Document:

vereit9302019-ex101

                                                                         Exhibit 10.1      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 1 of 60                                                             EXECUTION COPY   UNITED STATES DISTRICT COURT  SOUTHERN DISTRICT OF NEW YORK                                         x  In re AMERICAN REALTY CAPITAL         :  Civil Action No. 1:15-mc-00040-AKH  PROPERTIES, INC. LITIGATION           :                                        :  CLASS ACTION                                        :  This Document Relates To:             :                                        :        ALL ACTIONS.                    :                                        x                            STIPULATION OF SETTLEMENT 

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 2 of 60                                                              EXECUTION COPY          This Stipulation of Settlement, dated September 30, 2019 (the “Stipulation”), is made and   entered into by and among the following: (i) Lead Plaintiff TIAA (“TIAA”), on behalf of itself and   the Class, by and through Lead Counsel in the Litigation; and (ii) VEREIT, Inc. (f/k/a American   Realty  Capital  Properties,  Inc.  (“ARCP”))  (“VEREIT,  Inc.”)  and ARC  Properties  Operating   Partnership, L.P. (n/k/a VEREIT Operating Partnership, L.P.) (“VEREIT OP” and, with VEREIT,   Inc., collectively “VEREIT”); Nicholas S. Schorsch (“Schorsch”); Brian S. Block (“Block”); David   Kay (“Kay”); Lisa P. McAlister (“McAlister”); Scott J. Bowman; Peter M. Budko (“Budko”); Brian   D. Jones; William M. Kahane (“Kahane”); Edward M. Weil (“Weil”); Lisa Beeson (“Beeson”);   Scott P. Sealy, Sr.; Thomas A. Andruskevich; Leslie D. Michelson; Edward G. Rendell; William G.   Stanley; Bruce D. Frank; AR Capital, LLC (“AR Capital”); ARC Properties Advisors, LLC (“ARC   Advisors”); Realty Capital Securities, LLC; Grant Thornton LLP (“Grant Thornton”); and Barclays   Capital Inc., BMO Capital Markets Corp., Capital One Securities, Inc., Citigroup Global Markets   Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Janney Montgomery Scott,   LLC, JMP Securities LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc., Ladenburg   Thalmann & Co. Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Mizuho Securities USA   LLC (f/k/a Mizuho Securities USA Inc.), Morgan Stanley & Co. LLC, Piper Jaffray & Co., PNC   Capital Markets LLC, RBS Securities Inc., Robert W. Baird & Co. Incorporated, and Wells Fargo   Securities,  LLC  (collectively,  the  “Third-Party  Underwriter  Defendants”  and  with  all  other   defendants listed in this clause (ii), collectively, the “Defendants”), by and through their counsel of   record in the Litigation.1  The Stipulation is intended to fully, finally, and forever resolve, discharge,                                                        1  All capitalized terms not otherwise defined shall have the meanings ascribed to them in §IV.1   herein.                                         - 1 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 3 of 60                                                              EXECUTION COPY    and settle the Released Claims, subject to the approval of the Court and the terms and conditions set    forth in this Stipulation.    I.    THE LITIGATION         The Litigation is currently pending in the United States District Court for the Southern    District of New York before the Honorable Alvin K. Hellerstein (the “Court”).  The initial complaint   in this action was filed on October 30, 2014.  On February 13, 2015, the Court appointed TIAA as   Lead Plaintiff and Robbins Geller Rudman & Dowd LLP (“Robbins Geller”) as Lead Counsel.          Plaintiffs’ Third Amended Class Action Complaint for Violations of the Federal Securities    Laws (“Complaint”) was filed on September 30, 2016.  The Complaint alleges that the Defendants    violated the Securities Act of 1933 and/or the Securities Exchange Act of 1934 by making materially    false and misleading statements or omitting to state material facts necessary to make statements    made by Defendants in public filings and other public statements not misleading.  Among other    things, Plaintiffs allege that VEREIT improperly and artificially inflated its reported Adjusted Funds    From Operations (“AFFO”), a common measurement of REIT performance.  Plaintiffs further allege    that when the true facts regarding the alleged misstatements were revealed, artificial inflation was    removed from the price of ARCP Securities damaging members of the Class.  Defendants deny each    and all of Plaintiffs’ allegations.  Defendants contend that they did not make any false or misleading    statements and that they disclosed all information required to be disclosed by the federal securities    laws.          The parties vigorously litigated this case for nearly five years.  The parties briefed and argued   two rounds of motions to dismiss the Class’s claims.  After the Court denied the motions to dismiss   in substantial part, the parties engaged in extensive fact and class-related discovery which included    the exchange of over 12 million pages of documents and the taking of more than 50 depositions,                                         - 2 -    

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 4 of 60                                                             EXECUTION COPY   including Class Representatives, Defendants, and non-parties.  Additionally, after briefing and a full-  day evidentiary hearing where the Court heard evidence from the parties’ respective expert witnesses   concerning the applicability of the fraud-on-the-market reliance presumption and the Plaintiffs’   ability to construct a damages model in this matter, the Court certified the Class on August 31, 2017.    On that same day, the Court also granted summary judgment in favor of Defendants on Count VII of   the Complaint, a claim under Section 11 of the Securities Act of 1933 based on a September 2014   registration of senior notes.  After the close of fact discovery on December 28, 2018, the parties   briefed and argued 13 motions for summary judgment, which were granted in part and denied in part   on May 10, 2019.  After summary judgment was resolved, the parties then engaged in expert   discovery, exchanging reports from, and deposing, 21 experts who submitted reports.  In advance of   the trial in this matter, set for January 21, 2020, the parties also briefed 45 motions in limine and 17   motions to exclude expert testimony under Daubert.         During the course of the Litigation, the parties engaged a neutral third-party mediator and   held direct settlement discussions.  Over a period of nearly three years, Lead Counsel met in person   with the mediator and counsel for one or more Defendants on multiple occasions, and convened   various teleconferences.  On August 21, 2019, the Settling Parties agreed to settle the Litigation in   return for a cash payment of $1,025,000,000 for the benefit of the Class, including a $738.5 million   payment by VEREIT, $225 million payment by or caused by AR Capital, ARC Advisors, Schorsch,   Budko, Kahane, and Weil (inclusive of the thirty-one million, nine hundred seventy-two thousand,   nine hundred and thirty-four dollars ($31,972,934) already deemed to be in VEREIT’s custody,   which $31,972,934 VEREIT will cause to be contributed to the Settlement Fund), $12.5 million   payment by Block and $49 million payment by Grant Thornton, subject to approval by the Court.                                          - 3 -   

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 5 of 60                                                             EXECUTION COPY   This Stipulation (together with the Exhibits hereto) reflects the final and binding agreement between   the Settling Parties.   II.   LEAD PLAINTIFF’S CLAIMS AND THE BENEFITS OF SETTLEMENT        Lead Plaintiff and Lead Counsel believe that the claims asserted in the Litigation have merit   and that the evidence developed to date supports the claims asserted therein.  However, Lead   Plaintiff and Lead Counsel recognize the expense and risk of continued proceedings necessary to   prosecute the Litigation against Defendants through trial and post-trial appeals.  Lead Plaintiff and   Lead  Counsel  also  have  taken  into  account  the  uncertain  outcome  and  the  risk  of  litigation,   especially in complex actions such as this Litigation, as well as the difficulties and delays inherent in   such litigation.  Lead Plaintiff and Lead Counsel also are mindful of the inherent problems of proof   under and possible defenses to the securities law violations asserted in the Litigation.  Lead Plaintiff   and Lead Counsel believe that the Settlement set forth in this Stipulation confers substantial benefits   upon the Class.  Based on their evaluation, Lead Plaintiff and Lead Counsel have determined that the   Settlement set forth in this Stipulation is in the best interests of Lead Plaintiff and the Class.   III.  DEFENDANTS’ DENIALS OF WRONGDOING AND LIABILITY        Throughout this  Litigation,  Defendants  have  denied,  and  continue  to  deny,  any  and  all   allegations of fault, liability, wrongdoing, or damages whatsoever arising out of any of the conduct,   statements, acts, or omissions alleged, or that could have been alleged, in the Litigation.  Defendants   also have denied, and continue to deny, among other allegations, the allegations that Plaintiffs or the   Class have suffered any damages, or that Plaintiffs or the Class were harmed by the conduct alleged   in the Litigation or that could have been alleged as part of the Litigation.  In addition, Defendants   maintain that they have meritorious defenses to all claims alleged in the Litigation.  Defendants’   decision to settle the Litigation is based on the conclusion that it is desirable that the Litigation be   fully and finally settled in the manner and upon the terms and conditions set forth in this Stipulation,                                       - 4 -   

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 6 of 60                                                              EXECUTION COPY    and that it would be beneficial to avoid the burden, inconvenience, and expense associated with    continuing the Litigation, and the uncertainty and risks inherent in any litigation, especially in    complex cases like this Litigation.2    IV.   TERMS OF THE STIPULATION AND AGREEMENT OF SETTLEMENT         NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among Lead    Plaintiff (for itself and the Class Members) and Defendants, by and through their counsel, that,   subject to the approval of the Court pursuant to Rule 23(e) of the Federal Rules of Civil Procedure,   in consideration of the benefits flowing to the parties from the Settlement, the Litigation and the   Released Claims shall be finally and fully compromised, settled, and released, and the Litigation   shall be dismissed with prejudice, as to all Settling Parties, upon and subject to the terms and   conditions of this Stipulation, as follows:         1.    Definitions         As  used  in  this  Stipulation  the  following  terms,  when  capitalized,  have  the  meanings   specified below:         1.1   “AR Capital Parties” means AR Capital, ARC Advisors, Schorsch, Budko, Kahane,  and Weil.        1.2   “AR Capital Parties’ Counsel” means Kellogg, Hansen, Todd, Figel & Frederick,  P.L.L.C. (“Kellogg”) and Paul, Weiss, Rifkind, Wharton & Garrison LLP (“Paul, Weiss”), or any   successor counsel to any or all of the AR Capital Parties should Kellogg and/or Paul, Weiss no   longer be providing counsel to any or all of the AR Capital Parties in connection with the matters   herein.                                                       2  Notwithstanding the foregoing, McAlister, and only McAlister, acknowledges, as she has at   other times in the Litigation, her plea of guilty to certain offenses in United States v. Lisa McAlister,   16-cr-00653 (S.D.N.Y.), and does not intend anything in the foregoing to be inconsistent with her   plea.                                         - 5 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 7 of 60                                                              EXECUTION COPY          1.3   “ARCP Securities” means the common stock, preferred stock, and debt securities of    American  Realty  Capital  Properties,  Inc.  (n/k/a  VEREIT,  Inc.)  or  ARC  Properties  Operating    Partnership, L.P. (n/k/a VEREIT Operating Partnership, L.P.).         1.4   “Authorized Claimant” means any Class Member who submits a valid claim that is  accepted for payment by the Claims Administrator.        1.5   “Block’s Counsel” means Steptoe & Johnson LLP, or any successor counsel to Block   should Steptoe & Johnson LLP no longer be providing counsel to Block in connection with the   matters herein.         1.6   “Claim(s)” means a paper claim submitted on a Proof of Claim and Release form or  an electronic claim that is submitted to the Claims Administrator.        1.7   “Claims Administrator” means Gilardi & Co. LLC.        1.8   “Class” means all Persons who purchased or otherwise acquired ARCP Securities   between February 28, 2013 and October 29, 2014.  Excluded from the Class are:  Defendants,   members of the immediate families of each of the Defendants, any person, firm, trust, corporation,   officer, director or other individual or entity in which any Defendant has a controlling interest or   which is related to or affiliated with any Defendant, and the legal representatives, agents, affiliates,   heirs, successors-in-interest, or assigns of any such excluded party.  For the avoidance of doubt, this   exclusion does not extend to: (1) any investment company or pooled investment fund in which a   Third-Party Underwriter Defendant may have a direct or indirect interest, or as to which its affiliates   may act as an advisor, but of which a Third-Party Underwriter Defendant or its respective affiliates   is not a majority owner or does not hold a majority beneficial interest; or (2) any employee benefit   plan as to which a Third-Party Underwriter Defendant or its affiliates acts as an investment advisor   or  otherwise  may  be  a  fiduciary;  provided,  however,  that  membership  in  the  Class  by  such   investment company, pooled investment fund or employee benefit plan is limited to transactions in                                         - 6 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 8 of 60                                                              EXECUTION COPY    ARCP Securities made on behalf of, or for the benefit of, persons other than persons that are    excluded from the Class by definition.  In other words, the Third-Party Underwriter Defendants    cannot make a claim on their own behalf for their ownership share in any of the above entities.  The    Class also excludes any person or entity that entered into a settlement agreement or otherwise    provided a release to any Defendant relating to or arising from the purchase or other acquisition of    ARCP Securities prior to October 29, 2014.  Also excluded from the Class is any Class Member that    validly and timely requested exclusion in accordance with the requirements set by the Court in    connection with the Notice of Pendency of Class Action previously provided to the Class.         1.9   “Class Member” or “Member of the Class” mean a Person who falls within the  definition of the Class as set forth in ¶1.8 above.        1.10  “Class Period” means the period between February 28, 2013 and October 29, 2014.        1.11  “Class Representatives” means Lead Plaintiff together with Sheet Metal Workers’  National Pension Fund, Union Asset Management Holding AG, Corsair Select 100 L.P., Corsair  Select Master Fund, Ltd., Corsair Capital Partners L.P., Corsair Select L.P., Corsair Capital Partners  100 L.P., Corsair Capital Investors, Ltd., the New York City Employees’ Retirement System, the  New York City Police Pension Fund, the New York City Police Officers’ Variable Supplements  Fund, the Board of Education Retirement System of the City of New York, the Teachers’ Retirement  System  of  the  City  of New  York,  the  Teachers’  Retirement  System  of  the  City  of  New  York  Variable A, the New York City Fire Department Pension Fund, the New York City Fire Officers’  Variable Supplements Fund, the New York City Fire Fighters’ Variable Supplements Fund, the City  of Tampa General Employees Retirement Fund, the IRA FBO John Esposito, Noah Bender, Simon  Abadi, Paul Matten and Mitchell and Bonnie Ellis.        1.12  “Defendants’  Counsel”  means,  collectively,  the  law  firms  of  Milbank  LLP  (“Milbank”); Morris, Manning & Martin, LLP; Becker, Glynn, Muffly, Chassin & Hosinski LLP;  Kellogg, Hansen, Todd, Figel & Frederick, P.L.L.C.; Shearman & Sterling LLP; Steptoe & Johnson  LLP; Weil, Gotshal & Manges LLP; Kirkland & Ellis LLP; Zuckerman Spaeder LLP; Petrillo Klein                                        - 7 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 9 of 60                                                              EXECUTION COPY    & Boxer LLP; Winget, Spadafora & Schwartzberg LLP; Paul, Weiss, Rifkind, Wharton & Garrison   LLP; and Sidley Austin LLP.         1.13  “Derivative Action” means the action captioned Witchko v. Schorsch, No. 1:15-cv- 06043-AKH pending in the United States District Court for the Southern District of New York.        1.14  “Derivative  Settlement”  means  the  settlement  entered  into  by  the  parties  in  the  Derivative Action pursuant to a stipulation submitted to the Court contemporaneously herewith.        1.15  “Effective Date,” or the date upon which this Settlement becomes “effective,” means  the first date by which all of the events and conditions specified in ¶7.1 of the Stipulation have been  met and have occurred or have been waived.        1.16  “Escrow Agent” means the law firm of Robbins Geller Rudman & Dowd LLP or its  successor(s).        1.17  “Final” means, with respect to any order or Judgment of the Court, that such order or   Judgment represents a final and binding determination of all issues within its scope and has not been   reversed, vacated, or modified in any way and is no longer subject to appellate review, either   because of disposition on appeal and conclusion of the appellate process or because of passage,   without action, of time for seeking appellate review.  Without limitation, an order or Judgment   becomes final when: (a) either no appeal therefrom has been filed and the time has passed for any   notice of appeal to be timely filed therefrom; or (b) an appeal has been filed and either (i) the court   of appeals has either affirmed the order or Judgment or dismissed that appeal and the time for any   reconsideration or further appellate review has passed; or (ii) a higher court has granted further   appellate review and that court has either affirmed the underlying order or Judgment or affirmed the   court of appeals’ decision affirming the Judgment or dismissing the appeal.  For purposes of this   paragraph, an “appeal” shall include any motion for reconsideration or rehearing or petition for a   writ of certiorari or other writ that may be filed in connection with approval or disapproval of this   Settlement.  Any appeal or proceeding seeking subsequent judicial review pertaining solely to an                                        - 8 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 10 of 60                                                              EXECUTION COPY    order issued with respect to: (i) attorneys’ fees, costs, or expenses or awards to Lead Plaintiff or    other Class Representatives, (ii) the Plan of Allocation (as submitted or subsequently modified), or    (iii) the procedures for determining Authorized Claimants’ recognized claims, shall not in any way    delay, affect, or preclude the time set forth above for the Judgment to become Final, or otherwise    preclude the Judgment from becoming Final.          1.18  “Grant Thornton’s Counsel” means Sidley Austin LLP or any successor counsel to   Grant  Thornton  should  Sidley  Austin  no  longer  be  providing  counsel  to  Grant  Thornton  in   connection with the matters herein.         1.19  “Judgment”  means  the  Order  and  Final  Judgment  to  be  rendered  by  the  Court,   substantially in the form attached hereto as Exhibit B, as well as any form of final judgment that may   be entered by the Court in a form other than the form attached hereto as Exhibit B and where none of   the Settling Parties elects to terminate this Settlement by reason of such variance, consistent with the   terms of this Stipulation.         1.20  “Lead Counsel” means the law firm of Robbins Geller Rudman & Dowd LLP.         1.21  “Lead Plaintiff” means Teachers Insurance and Annuity Association of America,   College  Retirement  Equities  Fund,  TIAA-CREF  Equity  Index  Fund, TIAA-CREF  Real  Estate    Securities Fund, TIAA-CREF Large Cap Value Index Fund, TIAA-CREF Small Cap Blend Index   Fund, TIAA-CREF Life Real Estate Securities Fund, TIAA-CREF Life Equity Index Fund, and   TIAA-CREF Bond Index Fund.         1.22  “Litigation” means the consolidated actions captioned In re American Realty Capital    Properties, Inc. Litigation, No. 1:15-mc-00040-AKH pending in the United States District Court for   the Southern District of New York.         1.23  “Net  Settlement  Fund”  means  the  Settlement  Fund  less:  (i) any  Court-awarded  attorneys’ fees, expenses, costs and charges (including awards to Plaintiffs pursuant to 15 U.S.C.  §78u-4(a)(4) in connection with their representation of the Class), and interest thereon; (ii) Notice                                         - 9 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 11 of 60                                                              EXECUTION COPY    and  Administration  Expenses;  (iii) Taxes  and  Tax  Expenses;  and (iv) other  Court-approved   deductions.         1.24  “Person(s)”  means  an  individual,  corporation  (including  all  its  divisions  and  subsidiaries thereof), limited liability corporation, professional corporation, partnership, limited  partnership, limited liability partnership, limited liability company, joint venture, association, joint  stock company, estate, legal representative, trust, unincorporated association, government or any  political subdivision or agency thereof, and any business or legal entity and all of their respective  spouses, heirs, beneficiaries, executors, administrators, predecessors, successors, representatives, or  assignees.        1.25  “Plaintiffs” means Lead Plaintiff and Class Representatives.        1.26  “Plaintiffs’ Counsel” means Lead Counsel and any attorney or firm who has appeared  in the Litigation on behalf of any of the Plaintiffs or the Class.        1.27  “Plan of Allocation” means a plan or formula of allocation of the Net Settlement  Fund whereby the Net Settlement Fund shall be distributed to Authorized Claimants.  Any Plan of  Allocation is not part of this Stipulation and neither Defendants nor their Related Parties shall have  any responsibility or liability with respect thereto.        1.28  “Proof  of  Claim  and  Release”  means  the  Proof  of  Claim  and  Release  form  for  submitting a Claim, which, subject to approval of the Court, shall be substantially in the form  attached hereto as Exhibit A-2.  A Class Member must complete and submit the Proof of Claim and  Release should that Class Member seek to share in a distribution of the Net Settlement Fund.        1.29  “Related Parties” means each Defendant’s respective present and former parents,   subsidiaries, divisions, controlling persons, associates, entities and affiliates and each and all of their   respective  present  and  former  employees,  members,  partners,  principals,  officers,  directors,   controlling shareholders, agents, attorneys, advisors (including financial or investment advisors),   accountants, auditors, consultants, underwriters, investment bankers, commercial bankers, entities    providing fairness opinions, general or limited partners or partnerships, limited liability companies,                                        - 10 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 12 of 60                                                              EXECUTION COPY    members, joint ventures and insurers and reinsurers of each of them; as well as the predecessors,    successors, assigns, estates, immediate family members, spouses, heirs, executors, trusts, trustees,    administrators, agents, legal or personal representatives, assigns, and assignees of each of them, in   their capacity as such.         1.30  “Released Claims” means any and all rights, liabilities, suits, debts, obligations,   demands, damages, losses, judgment matters, issues, claims (including Unknown Claims), and   causes of action of every nature and description whatsoever, in law, equity, or otherwise, whether   accrued or unaccrued, fixed or contingent, liquidated or unliquidated, whether arising under federal,   state, local, statutory, common law, foreign law, or any other law, rule, or regulation, and whether   class and/or individual in nature, concerning, based on, arising out of, or in connection with both: (i)    the purchase or other acquisition of ARCP Securities by Lead Plaintiff or any other Class Member    during  the  period  between  February  28,  2013  and  October  29,  2014;  and  (ii)  the  allegations,    transactions,  acts,  facts,  matters,  occurrences,  disclosures,  statements,  filings,  representations,    omissions, or events that were or could have been alleged or asserted in the Litigation.  Released    Claims do not include claims to enforce the Settlement, any shareholder derivative claims on behalf    of ARCP, or governmental agency actions against the Released Persons.         1.31  “Released Defendants’ Claims” means any and all claims and causes of action of   every nature and description whatsoever, including both known claims and Unknown Claims, that   arise out of, are based upon, or relate in any way to the institution, prosecution, or settlement of the   claims against Defendants in the Litigation, except for claims relating to the enforcement of the  Settlement.        1.32  “Released Persons” means each and all of the Defendants and their Related Parties.         1.33  “Releasing Plaintiff Party” or “Releasing Plaintiff Parties” means Lead Counsel and  each and every plaintiff, Class Member, and counsel to any plaintiff, and each of their respective                                        - 11 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 13 of 60                                                              EXECUTION COPY    past or present trustees, officers, directors, partners, employees, contractors, accountants, auditors,   principals, agents, attorneys, predecessors, successors, assigns, representatives, affiliates, insurers,   parents, subsidiaries, general or limited partners or partnerships, and limited liability companies; and   the spouses, members of the immediate families, representatives, and heirs of any Releasing Plaintiff   Party who is an individual, as well as any trust of which any Releasing Plaintiff Party is the settlor or   which is for the benefit of any of their immediate family members.  Releasing Plaintiff Parties does   not include any Person who timely and validly sought exclusion from the Class, or any purchaser or   acquirer of any ARCP Securities which settled, compromised or otherwise resolved any claims   against  any  Released  Persons  related  to  such  purchaser’s  or  acquirer’s  acquisition  of  ARCP   Securities.         1.34  “Settlement” means the resolution of the Litigation in accordance with the terms and   provisions of this Stipulation.         1.35  “Settlement  Amount”  means  One  Billion  Twenty-five  Million  Dollars  (U.S.   $1,025,000,000.00) to be paid by check(s) and/or wire transfer(s) to the Escrow Agent pursuant to   ¶2.2 of this Stipulation.         1.36  “Settlement Fund” means the Settlement Amount plus all interest and accretions   thereto.         1.37  “Settlement Hearing” means the hearing set by the Court under Rule 23(e)(2) of the   Federal Rules of Civil Procedure to consider final approval of the Settlement.         1.38  “Settling Parties” means, collectively, Defendants and Lead Plaintiff, on behalf of   itself and the Class.         1.39  “Supplemental Agreement” means the Supplemental Agreement dated September 8,  2019 between TIAA and VEREIT.        1.40  “Tax” or “Taxes” mean any and all taxes, fees, levies, duties, tariffs, imposts, and  other  charges  of  any  kind  (together  with  any  and  all  interest, penalties,  additions  to  tax  and  additional amounts imposed with respect thereto) imposed by any governmental authority, including,  but not limited to, any local, state, and federal taxes.                                       - 12 -    

