section 11(a)(ii) and
subject to Section 8(l), Recipient’s obligations with respect to Section 8 (Net
Revenue Fees) shall survive only to the extent of unpaid amounts for Calculation
Periods (or portions thereof) up to the date of such termination (including
Carryover Amounts for such Calculation Periods).

(z) For purposes of this Agreement, the term “Willful Material Breach” means an
act or a failure to act by such Party with the actual knowledge that the taking
of such act or failure to take such act would, or would be reasonably expected
to, cause or result in a material breach of this Agreement and does actually
cause or result in a material breach of this Agreement.

12. Indemnification.

(aa) Indemnification by Provider. Provider, on behalf of itself and its
successors and assigns, jointly and severally agrees to indemnify, defend and
hold harmless Recipient and each of its Affiliates, each of their respective
officers, directors, employees, agents and representatives and each of the
heirs, executors, successors and assigns of any of the foregoing from, against,
and in respect of any and all Losses suffered or incurred by any of them after
the Closing to the extent arising out of or attributable to (i) to the extent
related to any Services provided with respect to a Named NLR that constitute
services under the applicable Advisory Agreement, any matter that constitutes
bad faith, fraud, misfeasance, misconduct, negligence or reckless disregard of
its duties by Provider in the provision of such Services, (ii) to the extent
related to any other Services hereunder, any matter that constitutes gross
negligence or willful misconduct by Provider or its Affiliates in the provision
of such Services and (iii) any material breach of this Agreement by Provider or
its Affiliates.

(bb) Indemnification by Recipient. Recipient, on behalf of itself and its
successors and assigns, jointly and severally agrees to indemnify, defend and
hold harmless Provider and each of its Affiliates, each of their respective
officers, directors, employees, agents and representatives and each of the
heirs, executors, successors and assigns of any of the foregoing from, against,
and in respect of any and all Losses suffered or incurred by any of them after
the Closing to the extent arising out of or attributable to (i) to the extent
related to any Services provided with respect to a Named NLR that constitute
services under the applicable Advisory Agreement, any matter as to which
Provider and its Affiliates would be entitled to indemnification from the Named
NLRs pursuant to the applicable Advisory Agreement with respect to such Services
if Provider were the Advisor, (ii) to the extent related to any other Services
hereunder, any matter other than a matter that constitutes gross negligence or
willful misconduct by Provider or any of its Affiliates in the provision of such
Services or material breach by Provider or any of its Affiliates of this
Agreement and (iii) any material breach of this Agreement by Recipient or its
Affiliates; provided that absent Provider’s receipt of a ruling from the IRS or
opinion from counsel contemplated by Section 12(c), the maximum amount of any

 

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payment required under this Section 12(b) or any installment thereof shall be
limited to such amount that can be paid to Provider without causing VEREIT, Inc.
to fail to meet the requirements of Sections 856(c)(2) and (3) of the Code (the
“REIT Income Requirements”) for the applicable taxable year determined in
accordance with Section 12(c).