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 14 of 60                                                             EXECUTION COPY         1.41  “Unknown Claims” means (a) any and all Released Claims which the Releasing  Plaintiff Parties do not know or suspect to exist in his, her, or its favor at the time of the release of  the  Released  Persons,  which,  if  known  by  him,  her,  or  it,  might  have  affected  his,  her,  or  its  settlement with and release of the Released Persons, or might have affected his, her, or its decision(s)  with  respect  to  the  Settlement,  including,  but  not  limited  to, whether  or  not  to  object  to  this  Settlement or seek exclusion from the Class; and (b) any and all Released Defendants’ Claims that  the Released Persons do not know or suspect to exist in his, her, or its favor at the time of the release  of the Plaintiffs, the Class and Plaintiffs’ Counsel, which, if known by him, her, or it, might have  affected his, her, or its settlement and release of Plaintiffs, the Class and Plaintiffs’ Counsel.  With  respect to (a) any and all Released Claims against the Released Persons, and (b) any and all Released  Defendants’ Claims against Plaintiffs, the Class and Plaintiffs’ Counsel, the Settling Parties stipulate  and agree that, upon the Effective Date, the Settling Parties shall expressly waive and each Releasing  Plaintiff Party and Released Person shall be deemed to have, and by operation of the Judgment shall  have expressly waived, the provisions, rights, and benefits of California Civil Code §1542, which  provides:        A general release does not extend to claims that the creditor or releasing party does        not know or suspect to exist in his or her favor at the time of executing the release        and that, if known by him or her, would have materially affected his or her settlement        with the debtor or released party.   The Settling Parties shall expressly waive and each Releasing Plaintiff Party and Released Person   shall be deemed to have, and by operation of the Judgment shall have, expressly waived any and all   provisions, rights, and benefits conferred by any law of any state or territory of the United States, or   principle of common law, which is similar, comparable, or equivalent to California Civil Code   §1542.  The Releasing Plaintiff Parties and Released Persons acknowledge that they may hereafter   discover facts in addition to or different from those which he, she, it or their counsel now knows or   believes to be true with respect to the subject matter of the Released Claims or Released Defendants’   Claims, but (a) the Releasing Plaintiff Parties shall expressly fully, finally, and forever waive,                                      - 13 -   

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 15 of 60                                                             EXECUTION COPY   compromise, settle, discharge, extinguish, and release, and each Releasing Plaintiff Party shall be   deemed to have waived, compromised, settled, discharged, extinguished, and released, and upon the   Effective  Date,  and  by  operation  of  the  Judgment  shall  have  waived,  compromised,  settled,   discharged, extinguished, and released, fully, finally, and forever, any and all Released Claims   against the Released Persons, known or unknown, suspected or unsuspected, contingent or non-  contingent, whether or not concealed or hidden, which now exist, or heretofore have existed, upon   any theory of law or equity now existing or coming into existence in the future, including, but not   limited to, conduct which is negligent, intentional, with or without malice, or a breach of any duty,   law or rule, without regard to the subsequent discovery or existence of such different or additional   facts, legal theories, or authorities, and (b) the Released Persons shall expressly fully, finally, and   forever waive, compromise, settle, discharge, extinguish, and release, and upon the Effective Date,   and  by  operation  of  the  Judgment  shall  have  waived,  compromised,  settled,  discharged,   extinguished, and released, fully, finally, and forever, any and all Released Defendants’ Claims   against  the  Plaintiffs,  the  Class  and  Plaintiffs’  Counsel,  known  or  unknown,  suspected  or   unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, or   heretofore have existed, upon any theory of law or equity now existing or coming into existence in   the future, including, but not limited to, conduct which is negligent, intentional, with or without   malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or existence   of such different or additional facts, legal theories, or authorities.  The Settling Parties acknowledge,   and  the  Releasing  Plaintiff  Parties  and  Released  Persons  shall be  deemed  by  operation  of  the   Judgment to have acknowledged, that the foregoing waiver was separately bargained for and is an   essential element of the Settlement of which this release is a part.                                        - 14 -   

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 16 of 60                                                              EXECUTION COPY          1.42  “VEREIT’s Counsel” means Milbank LLP (“Milbank”), or any successor counsel to   VEREIT should Milbank no longer be providing counsel to VEREIT in connection with the matters   herein.         2.    The Settlement         2.1   The obligations incurred pursuant to the Stipulation are: (a) subject to approval by the   Court and the Judgment becoming Final; (b) subject to approval of the Derivative Settlement by the   Court; and (c) in full and final disposition of the Litigation with respect to the Releasing Plaintiff   Parties and Released Persons and any and all Released Claims and Released Defendants’ Claims   upon and subject to the terms and conditions set forth herein.         2.2   Certain  Defendants  shall  pay  the  Settlement  Amount  of  one  billion  twenty-five   million dollars ($1,025,000,000).  The contributions to the Settlement Amount will be as follows:                     i.    VEREIT  shall  contribute  seven  hundred  thirty-eight  million  five                          hundred thousand dollars ($738,500,000);                     ii.   AR  Capital,  ARC  Advisors,  Schorsch,  Budko,  Kahane,  and  Weil                          shall contribute, or cause to be contributed, two hundred twenty-five                          million dollars ($225,000,000) (inclusive of the thirty-one million,                          nine  hundred  seventy-two  thousand,  nine  hundred  and  thirty-four                          dollars ($31,972,934) already deemed to be in VEREIT’s custody,                          which  $31,972,934  VEREIT  will  cause  to  be  contributed  to  the                          Settlement Fund);                     iii.  Block shall contribute twelve million five hundred thousand dollars                          ($12,500,000); and                     iv.   Grant  Thornton  shall  contribute  forty-nine  million  dollars                          ($49,000,000).         2.3   Within ten (10) calendar days of the later of (i) entry of an order permitting notice to   be provided to the Class in connection with the Class Settlement pursuant to Federal Rule of Civil   Procedure 23, and (ii) entry of an order permitting notice to be provided in connection with the   Derivative Settlement pursuant to Federal Rule of Civil Procedure 23.1, Defendants listed in ¶ 2.2 (i-                                       - 15 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 17 of 60                                                              EXECUTION COPY    iv), and only those Defendants, shall pay the Settlement Amount to the Escrow Agent plus the    interest associated therewith at the rate of 2.5% per annum, which shall begin accruing on October   15, 2019 with respect to a particular Defendant for any portion of the Settlement Amount that such   Defendant has not paid to the Escrow Agent by that date, and shall cease accruing with respect to   such Defendant on the date the Settlement Amount is paid to the Escrow Agent.          2.4   In the event any Defendant fails to make the contribution(s) provided for in ¶2.2    within the time period provided for in ¶2.3, Lead Plaintiff shall have the right to terminate and    cancel the Settlement on behalf of itself and the Class with respect to: (i) the Settlement in its    entirety; or (ii) any Defendant that fails to make the contribution amount as provided for in ¶2.2    within  the  time  period  as  provided  for  in  ¶2.3.   Lead  Plaintiff  may  terminate  and  cancel  the    Settlement in toto or as to a particular Defendant by providing written notice of its election to do so    to the other parties to this Stipulation.          2.5   Other than the obligation to pay or cause to be paid the Settlement Amount into the   Settlement Fund set forth in ¶2.2 within the time period set forth in ¶2.3, the Released Persons shall   have no responsibility for, interest in, or liability whatsoever with respect to: (i) any act, omission, or   determination by Lead Counsel or the Claims Administrator, or any of their respective designees, in   connection with the administration of the Settlement or otherwise; (ii) the management, investment,   or  distribution  of  the  Settlement  Fund;  (iii)  the  Plan  of  Allocation;  (iv)  the  determination,   administration, calculation, or payment of any Claims asserted against the Settlement Fund; (v) any   loss suffered by, or fluctuation in value of, the Settlement Fund; or (vi) the payment or withholding   of any Taxes, expenses, and/or costs incurred in connection with the taxation of the Settlement Fund,   distributions or other payments from the Escrow Account, or the filing of any federal, state, or local   returns.                                         - 16 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 18 of 60                                                              EXECUTION COPY          2.6   Other  than  the  obligation  to  cause  the  payment  of  the  Settlement  Amount  in   accordance with the terms of ¶¶2.2 and 2.3, Defendants shall have no obligation to make any other   payments into the Escrow Account, to any Class Member or to Plaintiffs pursuant to the Stipulation.              a.    Condition Precedent         2.7   The Settlement is conditioned on the Court granting final approval of each of the    Settlement and the Derivative Settlement, and approval of the Settlement (but not the Derivative    Settlement) becoming Final.  Approval of the Settlement becomes Final when the conditions set    forth in ¶1.17 are satisfied.  Approval of the Derivative Settlement becomes final within the meaning    of this ¶2.7 when the District Court enters judgment approving the Derivative Settlement, but does    not require the exhaustion of any appeals or the time for such appeals having run.                b.    The Escrow Agent          2.8   The Escrow Agent shall invest the Settlement Amount deposited pursuant to ¶2.2   hereof in United States Agency or Treasury Securities or other instruments backed by the Full Faith   & Credit of the United States Government or an Agency thereof, or fully insured by the United   States Government or an Agency thereof and shall reinvest the proceeds of these instruments as they   mature in similar instruments at their then-current market rates.  All risks related to the investment of   the Settlement Fund in accordance with the investment guidelines set forth in this paragraph shall be   borne by the Settlement Fund, and the Released Persons shall have no responsibility for, interest in,   or liability whatsoever with respect to investment decisions or the actions of the Escrow Agent, or   any transactions executed by the Escrow Agent.  Provided the Escrow Agent invests the Settlement   Fund as set forth herein, the Escrow Agent shall have no liability whatsoever with respect to any   investment decision made in connection with the Settlement Fund.                                         - 17 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 19 of 60                                                              EXECUTION COPY          2.9   The Escrow Agent shall not disburse the Settlement Fund except as provided in this   Stipulation, by an order of the Court, or with the prior written agreement of VEREIT’s Counsel,  Grant Thornton’s Counsel, AR Capital Parties’ Counsel, Block’s Counsel, and Lead Counsel.         2.10  Subject to further order(s) and/or directions as may be made by the Court, or as    provided in this Stipulation, the Escrow Agent is authorized to execute such transactions as are    consistent with the terms of this Stipulation and shall incur no liability whatsoever for doing so.  The    Released Persons shall have no responsibility for, interest in, or liability whatsoever with respect to    the actions of the Escrow Agent, or any transaction executed by the Escrow Agent.          2.11  All funds held by the Escrow Agent shall be deemed and considered to be in custodia   legis of the Court, and shall remain subject to the jurisdiction of the Court, until such time as such   funds shall be distributed pursuant to this Stipulation and/or further order(s) of the Court.         2.12  Notwithstanding  the  fact  that  the  Effective  Date  of  the  Settlement  has  not  yet    occurred,  Lead  Counsel  may  pay  from  the  Settlement  Fund,  without  further  approval  from    Defendants and/or order of the Court, costs and expenses actually incurred in connection with    providing notice of the Settlement to the Class by mail, publication, and other means, locating Class    Members, assisting with the submission of Claims, processing Proof of Claim and Release forms,    administering the Settlement, and paying escrow taxes, fees and costs, if any, up to a maximum of    $2.25 million (“Notice and Administration Expenses”).  The $2.25 million maximum only applies to    such costs and expenses paid prior to the Effective Date.  After the Effective Date, Lead Counsel    may pay all of the costs and expenses actually incurred in connection with the administration of the    Settlement Fund without further order of the Court.  In the event that the Settlement does not become    Final, any money paid or incurred for the above purposes, including any related fees, shall not be    returned or repaid to Defendants or their insurers.                                         - 18 -    

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 20 of 60                                                             EXECUTION COPY         2.13  It shall be Lead Counsel’s responsibility to disseminate the Notice, Proof of Claim   and Release, and Summary Notice to the Class in accordance with this Stipulation and as ordered by   the Court.  The Released Persons shall have no responsibility for or liability whatsoever with respect   to  the  Notice  and  Administration Expenses,  nor  shall  they  have any  responsibility  or  liability   whatsoever for any claims with respect thereto, including any claims that may arise from any failure   of the notice process.  The Escrow Agent through the Settlement Fund, shall indemnify and hold   each  of  the  Released  Persons  and  their  counsel  harmless  for  any  Notice  and  Administration   Expenses.               c.    Taxes        2.14  (a)   The Settling Parties and the Escrow Agent agree to treat the Settlement Fund   as being at all times a “qualified settlement fund” within the meaning of Treas. Reg. §1.468B-1, and   the regulations promulgated thereunder.  The Settling Parties and the Escrow Agent further agree   that the Settlement Fund shall be established pursuant to the Court’s subject matter jurisdiction   within the meaning of Treas. Reg. §1.468B-1(c)(1).  In addition, the Escrow Agent shall timely   make such elections as necessary or advisable to carry out the provisions of this ¶2.14, including the   “relation-back election” (as defined in Treas. Reg. §1.468B-1) back to the earliest permitted date.    Such elections shall be made in compliance with the procedures and requirements contained in such   regulations.  It shall be the responsibility of the Escrow Agent to timely and properly prepare and   deliver the necessary documentation for signature by all necessary parties, and thereafter to cause the   appropriate filing to occur.               (b)   For  the  purpose  of  §1.468B  of  the  Internal  Revenue  Code  of  1986,  as   amended, and the regulations promulgated thereunder, the “administrator” (as defined in Treas. Reg.   §1.468B-2(k)(3)) shall be the Escrow Agent.  The Escrow Agent shall timely and properly file all                                       - 19 -   

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 21 of 60                                                              EXECUTION COPY    informational and other federal, state, or local tax returns necessary or advisable with respect to the    earnings on the Settlement Fund (including, without limitation, the returns described in Treas. Reg.    §1.468B-2(k)).   Such  returns  (as  well  as  the  elections  described  in  ¶2.14(a)  hereof)  shall  be    consistent with this ¶2.14 and in all events shall reflect that all Taxes (including any estimated    Taxes, interest, or penalties) on the income earned by the Settlement Fund shall be paid out of the    Settlement Fund as provided in ¶2.14(c) hereof.                (c)   All (i) Taxes (including any estimated Taxes, interest, or penalties) arising  with respect to the income earned by the Settlement Fund, including any Taxes or tax detriments that  may be imposed upon the Released Persons or their counsel with respect to any income earned by  the Settlement Fund for any period, after the deposit of the Settlement Amount, during which the  Settlement Fund does not qualify as a “qualified settlement fund” for federal or state income tax  purposes, and (ii) expenses and costs incurred in connection with the operation and implementation  of this ¶2.14 (including, without limitation, expenses of tax attorneys and/or accountants and mailing  and distribution costs and expenses relating to filing (or failing to file) the returns described in this  ¶2.14) (“Tax Expenses”), shall be paid out of the Settlement Fund; in all events the Released Persons  and their counsel shall have no liability or responsibility whatsoever for the Taxes or the Tax  Expenses.  The Escrow Agent, through the Settlement Fund, shall indemnify and hold each of the   Released  Persons  and  their  counsel  harmless  for  Taxes  and  Tax  Expenses  (including,  without   limitation, Taxes payable by reason of any such indemnification).  Further, Taxes and Tax Expenses   shall be treated as, and considered to be, a cost of administration of the Settlement Fund and shall be   timely paid by the Escrow Agent out of the Settlement Fund without prior order from the Court and   the Escrow Agent shall be authorized (notwithstanding anything herein to the contrary) to withhold   from distribution to Authorized Claimants any funds necessary to pay such amounts, including the   establishment of adequate reserves for any Taxes and Tax Expenses (as well as any amounts that   may be required to be withheld under Treas. Reg. §1.468B-2(l)(2)); neither the Released Persons nor   their counsel are responsible nor shall they have any liability for any Taxes or Tax Expenses.  The                                       - 20 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 22 of 60                                                              EXECUTION COPY    Settling Parties hereto agree to cooperate with the Escrow Agent, each other, and their tax attorneys   and accountants to the extent reasonably necessary to carry out the provisions of this ¶2.14.        2.15  The Settlement is non-recapture, i.e., it is not a claims-made settlement.  If this  Settlement is finally approved, the Defendants will have no ability to get back any of the Settlement  Fund for any reason.               d.    Termination of Settlement        2.16  In the event that the Settlement is not approved, or is terminated, canceled, or the  Effective Date otherwise fails to occur for any reason, including, without limitation, in the event the  Judgment does not become Final or the Derivative Settlement is not granted final approval by the  Court, the Settlement Fund less Notice and Administration Expenses or Taxes or Tax Expenses paid,  incurred, or due and owing pursuant to ¶¶2.12 and 2.14 hereof in connection with the Settlement  provided for herein, shall be refunded pursuant to written instructions from Defendants’ Counsel in  accordance with ¶7.4 herein.        2.17  VEREIT may elect to terminate the Settlement in the event that valid requests for  exclusion from the Class exceed a criteria previously agreed upon in the Supplemental Agreement.   If the Court requires the filing of the Supplemental Agreement, VEREIT and TIAA shall request that  it be filed under seal, and no party to this Stipulation will oppose that request.         3.    Preliminary Approval Order and Settlement Hearing        3.1   Promptly  after  execution  of  this  Stipulation,  Lead  Counsel  shall  submit  this    Stipulation together with its Exhibits to the Court forthwith for entry of an order (the “Preliminary    Approval Order”), substantially in the form of Exhibit A attached hereto, requesting, inter alia, the    preliminary approval of the Settlement set forth in this Stipulation and approval for the mailing of a    settlement  notice  (the  “Notice”)  and  publication of a summary notice  (“Summary  Notice”),    substantially in the forms of Exhibits A-1 and A-3 attached hereto.  The Notice shall include the    general terms of the Settlement set forth in this Stipulation, the proposed Plan of Allocation, the                                        - 21 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 23 of 60                                                              EXECUTION COPY    general terms of the Fee and Expense Application, as defined in ¶6.1 hereof, and the date of the   Settlement Hearing as defined below.         3.2   Lead Counsel shall request that, after notice is given and not earlier than one hundred  (100) calendar days after the Court issues preliminary approval of the proposed Settlement, the Court  hold a hearing (the “Settlement Hearing”) and approve the Settlement of the Litigation as set forth  herein.  At or after the Settlement Hearing, Lead Counsel also will request that the Court approve the  proposed Plan of Allocation and the Fee and Expense Application.        3.3   The Settling Parties agree that they will request that the Court hold a hearing on final   approval of the Settlement prior to any hearing on final approval of the Derivative Settlement.         4.    Releases        4.1   Upon the Effective Date, as defined in ¶1.15 hereof, Lead Plaintiff shall, and each and  every Releasing Plaintiff Party shall be deemed to have, and by operation of the Judgment shall  have, fully, finally, and forever waived, released, relinquished, discharged, and dismissed each and  every one of the Released Claims against each and every one of the Released Persons and shall  forever be barred and enjoined from commencing, instituting, prosecuting, or maintaining any and  all  of  the  Released  Claims  against  any  and  all  of  the  Released Persons,  whether  or  not  such  Releasing Plaintiff Party executes and delivers the Proof of Claim and Release or shares in the Net  Settlement Fund.  Claims to enforce the terms of this Stipulation are not released.        4.2   Any Proof of Claim and Release that is executed by Class Members shall release all  Released Claims against the Released Persons and shall be substantially in the form contained in  Exhibit A-2 attached hereto.        4.3   Upon the Effective Date, the Releasing Plaintiff Parties will be forever barred and  enjoined from commencing, instituting, prosecuting, or continuing to prosecute any action or other  proceeding in any court of law or equity, arbitration tribunal, or administrative forum, asserting the  Released Claims against any of the Released Persons.                                         - 22 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 24 of 60                                                              EXECUTION COPY          4.4   Upon the Effective Date, each of the Released Persons shall be deemed to have, and    by operation of the Judgment shall have, fully, finally, and forever released, relinquished, and    discharged all Released Defendants’ Claims against Plaintiffs, the Class and Plaintiffs’ Counsel.     Claims to enforce the terms of this Stipulation are not released.          4.5   In  the  event  that  the  Settlement  becomes  Final,  and  approval  of  the  Derivative    Settlement is reversed or vacated on appeal, each of the contributions into the Settlement Fund listed    in ¶2.2 (i-iv) shall be deemed to have been made solely by and wholly attributable to VEREIT and,    in such event, VEREIT shall retain the right to pursue against such contributing parties listed in ¶2.2   (i-iv)  any  contribution  or  similar  claims  relating  to  the  contributions  to  the  Settlement  Fund,   provided, however, that VEREIT shall not be permitted to pursue any claim for prior advancement   or indemnification of attorney’s fees or other expenses incurred in connection with the Litigation or   any other proceeding other than the Derivative Action.         4.6   Upon the Effective Date, to the fullest extent permitted by law, (i) all Persons shall be   permanently  enjoined,  barred  and  restrained  from  commencing,  instituting,  prosecuting,  or   maintaining any claims, actions, or causes of action for contribution, indemnity or otherwise against   any of the Released Persons seeking as damages or otherwise the recovery of all or part of any   liability, judgment, or settlement which they pay or are obligated to pay or agree to pay to the   Releasing Plaintiff Parties arising out of, relating to or concerning any acts, facts, statements or   omissions that were or could have been alleged in the Litigation, both known and Unknown Claims,   whether arising under state, federal or foreign law, as claims, cross-claims, counterclaims, third-  party  claims  or  otherwise,  in  the  Court  or  any  other  federal,  state,  or  foreign  court,  or  in  any   arbitration  proceeding,  administrative  agency  proceeding,  tribunal,  or  any  other  proceeding  or   forum; and (ii) all Released Persons shall be permanently enjoined, barred and restrained from                                        - 23 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 25 of 60                                                              EXECUTION COPY    commencing, instituting, prosecuting, or maintaining any claims, actions, or causes of action for   contribution, indemnity or otherwise against any Persons seeking as damages or otherwise the   recovery of all or part of any liability, judgment or settlement which they pay or are obligated to pay   or agree to pay to the Releasing Plaintiff Parties arising out of, relating to, or concerning any acts,   facts, statements or omissions that were or could have been alleged in the Litigation, both known and   Unknown Claims, whether arising under state, federal or foreign law, as claims, cross-claims,   counterclaims, third-party claims or otherwise, in the Court or any other federal, state, or foreign    court, or in any arbitration proceeding, administrative agency proceeding, tribunal, or any other    proceeding or forum; provided that clauses (i) and (ii) of this Paragraph shall not be construed to    modify, amend, or supersede any agreements between or among the Released Persons with respect    to claims between or among those Released Persons, including but not limited to the Supplementary    Agreements as defined in the stipulation submitted to the Court contemporaneously herewith in    connection with the Derivative Settlement.          5.    Administration and Calculation of Claims, Final Awards, and               Supervision and Distribution of the Settlement Fund         5.1   The Claims Administrator, subject to such supervision and direction of Lead Counsel   and the Court as may be necessary or as circumstances may require, shall administer and calculate   the Claims submitted by Class Members and shall oversee distribution of the Net Settlement Fund to   Authorized Claimants.  The Released Persons and Defendants’ Counsel shall have no responsibility   for or interest in whatsoever with respect to the administration of the Settlement or the actions or   decisions of the Claims Administrator, and shall have no liability whatsoever to the Releasing   Plaintiff Parties, including Plaintiffs, any other Class Members, or Plaintiffs’ Counsel, in connection   with such administration, including, but not limited to: (i) any act, omission, or determination by   Lead  Counsel,  the  Escrow  Agent,  and/or  the  Claims  Administrator,  or  any  of  their  respective   designees or agents, in connection with the administration of the Settlement or otherwise; (ii) the                                        - 24 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 26 of 60                                                              EXECUTION COPY    management or investment of the Settlement Fund or the Net Settlement Fund, or the distribution of   the  Net  Settlement  Fund;  (iii)  the  Plan  of  Allocation;  (iv)  the  determination,  administration,   calculation, or payment of any Claims asserted against the Settlement Fund; (v) any losses suffered   by, or fluctuations in value of, the Settlement Fund; or (vi) the payment or withholding of any taxes,  expenses, and/or costs incurred with the taxation of the Settlement Fund or the filing of any federal,   state, or local returns.         5.2   The Settlement Fund shall be applied as follows:               (a)   to pay all Notice and Administration Expenses;               (b)   to pay the Taxes and Tax Expenses;               (c)   to pay attorneys’ fees and expenses of Plaintiffs’ Counsel and awards to   Plaintiffs (the “Fee and Expense Award”); and               (d)   after the Effective Date, to distribute the Net Settlement Fund to Authorized   Claimants as provided by this Stipulation, the Plan of Allocation, or the orders of the Court.         5.3   After the Effective Date, and in accordance with the terms of this Stipulation, the Plan   of Allocation, or such further approval and further order(s) of the Court as may be necessary or as   circumstances may require, the Net Settlement Fund shall be distributed to Authorized Claimants,   subject to and in accordance with the following provisions of this Stipulation.         5.4   Within ninety (90) calendar days after the mailing of the Notice or such other time as   may be set by the Court, each Class Member shall be required to submit to the Claims Administrator   a completed Proof of Claim and Release, substantially in the form of Exhibit A-2 attached hereto,   signed under penalty of perjury and supported by such documents as are specified in the Proof of   Claim and Release.         5.5   Except as provided for herein or otherwise ordered by the Court, all Class Members   who fail to timely submit a valid Proof of Claim and Release shall be forever barred from receiving   any payments pursuant to this Stipulation and the Settlement set forth herein, but will in all other   respects be subject to and bound by the provisions of this Stipulation, the releases contained herein,   and  the  Judgment,  and  will  be  barred  from  bringing  any  action  against  the  Released  Persons                                       - 25 -    

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 27 of 60                                                             EXECUTION COPY   concerning the Released Claims.  Notwithstanding the foregoing, Lead Counsel shall have the  discretion (but not an obligation) to accept late-submitted Claims for processing by the Claims  Administrator so long as the distribution of the Net Settlement Fund to Authorized Claimants is not  materially  delayed  thereby.   No  Person  shall  have  any  claim  against  any  Plaintiff,  Plaintiffs’  Counsel, the Claims Administrator or any Class Member by reason of the exercise or non-exercise of  such discretion.        5.6   Each Proof of Claim and Release shall be submitted to and reviewed by the Claims  Administrator, who shall determine, in accordance with this Stipulation and the approved Plan of  Allocation, the extent, if any, to which each Claim shall be allowed, subject to review by the Court  pursuant to ¶5.8 below.        5.7   Proof of Claim and Release forms that do not meet the submission requirements may  be  rejected.   Prior  to  rejecting  a  Proof  of  Claim  and  Release  in  whole  or  in  part,  the  Claims  Administrator shall communicate with the claimant in writing to give the claimant the chance to  remedy  any  curable  deficiencies  in  the  Proof  of  Claim  and  Release  submitted.   The  Claims  Administrator, under the supervision of Lead Counsel, shall notify, in a timely fashion and in  writing, all claimants whose Claims the Claims Administrator proposes to reject in whole or in part  for curable deficiencies, setting forth the reasons therefor, and shall indicate in such notice that the  claimant whose Claim is to be rejected has the right to a review by the Court if the claimant so  desires and complies with the requirements of ¶5.8 below.        5.8   If any claimant whose timely Claim has been rejected in whole or in part for curable  deficiency desires to contest such rejection, the claimant must, within twenty (20) calendar days after  the date of mailing of the notice required in ¶5.7 above, or a lesser period of time if the Claim was  untimely, serve upon the Claims Administrator a notice and statement of reasons indicating the  claimant’s  grounds  for  contesting  the  rejection along  with  any supporting  documentation,  and  requesting a review thereof by the Court.  If a dispute concerning a Claim cannot be otherwise  resolved, Lead Counsel shall thereafter present the claimant’s request for review to the Court.                                       - 26 -   

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 28 of 60                                                             EXECUTION COPY         5.9   Each claimant shall be deemed to have submitted to the jurisdiction of the Court with  respect to the Person’s claim to the Net Settlement Fund.  All proceedings with respect to the  administration, processing and determination of Claims and the determination of all controversies  relating thereto, including disputed questions of law and fact with respect to the validity of Claims,  shall be subject to the jurisdiction of the Court, but shall not in any event delay or affect the finality  of the Judgment.  All Class Members, other claimants, and parties to this Settlement expressly waive  trial by jury (to the extent any such right may exist) and any right of appeal or review with respect to  such determinations.        5.10  Following the Effective Date, the Net Settlement Fund shall be distributed to the  Authorized Claimants substantially in accordance with the Plan of Allocation set forth in the Notice  and approved by the Court.  No distributions will be made to Authorized Claimants who would  otherwise receive a distribution of less than $10.00.  If there is any balance remaining in the Net  Settlement Fund after a reasonable period of time after the date  of  the  distribution  of  the  Net  Settlement Fund, the Claims Administrator at Lead Counsel’s direction shall, if feasible, redistribute  such balance among Authorized Claimants who negotiated the checks sent in the initial distribution  and who would receive a minimum of $10.00.  These redistributions shall be repeated until the  balance remaining in the Net Settlement Fund is de minimis.  Any de minimis balance that still  remains in the Net Settlement Fund after such reallocation(s) and payments, which is not feasible or  economical to reallocate, shall be donated to any appropriate, non-profit charitable organization(s)  unaffiliated with any party or their counsel serving the public interest selected by Lead Counsel.        5.11  The  Released  Persons  shall  have  no  responsibility  for,  interest  in,  or  liability  whatsoever with respect to the distribution of the Net Settlement Fund, the Plan of Allocation, the  determination, administration, or calculation of Claims, the payment or withholding of Taxes or Tax  Expenses, or any losses incurred in connection therewith.  No Person shall have any claim of any  kind against the Released Persons with respect to the matters set forth in ¶¶5.1-5.13 hereof; and the  Releasing Plaintiff Parties release the Released Persons from any and all liability and claims arising  from or with respect to the administration, investment, or distribution of the Settlement Fund.                                      - 27 -   

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 29 of 60                                                             EXECUTION COPY         5.12  No Person shall have any claim against any Released Persons, any Plaintiff, any  counsel  to  any  Plaintiff  or  the  Claims  Administrator,  or  any  other  Person  designated  by  Lead  Counsel  based  on  determinations  or  distributions  made  substantially  in  accordance  with  this  Stipulation and the Settlement contained herein, the Plan of Allocation, or further order(s) of the  Court.        5.13  It  is  understood  and  agreed  by  the  Settling  Parties  that  any  proposed  Plan  of  Allocation  of  the  Net  Settlement  Fund,  including,  but  not  limited  to,  any  adjustments  to  an  Authorized Claimant’s Claim set forth therein, is not a part of this Stipulation and is to be considered  by the Court separately from the Court’s consideration of the fairness, reasonableness, and adequacy  of the Settlement set forth in this Stipulation, and any order or proceeding relating to the Plan of  Allocation shall not operate to terminate or cancel this Stipulation or affect the finality of the Court’s  Judgment approving this Stipulation and the Settlement set forth herein, or any other orders entered  pursuant to the Stipulation.         6.    Plaintiffs’ Counsel’s Attorneys’ Fees and Expenses        6.1   Lead Counsel may submit an application or applications (the “Fee and Expense  Application”) from the Settlement Fund for:  (a) an award of attorneys’ fees; plus (b) expenses or  charges in connection with prosecuting the Litigation; plus (c) any interest earned on such attorneys’  fees and expenses at the same rate and for the same periods as earned by the Settlement Fund (until  paid) as may be awarded by the Court.  In addition, Plaintiffs may request awards in connection with  their representation of the Class pursuant to 15 U.S.C. §78u-4(a)(4).  Lead Counsel reserves the right  to make additional applications for fees and expenses incurred.        6.2   Any fees and expenses, as awarded by the Court, shall be paid to Lead Counsel from  the Settlement Fund, as ordered, immediately after the Court executes the Judgment and an order  awarding such fees and expenses, notwithstanding the existence of any timely filed objections  thereto or to the Settlement, or potential for appeal therefrom, or collateral attack on the Settlement  or any part thereof.  Lead Counsel may thereafter allocate the attorneys’ fees among Plaintiffs’                                       - 28 -   

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 30 of 60                                                             EXECUTION COPY   Counsel in a manner in which it in good faith believes reflects the contributions of such counsel to  the initiation, prosecution, and resolution of the Litigation.        6.3   In the event that the Effective Date does not occur, or the Judgment or the order   making the Fee and Expense Award is reversed or modified, or this Stipulation is canceled or   terminated  for  any  other  reason, and  such  reversal,  modification,  cancellation  or  termination   becomes Final and not subject to review, and in the event that the Fee and Expense Award has been   paid, then Lead Counsel, including its partners, and such other Plaintiffs’ Counsel, including their   law firms, partners, and/or shareholders who received any portion of the Fee and Expense Award   shall,  within  ten  (10)  business  days  from  receiving  notice  from  VEREIT’s  Counsel,  Grant   Thornton’s Counsel, AR Capital Parties’ Counsel, or Block’s Counsel, or from a court of appropriate   jurisdiction, refund to the Settlement Fund all such fees and expenses previously paid to them from   the Settlement Fund, in an amount consistent with such reversal, modification, cancellation or   termination, and such fees and expenses shall be distributed from the Settlement Fund in accordance   with ¶7.4.  Any refunds required pursuant to this ¶6.3 shall be the several obligation of Plaintiffs’   Counsel, including their law firms, partners, and/or shareholders, to make appropriate refunds or   repayments to the Settlement Fund.  Each such Plaintiffs’ Counsel receiving an award of fees and   expenses or Plaintiff receiving an award pursuant to 15 U.S.C. §78u-4(a)(4), as a condition of   receiving such fees, expenses or award on behalf of itself and each partner and/or shareholder of it,   agrees  that  (a)  such  Person  and  its  partners,  shareholders,  and/or  members  are  subject  to  the   jurisdiction of the Court for the purpose of enforcing the provisions of this paragraph, and (b) are   severally  liable  for  the  full  amount  of  any  fees,  expenses  and/or  costs  paid  to  them  from  the   Settlement Fund together with the interest earned thereon.  Without limitation, Plaintiffs’ Counsel   and Plaintiffs and their partners, shareholders, and/or members agree that the Court may, upon   application of Defendants and notice to Plaintiffs’ Counsel, summarily issue orders, including, but                                      - 29 -   

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 31 of 60                                                             EXECUTION COPY   not limited to, judgments and attachment orders, and may make appropriate findings of or sanctions   for contempt, should such law firms or any of its partners, shareholders, or members fail to timely   repay fees, interest and expenses pursuant to this paragraph.         6.4   The procedure for and the allowance or disallowance by the Court of any applications  by any Plaintiffs’ Counsel for attorneys’ fees and expenses to be paid out of the Settlement Fund is  not part of the Settlement set forth in this Stipulation, and is to be considered by the Court separately  from the Court’s consideration of the fairness, reasonableness, and adequacy of the Settlement set  forth in this Stipulation, and shall have no effect on the terms of the Stipulation or on the validity or  enforceability of this Settlement.  The approval of the Settlement, and it becoming Final, shall not be  contingent on the award of attorneys’ fees and expenses, any award to Plaintiffs, Lead Counsel, or  Plaintiffs’ Counsel, nor any appeals from such awards.  Any order or proceeding relating to the Fee  and Expense Application, or any appeal from any order relating thereto or reversal or modification  thereof, shall not operate to terminate or cancel this Stipulation, or affect or delay the finality of the  Judgment approving this Stipulation and the Settlement of the Litigation set forth therein.        6.5   Any  fees  and/or  expenses  awarded by  the  Court  shall  be  paid  solely  from  the  Settlement Fund.  With the sole exception of Defendants’ obligation to pay or cause the Settlement  Amount to be paid into the Escrow Account as provided for in ¶2.2, the Released Persons shall have  no responsibility for, and no liability whatsoever with respect to, any payment of attorneys’ fees  and/or  expenses  (including  Taxes)  to  Plaintiffs’  Counsel,  or  any  other  counsel  or Person  who  receives payment from the Net Settlement Fund.        6.6   The Released Persons shall have no responsibility for, and no liability whatsoever   with respect to, the allocation among Plaintiffs’ Counsel and/or any other Person who may assert   some claim thereto, of any Fee and Expense Award that the Court may make in the Litigation.         6.7   The Released Persons shall have no responsibility for, and no liability whatsoever  with respect to, any attorneys’ fees, costs, or expenses (including Taxes) incurred by or on behalf of  any Class Member, whether or not paid from the Escrow Account.                                      - 30 -   

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 32 of 60                                                             EXECUTION COPY         7.    Conditions of Settlement, Effect of Disapproval, Cancellation, or              Termination        7.1   The Effective Date of the Settlement shall be conditioned on the occurrence of all of  the following events:              (a)   the Court has entered the Preliminary Approval Order directing notice to the  Class, as required by ¶3.1 hereof;              (b)   the Settlement Amount has been deposited into the Escrow Account;              (c)   the Court has entered the Judgment, or a judgment substantially in the form of  Exhibit B attached hereto;              (d)   the Judgment has become Final, as defined in ¶1.17 hereof; and               (e)   the Court has granted final approval of the Derivative Settlement.         7.2   Upon the Effective Date, any and all remaining interest or right of the Defendants in  or to the Settlement Fund, if any, shall be absolutely and forever extinguished.  If the conditions  specified in ¶7.1 hereof are not met, then the Settlement shall be canceled and terminated subject to  ¶¶7.4, 7.5 and 7.6 hereof unless Lead Counsel and counsel for the Defendants mutually agree in  writing to proceed with the Settlement.        7.3   Each of Lead Plaintiff and Defendants shall have the right to terminate the Settlement   and this Stipulation by providing written notice of their election to do so (“Termination Notice”) to   all other parties hereto within thirty (30) calendar days of: (a) the Court’s refusal to enter the   Preliminary Approval Order; (b) the Court’s refusal to approve the Settlement; (c) the Court’s   refusal to enter the Judgment; (d) the date upon which the Judgment is reversed or vacated or altered   following any appeal taken therefrom, or is successfully collaterally attacked; (e) the Court’s refusal   to grant final approval of the Derivative Settlement; or (f) the failure of the Effective Date to occur   for any reason.  Only VEREIT possesses the right to terminate the Settlement in the event that valid   requests for exclusion from the Class exceed the criteria set forth in the Supplemental Agreement.    For avoidance of doubt, no order of the Court or modification or reversal on appeal of any order of                                      - 31 -   

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 33 of 60                                                              EXECUTION COPY    the Court concerning the Plan of Allocation or the amount of any attorney’s fees, expenses, and    interest awarded by the Court to Lead Counsel or costs and expenses to Plaintiffs shall operate to   terminate or cancel this Stipulation or constitute grounds for cancellation or termination of the   Stipulation.         7.4   Unless otherwise ordered by the Court, in the event this Stipulation is not approved or   this Stipulation or the Settlement is terminated, or canceled, or the Effective Date otherwise fails to   occur for any reason, including, without limitation, in the event the Judgment is reversed or vacated   or  altered  following  any  appeal  taken  therefrom,  within  ten  (10)  business  days  after  written   notification of such event is sent by VEREIT’s Counsel, Grant Thornton’s Counsel, AR Capital   Parties’ Counsel, Block’s Counsel, or Lead Counsel to the Escrow Agent, the Settlement Fund, less   Taxes, Tax Expenses and Notice and Administration Expenses which have either been disbursed   pursuant to ¶¶2.12 and/or 2.14 hereof, or are chargeable to the Settlement Fund pursuant to ¶¶2.12   and/or 2.14 hereof, shall be distributed by the Escrow Agent as follows: 4.7805% to Grant Thornton;   18.832% to be distributed pursuant to joint instructions by VEREIT and the AR Capital Parties to be   issued consistent with a separate agreement reached between VEREIT and the AR Capital Parties;   0.4905% to Block; 0.729% to be distributed pursuant to joint instructions by VEREIT and Block to   be  issued  consistent  with  a  separate  agreement  reached  between VEREIT  and  Block;  and  the   remainder distributed to VEREIT.  Such distributions shall be made pursuant to written instructions   from (i) Grant Thornton’s Counsel as to the portion of the Settlement Fund to be distributed to Grant   Thornton, (ii) a joint letter executed by VEREIT’s Counsel and the AR Capital Parties’ Counsel for   the 18.832% portion of the Settlement Fund, (iii) Block’s Counsel as to the portion of the Settlement   Fund to be distributed to Block, (iv) a joint letter executed by VEREIT’s Counsel and Block’s   Counsel for the 0.729% portion of the Settlement Fund, and (v) VEREIT’s Counsel as to all other                                        - 32 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 34 of 60                                                              EXECUTION COPY    portions of the Settlement Fund.  The Escrow Agent or its designee shall apply for any tax refund   owed on the Settlement Amount and pay the proceeds, after deduction of any fees or expenses   incurred in connection with such application(s) for refund to the same Persons in the same manner as   the Settlement Fund described in this ¶7.4.  Such payments shall be pursuant to written instructions   from (i) Grant Thornton’s Counsel as to the portion of the Settlement Fund to be distributed to Grant   Thornton, (ii) a joint letter executed by VEREIT’s Counsel and the AR Capital Parties’ Counsel for   the 18.832% portion of the Settlement Fund, (iii) Block’s Counsel as to the portion of the Settlement   Fund to be distributed to Block, (iv) a joint letter executed by VEREIT’s Counsel and Block’s   Counsel for the 0.729% portion of the Settlement Fund, and (v) VEREIT’s Counsel as to all other   portions of the Settlement Fund.         7.5   In the event that this Stipulation is not approved or this Stipulation or the Settlement  is terminated, canceled, or the Effective Date otherwise fails to occur for any reason, the Settling  Parties shall be restored to their respective positions in the Litigation as of August 21, 2019.  In such  event, the terms and provisions of the Stipulation, with the exception of ¶¶1.1-1.42, 2.12-2.14, 2.16- 2.17, 6.3-6.4, 7.4-7.6, and 9.6 hereof, shall have no further force and effect with respect to the  Settling Parties and shall not be used in this Litigation or in any other proceeding for any purpose,  and any judgment or order entered by the Court in accordance with the terms of this Stipulation shall  be treated as vacated, nunc pro tunc.  No order of the Court or modification or reversal on appeal of  any order of the Court concerning the Plan of Allocation or any Fee and Expense Award shall  operate to terminate or cancel this Stipulation or constitute grounds for cancellation or termination of  this Stipulation.        7.6   If the Effective Date does not occur, or if this Stipulation is terminated pursuant to its  terms, neither Plaintiffs nor Plaintiffs’ Counsel shall have any obligation to repay any amounts  disbursed pursuant to ¶¶2.12 or 2.14.  In addition, any amounts already incurred pursuant to ¶¶2.12  or 2.14 hereof at the time of such termination or cancellation but which have not been paid, shall be                                        - 33 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 35 of 60                                                              EXECUTION COPY    paid by the Escrow Agent in accordance with the terms of this Stipulation prior to the balance being   refunded in accordance with ¶¶2.16 and 7.4 hereof.          8.    No Admission of Wrongdoing         8.1   Neither the Settlement, this Stipulation (whether or not consummated), including the   Exhibits hereto and the Plan of Allocation contained therein (or any other plan of allocation that may   be approved by the Court), the negotiations leading to the execution of this Stipulation and the   Settlement, nor any proceedings taken pursuant to or in connection with this Stipulation, and/or   approval of the Settlement (including any arguments proffered in connection therewith):              (a)   shall be offered or received against any Defendant as evidence of or construed   as or deemed to be evidence of any presumption, concession, or admission by any Defendant of the   truth of any allegations by Plaintiffs or any Member of the Class or the validity of any claim that has   been or could have been asserted in the Litigation, or the deficiency of any defense that has been or   could have been asserted in the Litigation or in any other litigation, including, but not limited to,   litigation of the Released Claims, or of any liability, negligence, fault, or wrongdoing of any kind of   any of the Defendants;               (b)   shall be referred to for any other reason as against any of the Defendants, in  any civil, criminal, or administrative action or proceeding, other than in such proceedings as may be  necessary to effectuate the provisions of this Stipulation;              (c)   shall  be  offered  or  received  against  any  Defendant  as  evidence of  a  presumption, concession, or admission of any fault, misrepresentations, or omission with respect to  any statement or written document approved or made by any Defendant, or against Plaintiffs or any  Member of the Class as evidence of any infirmity in the claims of Plaintiffs and the Class;              (d)   shall  be  offered  or  received  against  any  Defendant  as  evidence of  a  presumption, concession, or admission of any liability, negligence, fault, or wrongdoing, or in any  way referred to for any other reason as against any of the parties to this Stipulation, in any other  civil, criminal, or administrative action or proceeding; provided, however, that if this Stipulation is                                        - 34 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 36 of 60                                                              EXECUTION COPY    approved by the Court, Defendants and their Related Parties may refer to it to effectuate the release   granted them hereunder; or               (e)   shall be construed against Defendants, Plaintiffs, or the Class as evidence of a   presumption, concession, or admission that the consideration to be given hereunder represents the   amount which could be or would have been recovered after trial or in any proceeding other than this  Settlement.         9.    Miscellaneous Provisions        9.1   The Settling Parties:  (a) acknowledge that it is their intent to consummate this  agreement; and (b) agree to cooperate to the extent reasonably necessary to effectuate and implement  all terms and conditions of this Stipulation and to exercise their best efforts to accomplish the  foregoing terms and conditions of this Stipulation.        9.2   The Settling Parties intend this Settlement to be a final and complete resolution of all  disputes between the Class and the Defendants with respect to the Litigation.  The Settlement shall  not be deemed an admission by any Settling Party as to the merits of any claim or defense.  The  Judgment will contain a finding that, during the course of the Litigation, the Settling Parties and their  respective counsel at all times complied with the requirements of Federal Rule of Civil Procedure  11.  The Settling Parties agree that the Settlement Amount and the other terms of the Settlement  were negotiated in good faith by the Settling Parties, and reflect a settlement that was reached  voluntarily after consultation with competent legal counsel.  The Settling Parties reserve their right  to rebut, in a manner that such party determines to be appropriate, any contention made in any public  forum regarding the Litigation, including that the Litigation was brought or defended in bad faith or  without a reasonable basis.        9.3   Defendants and/or the Released Persons may file this Stipulation and/or the Judgment  from this action in any other action that may be brought against them in order to support a defense or   counterclaim based on principles of res judicata, collateral estoppel, release, statute of limitations,   statute of repose, good faith settlement, judgment bar or reduction, or any theory of claim preclusion   or issue preclusion or similar defense or counterclaim, or to effectuate any liability protection under                                       - 35 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 37 of 60                                                              EXECUTION COPY    any applicable insurance policy.  The Settling Parties may file this Stipulation and/or the Judgment   in any action that may be brought to enforce the terms of this Stipulation and/or the Judgment.  All   Settling Parties submit to the jurisdiction of the Court for purposes of implementing and enforcing   the Settlement.         9.4   All agreements made and orders entered during the course of the Litigation relating to   the confidentiality of information shall survive this Stipulation.         9.5   All of the Exhibits to this Stipulation are material and integral parts hereof and are   fully incorporated herein by this reference.         9.6   This Stipulation, along with its Exhibits, may be amended or modified only by a   written instrument signed by or on behalf of all Settling Parties or their respective successors-in- interest.        9.7   Other than the Supplemental Agreement, this Stipulation and the Exhibits attached   hereto constitute the entire agreement between Lead Plaintiff, on the one hand, and Defendants, on   the other hand, as to the subject matter hereof and supersede any prior or contemporaneous written   or oral agreements or understandings between the Lead Plaintiff, on the one hand, and Defendants,   on the other hand.  No representations, warranties, or inducements have been made between the   Lead Plaintiff, on the one hand, and Defendants on the other hand, concerning this Stipulation or its   Exhibits, other than the representations, warranties, and covenants contained and memorialized in   such  documents.   For  the  avoidance  of  doubt,  this  Stipulation  does  not  modify  the  terms  or   conditions  of  any  agreements  between  or  among  Defendants,  including  but  not  limited  to  the   Supplementary Agreements as defined in the stipulation submitted to the Court contemporaneously   herewith in connection with the Derivative Settlement.         9.8   Except as provided herein, or otherwise agreed to in writing by the parties hereto,   each party shall bear his, her, or its own fees and costs.                                         - 36 -    

 

      Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 38 of 60                                                              EXECUTION COPY          9.9   Lead Counsel, on behalf of the Class, is expressly authorized by Lead Plaintiff to take   all appropriate action required or permitted to be taken by the Class pursuant to this Stipulation to   effectuate its terms and also is expressly authorized to enter into any modifications or amendments to   this Stipulation on behalf of the Class which it deems appropriate.         9.10  Each counsel or other Person executing this Stipulation, its Exhibits, or any related   Settlement document, on behalf of any party hereto hereby warrants that such Person has the full   authority to do so, and that they have the authority to take appropriate action required or permitted to  be taken pursuant to the Stipulation to effectuate its terms, without requiring additional consent,  approval,  or  authorization  of  any  other  Person,  board,  entity, tribunal,  or  other  regulatory  or  governmental authority.        9.11  This  Stipulation  may  be  executed  in  one  or  more  counterparts.  All  executed  counterparts and each of them shall be deemed to be one and the same instrument.  A complete set of  executed counterparts shall be filed with the Court.  Signatures sent by facsimile or pdf’d via e-mail  shall be deemed originals.        9.12  All notices, requests, demands, claims, and other communications hereunder shall be  in writing and shall be deemed duly given (i) when delivered personally to the recipient, (ii) one (1)  business day after being sent to the recipient by UPS overnight courier service (charges prepaid), or  (iii) seven (7) business days after being mailed to the recipient by certified or registered mail, return  receipt requested and postage prepaid, and addressed to the intended recipient as set forth below:        If to Plaintiffs or to Lead Counsel:          ROBBINS GELLER RUDMAN            & DOWD LLP         DEBRA J. WYMAN         655 West Broadway, Suite 1900         San Diego, CA  92101                                                                   - 37 -    