(cc) Recipient’s obligations to pay any amount to Provider under Section 12(b)
shall be subject to receipt from Provider or its counsel of one or more of the
letters described in this Section 12(c). Upon receipt of one or more of such
letters, Recipient shall pay such amount due under Section 12(b) or portions of
such amount determined as follows. In the event Recipient receives a letter from
Provider indicating the maximum amount that can be paid by Recipient to Provider
without causing VEREIT, Inc. to fail to meet the REIT Income Requirements
determined as if the payment of such amount did not constitute Qualifying Income
and taking into account any payments under Section 7 and Section 8 (which letter
shall certify that the REIT Accountants have reviewed the calculation of such
amount), or a subsequent letter from Provider delivered within 30 days of the
close of the applicable taxable year increasing that amount (which letter also
shall certify that the REIT Accountants have reviewed such revision), then
Recipient shall pay the lesser of (i) the amount indicated in such letter(s) and
(ii) the amount determined pursuant to Section 12(b) without regard to the
proviso at the end thereof (the “Initial Indemnity Amount”). In the event that
the amount paid in accordance with the prior sentence is less than the Initial
Indemnity Amount, within 45 days of the close of each of the three calendar
years following the calendar year in which Provider included such payment in
gross income for U.S. federal income tax purposes, and subject to receipt of a
letter from Provider following the close of the applicable calendar year
indicating the maximum amount that can be paid by Recipient to Provider with
respect to such calendar year without causing VEREIT, Inc. to fail to meet the
REIT Income Requirements with respect to such calendar year (determined as if
the payment of such amount did not constitute Qualifying Income and taking into
account any payments under Section 7 and Section 8 (which letter shall certify
that the REIT Accountants have reviewed the calculation of such amount), and
determined after taking into account any Net Revenue Fees paid in such year and
any payments owed pursuant to Section 12(b) and this Section 12(c) arising in
such year), Recipient shall pay to Provider the lesser of (x) the amount
indicated in such letter and (y) any then unpaid balance of the Initial
Indemnity Amount. Notwithstanding the foregoing provisions of this
Section 12(c), in the event Recipient receives a letter from Provider’s counsel
indicating that VEREIT, Inc. received (A) a ruling from the IRS holding to the
effect that the payment of the Initial Indemnity Amount either constitutes
Qualifying Income or is excluded from gross income within the meaning of the
REIT Income Requirements, or (B) an opinion of counsel to the effect that the
payment of the Initial Indemnity Amount should either constitute Qualifying
Income or should be excluded from gross income within the meaning of the REIT
Income Requirements, then Recipient shall promptly pay any unpaid balance of the
Initial Indemnity Amount.

13. Binding Effect; Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either of the Parties
without the prior written consent of the other Party; provided that either Party
may assign this Agreement to any of its Affiliates so long as such Party remains
bound by its obligations under this Agreement.

14. Notices. All notices, requests, demands and other communications made under
or by reasons of this Agreement shall be in writing and shall be deemed given
and received (a) if delivered in person, on the date delivered, (b) if
transmitted by facsimile, on the date sent if sent

 

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by facsimile before 5:00 p.m. on a Business Day at the location of receipt and
otherwise the next following Business Day, (c) if delivered by an express
courier, on the next Business Day after mailing or (d) if transmitted by e-mail,
on the date received if received by electronic mail before 5:00 p.m. on a
Business Day at the location of receipt and otherwise the next following
Business Day, to the Parties at the following addresses (or at such other
address for a Party as is specified to the other Party by like notice):

(i) if to Recipient:

 

 

 

 

 

Attn.:                                                          

 

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

 

Sullivan & Cromwell LLP

1888 Century Park East, Suite 2100

Los Angeles, CA 90067

Attn.: Patrick S. Brown

Fax: 310-712-8800

Email: brownp@sullcrom.com

(ii) if to Provider:

 

 

 

 

 

Attn.:                                                        

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

 

Goodwin Procter LLP

100 Northern Avenue

Boston, MA 02210

Attn.: Gilbert G. Menna and Thomas J. LaFond

Fax: 617-801-8710

      617-649-1475

Email: GMenna@goodwinlaw.com;

        TLaFond@goodwinlaw.com

All invoices shall be delivered in the manner agreed upon by the Program
Managers.

 

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15. Entire Agreement. This Agreement (including the schedules, annexes and
exhibits hereto and the other agreements and instruments referred to herein),
together with the other Transaction Documents, constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
among the Parties with respect to the subject matter of this Agreement. The
Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring either
Party by virtue of the authorship of any of the provisions of this Agreement.

16. Severability. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.

17. No Third-Party Beneficiaries. Except as otherwise specifically set forth
herein, this Agreement is for the sole benefit of the Parties and their
permitted assigns, and nothing herein expressed or implied shall give or be
construed to give any Person, other than the Parties and such permitted assigns,
any legal or equitable rights hereunder. All references herein to the
enforceability of agreements with third Parties, the existence or non-existence
of third party rights, the absence of breaches or defaults by third parties, or
similar matters or statements, are intended only to allocate rights and risks
among the Parties and are not intended to be admissions against interest, give
rise to any inference or proof of accuracy, be admissible against either Party
by any third party, or give rise to any claim or benefit to any third party.

18. Amendment. This Agreement may be amended, restated, supplemented or
otherwise modified only by a written instrument signed by Recipient and
Provider.