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 39 of 60                                                             EXECUTION COPY         If to VEREIT or to VEREIT’s Counsel:         MILBANK LLP        JED M. SCHWARTZ        55 Hudson Yards        New York, NY 10001           If to Grant Thornton’s Counsel:         SIDLEY AUSTIN LLP        BRUCE R. BRAUN        One South Dearborn        Chicago, IL 60603        bbraun@sidley.com          If to AR Capital Parties’ Counsel:         PAUL, WEISS, RIFKIND,            WHARTON & GARRISON LLP        AUDRA J. SOLOWAY        1285 Avenue of the Americas        New York, NY 10019                KELLOGG, HANSEN, TODD,            FIGEL & FREDERICK, P.L.L.C.        REID M. FIGEL        1615 M Street, NW, Suite 400        Washington, DC 20036          If to Block’s Counsel:         STEPTOE & JOHNSON LLP        MICHAEL C. MILLER        1114 Avenue of the Americas        New York, NY  10036          9.13  This Stipulation shall be binding upon, and inure to the benefit of, the successors and   assigns of the Settling Parties.         9.14  The Court shall retain jurisdiction with respect to implementation and enforcement of   the terms of this Stipulation, and all Settling Parties submit to the jurisdiction of the Court for                                       - 38 -   

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 40 of 60                                                             EXECUTION COPY   purposes of implementing and enforcing the Settlement embodied in this Stipulation and matters   related to the Settlement.         9.15  The waiver by one Settling Party of any breach of this Stipulation by any other party   shall not be deemed a waiver by any other Settling Party or a waiver of any other prior or subsequent   breach of this Stipulation.         9.16  Pending approval of the Court of this Stipulation and its Exhibits, all non-settlement-  related proceedings in this Litigation shall be stayed and all Members of the Class shall be barred   and enjoined from prosecuting any of the Released Claims against any of the Released Persons.         9.17  This  Stipulation  and  its  Exhibits  shall  be  considered  to  have  been  negotiated,   executed and delivered, and to be wholly performed, in the State of New York and the rights and   obligations of the parties to the Stipulation shall be construed and enforced in accordance with, and   governed by, the internal, substantive laws of New York without giving effect to its choice-of-law   principles, except to the extent that federal law requires that federal law govern.         9.18  The headings herein are used for the purpose of convenience only and are not meant   to have legal effect.         9.19  This Stipulation shall not be construed more strictly against one party than another   merely by virtue of the fact that it, or any part of it, may have been prepared by counsel for one of   the Settling Parties, it being recognized that it is the result of arm’s-length negotiations between the   Settling  Parties  and  the  Settling  Parties  have  contributed  substantially  and  materially  to  the   preparation of this Stipulation.         9.20  Nothing in the Stipulation, or the negotiations relating thereto, is intended to or shall   be  deemed  to  constitute  a  waiver  of  any  applicable  privilege  or  immunity,  including,  without   limitation, attorney-client privilege, joint defense privilege, or work product protection.                                       - 39 -   

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 41 of 60                                                             EXECUTION COPY         9.21  Unless otherwise provided, the Settling Parties may agree to reasonable extensions of   time to carry out any of the provisions of this Stipulation without further order of the Court.         IN WITNESS WHEREOF, the parties hereto have caused the Stipulation to be executed, by   their duly authorized attorneys, dated September 30, 2019.                                            - 40 -   

 

Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 42 of 60                                                           EXECUTION COPY                                   ROBBINS GELLER RUDMAN                                   &DOWDLLP                                 DARREN J. ROBBINS                                 MICHAEL J.  DOWD                                 JONAH H.  GOLDSTEIN                                 DEBRA J. WYMAN                                 JESSICAv T.l SHINNEFIELD --    -                                              DEBRA   J. WYMAN                                  655 West Broadway, Suite 1900                                 San Diego, CA 92101-8498                                 Telephone: 619/231-1058                                 619/231-7423 (fax)                                 darrenr@rgrdlaw.com                                 miked@rgrdlaw.com                                 jonahg@rgrdlaw.com                                 debraw@rgrdlaw.com                                 jshinnefield@rgrdlaw.com                                  ROBBINS GELLER RUDMAN                                   &DOWDLLP                                 SAMUEL H.  RUDMAN                                 ROBERT M.  ROTHMAN                                 58 South Service Road, Suite 200                                 Melville, NY 11747                                 Telephone: 631/367-7100                                 631/367-1173 (fax)                                 srudman@rgrdlaw.com                                 rrothman@rgrdlaw.com                                  Lead Counsel for Lead Plaintiff and the Class                                  MILBANKLLP                                 SCOTT A.  EDELMAN                                 ANTONIA M. APPS                                 JED M. SCHWARTZ                                 JONATHAN OHRING                                         ~M~                                   - 41 -

 

    Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 43 of 60                                                              EXECUTION COPY                                        55 Hudson Yards                                     New York, NY  10001-2163                                     Telephone: 212/530-5000                                      MILBANKLLP                                     JERRY L. MARKS                                     2029 Century Park East                                     33rd Floor                                     Los Angeles, CA US 90067-3019                                      Attorneys for Defendants American Realty Capital                                     Properties, Inc. (n/k/a VEREIT, Inc.) and ARC                                     Properties Operating Partnership, L.P. (n/k/a                                     VEREIT Operating Partnership, L.P.)   MORRIS, MANNING & MARTIN, LLP         KELLOGG, HANSEN, TODD, FIGEL &  JOHN P. MacNAUGHTON                    FREDERICK, P.L.L.C.                                        REID M. FIGEL                                        REBECCA A.  BEYNON                                        ANDREW E.  GOLDSMITH                                        BRADLEY E.  OPPENHEIMER         JOHN P. MacNAUGHTON                           REID M. FIGEL   1600 Atlanta Financial Center         1615 M Street, NW, Suite 400  3343 Peachtree Road, NE               Washington, DC 20036  Atlanta, GA 30326                     Telephone: 202/326-7900  Telephone: 404/504-7689   BECKER, GLYNN, MUFFL Y,  CHASSIN & ROSINSKI LLP  299 Park Avenue  New York, NY 10171  Telephone: 212/888-3033   Attorneys for Defendant Scott P. Sealy, Attorneys for Defendants AR Capital, LLC, ARC  Sr.                                   Properties Advisors, LLC, Edward M. Weil, Peter                                        M. Budko, Brian D. Jones, William M. Kahane,                                        and Scott J. Bowman                                        - 42 -

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 44 of 60                                                               EXECUTION COPY                                        55 Hudson Yards                                      New York, NY 10001-2163                                      Telephone: 212/530-5000                                       MILBANKLLP                                      JERRY L. MARKS                                      2029 Century Park East                                      33rd Floor                                      Los Angeles, CA US 90067-3019                                       Attorneys for Defendants American Realty Capital                                      Properties, Inc. (n/k/a VEREIT, Inc.) and ARC                                      Properties Operating Partnership, L.P. (n/k/a                                      VEREIT Operating Partnership, L.P.)   MORRIS, MANNING & MARTIN, LLP         KELLOGG, HANSEN, TODD, FIGEL &  JOHN P. MacNAUGHTON                    FREDERICK, P.L.L.C.                                        REID M. FIGEL                                        REBECCA A.  BEYNON                                        ANDREW E.   GOLDSMITH                                        BRADLEY E.  OPPENHEIMER          JOHN P. MacNAUGHTON               ~M.FIGEL   1600 Atlanta Financial Center         1615 M Street, NW, Suite 400  3343 Peachtree Road, NE               Washington, DC 20036  Atlanta, GA 30326                     Telephone: 202/326-7900  Telephone: 404/504-7689   BECKER, GLYNN, MUFFLY,  CHASSIN & HOSINSKI LLP  299 Park A venue  NewYork,NY   10171  Telephone: 212/888-3033   Attorneys for Defendant Scott P. Sealy, Attorneys for Defendants AR Capital, LLC, ARC  Sr.                                   Properties Advisors, LLC, Edward M. Weil, Peter                                        M. Budko, Brian D. Jones, William M. Kahane,                                        and Scott J. Bowman                                        - 42-

 

       Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 45 of 60                                                                 EXECUTION COPY    SHEARMAN & STERLING LLP                STEPTOE & JOHNSON LLP   ADAMS. HAKKI                           MICHAEL C.   MILLER   DANIEL C.  LEWIS                       MICHAEL G.   SCAVELLI   H. MIRIAM FARBER     11J,C.L               1:n.            ))ANIEL C. LEWIS                         MICHAEL C.  MILLER   599 Lexington Avenue                   1114 A venue of the Americas   New York, NY  10022                    New York, NY  10036   Telephone: 212/848-4000                Telephone: 212/506-3900    Attorneys for Third-Party Underwriter  Attorneys for Defendant Brian S. Block   Defendants    WEIL, GOTSHAL & MANGES LLP             KIRKLAND & ELLIS LLP   CHRISTOPHER L.   GARCIA                JAMES P. GILLESPIE   RICHARD W.   SLACK                     BETH MUELLER   EVERT J. CHRISTENSEN, JR.   ADAM BOOKMAN   RAQUEL KELLERT          CHRISTOPHER L.   GARCIA                      JAMES P. GILLESPIE    767 Fifth Avenue                       1301 Pennsylvania Avenue, NW   New York, NY  10153                    Washington, DC 20004   Telephone: 212/310-8000                Telephone: 202/389-5000   Attorneys for Defendants Thomas A.     Attorneys for Defendant David S. Kay   Andruskevich, Bruce D. Frank, Leslie D.   Michelson, Edward G. Rendell and   William G. Stanley   ZUCKERMAN SPAEDER LLP                   PETRILLO KLEIN & BOXER LLP  ADAM L.   FOTIADES                      GUY PETRILLO                                          DANIEL Z. GOLDMAN            ADAM L.  FOTIADES                            GUY PETRILLO   1800 M  Street, NW, Suite 1000          655 Third Avenue, 22nd Floor  Washington, DC 2003 6                   NewYork,NY    10017  Telephone: 202/778-1800                 Telephone: 212/370-0330                                         - 43 -

 

    Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 46 of 60                                                              EXECUTION COPY   SHEARMAN & STERLING LLP               STEPTOE & JOHNSON LLP  ADAM S.  HAKKI                        MICHAEL C.  MILLER  DANIEL C. LEWIS                       MICHAEL G.  SCAVELLI  H. MIRIAM FARBER            DANIEL C.  LEWIS                        MICHAEL C.  MILLER  599 Lexington Avenue                  1114 A venue of the Americas  New York, NY 10022                    New York, NY 10036  Telephone: 212/848-4000               Telephone: 212/506-3900   Attorneys for Third-Party Underwriter Attorneys for Defendant Brian S. Block  Defendants   WEIL, GOTSHAL & MANGES LLP            KIRKLAND & ELLIS LLP  CHRISTOPHER L.  GARCIA                JAMES P. GILLESPIE  RICHARD W.  SLACK                     BETH MUELLER  EVERT J. CHRISTENSEN, JR.  ADAM BOOKMAN  RAQUEL KELLERT         CHRISTOPHER L.  GARCIA                     JAMES P. GILLESPIE   767 Fifth Avenue                      1301 Pennsylvania Avenue, NW  New York, NY 10153                    Washington, DC 20004  Telephone: 212/310-8000               Telephone: 202/389-5000  Attorneys for Defendants Thomas A.    Attorneys for Defendant David S. Kay  Andruskevich, Bruce D. Frank, Leslie D.  Michelson, Edward G. Rendell and  William G. Stanley                                        - 43 -

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 47 of 60                                                              EXECUTION COPY   SHEARMAN & STERLING LLP               STEPTOE & JOHNSON LLP  ADAM S.  HAKKI                        MICHAEL C.  MILLER  DANIEL C.  LEWIS                      MICHAEL G.  SCAVELLI    H. MIRIAM FARBER             DANIEL C. LEWIS                         MICHAEL C.  MILLER  599 Lexington Avenue                  1114 A venue of the Americas  New York, NY  10022                   New York, NY  10036  Telephone: 212/848-4000               Telephone: 212/506-3900   Attorneys for Third-Party Underwriter Attorneys for Defendant Brian S. Block  Defendants   WEIL, GOTSHAL & MANGES LLP            KIRKLAND & ELLIS LLP  CHRISTOPHER L. GARCIA                 JAMES P. GILLESPIE  RICHARD W.   SLACK                    BETH MUELLER  EVERT J. CHRISTENSEN, JR.  ADAM BOOKMAN  RAQUEL KELLERT        fkr::       CHRISTOPHER L. GARCIA                       JAMES P. GILLESPIE   767 Fifth Avenue                      1301 Pennsylvania Avenue, NW  New York, NY  10153                   Washington, DC 20004  Telephone: 212/310-8000               Telephone: 202/389-5000  Attorneys for Defendants Thomas A.    Attorneys for Defendant David S. Kay  Andruskevich, Bruce D. Frank, Leslie D.  Michelson, Edward G. Rendell and  William G. Stanley   ZUCKERMANSPAEDERLLP                   PETRILLO KLEIN & BOXER LLP  ADAM L. FOTIADES                      GUY PETRILLO                                        DANIEL Z. GOLDMAN            ADAM L. FOTIADES                           GUY PETRILLO   1800 M Street, NW, Suite 1000         655 Third A venue, 22nd Floor  Washington, DC 20036                  New York, NY 10017  Telephone: 202/778-1800               Telephone: 212/370-0330                                       - 43 -

 

  Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 48 of 60                                                                  EXECUTION COPY   SHEARMAN &     STERLING LLP             STEPTOE & JOHNSON LLP  ADAMS. HAKKI                            MICHAEL C.   MILLER  DANIEL C. LEWIS                         MICHAEL G.   SCAVELLI    H. MIRIAM FARB ER             DANIEL C. LEWIS                           MICHAEL C. MILLER  599 Lexington Avenue                    l 114·Avenue of the Americas  New York, NY  I 0022                    New York, NY  10036  Telephone: 212/848-4000                 Telephone: 212/506-3900   Attorneys for Third-Party Underwriter   Attorneys for Defendant Brian S. Block  Defendants   WEIL, GOTSHAL & MANGES LLP              KIRKLAND & ELLIS LLP  CHRISTOPHER L. GARCIA                   JAMES P. GILLESPIE  RICHARD W.   SLACK                      BETH MUELLER  EVERT J. CHRISTENSEN, JR.  ADAM BOOKMAN  RAQUEL KELLERT         CHRISTOPHER L.   GARCIA   767 Fifth Avenue                           . Pennsylvania Avenue, NW  New York, NY  10153                     Washington, DC 20004  Telephone: 212/310-8000                 Telephone: 202/389-5000  Attorneys for Defendants Thomas A.      Attorneys for Defendant David S. Kay  Andruskevich, Bruce D. Frank, Leslie D.  Michelson, Edward G. Rendell and  William G. Stanley   ZUCKERMAN SPAEDER LLP                   PETRILLO KLEIN & BOXER LLP  ADAM L. FOTJADES                        GUY PETRILLO                                          DANIEL Z. GOLDMAN            ADAM L. FOTJADES                             GUY PETRILLO   1800 M Street, NW, Suite l 000          655 Third Avenue, 22nd Floor  Washington, DC 20036                   New York, NY   10017  Telephone: 202/778-1800                 Telephone: 212/3 70-0330                                         - 43 -

 

   Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 49 of 60                                                           EXECUTION COPY    SHEARMAN & STERLING    LLP         STEPTOE &, JOHNSON  LLP   ADAMS. HAKKI                       MICHAEL C.  MILLER   DANIEL C. LEWIS                    MICHAEL  G. SCA VELLI   H. MIRIAM FARBER             DANIEL C. LEWJS                      MICHAEL  C. MILLER   599 Lexington Avenue               1114 Avenue of the Americas   New York, NY 10022                 New York, NY 10036   Telephone: 212/848-4000            Telephone: 212/506-3900    Attorneys for Third-Party Underwriter Attorneys for Defendant Brian S. Block   Defendants    WEIL, GOTSHAL  & MANGES LLP        KIRKLAND  & ELLIS LLP   CHRISTOPHER L. GARCIA              JAMES  P. GILLESPIE   RICHARD  W. SLACK                  BETH MUELLER   EVERT J. CHRISTENSEN, JR.   ADAM BOOKMAN   RAQUEL KELLERT         CHRISTOPHER L. GARCIA                    JAMES P. GILLESPIE    767 Fifth Avenue                   1301 Pennsylvania Avenue, NW   New York, NY 10153                 Washington, DC 20004   Telephone: 212/310-8000            Telephone: 202/389-5000   Attorneys for Defendants Thomas A. Attorneys for Defendant David S. Kay   Andruskevich, Bruce D. Frank, Leslie D.   Michelson, Edward G. Rendell and   William G. Stanley   ZUCKERMANSPAEDERLLP                 PETRILLO KLEIN & BOXER LLP  ADAM L. FOTIADES                    GUY PETRILLO                                      DANIEL  Z. GOLDMAN                                                    GUY  PETRILLO    1800 M Street, NW, Suite 1000      655 Third Avenue, 22nd Floor   Washington, DC 20036               New York, NY 10017   Telephone: 202/778-1800            Telephone: 212/370-0330                                     - 43 -

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 50 of 60                                                        EXECUTION  COPY   SHEARMAN & STERLING LLP           STEPTOE & JOHNSON LLP  ADAM  S. HAKKI                    MICHAEL C. MILLER  DANIEL C. LEWIS                   MICHAEL  G. SCA VELLI  H. MIRIAM FARBER            DANIEL C. LEWIS                     MICHAEL C. MILLER  599 Lexington Avenue              1114 Avenue  of the Americas  New York, NY 10022                New York, NY 10036  Telephone: 212/848-4000           Telephone: 212/506-3900   Attorneys for Third-Party Underwriter Attorneys for Defendant Brian S. Block  Defendants   WEIL, GOTSHAL & MANGES  LLP       KIRKLAND & ELLIS LLP  CHRISTOPHER L. GARCIA             JAMES P. GILLESPIE                              I                                                                                    I  RICHARD W. SLACK                  BETH MUELLER  EVERT J. CHRISTENSEN, JR.  ADAM BOOKMAN  RAQUEL KELLERT        CHRISTOPHER L. GARCIA                   JAMES P. GILLESPIE   767 Fifth Avenue                  1301 Pennsylvania Avenue, NW  New York, NY 10153                Washington, DC 20004  Telephone: 212/310-8000           Telephone: 202/389-5000  Attorneys for Defendants Thomas A. Attorneys for Defendant David S. Kay  Andruskevich, Bruce D. Frank, Leslie D.  Michelson, Edward G. Rendell and  William G. Stanley   ZUCKERMAN SPAEDER LLP             PETRILLO KLEIN & BOXER LLP  ADAM L. FOTIADES                  GUY PETRILLO                                    DANIEL Z. GOLDMAN           ADAM  L. FOTIADES           '          GUY PETRILLO   1800 M Street, NW, Suite 1000     655 Third Avenue,  22nd Floor  Washington, DC 20036              New York, NY 10017  Telephone: 202/778-1800           Telephone: 212/370-0330                                   - 43 -

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 51 of 60                                                               EXECUTION COPY     Daniel P. Moylan   100 East Pratt Street, Suite 2440   Baltimore, MD 21202-1031   Telephone: 410/332-0444    Attorneys for Defendant Lisa P.      Attorneys for Defendant Lisa Beeson   McAlister     WINGET, SPADAFORA                     PAUL, WEISS, RIFKIND, WHARTON    & SCHWARTZBERG LLP                    & GARRISON LLP   LUIGI SPADAFORA                       THEODORE V.  WELLS, JR.   MATTHEW TRACY                        DANIEL J. KRAMER                                        LORIN L. REISNER                                        AUDRAJ. SOLOWAY                                         CHRISTOPHER L. FILBURN             MATTHEW TRACY                        CHRISTOPHER L. FILBURN   45 Broadway, 19th Floor               1285 Avenue of the Americas   New York, NY 10003                   New York, NY  10019   Telephone: 212/221-6900              Telephone: 212/373-3000   Attorneys for Defendant Realty Capital Attorneys for Defendant Nicholas S. Schorsch   Securities, LLC    SIDLEY AUSTIN LLP   BRUCE R. BRAUN   MELANIE E. WALKER   KENDRA L. STEAD            BRUCE R.  BRAUN   One South Dearborn   Chicago, IL 60603  Telephone: 312/853-7000    SIDLEY AUSTIN LLP   GARYF. BENDINGER   787 Seventh Avenue  New York, NY  10019  Telephone: 212/839-5300  Attorneys for Defendant Grant Thornton,  LLP                                        - 44-

 

    Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 52 of 60                                                         EXECUTION COPY   Daniel P. Moylan  100 East Pratt Street, Suite 2440  Baltimore, MD 21202-10:31  Telephone: 410/332w0444  Attorneys for Defendant Lisa P.   Attorneys for Defendant Lisa Beeson  McAlister   WINGET, SPADAFORA                 PAUL, WEISS, RIFKIND, WHARTON   & SCHW ARTZBERO LLP               &. GARRISON LLP  LUIGI SPADAFORA                   THEODORE V.  WELLS, JR.  MATTHEW   TRACY                   DANIEL 1. KRAMER                                    LORIN L. REISNER                                    AUDRA J. SOLOWAY                                     CHRISTOPHER L. FILBURN           MATTHEW TRACY                     CHRISTOPHER L. FILBURN  45 Broadway, 19th Floor            1285 Avenue of the Americas  New York, NY 10003                New York, NY 10019  Telephone: 212/221-6900           Telephone: 212/373-3000  Attorneys for Defendant Realty Capital Attorneys for Defendant Nicholas S. Schorsch  Securitiea. LLC   SIDLEY AUSTIN LLP  BRUC:E il, BRAUN  MELANIE E. WALKER  KENDRA L. STEAD           BRUCE R. BRAUN  One South Dearborn  Chicaso, a 60603  Telephone: 312/853-7000  SIDLEY AUSTIN LLP  OARY F. BENDING'ER  787 Seventh Avenue  New York, NY 10019  Telephone: 212/SJ9-5300  Attorneys for Defendant Grant Thornton,  LLP                                    • 44 • 

 

    Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 53 of 60                                                               EXECUTION COPY    Daniel P. Moylan  100 East Pratt Street, Suite 2440  Baltimore, MD 21202-1031  Telephone: 410/332-0444   Attorneys for Defendant Lisa P.       Attorneys for Defendant Lisa Beeson  McAlister   WINGET, SPADAFORA                     PAUL, WEISS, RIFKIND, WHARTON   & SCHWARTZBERG LLP                    & GARRISON LLP  LUIGI SPADAFORA                       THEODORE V.   WELLS, JR.  MATTHEW TRACY                         DANIEL J. KRAMER                                        LORIN L. REISNER                                        AUDRA J.  SOLOWAY                                        CHRISTOPHER L.   FILBURN            MATTHEW TRACY                         CHRISTOPHER L.  FILBURN  45 Broadway, 19th Floor               1285 Avenue of the Americas  New York, NY  10003                   New York, NY  10019  Telephone: 212/221-6900               Telephone: 212/373-3000  Attorneys for Defendant Realty Capital Attorneys for Defendant Nicholas S. Schorsch  Securities, LLC   SIDLEY AUSTIN LLP  BRUCE R.  BRAUN  MELANIE E.  WALKER  KENDRA L.  STEAD   ~e. ~,Jlt.."<           BRUCE R. BRAUN  One South Dearborn  Chicago, IL 60603  Telephone: 312/853-7000   SIDLEY AUSTIN LLP  GARYF. BENDINGER  787 Seventh A venue  New York, NY 10019  Telephone: 212/839-5300  Attorneys for Defendant Grant Thornton,  LLP                                       - 44 -

 

     Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 54 of 60                             CERTIFICATE OF SERVICE         I hereby certify under penalty of perjury that on September 30, 2019, I authorized the   electronic filing of the foregoing with the Clerk of the Court using the CM/ECF system which will   send notification of such filing to the e-mail addresses on the attached Electronic Mail Notice List,   and I hereby certify that I caused the mailing of the foregoing via the United States Postal Service   to the non-CM/ECF participants indicated on the attached Manual Notice List.                                          s/ Debra J. Wyman                                         DEBRA J. WYMAN                                                                                  ROBBINS GELLER RUDMAN                                            & DOWD LLP                                         655 West Broadway, Suite 1900                                         San Diego, CA  92101-8498                                         Telephone:  619/231-1058                                         619/231-7423 (fax)                                                                                  E-mail:  debraw@rgrdlaw.com   

 

                    Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 55 of 60 Mailing Information for a Case 1:15-mc-00040-AKH In re American Realty Capital Properties, Inc. Litigation  Electronic Mail Notice List  The following are those who are currently on the list to receive e-mail notices for this case.       Jeffrey Simon Abraham       jabraham@aftlaw.com       Robin L. Alperstein       ralperstein@beckerglynn.com,esteckhan@beckerglynn.com,hhill@beckerglynn.com       Antonia Marie Apps       aapps@milbank.com,ggreen@milbank.com,AutoDocketECF@milbank.com       Adam M. Apton       aapton@zlk.com       Karim Basaria       kbasaria@sidley.com       Khristoph Becker       kbecker@steptoe.com,spu@steptoe.com,ehartman@steptoe.com,ocorn@steptoe.com       Gary Frederick Bendinger       gbendinger@sidley.com,nyefiling@sidley.com,gary-bendinger-4030@ecf.pacerpro.com       Stanley D Bernstein       bernstein@bernlieb.com,birkeland@bernlieb.com,ecf@bernlieb.com       Rebecca A. Beynon       rbeynon@kellogghansen.com       Brian Roger Blais       brian.blais@usdoj.gov,usanys.ecf@usdoj.gov,CaseView.ECF@usdoj.gov       Jeffrey Craig Block       jeff@blockesq.com,jason@blockesq.com,pacer-blockleviton-9062@ecf.pacerpro.com       Kristen Leigh Bokhan       kristen.bokhan@kirkland.com       Adam Jerrod Bookman       adam.bookman@weil.com,adam-bookman-4279@ecf.pacerpro.com       Bruce Roger Braun       bbraun@sidley.com,nyefiling@sidley.com,efilingnotice@sidley.com,catherine.stewart@sidley.com,kbasaria@sidley.com,ntygesso@sidley.com,nconrad@sidley.com,b      braun-9612@ecf.pacerpro.com       Kristina Anne Bunting       kbunting@paulweiss.com,mao_fednational@paulweiss.com       Jennifer Nunez Caringal       jcaringal@rgrdlaw.com,SCaesar@rgrdlaw.com,5233378420@filings.docketbird.com,kmccormack@rgrdlaw.com,lmix@rgrdlaw.com       Alexandra Rebecca Clark       aclark@pkbllp.com       Neil Harris Conrad       nconrad@sidley.com,efilingnotice@sidley.com,neil-conrad-4222@ecf.pacerpro.com       Patrick Joseph Coughlin       patc@rgrdlaw.com,smiller@rgrdlaw.com,e_file_sd@rgrdlaw.com       Jason Robert D'Agnenica       jasondag@ssbny.com       Glen DeValerio       gdevalerio@bermandevalerio.com,bdentremont@bermandevalerio.com,ecf@bermandevalerio.com,bmccarthy@bermandevalerio.com       Bruce Whitney Dona       bruce.dona@ksfcounsel.com       Michael Joseph Dowd       miked@rgrdlaw.com,debg@rgrdlaw.com,e_file_sd@rgrdlaw.com,tome@rgrdlaw.com       Daniel S. Drosman       ddrosman@rgrdlaw.com,E_File_SD@rgrdlaw.com,tholindrake@rgrdlaw.com,5593753420@filings.docketbird.com       H. Miriam Farber       mfarber@shearman.com,managing-attorney-5081@ecf.pacerpro.com,CourtAlert@Shearman.com,miriam-farber-      7421@ecf.pacerpro.com,manattyoffice@shearman.com

 

               Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 56 of 60 Meagan Alicia Farmer  mfarmer@gardylaw.com  Reid Mason Figel  rfigel@kellogghansen.com,fli@kellogghansen.com,cparra@kellogghansen.com  Christopher Lee Filburn  cfilburn@paulweiss.com,mao_fednational@paulweiss.com  Robert Craig Finkel  rfinkel@wolfpopper.com,cdunleavy@wolfpopper.com,mgianfagna@wolfpopper.com  Jason A. Forge  jforge@rgrdlaw.com,2249257420@filings.docketbird.com,tholindrake@rgrdlaw.com,e_file_SD@rgrdlaw.com  Adam Fotiades  afotiades@zuckerman.com  Molly Bruder Fox  mbfox@steptoe.com  Christopher Louis Garcia  christopher.garcia@weil.com,mco.ecf@weil.com,evert.christensen@weil.com,christopher-garcia-1339@ecf.pacerpro.com,nymao@ecf.pacerpro.com  James Philip Gillespie  jgillespie@kirkland.com,kevin.mccarthy@kirkland.com,kenymanagingclerk@kirkland.com  Daniel Zachary Goldman  dgoldman@pkbllp.com  Andrew Edward Goldsmith  agoldsmith@kellogghansen.com,ecfnotices@kellogghansen.com,ggoldfeder@kellogghansen.com,ecf-2ff5a29c9f5d@ecf.pacerpro.com  Jonah H. Goldstein  jonahg@rgrdlaw.com  Douglas W. Greene  dgreene@bakerlaw.com,agougisha@bakerlaw.com,bhlitdocket@bakerlaw.com  Theresa Hsin-Yi Gue  tgue@pkbllp.com  John Gueli  jgueli@shearman.com,managing-attorney-5081@ecf.pacerpro.com,CourtAlert@Shearman.com,manattyoffice@shearman.com,john-gueli-5051@ecf.pacerpro.com  Adam Selim Hakki  ahakki@shearman.com,managing-attorney-5081@ecf.pacerpro.com,Courtalert@shearman.com,manattyoffice@shearman.com,adam-hakki-1816@ecf.pacerpro.com  John Louis Hardiman  hardimanj@sullcrom.com,john-hardiman-9552@ecf.pacerpro.com,s&cmanagingclerk@sullcrom.com  David Charles Harrison  dharrison@lowey.com  Barbara J. Hart  bhart@lowey.com  Steven P. Harte  steven@blockesq.com,pacer-blockleviton-9062@ecf.pacerpro.com  James Ormerod Heyworth , V jheyworth@sidley.com,nyefiling@sidley.com,james-heyworth-0340@ecf.pacerpro.com  William Scott Holleman  holleman@bespc.com,ecf@bespc.com  Geoffrey Coyle Jarvis  gjarvis@ktmc.com,9343632420@filings.docketbird.com,mswift@ktmc.com  Frank James Johnson  frankj@johnsonandweaver.com,paralegal@johnsonandweaver.com  Rebecca M Katz  rkatz@katzlawnewyork.com,disaacson@motleyrice.com,dabel@motleyrice.com,lkorenblit@motleyrice.com,kweil@motleyrice.com  Christopher J. Keller  ckeller@labaton.com,5497918420@filings.docketbird.com,lpina@labaton.com,ElectronicCaseFiling@labaton.com  Michael Anthony Keough  mkeough@steptoe.com,ehartman@steptoe.com,ocorn@steptoe.com  Phillip C. Kim  pkim@rosenlegal.com

 

               Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 57 of 60 Robert Klipper  rklipper@kellogghansen.com,jmarine@kellogghansen.com  Lawrence Paul Kolker  kolker@whafh.com  Alexia Dorothea Korberg  akorberg@paulweiss.com,mao_fednational@paulweiss.com  Daniel Jonathan Kramer  dkramer@paulweiss.com,mao_fednational@paulweiss.com  Larry Howard Krantz  lkrantz@krantzberman.com  Eric Albin Larson  elarson@mmmlaw.com,eeckard@mmmlaw.com  Angel P. Lau  alau@rgrdlaw.com,8467512420@filings.docketbird.com,tdevries@rgrdlaw.com  Grace Jheeyoung Lee  grace.lee@shearman.com,managing-attorney-5081@ecf.pacerpro.com,CourtAlert@Shearman.com,grace-lee- 3889@ecf.pacerpro.com,manattyoffice@shearman.com,mariusz.jedrzejewski@shearman.com  Justin David Lerer  jlerer@paulweiss.com,mao_fednational@paulweiss.com  Michelle Lynn Levin  mlevin@steptoe.com,spu@steptoe.com,ehartman@steptoe.com,ocorn@steptoe.com  Daniel Craig Lewis  daniel.lewis@shearman.com,managing-attorney-5081@ecf.pacerpro.com,daniel-lewis- 6070@ecf.pacerpro.com,CourtAlert@Shearman.com,manattyoffice@shearman.com  Jeremy Alan Lieberman  jalieberman@pomlaw.com,ahood@pomlaw.com,disaacson@pomlaw.com,abarbosa@pomlaw.com  Neil Robert Lieberman  nlieberman@hsgllp.com,crodriguez@hsgllp.com,Managingclerk@hsgllp.com  Howard Theodore Longman  tsvi@aol.com,hlongman@ssbny.com  Morgan Paige Lucas  mlucas@steptoe.com,ehartman@steptoe.com,ocorn@steptoe.com  John Phillip MacNaughton  jpm@mmmlaw.com,wew@mmmlaw.com,elarson@mmmlaw.com  Michael David Margulies  mmargulies@carltonfields.com  Jerry Lee Marks  jmarks@milbank.com  Rita Kathleen Maxwell  rita.maxwell@bracewelllaw.com,mco@bracewelllaw.com  Francis Paul McConville  fmcconville@labaton.com,HChang@labaton.com,lpina@labaton.com,drogers@labaton.com,9849246420@filings.docketbird.com,electroniccasefiling@labaton.com  Glen Garrett McGorty  gmcgorty@crowell.com  Donald Alan Migliori  dmigliori@motleyrice.com,kdotson@motleyrice.com  Michael Campion Miller  mmiller@steptoe.com,spu@steptoe.com,ocorn@Steptoe.com,ehartman@steptoe.com  Mark Tamerlane Millkey  mmillkey@rgrdlaw.com,e_file_ny@rgrdlaw.com,1781895420@filings.docketbird.com  Erin Jennifer Morgan  ejmorgan@paulweiss.com,mao_fednational@paulweiss.com  Christopher F. Moriarty  cmoriarty@motleyrice.com,sturman@sturman.ch  Daniel P. Moylan  dmoylan@zuckerman.com,jlinton@zuckerman.com,cvandergriff@zuckerman.com

 

               Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 58 of 60 Beth Mueller  beth.mueller@kirkland.com,lroberts@kirkland.com,kenymanagingclerk@kirkland.com  Mark Francis Murphy  mmurphy@steptoe.com  Sean Michael Nadel  snadel@kellogghansen.com  William H. Narwold  bnarwold@motleyrice.com,glevin@motleyrice.com,lmclaughlin@motleyrice.com,vlepine@motleyrice.com,ajanelle@motleyrice.com  Shawn Patrick Naunton  snaunton@zuckerman.com,lgehlbach@zuckerman.com  Gregory Mark Nespole  gnespole@zlk.com,jtash@zlk.com  Ivy T. Ngo  ingo@rgrdlaw.com,e_file_sd@rgrdlaw.com  Jonathan Ohring  johring@milbank.com,DMarcou@milbank.com,mprostko@milbank.com,TQuinn@milbank.com,JKammerman@milbank.com,milbank@ecf.courtdrive.com,jon- ohring- 4945@ecf.pacerpro.com,dhooks1@milbank.com,klandis@milbank.com,AutoDocketECF@milbank.com,ggreen@milbank.com,MGrier@milbank.com,molsson@milb  Bradley E Oppenheimer  boppenheimer@kellogghansen.com,ecf-780f0d54d6a1@ecf.pacerpro.com,ggoldfeder@kellogghansen.com  Guy Petrillo  gpetrillo@pkbllp.com  Ashley M. Price  APrice@rgrdlaw.com,e_file_sd@rgrdlaw.com,9561670420@filings.docketbird.com,lmix@rgrdlaw.com  Kingdar Prussien  kprussien@milbank.com  Arlen Pyenson  apyenson@crowell.com  Fei-Lu Qian  fqian@saxenawhite.com,e-file@saxenawhite.com,cwallace@saxenawhite.com  Leah Margaret Quadrino  lquadrino@steptoe.com,pparker@steptoe.com  Daniel Brett Rehns  drehns@hrsclaw.com,efilings@hrsclaw.com  Kenneth Mark Rehns  krehns@saxenawhite.com,krehns@cohenmilstein.com,e-file@saxenawhite.com,cwallace@saxenawhite.com  Julie Goldsmith Reiser  jreiser@cohenmilstein.com  Lorin L. Reisner  LReisner@paulweiss.com,mao_fednational@paulweiss.com  Joseph F. Rice  jrice@motleyrice.com  Ann Kimmel Ritter  aritter@motleyrice.com,glevin@motleyrice.com,kweil@motleyrice.com  Darren J. Robbins  e_file_sd@rgrdlaw.com,jcaringal@rgrdlaw.com  Lara Elizabeth Romansic  lromansic@steptoe.com  Laurence Matthew Rosen  lrosen@rosenlegal.com  David Avi Rosenfeld  drosenfeld@rgrdlaw.com,e_file_ny@rgrdlaw.com,2879289420@filings.docketbird.com,e_file_sd@rgrdlaw.com  Robert M. Rothman  rrothman@rgrdlaw.com,e_file_ny@rgrdlaw.com,9858910420@filings.docketbird.com,e_file_sd@rgrdlaw.com  Samuel Howard Rudman  srudman@rgrdlaw.com,e_file_ny@rgrdlaw.com,mblasy@rgrdlaw.com,e_file_sd@rgrdlaw.com

 

               Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 59 of 60 Peter George Safirstein  psafirstein@safirsteinmetcalf.com,sfeerick@safirsteinmetcalf.com  Michael Gerard Scavelli  mscavelli@steptoe.com,spu@steptoe.com,ehartman@steptoe.com,ocorn@steptoe.com  Jed Mastren Schwartz  jschwartz@milbank.com,jed-schwartz-8050@ecf.pacerpro.com,milbank@ecf.courtdrive.com,ggreen@milbank.com,AutoDocketECF@milbank.com  Kevin S. Sciarani  ksciarani@rgrdlaw.com,3827167420@filings.docketbird.com,tdevries@rgrdlaw.com,e_file_sd@rgrdlaw.com  Joseph R. Seidman  seidman@bernlieb.com  Jonathan Lucas Shapiro  jshapiro@kasowitz.com,courtnotices@kasowitz.com,autodocket@kasowitz.com  Jessica T. Shinnefield  jshinnefield@rgrdlaw.com,4243953420@filings.docketbird.com,landracchio@rgrdlaw.com  Thomas Michael Skelton  tskelton@lowey.com  Richard William Slack  richard.slack@weil.com,mco.ecf@weil.com,richard-slack- 7880@ecf.pacerpro.com,adam.bookman@weil.com,Patrick.Branson@weil.com,nymao@ecf.pacerpro.com,evert.christensen@weil.com,Raquel.Kellert@weil.com  Patrick Kevin Slyne  pkslyne@ssbny.com  Patrick C Smith  psmith@dehay.com  Audra Jan Soloway  asoloway@paulweiss.com,mao_fednational@paulweiss.com  Luigi Spadafora  spadafora.l@wssllp.com  Kendra L Stead  kstead@sidley.com,efilingnotice@sidley.com,tcollier@sidley.com,jdent@sidley.com,kendra-stead-0480@ecf.pacerpro.com  Michael Howard Steinberg  steinbergm@sullcrom.com,michael-h-steinberg-5026@ecf.pacerpro.com,s&cmanagingclerk@sullcrom.com  Christopher D. Stewart  cstewart@rgrdlaw.com,karenc@rgrdlaw.com,e_file_sd@rgrdlaw.com  Elizabeth Johnson Stewart  elizabeth.stewart@shearman.com,managing-attorney-5081@ecf.pacerpro.com,CourtAlert@Shearman.com,elizabeth-stewart- 0821@ecf.pacerpro.com,manattyoffice@shearman.com  Ellen Anne Gusikoff Stewart  elleng@rgrdlaw.com  Daniel Ben Tehrani  Daniel.Tehrani@usdoj.gov,CaseView.ECF@usdoj.gov  Steven Jeffrey Toll  stoll@cohenmilstein.com,efilings@cohenmilstein.com  Matthew Tracy  tracy.m@wssllp.com  Nicholas Tygesson  ntygesso@sidley.com  Anil Karim Vassanji  avassanji@fklaw.com  Melanie Elizabeth Walker  mewalker@sidley.com,melanie-walker-7174@ecf.pacerpro.com,efilingnotice@sidley.com  Reid Weingarten  rweingarten@steptoe.com  Joseph Harry Weiss  jweiss@weisslawllp.com,infony@weisslawllp.com,joshua-rubin-1257@ecf.pacerpro.com,exec@weisslawllp.com  Theodore Von Wells , Jr twells@paulweiss.com,mao_fednational@paulweiss.com

 

                         Case 1:15-mc-00040-AKH   Document 1272   Filed 09/30/19   Page 60 of 60        Collin White         cwhite@kellogghansen.com         Regis C. Worley , Jr        rworley@rgrdlaw.com         Debra J. Wyman         debraw@rgrdlaw.com,e_file_sd@rgrdlaw.com,9404133420@filings.docketbird.com,scaesar@rgrdlaw.com         Genevieve Graeme York-Erwin         gyorkerwin@bakerlaw.com  Manual Notice List  The following is the list of attorneys who are not on the list to receive e-mail notices for this case (who therefore require manual noticing). You may wish to use your mouse to select and copy this list into your word processing program in order to create notices or labels for these recipients.  ”ƒ’‹–ƒŽ  ,     TM‹‰Š–Š‹ŽŽ‹’‘•–TM‹...�  Zuckerman Spaeder, LLP  1800  M  Street,   N.W.,   Ste. 1000  Washington, DC 20036-5802   ...‘––Ž‡šƒ�†‡”†‡Ž�ƒ�  Milbank LLP  55 Hudson Yards  New York City, NY 10001-2163   ‡ ̃‹�ƒ––‘�  ,     ‹ŽŽ‹ƒ�ƒ›Ž‘”  Zuckerman Spaeder LLP  1800 M Street, N.W  Washington, DC 20036   ƒ ̃‹†ŜƒŽ–‘�  Robbins Geller Rudman & Dowd LLP (SANDIEGO)  655 West  Broadway  Suite  1900  San Diego, CA 92101   „„›Ŝ‡�œ‡Ž  ,   

 

     Case 1:15-mc-00040-AKH   Document 1272-1   Filed 09/30/19   Page 1 of 1              INDEX OF EXHIBITS TO STIPULATION OF SETTLEMENT                                                                                                                                                        DOCUMENT                                  EXHIBIT   [Proposed] Order Granting Preliminary Approval Pursuant to Fed. R. Civ. P. 23(e)(1) A  and Permitting Notice to the Class   Notice of Proposed Settlement of Class Action                           A-1   Proof of Claim and Release                                              A-2   Summary Notice of Proposed Settlement of Class Action                   A-3   [Proposed] Order and Final Judgment                                      B      4823-5678-9672.v1 

 

Case 1:15-mc-00040-AKH   Document 1272-2   Filed 09/30/19   Page 1 of 11                                    EXHIBIT A                

 

    Case 1:15-mc-00040-AKH   Document 1272-2   Filed 09/30/19   Page 2 of 11                                                             EXECUTION COPY   UNITED STATES DISTRICT COURT  SOUTHERN DISTRICT OF NEW YORK                                           x    In re AMERICAN REALTY CAPITAL         :  Civil Action No. 1:15-mc-00040-AKH  PROPERTIES, INC. LITIGATION           :                                        :  CLASS ACTION                                        :  This Document Relates To:             :                                          :        ALL ACTIONS.                    :                                        x            [PROPOSED] ORDER GRANTING PRELIMINARY APPROVAL PURSUANT         TO FED. R. CIV. P. 23(e)(1) AND PERMITTING NOTICE TO THE CLASS                                     EXHIBIT A      42350.00200 

 

     Case 1:15-mc-00040-AKH   Document 1272-2   Filed 09/30/19   Page 3 of 11                                                              EXECUTION COPY          WHEREAS, an action pending before this Court is styled In re American Realty Capital    Properties, Inc. Litigation, No. 1:15-mc-00040-AKH (S.D.N.Y.) (the “Litigation”);          WHEREAS, Lead Plaintiff having made a motion, pursuant to Federal Rule of Civil    Procedure 23(e), for an order preliminarily approving the Settlement of this Litigation, in    accordance with a Stipulation of Settlement, dated September 30, 2019 (the “Stipulation”), which,    together with the Exhibits annexed thereto, sets forth the terms and conditions for a proposed    Settlement of the Litigation between the Settling Parties and for dismissal of the Litigation with    prejudice upon, and subject to, the terms and conditions set forth therein; and the Court having    read and considered: (1) the motion for preliminary approval of the Settlement, and the papers    filed and arguments made in connection therewith, and (2) the Stipulation and the exhibits annexed    thereto;           WHEREAS, the Settling Parties having consented to the entry of this Order; and          WHEREAS, unless otherwise defined, all terms used herein have the same meanings as set    forth in the Stipulation.          NOW, THEREFORE, IT IS HEREBY ORDERED:          1.    The Court has reviewed the Stipulation and does hereby preliminarily approve the    Stipulation and the Settlement set forth therein as fair, reasonable and adequate, subject to further    consideration at the Final Approval Hearing (as defined in ¶3 below).          2.    The Court preliminarily finds that the proposed Settlement should be approved as:    (i) it is the result of serious, extensive arm’s-length and non-collusive negotiations; (ii) falling   within a range of reasonableness warranting final approval; (iii) having no obvious deficiencies;   (iv) there is no substantive deviation from the Class previously certified and later modified by the                                          - 1 -    

 

    Case 1:15-mc-00040-AKH   Document 1272-2   Filed 09/30/19   Page 4 of 11                                                             EXECUTION COPY   Court; and (v) warranting notice of the proposed Settlement to Class Members and further   consideration of the Settlement at the Final Approval Hearing described below.         3.    A hearing shall be held before this Court on _______________, 2020, at ___ _.m.   [a date that is one hundred (100) calendar days or more from the date of this Order] (the “Final   Approval Hearing”), at the Daniel Patrick Moynihan United States Courthouse, United States   District Court for the Southern District of New York, 500 Pearl Street, New York, NY 10007, to   determine whether the proposed Settlement of the Litigation on the terms and conditions provided   for in the Stipulation is fair, reasonable and adequate to the Class and should be approved by the   Court; to determine whether a Judgment as provided in ¶1.19 of the Stipulation should be entered;   to determine whether the proposed Plan of Allocation should be approved; to determine the amount   of attorneys’ fees, costs, charges and expenses that should be awarded to Lead Counsel; to   determine any award to Plaintiffs pursuant to 15 U.S.C. §78u-4(a)(4); to hear any objections by   Class Members to: (i) the Settlement or Plan of Allocation; (ii) the award of attorneys’ fees and   expenses to Lead Counsel; and (iii) awards to Plaintiffs pursuant to 15 U.S.C. §78u-4(a)(4); and   to consider such other matters the Court deems appropriate.  The Court may adjourn the Final   Approval Hearing without further notice to the Class.         4.    The Court approves the form, substance, and requirements of the Notice of   Proposed Settlement of Class Action (“Notice”) and Proof of Claim and Release, substantially in   the forms annexed hereto as Exhibits A-1 and A-2, respectively.         5.    The Court approves the form of the Summary Notice of Proposed Settlement of   Class Action (“Summary Notice”), substantially in the form annexed hereto as Exhibit A-3.                                         - 2 -   

 

    Case 1:15-mc-00040-AKH   Document 1272-2   Filed 09/30/19   Page 5 of 11                                                             EXECUTION COPY         6.    The firm of Gilardi & Co. LLC (“Claims Administrator”) is hereby appointed to   supervise and administer the notice procedure as well as the processing of claims as more fully set   forth below.         7.    Not later than ___________, 2019 [a date twenty-one (21) calendar days after the   Court signs and enters this Order] (the “Notice Date”), the Claims Administrator shall cause a   copy of the Notice and Proof of Claim and Release, substantially in the forms annexed hereto, to   be mailed by First-Class Mail to all Class Members who can be identified with reasonable effort   and to be posted on the case-designated website, www.ARCPSecuritiesLitigation.com.         8.    Not later than ___________, 2019 [a date seven (7) calendar days after the Notice   Date], the Claims Administrator shall cause the Summary Notice to be published once in The Wall   Street Journal, and once over a national newswire service.         9.    At least seven (7) calendar days prior to the Final Approval Hearing, Lead Counsel   shall serve on Defendants’ Counsel and file with the Court proof, by affidavit or declaration, of   such mailing and publishing.         10.   The Claims Administrator shall use reasonable efforts to give notice to nominee   purchasers such as brokerage firms and other persons or entities who purchased or otherwise   acquired ARCP Securities between February 28, 2013 and October 29, 2014 as record owners but   not as beneficial owners. Such nominee purchasers are directed, within fourteen (14) business days   of their receipt of the Notice, to either forward copies of the Notice and Proof of Claim and Release   to their beneficial owners or to provide the Claims Administrator with lists of the names and   addresses of the beneficial owners, and the Claims Administrator is ordered to send the Notice and   Proof of Claim and Release promptly to such identified beneficial owners.  Nominee purchasers   who elect to send the Notice and Proof of Claim and Release to their beneficial owners shall send                                        - 3 -   

 

    Case 1:15-mc-00040-AKH   Document 1272-2   Filed 09/30/19   Page 6 of 11                                                             EXECUTION COPY   a statement to the Claims Administrator confirming that the mailing was made as directed.    Additional copies of the Notice shall be made available to any record holder requesting such for   the purpose of distribution to beneficial owners, and such record holders shall be reimbursed from   the Settlement Fund, upon receipt by the Claims Administrator of proper documentation, for the   reasonable expense of sending the Notice and Proof of Claim and Release to beneficial owners.         11.   The form and content of the notice program described herein and the methods set   forth herein for notifying the Class of the Settlement and its terms and conditions, the Fee and   Expense Application, and the Plan of Allocation meet the requirements of Rule 23 of the Federal   Rules of Civil Procedure, the Private Securities Litigation Reform Act of 1995 and due process,   constitute the best notice practicable under the circumstances, and shall constitute due and   sufficient notice to all Persons entitled thereto.         12.   All fees, costs, and expenses incurred in identifying and notifying Members of the   Class shall be paid from the Settlement Fund and in no event shall any of the Released Persons   bear any responsibility or liability for such fees, costs, or expenses.         13.   All Class Members (except Persons who requested exclusion pursuant to the Notice   of Pendency of Class Action provided in August 2019 and Persons that entered into a settlement   agreement or otherwise provided a release to any Defendant relating to or arising from the purchase   or other acquisition of ARCP Securities prior to October 29, 2014) shall be bound by all   determinations and judgments in the Litigation concerning the Settlement, including, but not   limited to, the releases provided for therein, whether favorable or unfavorable to the Class,   regardless of whether such Persons seek or obtain by any means, including, without limitation, by   submitting a Proof of Claim and Release or any similar document, any distribution from the   Settlement Fund or the Net Settlement Fund.                                        - 4 -   