19. Waiver. Each Party may, with respect to the other: (a) extend the time for
the performance of any of its obligations or other acts; or (b) waive compliance
with any of its agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
Party granting the waiver. No failure on the part of either Party to exercise,
and no delay in exercising, any right, power or remedy under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
such right, power or remedy by such Party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.

20. Governing Law; Waiver of Jury Trial. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware without regard to
principles of conflict of laws. Each of the Parties: (a) consents to the
exclusive personal jurisdiction of the state and federal courts sitting in the
State of New York in any action or proceeding arising out of or relating to this
Agreement or the transactions contemplated by this Agreement; (b) agrees that
all claims in respect of such action or proceeding may be heard and determined
in any such court; (c) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or

 

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other request for leave from any such court; and (d) agrees not to bring any
action or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby in any other court. Each of the Parties waives
any defense of inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety or other security that might be required
of the other Party with respect thereto. To the extent permitted by Applicable
Law, either Party may make service on the other Party by sending or delivering a
copy of the process to the Party to be served at the address and in the manner
provided for the giving of notices in Section 14. Nothing in this Section 20,
however, shall affect the right of either Party to serve legal process in any
other manner permitted by Applicable Law. RECIPIENT AND PROVIDER HEREBY
IRREVOCABLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OF RECIPIENT OR
PROVIDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF
AND THEREOF.

21. Specific Performance. The Parties agree that irreparable damage may occur if
any of the provisions of this Agreement are not performed in accordance with
their specific terms or are otherwise breached. It is accordingly agreed that
the Parties will be entitled, without the posting of a bond, to seek an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement, this being in addition
to any other remedy to which they are entitled hereunder. In the event that any
action or proceeding should be brought in equity to enforce the provisions of
this Agreement, neither Party shall allege, and each Party hereby waives the
defense, that there is an adequate remedy at law.

22. Confidentiality.

(dd) For purposes of this Agreement, the term “Confidential Information” shall
mean, (i) with respect to Recipient, technical, scientific, trade secret or
other proprietary information related to Recipient, its Affiliates, its or its
Affiliates’ business, the Company Business or the Services provided hereunder
that Provider, its Affiliates or representatives thereof may come into contact
with in the performance of Provider’s obligations hereunder, whether oral,
written or electronic, together with any reports, analyses, summaries,
interpretations, compilations, forecasts, financial statements, memoranda,
notes, studies or any other written or electronic materials prepared by or for
Provider, its Affiliates or representatives thereof that contain, reflect or are
based upon or generated from such information and (ii) with respect to Provider,
technical, scientific, trade secret or other proprietary information related to
Provider, its Affiliates or its or its Affiliates’ business that Recipient, its
Affiliates or representatives thereof may come into contact with as a result of
provision by Provider of the Services hereunder, whether oral, written or
electronic, together with any reports, analyses, summaries, interpretations,
compilations, forecasts, financial statements, memoranda, notes, studies or any
other written or electronic materials prepared by or for Recipient, its
Affiliates or representatives thereof that contain, reflect or are based upon or
generated from such information.

 

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(ee) Confidential Information shall not include information that (i) is or
becomes generally available to the public other than as a result of disclosure
made by Provider or Recipient, as applicable, their Affiliates or
representatives thereof in violation of this Agreement or (ii) is or becomes
available to Provider or Recipient, as applicable, any of their Affiliates or
representatives thereof on a non-confidential basis from a source other than
such Party’s own files or personnel or the other Party or its Affiliates,
provided that such source is not known by Provider or Recipient, as applicable,
to be bound by confidentiality agreements with the other Party or its Affiliates
or by legal, fiduciary or ethical constraints on disclosure of such information
or (iii) is requested to be disclosed by a regulator with jurisdiction over the
disclosing Party or (iv) is required to be disclosed pursuant to a governmental
order or decree or other legal requirement; provided that in the case of clause
(iii) and (iv) the disclosing Party shall (x) to the extent legally permitted,
give the non-disclosing Party prompt notice thereof prior to such disclosure
and, at the request of the non-disclosing Party, shall cooperate with the
disclosing Party in maintaining the confidentiality of such information,
including seeking a protective order or other similar order, and (y) shall only
disclose the portion of Confidential Information that is required (or, in the
case of clause (iii), requested) to be disclosed.