 

    Case 1:15-mc-00040-AKH   Document 1272-2   Filed 09/30/19   Page 7 of 11                                                             EXECUTION COPY         14.   VEREIT shall provide within 10 days of the entry of this order: (a) to Lead Counsel   the identity of the settling  parties that entered into a settlement agreement or otherwise provided   a release to any Defendant relating to or arising from the purchase or other acquisition of ARCP   Securities prior to October 29, 2014 and the language memorializing the releasors therein; (b) to   Lead Counsel the scope of any release(s) provided; and (c) to the Claims Administrator, to the   extent that it is in VEREIT’s possession, the anonymized underlying trading data of such settling   parties and releasors.          15.   Class Members who wish to participate in the Settlement shall complete and submit   a Proof of Claim and Release in accordance with the instructions contained therein.  Unless the   Court orders otherwise, all Proofs of Claim must be postmarked or submitted electronically no   later than ____________, 2020 [a date ninety (90) calendar days from the Notice Date].  Any Class   Member who does not submit a Proof of Claim and Release within the time provided shall be   barred from sharing in the distribution of the proceeds of the Net Settlement Fund, unless otherwise   ordered by the Court, but shall nevertheless be bound by any final judgment entered by the Court.    Notwithstanding the foregoing, Lead Counsel shall have the discretion (but not the obligation) to   accept late-submitted claims for processing by the Claims Administrator so long as distribution of   the Net Settlement Fund is not materially delayed thereby.  No person shall have any claim against   Lead Plaintiff, Lead Counsel or the Claims Administrator by reason of the decision to exercise   such discretion whether to accept late submitted claims.         16.   Any Member of the Class may enter an appearance in the Litigation, at his, her, or   its own expense, individually or through counsel of his, her, or its own choice.  If they do not enter   an appearance, they will be represented by Lead Counsel.                                         - 5 -   

 

     Case 1:15-mc-00040-AKH   Document 1272-2   Filed 09/30/19   Page 8 of 11                                                              EXECUTION COPY          17.   Any Member of the Class may appear at the Final Approval Hearing and object if    he, she, or it has any reason why the proposed Settlement of the Litigation should not be approved    as fair, reasonable and adequate, or why a judgment should not be entered thereon, why the Plan    of Allocation should not be approved, or why attorneys’ fees, together with costs, charges and    expenses should not be awarded or awards to Plaintiffs pursuant to 15 U.S.C. §78u-4(a)(4) should    not be awarded; provided, however, that no Class Member or any other Person shall be heard at    the Final Approval Hearing or entitled to contest the approval of the terms and conditions of the    proposed Settlement, or, if approved, the Judgment to be entered thereon approving the same, or    the order approving the Plan of Allocation, or any attorneys’ fees, together with costs and expenses    to be awarded to Lead Counsel or any award to Plaintiffs, unless the Person objecting has filed    said written objections and copies of any papers and briefs with the Clerk of the United States    District Court for the Southern District of New York and mailed copies thereof by first-class mail   to Robbins Geller Rudman & Dowd LLP, Debra J. Wyman, 655 West Broadway, Suite 1900, San   Diego, CA 92101, and Jed M. Schwartz, Milbank LLP, 55 Hudson Yards, New York, NY 10001   no later than _____________, 20__ [a date twenty-one (21) calendar days prior to the Final   Approval Hearing].  Any Member of the Class who does not make his, her, or its objection in the   manner provided shall be deemed to have waived such objection and shall forever be foreclosed   from making any objection to the fairness, reasonableness or adequacy of the proposed Settlement   as incorporated in the Stipulation, to the Plan of Allocation, or to the award of fees, costs, charges   and expenses to Lead Counsel or Plaintiffs, unless otherwise ordered by the Court.  Attendance at   the Final Approval Hearing is not necessary.  However, Persons wishing to be heard orally in   opposition to the approval of the Settlement, the Plan of Allocation, and/or the application for an   award of fees, costs, charges and expenses are required to indicate in their written objection their                                         - 6 -    

 

     Case 1:15-mc-00040-AKH   Document 1272-2   Filed 09/30/19   Page 9 of 11                                                              EXECUTION COPY    intention to appear at the hearing and to include in their written objections the identity of any    witnesses they may call to testify and copies of any exhibits they intend to introduce into evidence    at the Final Approval Hearing.  Class Members do not need to appear at the Final Approval Hearing    or take any other action to indicate their approval.          18.   Any Class Member who does not object to the Settlement, the Plan of Allocation,    or Lead Counsel’s application for an award of attorneys’ fees, costs, charges and expenses in the    manner prescribed herein and in the Notice shall be deemed to have waived such objection, and    shall forever be foreclosed from making any objection to the fairness, adequacy or reasonableness    of the proposed Settlement, this Order and the Judgment to be entered approving the Settlement,    the Plan of Allocation and/or the application by Lead Counsel for an award of attorneys’ fees    together with costs, charges and expenses.          19.   All funds held by the Escrow Agent shall be deemed and considered to be in    custodia legis, and shall remain subject to the jurisdiction of the Court, until such time as such   funds shall be distributed pursuant to the Stipulation and/or further order(s) of the Court.          20.   All papers in support of the Settlement, Plan of Allocation, and any application by    Lead Counsel for attorneys’ fees, costs, charges and expenses and awards to Plaintiffs shall be    filed and served no later than ____________, 20__ [a date thirty-five (35) calendar days prior to    the Final Approval Hearing], and any reply papers shall be filed and served no later than    ____________, 20__ [a date seven (7) calendar days prior to the Final Approval Hearing].          21.   The Released Persons shall have no responsibility for the Plan of Allocation or any    application for attorneys’ fees, costs, charges or expenses submitted by Lead Counsel, and such    matters will be considered by the Court separately from the fairness, reasonableness, and adequacy    of the Settlement.                                         - 7 -    

 

     Case 1:15-mc-00040-AKH   Document 1272-2   Filed 09/30/19   Page 10 of 11                                                              EXECUTION COPY          22.   At or after the Final Approval Hearing, the Court shall determine whether the Plan    of Allocation proposed by Lead Counsel, and any application for attorneys’ fees, costs, charges    and expenses, should be approved.  The Court reserves the right to enter the Order and Final    Judgment approving the Settlement regardless of whether it has approved the Plan or Allocation    or awarded attorneys’ fees and/or costs, charges and expenses.          23.   All reasonable expenses incurred in identifying and notifying Class Members as    well as administering the Settlement Fund shall be paid as set forth in the Stipulation.  In the event    the Court does not approve the Settlement, or it otherwise fails to become effective, neither Lead    Plaintiff nor Lead Counsel nor the Claims Administrator shall have any obligation to repay any    amounts actually and properly incurred or disbursed pursuant to ¶¶2.12 or 2.14 of the Stipulation.          24.   Neither this Order nor the Stipulation, nor any of their respective terms or    provisions, nor any of the negotiations, discussions, proceedings connected with them, nor any act    performed or document executed pursuant to or in furtherance of the Stipulation or the Settlement    or this Order may be construed as an admission or concession by the Defendants or any other    Released Persons of the truth of any of the allegations in the Litigation, or of any liability, fault,   or wrongdoing of any kind, or offered or received in evidence, or otherwise used by any person in   the Litigation, or in any other action or proceeding, whether civil, criminal, or administrative, in   any court, administrative agency, or other tribunal, except in connection with any proceeding to   enforce the terms of the Stipulation or this Order.  The Released Persons, Lead Plaintiff, Class   Members, and each of their counsel may file the Stipulation, and/or this Order and/or the Judgment   in any action that may be brought against them in order to support a defense or counterclaim based   on principles of res judicata, collateral estoppel, release, good faith settlement, judgment bar or                                          - 8 -    

 

    Case 1:15-mc-00040-AKH   Document 1272-2   Filed 09/30/19   Page 11 of 11                                                             EXECUTION COPY   reduction or any other theory of claim preclusion or issue preclusion or similar defense or   counterclaim.        25.    All proceedings in the Litigation are stayed until further order of this Court, except   as may be necessary to implement the Settlement or comply with the terms of the Stipulation.    Pending final determination of whether the Settlement should be approved, neither the Lead   Plaintiff nor any Class Member, either directly, representatively, or in any other capacity shall   commence or prosecute against any of the Released Persons any action or proceeding in any court   or tribunal asserting any of the Released Claims.         26.   The Court reserves the right to alter the time or the date of the Final Approval   Hearing without further notice to Class Members, and retains jurisdiction to consider all further   applications arising out of or connected with the proposed Settlement.  The Court may approve the   Settlement, with such modifications as may be agreed to by the Settling Parties, if appropriate,   without further notice to the Class.         27.   If the Settlement fails to become effective as defined in the Stipulation or is   terminated, then, in any such event, the Stipulation, including any amendment(s) thereof, except   as expressly provided in the Stipulation, and this Order shall be null and void, of no further force   or effect, and without prejudice to any Settling Party, and may not be introduced as evidence or   used in any actions or proceedings by any person or entity against the Settling Parties, and they   shall be deemed to have reverted to their respective litigation positions as of August 21, 2019.        IT IS SO ORDERED.                 DATED:                                                                        THE HONORABLE ALVIN K. HELLERSTEIN                                        UNITED STATES DISTRICT JUDGE                                          - 9 -   

 

Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 1 of 29                                 EXHIBIT A-1                

 

    Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 2 of 29                                                             EXECUTION COPY   UNITED STATES DISTRICT COURT  SOUTHERN DISTRICT OF NEW YORK                                           x    In re AMERICAN REALTY CAPITAL         :  Civil Action No. 1:15-mc-00040-AKH  PROPERTIES, INC. LITIGATION           :                                        :  CLASS ACTION                                        :  This Document Relates To:             :                                          :        ALL ACTIONS.                    :                                        x                   NOTICE OF PROPOSED SETTLEMENT OF CLASS ACTION                                    EXHIBIT A-1    

 

     Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 3 of 29                                                              EXECUTION COPY    TO:   ALL PERSONS AND ENTITIES THAT PURCHASED OR OTHERWISE         ACQUIRED THE COMMON STOCK, PREFERRED STOCK, OR DEBT         SECURITIES OF AMERICAN REALTY CAPITAL PROPERTIES, INC. (“ARCP”,         NOW KNOWN AS VEREIT,         INC.) OR ARC PROPERTIES OPERATING        PARTNERSHIP, L.P. (NOW KNOWN AS VEREIT OPERATING PARTNERSHIP,        L.P.) (“ARCP SECURITIES”) DURING THE PERIOD BETWEEN FEBRUARY 28,        2013 AND OCTOBER 29, 2014 (THE “CLASS PERIOD”)         IN ORDER TO QUALIFY FOR A SETTLEMENT PAYMENT, YOU                  MUST        TIMELY SUBMIT A PROOF OF CLAIM AND RELEASE FORM BY ___________,        2020.         THIS NOTICE WAS AUTHORIZED BY THE COURT.  IT IS NOT A LAWYER        SOLICITATION.  PLEASE READ THIS NOTICE CAREFULLY AND IN ITS        ENTIRETY.                        WHY SHOULD I READ THIS NOTICE?         This Notice is given pursuant to an order issued by the United States District Court for the  Southern District of New York (the “Court”).  This Notice serves to inform you of the proposed  settlement of the above-captioned class action lawsuit for $1,025,000,000.00 in cash (the  “Settlement”) and the hearing (the “Settlement Fairness Hearing”) to be held by the Court to  consider the fairness, reasonableness, and adequacy of the Settlement, as set forth in the Stipulation  of Settlement dated September 30, 2019 (the “Stipulation”), by and between Lead Plaintiff Teachers  Insurance and Annuity Association of America, College Retirement Equities Fund, TIAA-CREF  Equity Index Fund, TIAA-CREF Real Estate Securities Fund, TIAA-CREF Large Cap Value Index  Fund, TIAA-CREF Small Cap Blend Index Fund, TIAA-CREF Life Real Estate Securities Fund,  TIAA-CREF Life Equity Index Fund, and TIAA-CREF Bond Index Fund (collectively “TIAA” or  “Lead Plaintiff”), on behalf of itself and the Class (as defined below), on the one hand, and  Defendants ARCP (now known as VEREIT), AR Capital, LLC (“AR Capital”), ARC Properties  Advisors, LLC, certain of ARCP’s and AR Capital’s current or former officers and directors, Grant  Thornton LLP and the underwriters involved in four securities offerings by ARCP during the Class  Period, on the other hand (collectively, “Defendants”).1          This Notice is intended to inform you how this lawsuit and proposed Settlement may   affect your rights and what steps you may take in relation to it.  This Notice is different than   the one you previously received advising you of the pendency of this Litigation.  This Notice is   NOT an expression of any opinion by the Court as to the merits of the claims or defenses   asserted in the lawsuit or whether the Defendants engaged in any wrongdoing.                                                        1  The Stipulation can be viewed and/or downloaded at www.ARCPSecuritiesLitigation.com.  All   capitalized terms used herein have the same meaning as the terms defined in the Stipulation.                                         - 1 -    

 

    Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 4 of 29                                                             EXECUTION COPY            YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLEMENT   SUBMIT A PROOF OF       The only way to be eligible to receive a payment from the  CLAIM AND RELEASE       Settlement.  Proofs of Claim and Release must be postmarked (if                          mailed) or received (if submitted online) on or before                          __________, 2020.   OBJECT TO THE           Write to the Court about why you do not like the Settlement, the  SETTLEMENT BY           Plan of Allocation and/or the request for attorneys’ fees and  SUBMITTING A            expenses.  Objections must be postmarked on or before  WRITTEN OBJECTION       _____________, 20__.   GO TO THE HEARING       Ask to speak in Court about the fairness of the Settlement.   ON __________, 2020,    Requests to speak must be postmarked on or before  AND FILE A NOTICE       ___________, 20__.  If you submit a written objection, you may  OF INTENTION TO         (but you do not have to) attend the hearing.  APPEAR   DO NOTHING              Receive no payment.  You will, however, still be a Class Member,                          which means that you give up your right to ever be part of any other                          lawsuit against the Defendants or any other Released Person about                          the legal claims being resolved by this Settlement and you will be                          bound by any judgments or orders entered by the Court in the                          Litigation.                                                                      - 2 -   

 

    Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 5 of 29                                                             EXECUTION COPY                            SUMMARY OF THIS NOTICE         Description of the Litigation and the Class         This Notice relates to a proposed settlement of claims in a pending securities class action  brought by ARCP investors alleging, among other things, that Defendants violated the federal  securities laws by making materially false and misleading statements or omitting to state facts  necessary to make statements not misleading in public filings and other public statements during the  Class Period.  A more detailed description of the Litigation is set forth on pages ____ below.  The  proposed Settlement, if approved by the Court, will settle claims of the Class, as defined on pages  ____ below.         Statement of Class Recovery         Pursuant to the Settlement described herein, a $1,025,000,000.00 settlement fund has been  established (the “Settlement Amount”).  The Settlement Amount together with any interest earned  thereon is the “Settlement Fund.”  The Settlement Fund, less (a) any taxes, (b) any Notice and  Administration Expenses, and (c) any attorneys’ fees and litigation costs, charges and expenses  (including any awards to Plaintiffs of their costs and expenses in representing the Class) awarded by  the Court, will be distributed to Class Members in accordance with a plan of allocation that is  approved by the Court.  The proposed plan of allocation (the “Plan of Allocation”) is set forth on  pages ____ below.  Based on Lead Plaintiff’s estimate of the number of ARCP Securities eligible to  recover, and Defendants’ representations concerning previously settled claims, the average  distribution under the Plan of Allocation is roughly $1.72 per common share, $1.35 per preferred  share, and $6.91 per $100 face value of the TAA Notes, $9.04 per $100 face value of the TAB  Notes, $2.24 per $100 face value of the QAA/QAB Notes, $2.78 per $100 face value of the  QAC/QAD Notes, $5.27 per $100 face value of the QAE/QAF Notes, before deduction of any taxes  on the income earned on the Settlement Fund, Notice and Administration Expenses, and allowable  attorneys’ fees and expenses (including any awards to Plaintiffs) as determined by the Court.  Class  Members should note, however, that these are only estimates.  A Class Member’s actual recovery  will be a proportion of the Net Settlement Fund determined by that claimant’s claims as compared to  the total claims of all Class Members who submit acceptable Proofs of Claim.  An individual Class  Member may receive more or less than these estimated average amounts.  See Plan of Allocation set  forth and discussed at pages ___ below for more information on the calculation of your claim.         Statement of Potential Outcome of Case         The Settling Parties disagree on both liability and damages and do not agree on the amount of  damages per security, if any, that would be recoverable if the Class prevailed on each claim alleged.   Defendants deny that they are liable to the Class and deny that the Class has suffered any injury or  damages.  The issues on which the parties disagree are many, but include: (1) whether Defendants  engaged in conduct that would give rise to any liability to the Class under the federal securities laws;  (2) whether Defendants have valid defenses to any such claims of liability; (3) the appropriate  economic model for determining the amount by which the prices of ARCP Securities were allegedly  artificially inflated (if at all) during the Class Period; (4) the amount, if any, by which the prices of  ARCP Securities were allegedly artificially inflated (if at all) during the Class Period; (5) the effect  of various market forces on the prices of ARCP Securities at various times during the Class Period;                                       - 3 -   

 

     Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 6 of 29                                                              EXECUTION COPY    (6) the extent to which external factors influenced the price of ARCP Securities at various times  during the Class Period; (7) the extent to which the various matters that Plaintiffs alleged were  materially false or misleading influenced (if at all) the prices of ARCP Securities at various times   during the Class Period; and (8) the extent to which the various allegedly adverse material facts that   Lead Plaintiff alleged were omitted influenced (if at all) the price of ARCP Securities during the   Class Period.          Statement of Attorneys’ Fees and Expenses Sought          Lead Counsel will apply to the Court on behalf of all Plaintiffs’ Counsel for an award of   attorneys’ fees not to exceed thirteen percent (13%) of the Settlement Amount, plus costs, charges   and expenses not to exceed $6 million, including awards to Plaintiffs pursuant to 15 U.S.C. §78u-  4(a)(4) in connection with their representation of the Class, plus interest earned on both amounts at   the same rate as earned by the Settlement Fund.  Since the Litigation’s inception, Lead Counsel have   expended considerable time and effort in the prosecution of this Litigation on a wholly contingent   basis and have advanced the expenses of the Litigation in the expectation that if they were successful   in obtaining a recovery for the Class they would be paid from such recovery.  The requested   attorneys’ fees, costs, charges and expenses amount to an average cost of approximately $0.23 per   allegedly damaged ARCP common share, $0.18 per allegedly damaged preferred share and $0.94   per allegedly damaged $100 face value of the TAA Notes, $1.23 per allegedly damaged $100 face   value of the TAB Notes, $0.30 per allegedly damaged $100 face value of the QAA/QAB Notes,   $0.38 per allegedly damaged $100 face value of the QAC/QAD Notes, and $0.71 per allegedly   damaged $100 face value of the QAE/QAF Notes.  The average cost per damaged share will vary   depending on the number of acceptable Proofs of Claim submitted.          Further Information          For further information regarding the Litigation or this Notice or to review the Stipulation,   please contact the Claims Administrator toll-free at _______________, or visit the website  www.ARCPSecuritiesLitigation.com.         You may also contact a representative of counsel for the Class:  Rick Nelson, Shareholder  Relations, Robbins Geller Rudman & Dowd LLP, 655 West Broadway, Suite 1900, San Diego, CA   92101, 1-800-449-4900, www.rgrdlaw.com.           Please Do Not Call the Court or Defendants with Questions About the Settlement.          Reasons for the Settlement          Lead Plaintiff’s principal reason for entering into the Settlement is the benefit to the Class   now, without further risk or the delays inherent in continued litigation.  The cash benefit under the   Settlement must be considered against the significant risk that a smaller recovery – or, indeed, no   recovery at all – might be achieved after trial, and likely appeals, a process that could last several   years into the future.         Defendants have denied and continue to deny each and all of the claims alleged by Lead   Plaintiff in the Litigation.  Defendants expressly have denied and continue to deny all charges of                                         - 4 -    

 

     Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 7 of 29                                                              EXECUTION COPY    wrongdoing or liability against them arising out of any of the conduct, statements, acts or omissions   alleged, or that could have been alleged, in the Litigation.  Defendants also have denied and continue   to deny, among other things, the allegations that Lead Plaintiff or the Class has suffered any damage,   or that Lead Plaintiff or the Class was harmed by the conduct alleged in the Litigation.  For   Defendants, the principal reason for entering into the Settlement is to eliminate the uncertainty, risk,   costs, and burdens inherent in any litigation, especially in complex cases such as this Litigation.    Defendants have concluded that further conduct of this Litigation could be expensive, protracted and   distracting.                          WHAT IS THIS LAWSUIT ABOUT?                                 THE ALLEGATIONS         The Litigation is currently pending before the Honorable Alvin K. Hellerstein in the United  States District Court for the Southern District of New York (the “Court”).  The initial complaint in  this action was filed on October 30, 2014.  On February 13, 2015, the Court appointed TIAA as Lead  Plaintiff and Robbins Geller Rudman & Dowd LLP (“Robbins Geller”) as Lead Counsel.         Lead Plaintiff’s Third Amended Complaint for Violations of the Federal Securities Laws (the  “Complaint”) alleges that Defendants variously violated §§11 and/or 15 of the Securities Act of  1933 and/or §§10(b) and 20(a) of the Securities Exchange Act of 1934.  More specifically, Lead  Plaintiff alleges that ARCP failed to properly report Adjusted Funds From Operations (“AFFO”), a  common measure of REIT performance, by improperly and artificially inflating AFFO, causing it to  be overstated.  Lead Plaintiff further alleges that when the true facts regarding the alleged accounting  improprieties were revealed, that artificial inflation was removed from the prices of ARCP  Securities, causing the prices to drop and damaging members of the Class.         Defendants deny all of Lead Plaintiff’s allegations.  Defendants contend that they did not  make any false or misleading statements and that they disclosed all information required to be  disclosed by the federal securities laws.         THE COURT HAS NOT RULED AS TO WHETHER DEFENDANTS ARE LIABLE  TO LEAD PLAINTIFF OR TO THE CLASS.  THIS NOTICE IS NOT INTENDED TO BE  AN EXPRESSION OF ANY OPINION BY THE COURT WITH RESPECT TO THE TRUTH  OF THE ALLEGATIONS IN THIS LITIGATION OR THE MERITS OF THE CLAIMS OR  DEFENSES ASSERTED.  THIS NOTICE IS SOLELY TO ADVISE YOU OF THE  PROPOSED SETTLEMENT OF THIS ACTION AND YOUR RIGHTS IN CONNECTION  WITH THAT SETTLEMENT.                               PROCEDURAL HISTORY         The Settling Parties vigorously litigated this case for nearly five years.  They briefed and  argued two rounds of motions to dismiss the Class’s claims, and following rulings on the motions to  dismiss, the Settling Parties engaged in extensive fact and class-related discovery which included the  exchange of over 12 million pages of documents and the taking of more than 50 depositions.  After  full briefing and an evidentiary hearing, the Court certified the Class on August 31, 2017.  After the                                         - 5 -    

 

     Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 8 of 29                                                              EXECUTION COPY    close of fact discovery in December 2018, the Settling Parties briefed and argued 13 motions for   summary judgment, which were granted in part and denied in part on May 10, 2019.          After summary judgment was resolved, the Settling Parties engaged in expert discovery,   exchanging reports from and deposing 21 experts.            The Settling Parties were scheduled to begin the trial of this Litigation in January 2020.  In   anticipation of the trial, the Settling Parties briefed 45 motions in limine and 17 motions to exclude   expert testimony.  Those motions were scheduled for oral argument in mid-September 2019.          The Settling Parties also participated in multiple in-person mediation sessions as well as   numerous telephonic conferences over several years with the Honorable Layn R. Phillips (Ret.), a   retired United States District Court Judge and an experienced mediator.  The Settling Parties   engaged in good-faith, arm’s-length negotiations during the earlier mediation sessions, but were   unable to reach an agreement.  The Settling Parties pursued pre-trial motion practice while   settlement discussions continued through Judge Phillips.  On September 8, 2019, the Settling Parties   reached an agreement in principle to resolve the Litigation, subject to the negotiation of the terms of   a Stipulation of Settlement and approval by the Court.                    HOW DO I KNOW IF I AM A CLASS MEMBER?          If you purchased or otherwise acquired ARCP Securities during the period between February   28, 2013 and October 29, 2014 and are not otherwise excluded, you are a Class Member.  As set   forth in the Stipulation, excluded from the Class are: Defendants, members of the immediate families   of each of the Defendants, any person, firm, trust, corporation, officer, director or other individual or   entity in which any Defendant has a controlling interest or which is related to or affiliated with any   Defendant, and the legal representatives, agents, affiliates, heirs, successors-in-interest, or assigns of   any such excluded party.  For the avoidance of doubt, this exclusion does not extend to: (1) any   investment company or pooled investment fund in which a Third-Party Underwriter Defendant2 may  have a direct or indirect interest, or as to which its affiliates may act as an advisor, but of which a  Third-Party Underwriter Defendant or its respective affiliates is not a majority owner or does not  hold a majority beneficial interest; or (2) any employee benefit plan as to which a Third-Party  Underwriter Defendant or its affiliates acts as an investment advisor or otherwise may be a fiduciary;  provided, however, that membership in the Class by such investment company, pooled investment  fund or employee benefit plan is limited to transactions in ARCP Securities made on behalf of, or for  the benefit of, persons other than persons that are excluded from the Class by definition.  In other  words, the Third-Party Underwriter Defendants cannot make a claim on their own behalf for their  ownership share in any of the above entities.                                                       2  Third-Party Underwriter Defendants are defined as Barclays Capital Inc., BMO Capital Markets   Corp., Capital One Securities, Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA)   LLC, Deutsche Bank Securities Inc., Janney Montgomery Scott, LLC, JMP Securities LLC, J.P.   Morgan Securities LLC, KeyBanc Capital Markets Inc., Ladenburg Thalmann & Co. Inc., Merrill   Lynch, Pierce, Fenner & Smith Incorporated, Mizuho Securities USA LLC (f/k/a Mizuho Securities   USA Inc.), Morgan Stanley & Co. LLC, Piper Jaffray & Co., PNC Capital Markets LLC, RBS   Securities Inc., Robert W. Baird & Co. Incorporated, and Wells Fargo Securities, LLC.                                        - 6 -    

 

     Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 9 of 29                                                              EXECUTION COPY          Additionally, the Class excludes any person or entity that entered into any other settlement   agreement or otherwise provided a release to any Defendant relating to or arising from the purchase   or other acquisition of ARCP Securities prior to October 29, 2014.  Also excluded from the Class is   any Class Member who timely and validly requested exclusion in accordance with the requirements   set by the Court in connection with the Notice of Pendency of Class Action previously provided to   the Class.          PLEASE NOTE:  Receipt of this Notice does not mean that you are a Class Member or that   you will be entitled to receive a payment from the Settlement.  If you are a Class Member and you   wish to be eligible to participate in the distribution of proceeds from the Settlement, you are required   to submit the Proof of Claim and Release that is being distributed with this Notice and the required   supporting documentation as set forth therein postmarked or submitted online on or before   ______________, 2020.        WHAT IS THE MONETARY VALUE OF THE PROPOSED SETTLEMENT?          The Settlement, if approved, will result in the creation of a cash settlement fund of   $1,025,000,000.00.  This fund, plus accrued interest and minus the costs of this Notice and all costs  associated with the administration of the Settlement, as well as attorneys’ fees and expenses, and the  payment of Plaintiffs’ costs and expenses in representing the Class, as approved by the Court (the  “Net Settlement Fund”), will be distributed to eligible Class Members pursuant to the Plan of  Allocation that is described in the next section of this Notice.                  WHAT IS THE PROPOSED PLAN OF ALLOCATION?         The objective of the Plan of Allocation is to equitably distribute the Net Settlement Fund  among Class Members based on their respective alleged economic losses resulting from the  securities law violations alleged in the Litigation.         The Claims Administrator shall determine each Class Member’s share of the Net Settlement  Fund based upon the recognized loss formula (the “Recognized Loss”) described below.  A  Recognized Loss will be calculated for each ARCP Security purchased or otherwise acquired during  the Class Period.  The calculation of a Recognized Loss will depend upon several factors, including  when the ARCP Security was purchased or otherwise acquired and in what amounts, whether the  securities were ever sold, and, if so, when they were sold and for what amounts.  The Recognized  Loss is not intended to estimate the amount a Class Member might have been able to recover after a  trial, nor to estimate the amount that will be paid to Class Members pursuant to the Settlement.  The  Recognized Loss is the basis upon which the Net Settlement Fund will be proportionately allocated  to Class Members.         Your share of the Net Settlement Fund will depend on the number of valid Proofs of Claim  that Class Members send in and how many and which type of ARCP Security you purchased or  otherwise acquired during the Class Period, and whether you sold any of those securities and when  you sold them.                                          - 7 -    

 

    Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 10 of 29                                                             EXECUTION COPY         The calculation of claims below is not an estimate of the amount you will receive.  It is a  formula for allocating the Net Settlement Fund among all Authorized Claimants.  Furthermore, if  any of the formulas set forth below yield an amount less than $0.00, the claim per share is $0.00.         In the event a Class Member has more than one purchase or acquisition or sale of ARCP  Securities during the Class Period, all such purchases and sales shall be matched by security on a  First-In, First-Out (“FIFO”) basis.  Sales will be matched against purchases in chronological order,  beginning with the earliest purchase made during the Class Period.         If a matched Class Period purchase and sale reflects a market gain, the recognized claim for  the specific shares or notes involved in the transaction will be $0.00.  The Claims Administrator  shall allocate to each Authorized Claimant a pro rata share of the Net Settlement Fund based on his,  her, or its recognized claim as compared to the total recognized claims of all Authorized Claimants.   No distribution shall be made to Authorized Claimants who would otherwise receive a distribution  of less than $10.00.                 CALCULATION OF RECOGNIZED LOSS AMOUNTS         1.    For each Class Period  purchase or acquisition of an ARCP Security that is properly  documented, a “Recognized Loss Amount” will be calculated for that security according to the  formulas described below.  Such “Recognized Loss Amounts” will be aggregated across all  purchases to determine the “Recognized Claim” for each Class Member.  To the extent a Class  Member has a Recognized Loss Amount under the Exchange Act and the Securities Act resulting  from the same purchase or acquisition of an ARCP Security, the Recognized Loss Amount will be  the greater of the Exchange Act Recognized Loss Amount and the Securities Act Recognized Loss  Amount.         2.    The calculations made pursuant to the Plan of Allocation are not intended to be  estimates of, nor indicative of, the amounts that Class Members might have been able to recover  after a trial.  Nor are the calculations pursuant to the Plan of Allocation intended to be estimates of  the amounts that will be paid to Authorized Claimants pursuant to the Settlement.  The computations  under the Plan of Allocation are only a method to weigh the claims of claimants against one another  for the purposes of making pro rata allocations of the Net Settlement Fund.                  EXCHANGE ACT RECOGNIZED LOSS AMOUNTS         3.    For the Exchange Act Securities, estimated damages and the Plan were developed  based on event study analysis, which determines how much artificial inflation was in the prices of  such securities on each day during the Class Period by measuring how much the prices declined as a  result of disclosures that corrected the alleged misrepresentations and omissions.  An Exchange Act  Recognized Loss Amount is calculated for each Class Member who purchased Exchange Act  Securities during the Class Period based on when that claimant purchased and sold shares, or  retained shares beyond the end of the Class Period.         4.    Based on the formulas presented below, an “Exchange Act Recognized Loss  Amount” will be calculated for each purchase or acquisition of ARCP Exchange Act Securities stock  during the Class Period that is listed on the Proof of Claim and Release form and for which adequate                                       - 8 -   

 

     Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 11 of 29                                                              EXECUTION COPY    documentation is provided.  If a Recognized Loss Amount calculates to a negative number or zero   under the formula below, that Recognized Loss Amount will be zero.    ARCP Common Stock           5.    For each share of ARCP common stock purchased or otherwise acquired during the   Class Period and:                (a)   Sold at or prior to 7:03 a.m. on October 29, 2014, the Exchange Act   Recognized Loss Amount per share is zero.                (b)   Sold after 7:03 a.m. on October 29, 2014, the Exchange Act Recognized Loss   Amount per share is the lesser of: (1) $2.32 per share; and (ii) the difference between the purchase   price and the sale price.                (c)   Sold on October 30, 2014, the Exchange Act Recognized Loss Amount per   share is the lesser of: (1) $2.95 per share; and (ii) the difference between the purchase price and the   sale price.                (d)   Sold on October 31, 2014, the Exchange Act Recognized Loss Amount per   share is the lesser of: (1) $3.56 per share; and (ii) the difference between the purchase price and the   sale price.                (e)   Sold on November 3, 2014, the Exchange Act Recognized Loss Amount per   share is the lesser of: (1) $4.61 per share; and (ii) the difference between the purchase price and the   sale price.                (f)   Retained at the end of November 3, 2014 and sold before January 30, 2015,   the claim per share shall be the least of: (i) $4.61 per share; (ii) the difference between the purchase   price and the sale price; and (iii) the difference between the purchase price and the average closing   price up to the date of sale as set forth in Table-1 below.                (g)   Held as of the close of trading on January 30, 2015 or sold thereafter, the   claim per share shall be the lesser of (i) $4.61 per share; and (ii) the difference between the purchase   price and $8.96 per share.3                                                       3  Under Section 21(D)(e)(1) of the Exchange Act, “in any private action arising under this Act in   which the plaintiff seeks to establish damages by reference to the market price of a security, the   award of damages to the plaintiff shall not exceed the difference between the purchase or sale price   paid or received, as appropriate, by the plaintiff for the subject security and the mean trading price of   that security during the 90-day period beginning on the date on which the information correcting the   misstatement or omission that is the basis for the action is disseminated to the market.”  Consistent   with the requirements of the statute, Exchange Act Recognized Loss Amounts for ARCP common   stock are reduced to an appropriate extent by taking into account the closing prices of ARCP   common stock during the 90-day look-back period.  The mean (average) closing price for ARCP  common stock during this 90-day look-back period was $8.96 per share as shown in Table-1.                                         - 9 -    

 

    Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 12 of 29                                                             EXECUTION COPY   ARCP Preferred Stock         6.    For each share of ARCP preferred stock purchased or otherwise acquired during the  Class Period and:               (h)   Sold at or prior to 7:03 a.m. on October 29, 2014, the Exchange Act  Recognized Loss Amount per share is zero.               (i)   Sold after 7:03 a.m. on October 29, 2014, or on October 30, 2014 or October  31, 2014, the Exchange Act Recognized Loss Amount per share is the lesser of: (1) $1.25 per share;  and (ii) the difference between the purchase price and the sale price.               (j)   Sold on November 3, 2014, the Exchange Act Recognized Loss Amount per  share is the lesser of: (1) $2.40 per share; and (ii) the difference between the purchase price and the  sale price.               (k)   Retained at the end of November 3, 2014 and sold before January 30, 2015,  the claim per share shall be the least of: (i) $2.40 per share; (ii) the difference between the purchase  price and the sale price; and (iii) the difference between the purchase price and the average closing  price up to the date of sale as set forth in Table-1 below.               (l)   Held as of the close of trading on January 30, 2015 or sold thereafter, the  claim per share shall be the lesser of: (i) $2.40 per share; and (ii) the difference between the purchase  price and $22.21 per share.4   ARCP TAA Note         7.    For each $100 of par of the ARCP TAA Notes purchased or otherwise acquired  during the Class Period and:               (m)   Sold at or prior to 7:03 a.m. on October 29, 2014, the Exchange Act  Recognized Loss Amount per share is zero.               (n)   Sold after 7:03 a.m. on October 29, 2014, or on October 30, 2014 or October  31, 2014, the Exchange Act Recognized Loss Amount per share is the lesser of: (1) $6.37 per $100  of par; and (ii) the difference between the purchase price and the sale price.               (o)   Sold on November 3, 2014, the Exchange Act Recognized Loss Amount per  share is the lesser of: (1) $13.60 per $100 of par; and (ii) the difference between the purchase price  and the sale price.                                                     4  Consistent with the requirements of Section 21(D)(e)(1) of the Exchange Act, Exchange Act  Recognized Loss Amounts for ARCP preferred stock are reduced to an appropriate extent by taking  into account the closing prices of ARCP preferred stock during the 90-day look-back period.  The  mean (average) closing price for ARCP preferred stock during this 90-day look-back period was  $22.21 per share as shown in Table-1.                                       - 10 -   

 

     Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 13 of 29                                                              EXECUTION COPY                (p)   Retained at the end of November 3, 2014 and sold before January 30, 2015,   the claim per share shall be the least of: (i) $13.60 per $100 of par; (ii) the difference between the   purchase price and the sale price; and (iii) the difference between the purchase price and the average   volume weighted average price (“VWAP”) up to the date of sale as set forth in Table-1 below.                (q)   Held as of the close of trading on January 30, 2015 or sold thereafter, the   claim per share shall be the lesser of: (i) $13.60 per $100 of par; and (ii) the difference between the   purchase price and $91.06 per $100 of par.5    ARCP TAB Note          8.    For each $100 of par of the ARCP TAB Notes purchased or otherwise acquired   during the Class Period and:                (r)   Sold at or prior to 7:03 a.m. on October 29, 2014, the Exchange Act   Recognized Loss Amount per share is zero.                (s)   Sold after 7:03 a.m. on October 29, 2014, or on October 30, 2014 or October   31, 2014, the Exchange Act Recognized Loss Amount per share is the lesser of: (1) $9.39 per $100   of par; and (ii) the difference between the purchase price and the sale price.                (t)   Sold on November 3, 2014, the Exchange Act Recognized Loss Amount per   share is the lesser of: (1) $17.81 per $100 of par; and (ii) the difference between the purchase price   and the sale price.                (u)   Retained at the end of November 3, 2014 and sold before January 30, 2015,   the claim per share shall be the least of: (i) $17.81 per $100 of par; (ii) the difference between the   purchase price and the sale price; and (iii) the difference between the purchase price and the average  volume weighted average price (“VWAP”) up to the date of sale as set forth in Table-1 below.                (v)   Held as of the close of trading on January 30, 2015 or sold thereafter, the   claim per share shall be the lesser of: (i) $17.81 per $100 of par; and (ii) the difference between the   purchase price and $90.42 per $100 of par.6                                                       5  Consistent with the requirements of Section 21(D)(e)(1) of the Exchange Act, Exchange Act   Recognized Loss Amounts for the ARCP TAA Notes are reduced to an appropriate extent by taking   into account the VWAPs of the TAA Notes during the 90-day look-back period.  The mean  (average) VWAP for the TAA Notes during this 90-day look-back period was $91.06 per $100 of  par as shown in Table-1.    6  Consistent with the requirements of Section 21(D)(e)(1) of the Exchange Act, Exchange Act   Recognized Loss Amounts for the ARCP TAB Notes are reduced to an appropriate extent by taking   into account the VWAPs of the TAB Notes during the 90-day look-back period.  The mean (average)  VWAP for the TAB Notes during this 90-day look-back period was $90.42 per $100 of par as shown  in Table-1.                                        - 11 -    

 

     Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 14 of 29                                                              EXECUTION COPY    ARCP QAA/QAB Note          9.    For each $100 of par of the ARCP QAA/QAB Notes purchased or otherwise acquired   during the Class Period and:                (w)   Sold at or prior to 7:03 a.m. on October 29, 2014, the Exchange Act   Recognized Loss Amount per share is zero.                (x)   Sold after 7:03 a.m. on October 29, 2014, the Exchange Act Recognized Loss   Amount per share is the lesser of: (1) $1.24 per $100 of par; and (ii) the difference between the   purchase price and the sale price.                (y)   Sold on October 30, 2014, the Exchange Act Recognized Loss Amount per   share is the lesser of: (1) $2.26 per $100 of par; and (ii) the difference between the purchase price   and the sale price.                (z)   Sold on October 31, 2014, the Exchange Act Recognized Loss Amount per  share is the lesser of: (1) $2.60 per $100 of par; and (ii) the difference between the purchase price  and the sale price.               (aa)  Sold on November 3, 2014, the Exchange Act Recognized Loss Amount per  share is the lesser of: (1) $4.42 per $100 of par; and (ii) the difference between the purchase price  and the sale price.                (bb)  Retained at the end of November 3, 2014 and sold before January 30, 2015,   the claim per share shall be the least of: (i) $4.42 per $100 of par; (ii) the difference between the   purchase price and the sale price; and (iii) the difference between the purchase price and the average   volume weighted average price (“VWAP”) up to the date of sale as set forth in Table-1 below.                (cc)  Held as of the close of trading on January 30, 2015 or sold thereafter, the   claim per share shall be the lesser of: (i) $4.42 per $100 of par; and (ii) the difference between the   purchase price and $95.32 per $100 of par.7    ARCP QAC/QAD Note          10.   For each $100 of par of the ARCP QAC/QAD Notes purchased or otherwise acquired   during the Class Period and:                (dd)  Sold at or prior to 7:03 a.m. on October 29, 2014, the Exchange Act   Recognized Loss Amount per share is zero.                                                       7  Consistent with the requirements of Section 21(D)(e)(1) of the Exchange Act, Exchange Act   Recognized Loss Amounts for the ARCP QAA/QAB Notes are reduced to an appropriate extent by   taking into account the VWAPs of the QAA/QAB Notes during the 90-day look-back period.  The   mean (average) VWAP for the QAA/QAB Notes during this 90-day look-back period was $95.32   per $100 of par as shown in Table-1.                                        - 12 -    

 

    Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 15 of 29                                                             EXECUTION COPY               (ee)  Sold after 7:03 a.m. on October 29, 2014, or on October 30, 2014 or October  31, 2014, the Exchange Act Recognized Loss Amount per share is the lesser of: (1) $2.48 per $100  of par; and (ii) the difference between the purchase price and the sale price.               (ff)  Sold on November 3, 2014, the Exchange Act Recognized Loss Amount per  share is the lesser of: (1) $5.47 per $100 of par; and (ii) the difference between the purchase price  and the sale price.               (gg)  Retained at the end of November 3, 2014 and sold before January 30, 2015,  the claim per share shall be the least of: (i) $5.47 per $100 of par; (ii) the difference between the  purchase price and the sale price; and (iii) the difference between the purchase price and the average  volume weighted average price (“VWAP”) up to the date of sale as set forth in Table-1 below.               (hh)  Held as of the close of trading on January 30, 2015 or sold thereafter, the  claim per share shall be the lesser of: (i) $5.47 per $100 of par; and (ii) the difference between the  purchase price and $94.08 per $100 of par.8   ARCP QAE/QAF Note         11.   For each $100 of par of the ARCP QAE/QAF Notes purchased or otherwise acquired  during the Class Period and:               (ii)  Sold at or prior to 7:03 a.m. on October 29, 2014, the Exchange Act  Recognized Loss Amount per share is zero.               (jj)  Sold after 7:03 a.m. on October 29, 2014, or on October 30, 2014 or October  31, 2014, the Exchange Act Recognized Loss Amount per share is the lesser of: (1) $5.98 per $100  of par; and (ii) the difference between the purchase price and the sale price.               (kk)  Sold on November 3, 2014, the Exchange Act Recognized Loss Amount per  share is the lesser of: (1) $10.37 per $100 of par; and (ii) the difference between the purchase price  and the sale price.               (ll)  Retained at the end of November 3, 2014 and sold before January 30, 2015,  the claim per share shall be the least of: (i) $10.37 per $100 of par; (ii) the difference between the  purchase price and the sale price; and (iii) the difference between the purchase price and the average  volume weighted average price (“VWAP”) up to the date of sale as set forth in Table-1 below.               (mm)  Held as of the close of trading on January 30, 2015 or sold thereafter, the  claim per share shall be the lesser of: (i) $10.37 per $100 of par; and (ii) the difference between the  purchase price and $94.21 per $100 of par.9                                                    8  Consistent with the requirements of Section 21(D)(e)(1) of the Exchange Act, Exchange Act  Recognized Loss Amounts for the ARCP QAC/QAD Notes are reduced to an appropriate extent by  taking into account the VWAPs of the QAC/QAD Notes during the 90-day look-back period.  The  mean (average) VWAP for the QAC/QAD Notes during this 90-day look-back period was $94.08  per $100 of par as shown in Table-1.                                       - 13 -   

 

     Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 16 of 29                                                              EXECUTION COPY                   SECURITIES ACT RECOGNIZED LOSS AMOUNTS          12.   Securities Act claims were asserted with respect to ARCP Securities Act Securities   purchased or otherwise acquired pursuant or traceable to the Registration Statements.  The Section   11 Securities Act claims asserted in the action serve as the basis for the calculation of Securities Act   Recognized Loss Amounts.  Section 11 provides a statutory formula for the calculation of damages   under that provision.  The formula set forth below, developed by Plaintiffs’ damages expert   generally tracks the statutory formula.  For purposes of the calculations, October 30, 2014 is the date   of suit, and is the proxy for the date of judgment.          13.   Based on the formulas stated below, a “Securities Act Recognized Loss Amount” will   be calculated for each purchase/acquisition of ARCP Securities Act Securities.  If a Securities Act   Recognized Loss Amount calculates to a negative number or zero under the formula below, that   number will be zero.         14.    For the Securities Act Securities, a Securities Act Recognized Loss Amount will be   calculated as set forth below for each purchase or other acquisition of a security pursuant or   traceable to a Registration Statement.  The calculation of a Securities Act Recognized Loss Amount   will depend upon several factors, including (i) which security was purchased or otherwise acquired,   and in what amounts; (ii) when the security was purchased or otherwise acquired; and (iii) whether   the security was sold, and if so, when they were sold, and for what amounts.  The “value” of a   security on the date on which a complaint was first filed alleging claims under Section 11 of the   Securities Act is relevant for purposes of calculating damages for securities still held as of that date   under Section 11(e).  Thus, “value” is measured by the closing price on October 30, 2014, which is   the date the complaint was filed.  Consequently, in order to fairly allocate the Net Settlement Fund,   for the securities that are the subject of claims under Section 11 the October 30, 2014 Closing Price   shall be utilized in measuring the “value” of the securities.                               ARCP COMMON STOCK          A.    The ARCT IV Merger          15.   For each share of ARCP common stock received in exchange for shares of ARCT IV,   Inc. (“ARCT IV”) in the merger between ARCP and ARCT IV (the “ARCT IV Merger”), and                (nn)  Sold at or prior to 7:03 a.m. on October 29, 2014, the Securities Act   Recognized Loss Amount per share is zero.                (a)   Held from the ARCT IV Merger and sold before the close of trading on   October 30, 2014, the Securities Act Recognized Loss Amount per share is the purchase price (not to                                                                                                                                                                   9  Consistent with the requirements of Section 21(D)(e)(1) of the Exchange Act, Exchange Act   Recognized Loss Amounts for the ARCP QAE/QAF Notes are reduced to an appropriate extent by   taking into account the VWAPs of the QAE/QAF Notes during the 90-day look-back period.  The  mean (average) VWAP for the QAE/QAF Notes during this 90-day look-back period was $94.21 per  $100 of par as shown in Table-1.                                        - 14 -    

 

    Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 17 of 29                                                             EXECUTION COPY   exceed $12.87 per share, the issue price of the ARCP common stock registered in connection with  the ARCT IV Merger) minus the sale price.               (b)   Held from the ARCT IV Merger through the close of trading on October 30,  2014, the Securities Act Recognized Loss Amount per share is the purchase price (not to exceed  $12.87 per share, the issue price of the ARCP common stock registered in connection with the  ARCT IV Merger) minus $9.42 per share, the price of ARCP common stock on October 30, 2014.         B.    The Cole Merger         16.   For each share of ARCP common stock received in exchange for shares of Cole, Inc.  (“Cole”) in the merger between ARCP and Cole (the “Cole Merger”) purchased or otherwise  acquired pursuant or traceable to the Registration Statement on Form S-4 dated December 23, 2013  and Proxy Statement/Prospectus dated December 23, 2013 Registration Statement, which registered  and ultimately issued 520,443,854 shares of ARCP common stock, and               (qq)  Sold at or prior to 7:03 a.m. on October 29, 2014, the Securities Act  Recognized Loss Amount per share is zero.               (a)   Held from the Cole Merger and sold before the close of trading on October 30,  2014, the Securities Act Recognized Loss Amount per share is the purchase price (not to exceed  $13.35 per share, the issue price of the ARCP common stock registered in connection with Cole  Merger) minus the sale price.               (b)   Held from the Cole Merger through the close of trading on October 30, 2014,  the Securities Act Recognized Loss Amount per share is the purchase price (not to exceed $13.35 per  share, the issue price of ARCP common stock registered in connection with Cole Merger) minus  $9.42 per share, the price of ARCP common stock on October 30, 2014.         C.    May 20, 2014 Follow-On Offering         17.   For each share of ARCP common stock purchased or otherwise acquired pursuant or  traceable to the March 14, 2013 Shelf Registration Statement on Form S-3ASR, preliminary  Prospectus Supplement dated May 21, 2014, and Prospectus Supplement dated May 23, 2014, which  registered and ultimately issued shares of ARCP common stock (the “Follow-On Offering”), and               (tt)  Sold at or prior to 7:03 a.m. on October 29, 2014, the Securities Act  Recognized Loss Amount per share is zero.               (a)   Held from the Follow-On Offering and sold before the close of trading on  October 30, 2014, the Securities Act Recognized Loss Amount per share is the purchase price (not to  exceed $12.00 per share, the issue price of the ARCP common stock registered in connection with  the Follow-On Offering) minus the sale price.               (b)   Held from the Follow-On Offering through the close of trading on October 30,  2014, the Securities Act Recognized Loss Amount per share is the purchase price (not to exceed  $12.00 per share, the issue price of the ARCP common stock registered in connection with the  Follow-On Offering) minus $9.42 per share, the price of ARCP common stock on October 30, 2014.                                      - 15 -   