(ff) Each Party shall (i) protect the Confidential Information of the other
Party by using the same degree of care, but no less than a reasonable degree of
care, to prevent the unauthorized use, dissemination or publication of the
Confidential Information as such Party uses to protect its own confidential
information of a like nature, (ii) use such Confidential Information for the
sole purpose of performing its obligations under this Agreement and the other
Transaction Documents or enforcing its rights under this Agreement and the
Transaction Documents, and otherwise in accordance with the restrictions set
forth in this Agreement and (iii) not disclose such Confidential Information to
any third party without prior written consent of the other Party.

23. No Cross-Default. No default or breach under the Purchase and Sale Agreement
or default or breach under, or termination of, any other Transaction Document
(other than this Agreement), shall in and of itself cause a default or breach
under, or give either Party a right to terminate this Agreement or any rights or
obligations herein.

24. Taxes. All charges and fees to be paid to Provider under this Agreement are
exclusive of any applicable taxes required by law to be collected from Recipient
(including withholding, sales, use, excise, or services tax (but excluding any
income tax), which may be assessed on or result from the provision of Services
under this Agreement). Recipient may be invoiced by Provider and will pay any
such applicable taxes. In the event that any such applicable tax withholding,
sales, use, excise, or services tax is assessed on the provision of any of the
Services under this Agreement, Recipient will pay directly, reimburse or
indemnify Provider for such tax; provided, however, that the foregoing provision
shall not apply to any penalties or interest relating to any applicable tax that
was not collected in keeping with industry practice. However, if the assessment
is due to exemption documentation that is supplied by Recipient and which is
determined to be invalid, then Provider may collect applicable penalties and
interest. The Parties will cooperate with each other in determining the extent
to which any tax is due and owing under the circumstances and to reduce the
amount of tax so due and owing, and shall provide and make available to each
other any resale certificate, information regarding out-of-state use of
materials, services or sale, and other exemption certificates or information
reasonably requested by either Party.

 

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25. Employees. Each of Provider and Recipient shall be solely responsible for
payment of compensation to its employees and for any injury to them in the
course of their employment. Each of Provider and Recipient shall assume full
responsibility for payment of all federal, state and local taxes or
contributions imposed or required under unemployment insurance, social security
and income tax laws with respect to its employees.

26. Counterparts. This Agreement may be executed in two (2) or more counterparts
(including by facsimile or other electronic transmission), 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.

27. Fulfillment of Obligations. Any obligation of either Party to the Party
under this Agreement, which obligation is performed, satisfied or fulfilled
completely by an Affiliate of such Party, shall be deemed to have been
performed, satisfied or fulfilled by such Party.

 

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IN WITNESS WHEREOF, the Parties to this Agreement have caused this Agreement to
be executed as of the date first above written.

 

COLE CAPITAL ADVISORS, INC.

By:  

 

 

Name:

Title:

VEREIT OPERATING PARTNERSHIP, L.P.

 

By:

 

 

 

Name:

Title:

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Schedule A

Advisory Agreements

 

1. Advisory Agreement, dated as of January 20, 2012, by and between Cole Credit
Property Trust IV, Inc. and Cole REIT Advisors IV, LLC, as amended on
February 23, 2012.

 

2. Advisory Agreement, dated as of March 17, 2014, by and between Cole Credit
Property Trust V, Inc. and Cole REIT Advisors V, LLC, as amended on August 2,
2017.

 

3. Advisory Agreement, dated as of August 27, 2013, by and between Cole Office &
Industrial REIT (CCIT II), Inc. and Cole Corporate Income Advisors II, LLC, as
amended on November 12, 2013.

 

4. Advisory Agreement, dated as of September 22, 2016, by and between Cole
Office & Industrial REIT (CCIT III), Inc. and Cole Corporate Income Advisors
III, LLC, as amended on June 23, 2017.

 

5. Amended and Restated Advisory Agreement, dated as of August 26, 2013, by and
among Cole Real Estate Income Strategy (Daily NAV), Inc., Cole Real Estate
Income Strategy (Daily NAV) Operating Partnership, LP and Cole Real Estate
Income Strategy (Daily NAV) Advisors, LLC.