 

     Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 18 of 29                                                              EXECUTION COPY    ARCP Preferred Stock – ARCT IV Merger          18.   For each share of ARCP Series F preferred stock purchased or otherwise acquired   pursuant or traceable to the Registration Statement on Form S-4 dated December 3, 2013 and Proxy  Statement/Prospectus dated December 4, 2013, which registered and ultimately issued shares of  ARCP preferred stock, and               (ww)  Sold at or prior to 7:03 a.m. on October 29, 2014, the Securities Act  Recognized Loss Amount per share is zero.               (xx)  Sold before the close of trading on October 30, 2014, the Securities Act  Recognized Loss Amount per share is the purchase price (not to exceed $25.00 per share, the issue  price of ARCP Series F preferred stock) minus the sale price.               (yy)  Held as of the close of trading on October 30, 2014, the Securities Act  Recognized Loss Amount per share is the purchase price (not to exceed $25.00 per share, the issue  price of ARCP Series F preferred stock) minus $22.34 per share, the price of ARCP Series F  preferred stock on October 30, 2014.   ARCP TAA Notes – July 25, 2013 Offering         19.   For each $100 of par of ARCP TAA Notes purchased or otherwise acquired pursuant  or traceable to the March 14, 2013 Shelf Registration Statement on Form S-3ASR, Prospectus  Supplements dated July 23, 2013 and July 25, 2013, and Free Writing Prospectuses dated 23 July  2013, which registered and ultimately issued $310.0 million in face value of the TAA Notes, and               (zz)  Sold at or prior to 7:03 a.m. on October 29, 2014, the Securities Act  Recognized Loss Amount is zero.               (aaa) Sold before the close of trading on October 30, 2014, the Securities Act  Recognized Loss Amount per share is the purchase price (not to exceed $99.50 per $100 of par, the  VWAP of the TAA Notes on July 25, 2013) minus the sale price.               (bbb) Held as of the close of trading on October 30, 2014, the Securities Act  Recognized Loss Amount per share is the purchase price (not to exceed $99.50 per $100 of par, the  VWAP of the TAA Notes on July 25, 2013) minus $94.00 per $100 of par, the VWAP of the TAA  Notes on October 30, 2014.   ARCP TAA Notes – December 5, 2013 Offering         20.   For each $100 of par of ARCP TAA Notes purchased or otherwise acquired pursuant  or traceable to the March 14, 2013 Shelf Registration Statement on Form S-3ASR, Prospectus  Supplements dated December 5, 2013, December 6, 2013, and December 9, 2013, and Free Writing  Prospectus dated December 5, 2013, which registered and reopened the TAA Notes offering for  another $287.5 million in face value, and               (ccc) Sold at or prior to 7:03 a.m. on October 29, 2014, the Securities Act  Recognized Loss Amount is zero.                                       - 16 -    

 

    Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 19 of 29                                                             EXECUTION COPY               (ddd) Sold before the close of trading on October 30, 2014, the Securities Act  Recognized Loss Amount per share is the purchase price (not to exceed $100 per $100 of par, the  VWAP of the TAA Notes on December 5, 2013) minus the sale price.               (eee) Held as of the close of trading on October 30, 2014, the Securities Act  Recognized Loss Amount per share is the purchase price (not to exceed $100 per $100 of par, the  VWAP of the TAA Notes on December 5, 2013) minus $94.00 per $100 of par, the VWAP of the  TAA Notes on October 30, 2014.   ARCP TAB Notes – December 5, 2013 Offering         21.   For each $100 of par of ARCP TAB Notes purchased or otherwise acquired pursuant  or traceable to the March 14, 2013 Shelf Registration Statement on Form S-3ASR, Prospectus  Supplements dated December 5, 2013, December 6, 2013, and December 9, 2013, and Free Writing  Prospectus dated December 5, 2013, which registered and ultimately issued $402.5 million in face  value, and               (fff) Sold at or prior to 7:03 a.m. on October 29, 2014, the Securities Act  Recognized Loss Amount is zero.               (ggg) Sold before the close of trading on October 30, 2014, the Securities Act  Recognized Loss Amount per share is the purchase price (not to exceed $100 per $100 of par, the  VWAP of the TAB Notes on December 5, 2013) minus the sale price.               (hhh) Held as of the close of trading on October 30, 2014, the Securities Act  Recognized Loss Amount per share is the purchase price (not to exceed $100 per $100 of par, the  VWAP of the TAB Notes on December 5, 2013) minus $93.58 per $100 of par, the VWAP of the  TAA Notes on October 30, 2014.                                     TABLE-1                   ARCP Securities Average Closing Prices and VWAPs                        November 3, 2014 – January 30, 2015              Common   Preferred   TAA      TAB      QAA/QA    QAC/QA    QAE/QAF    Date      Stock     Stock    Notes     Notes    B Notes   D Notes     Notes   11/3/2014  $7.85    $20.91    $85.51    $83.88    $95.86    $93.88    $93.09   11/4/2014  $8.00    $21.12    $86.88    $85.65    $95.39    $93.74    $92.65   11/5/2014  $8.24    $21.28    $88.15    $87.22    $95.32    $93.88    $92.96   11/6/2014  $8.34    $21.40    $88.95    $88.18    $95.45    $94.08    $93.15   11/7/2014  $8.43    $21.47    $89.32    $88.73    $95.53    $94.22    $93.72  11/10/2014  $8.44    $21.51    $89.43    $88.94    $95.62    $94.22    $93.97  11/11/2014  $8.47    $21.57    $89.49    $89.03    $95.62    $94.22    $93.97  11/12/2014  $8.51    $21.61    $89.49    $89.06    $95.66    $94.41    $94.10  11/13/2014  $8.54    $21.64    $89.50    $89.05    $95.74    $94.41    $94.34                                      - 17 -   

 

    Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 20 of 29                                                             EXECUTION COPY               Common   Preferred   TAA      TAB      QAA/QA    QAC/QA    QAE/QAF    Date      Stock     Stock    Notes     Notes    B Notes   D Notes     Notes  11/14/2014  $8.56    $21.66    $89.50    $89.03    $95.70    $94.36    $94.34  11/17/2014  $8.58    $21.68    $89.50    $89.03    $95.70    $94.32    $94.30  11/18/2014  $8.60    $21.70    $89.46    $89.03    $95.71    $94.35    $94.30  11/19/2014  $8.61    $21.71    $89.42    $89.03    $95.72    $94.40    $94.32  11/20/2014  $8.64    $21.71    $89.43    $89.06    $95.72    $94.44    $94.32  11/21/2014  $8.66    $21.73    $89.51    $89.16    $95.73    $94.52    $94.32  11/24/2014  $8.69    $21.74    $89.62    $89.26    $95.74    $94.62    $94.49  11/25/2014  $8.71    $21.74    $89.71    $89.37    $95.75    $94.61    $94.49  11/26/2014  $8.75    $21.78    $89.79    $89.47    $95.75    $94.61    $94.49  11/28/2014  $8.78    $21.81    $89.79    $89.47    $95.75    $94.61    $94.63   12/1/2014  $8.81    $21.84    $89.89    $89.60    $95.79    $94.61    $94.69   12/2/2014  $8.83    $21.87    $89.96    $89.60    $95.80    $94.61    $94.69   12/3/2014  $8.85    $21.88    $90.01    $89.69    $95.82    $94.64    $94.69   12/4/2014  $8.87    $21.90    $90.07    $89.69    $95.84    $94.68    $94.72   12/5/2014  $8.88    $21.91    $90.15    $89.80    $95.87    $94.68    $94.72   12/8/2014  $8.89    $21.92    $90.24    $89.80    $95.87    $94.68    $94.77   12/9/2014  $8.91    $21.93    $90.24    $89.93    $95.89    $94.73    $94.77  12/10/2014  $8.92    $21.93    $90.34    $90.05    $95.89    $94.73    $94.82  12/11/2014  $8.93    $21.93    $90.34    $90.15    $95.92    $94.73    $94.88  12/12/2014  $8.93    $21.93    $90.42    $90.23    $95.92    $94.80    $94.96  12/15/2014  $8.91    $21.91    $90.37    $90.13    $95.90    $94.76    $95.01  12/16/2014  $8.87    $21.88    $90.32    $89.94    $95.82    $94.65    $94.93  12/17/2014  $8.85    $21.87    $90.23    $89.80    $95.71    $94.46    $94.60  12/18/2014  $8.83    $21.85    $90.15    $89.67    $95.58    $94.22    $94.27  12/19/2014  $8.81    $21.83    $90.05    $89.53    $95.44    $93.96    $93.96  12/22/2014  $8.79    $21.82    $89.98    $89.44    $95.32    $93.77    $93.96  12/23/2014  $8.78    $21.81    $89.98    $89.44    $95.24    $93.61    $93.96              Common   Preferred   TAA      TAB      QAA/QA    QAC/QA    QAE/QAF    Date      Stock     Stock    Notes     Notes    B Notes   D Notes     Notes  12/24/2014  $8.77    $21.81    $89.95    $89.41    $95.18    $93.61    $93.96  12/26/2014  $8.76    $21.81    $89.96    $89.41    $95.18    $93.61    $93.96  12/29/2014  $8.75    $21.81    $89.93    $89.39    $95.16    $93.53    $93.73  12/30/2014  $8.76    $21.84    $90.00    $89.46    $95.17    $93.49    $93.63  12/31/2014  $8.76    $21.86    $90.00    $89.54    $95.18    $93.46    $93.58    1/2/2015  $8.78    $21.88    $90.00    $89.54    $95.19    $93.47    $93.53    1/5/2015  $8.78    $21.91    $90.06    $89.60    $95.21    $93.49    $93.49    1/6/2015  $8.80    $21.93    $90.11    $89.67    $95.21    $93.51    $93.44    1/7/2015  $8.82    $21.95    $90.18    $89.67    $95.22    $93.54    $93.44                                      - 18 -   

 

     Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 21 of 29                                                              EXECUTION COPY                Common   Preferred   TAA      TAB      QAA/QA    QAC/QA    QAE/QAF     Date      Stock     Stock    Notes     Notes    B Notes   D Notes     Notes     1/8/2015  $8.83    $21.97    $90.26    $89.76    $95.23    $93.59    $93.49     1/9/2015  $8.85    $21.99    $90.34    $89.85    $95.24    $93.65    $93.54    1/12/2015  $8.86    $22.01    $90.44    $89.94    $95.24    $93.69    $93.62    1/13/2015  $8.87    $22.03    $90.52    $90.02    $95.24    $93.69    $93.70    1/14/2015  $8.88    $22.05    $90.58    $90.10    $95.24    $93.69    $93.77    1/15/2015  $8.89    $22.06    $90.65    $90.18    $95.22    $93.72    $93.84    1/16/2015  $8.89    $22.08    $90.71    $90.24    $95.21    $93.76    $93.90    1/20/2015  $8.89    $22.10    $90.71    $90.24    $95.20    $93.80    $93.90    1/21/2015  $8.90    $22.11    $90.71    $90.24    $95.21    $93.80    $93.90    1/22/2015  $8.91    $22.13    $90.78    $90.30    $95.23    $93.86    $93.98    1/23/2015  $8.92    $22.14    $90.85    $90.37    $95.27    $93.91    $94.06    1/26/2015  $8.93    $22.16    $90.91    $90.37    $95.28    $93.98    $94.06    1/27/2015  $8.94    $22.17    $90.91    $90.37    $95.29    $93.98    $94.06    1/28/2015  $8.95    $22.19    $90.97    $90.37    $95.29    $93.98    $94.14    1/29/2015  $8.96    $22.20    $91.01    $90.42    $95.31    $94.03    $94.14    1/30/2015  $8.96    $22.21    $91.06    $90.42    $95.32    $94.08    $94.21            A purchase, acquisition or sale of an ARCP Security shall be deemed to have occurred on the   “contract” or “trade” date as opposed to the “settlement” or “payment” date.  All purchase,   acquisition and sale prices shall exclude any fees and commissions.  The receipt or grant by gift,   devise, or operation of law of ARCP Securities during the Class Period shall not be deemed a   purchase, acquisition or sale of ARCP Securities for the calculation of a claimant’s recognized claim  nor shall it be deemed an assignment of any claim relating to the purchase or acquisition of such  shares unless specifically provided in the instrument of gift or assignment.  The receipt of ARCP  Securities during the Class Period in exchange for securities of any other corporation or entity, other  than American Realty Capital Trust IV, Inc. and Cole Real Estate Investments, Inc. (formerly known  as Cole Credit Property Trust III, Inc.), shall not be deemed a purchase, acquisition or sale of ARCP  Securities.         Distributions will be made to Authorized Claimants after all claims have been processed,  after the Court has finally approved the Settlement, and after any appeals are resolved.  If there is  any balance remaining in the Net Settlement Fund after at least six (6) months from the initial date of  distribution of the Net Settlement Fund (whether by reason of tax refunds, uncashed checks, or  otherwise), the Claims Administrator shall, if feasible, reallocate such balance among Authorized  Claimants in an equitable and economic fashion.  These redistributions shall be repeated until the  balance remaining in the Net Settlement Fund is no longer economically feasible to distribute to  Class Members.  Thereafter, any balance that still remains in the Net Settlement Fund shall be  donated to any appropriate non-profit charitable organization(s) unaffiliated with any party or their  counsel serving the public interest.         Please contact the Claims Administrator or Lead Counsel if you disagree with any  determinations made by the Claims Administrator regarding your Proof of Claim and Release.  If                                       - 19 -    

 

     Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 22 of 29                                                              EXECUTION COPY    you are dissatisfied with the determinations, you may ask the Court, which retains jurisdiction over   all Class Members and the claims administration process, to decide the issue by submitting a written   request.          The Court has reserved jurisdiction to allow, disallow, or adjust the claim of any Class   Member on equitable grounds.          Payment pursuant to the Plan of Allocation set forth above shall be conclusive against all   Authorized Claimants.  No Person shall have any claim against Lead Plaintiff, Lead Counsel, any   Claims Administrator, any other Person designated by Lead Plaintiff’s counsel, or any of the   Released Persons based on the distributions made substantially in accordance with the Stipulation   and the Settlement contained therein, the Plan of Allocation, or further orders of the Court.  All Class   Members who fail to complete and submit a valid and timely Proof of Claim and Release shall be   barred from participating in distributions from the Net Settlement Fund (unless otherwise ordered by   the Court), but otherwise shall be bound by all of the terms of the Settlement, including the terms of   any judgment entered and the releases given.       DO I NEED TO CONTACT LEAD COUNSEL IN ORDER TO PARTICIPATE IN                   DISTRIBUTION OF THE SETTLEMENT FUND?         No.  If you have received this Notice and timely submit your Proof of Claim and Release to  the designated address, you need not contact Lead Counsel.  If your address changes, please contact  the Claims Administrator at:                                ARCP Securities Litigation                                c/o Gilardi & Co. LLC                                   P.O. Box 43434                              Providence, RI 02940-3434                              Telephone:  1-866-558-9236                           www.ARCPSecuritiesLitigation.com        THERE WILL BE NO PAYMENTS IF THE STIPULATION IS TERMINATED         The Stipulation may be terminated under several circumstances outlined in it.  If the  Stipulation is terminated, the Litigation will proceed as if the Stipulation had not been entered into.                    WHAT ARE THE REASONS FOR SETTLEMENT?         The Settlement was reached after contested motion practice directed to the sufficiency of  Lead Plaintiff’s claims.  The parties also completed document, deposition, and expert discovery.   Nevertheless, the Court has not reached any final decisions in connection with Lead Plaintiff’s  claims against Defendants.  Instead, Lead Plaintiff and Defendants have agreed to this Settlement,  which was reached with the substantial assistance of a highly respected mediator.  In reaching the  Settlement, the parties have avoided the cost, delay and uncertainty of further litigation.         As in any litigation, Lead Plaintiff and the Class would face an uncertain outcome if they did  not agree to the Settlement.  If Lead Plaintiff succeeded at the upcoming trial, Defendants would                                        - 20 -    

 

     Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 23 of 29                                                              EXECUTION COPY    likely file appeals that would postpone final resolution of the case.  Continuation of the Litigation   against Defendants could result in a judgment greater than this Settlement.  Conversely, continuing   the case could result in no recovery at all or a recovery that is less than the amount of the Settlement.          Lead Plaintiff and Lead Counsel believe that this Settlement is fair and reasonable to the   Members of the Class.  They have reached this conclusion for several reasons.  Specifically, if the   Settlement is approved, the Class will receive a certain and immediate monetary recovery.    Additionally, Lead Counsel believes that the significant and immediate benefits of the Settlement,   when weighed against the significant risk, delay and uncertainty of continued litigation, are a very   favorable result for the Class.          Defendants are entering into this Settlement because it would be beneficial to avoid the   burden, inconvenience, and expense associated with continuing the Litigation, and the uncertainty   and risks inherent in any litigation. Defendants have determined that it is desirable and beneficial to   them that the Litigation be settled in the manner and upon the terms and conditions set forth in the   Stipulation.                           WHO REPRESENTS THE CLASS?   The following attorneys are counsel for the Class:                                    Debra J. Wyman                           ROBBINS GELLER RUDMAN &                                    DOWD LLP                             655 West Broadway, Suite 1900                                San Diego, CA  92101                               Telephone:  800/449-4900         If you have any questions about the Litigation, or the Settlement, you are entitled to consult  with Lead Counsel by contacting counsel at the phone number listed above.         You may obtain a copy of the Stipulation by contacting the Claims Administrator at:                                ARCP Securities Litigation                                c/o Gilardi & Co. LLC                                   P.O. Box 43434                              Providence, RI 02940-3434                              Telephone:  1-866-558-9236                           www.ARCPSecuritiesLitigation.com                HOW WILL THE LEAD PLAINTIFF’S LAWYERS BE PAID?         Lead Counsel will file a motion for an award of attorneys’ fees and expenses that will be  considered at the Settlement Fairness Hearing.  Lead Counsel will apply for an attorneys’ fee award  for Plaintiffs’ Counsel in the amount of up to 13% of the Settlement Fund, plus payment of  Plaintiffs’ Counsel’s costs, charges and expenses incurred in connection with this Litigation in an  amount not to exceed $6 million, which may include awards to Plaintiffs pursuant to 15 U.S.C.                                        - 21 -    

 

    Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 24 of 29                                                             EXECUTION COPY   §78u-4(a)(4) in connection with their representation of the Class.  Such sums as may be approved by  the Court will be paid from the Settlement Fund.  Class Members are not personally liable for any  such fees or expenses.         The attorneys’ fees and costs, charges and expenses requested will be the only payment to  Plaintiffs’ Counsel for their efforts in achieving this outstanding Settlement and for their risk in  undertaking this representation on a wholly contingent basis.  The fees requested will compensate  Plaintiffs’ Counsel for their work in achieving the Settlement.  The Court will decide what  constitutes a reasonable fee award and may award less than the amount requested by Lead Counsel.                CAN I EXCLUDE MYSELF FROM THE SETTLEMENT?         No.  If you did not exclude yourself from the Class in connection with the Notice of  Pendency of Class Action, you remain a Class Member.    CAN I OBJECT TO THE SETTLEMENT, THE REQUESTED ATTORNEYS’ FEES,   THE REQUESTED PAYMENT OF COSTS AND EXPENSES AND/OR THE PLAN OF                                 ALLOCATION?         Yes.  If you are a Class Member, you may object to the terms of the Settlement.  Whether or  not you object to the terms of the Settlement, you may also object to the requested attorneys’ fees,  costs, charges and expenses, Plaintiffs’ request for awards for representing the Class and/or the Plan  of Allocation.  In order for any objection to be considered, you must file a written statement,  accompanied by proof of Class membership, with the Court and send a copy to Lead Counsel and  ARCP’s Counsel, at the addresses listed below by __________, 20__.  The Court’s address is Daniel  Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, NY 10007; Lead  Counsel’s address is Robbins Geller Rudman & Dowd LLP, 655 West Broadway, Suite 1900, San  Diego, CA 92101, c/o Debra J. Wyman; ARCP’s Counsel’s address is: Milbank LLP, 55 Hudson  Yards, New York, NY 10001, c/o Jed M. Schwartz.  Attendance at the Settlement Fairness Hearing  is not necessary; however, persons wishing to be heard orally at the Settlement Fairness Hearing are  required to indicate in their written objection their intention to appear at the hearing and identify any  witnesses they may call to testify and exhibits, if any, they intend to introduce into evidence.      WHAT ARE MY RIGHTS AND OBLIGATIONS UNDER THE SETTLEMENT?         If you are a Class Member and you did not exclude yourself from the Class, you may receive  the benefit of, and you will be bound by, the terms of the Settlement described in this Notice, upon  approval by the Court.                           HOW CAN I GET A PAYMENT?         In order to qualify for a payment, you must timely complete and return the Proof of Claim  and Release that accompanies this Notice.  A Proof of Claim and Release is enclosed with this  Notice and also may be downloaded at www.ARCPSecuritiesLitigation.com.  Read the instructions  carefully; fill out the Proof of Claim and Release; sign it; and mail or submit it online so that it is  postmarked (if mailed) or received (if submitted online) no later than __________, 2020.  The  Proof of Claim and Release may be submitted online at www.ARCPSecuritiesLitigation.com.  If you                                       - 22 -   

 

     Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 25 of 29                                                              EXECUTION COPY    do not submit a timely Proof of Claim and Release with all of the required information, you will not   receive a payment from the Settlement Fund; however, unless you expressly excluded yourself from   the Class as described above, you will still be bound in all other respects by the Settlement, the   Judgment, and the release contained in them.             WHAT CLAIMS WILL BE RELEASED BY THE SETTLEMENT?          If the Settlement is approved by the Court, the Court will enter a Judgment.  If the Judgment  becomes final pursuant to the terms of the Stipulation, all Class Members shall be deemed to have,  and by operation of the Final Judgment shall have, fully, finally, and forever released, relinquished,   and discharged any and all of the Released Persons from all Released Claims.          •     “Released Claims” means any and all rights, liabilities, suits, debts, obligations,               demands, damages, losses, judgment matters, issues, claims (including Unknown               Claims), and causes of action of every nature and description whatsoever, in law,               equity, or otherwise, whether accrued or unaccrued, fixed or contingent, liquidated or               unliquidated, whether arising under federal, state, local, statutory, common law,               foreign law, or any other law, rule, or regulation, and whether class and/or individual               in nature, concerning, based on, arising out of, or in connection with both: (i) the               purchase or other acquisition of ARCP Securities by Lead Plaintiff or any other Class               Member during the period between February 28, 2013 and October 29, 2014; and (ii)               the allegations, transactions, acts, facts, matters, occurrences, disclosures, statements,               filings, representations, omissions, or events that were or could have been alleged or               asserted in the Litigation.  Released Claims do not include claims to enforce the               Settlement, any shareholder derivative claims on behalf of ARCP, or governmental               agency actions against the Released Persons.          •     “Related Parties” means each Defendant’s respective present and former parents,               subsidiaries, divisions, controlling persons, associates, entities and affiliates and each               and all of their respective present and former employees, members, partners,               principals, officers, directors, controlling shareholders, agents, attorneys, advisors               (including financial or investment advisors), accountants, auditors, consultants,               underwriters, investment bankers, commercial bankers, entities providing fairness               opinions, general or limited partners or partnerships, limited liability companies,               members, joint ventures and insurers and reinsurers of each of them; as well as the               predecessors, successors, assigns, estates, immediate family members, spouses, heirs,               executors, trusts, trustees, administrators, agents, legal or personal representatives,               assigns, and assignees of each of them, in their capacity as such.          •     “Released Persons” means each and all of the Defendants and their Related Parties.          •     “Unknown Claims” means (a) any and all Released Claims which the Releasing               Plaintiff Parties do not know or suspect to exist in his, her, or its favor at the time of               the release of the Released Persons, which, if known by him, her, or it, might have               affected his, her, or its settlement with and release of the Released Persons, or might               have affected his, her, or its decision(s) with respect to the Settlement, including, but               not limited to, whether or not to object to this Settlement or seek exclusion from the                                       - 23 -    

 

Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 26 of 29                                                         EXECUTION COPY           Class; and (b) any and all Released Defendants' Claims that the Released Persons do          not know or suspect to exist in his, her, or its favor at the time of the release of the          Plaintiffs, the Class and Plaintiffs' Counsel, which, if known by him, her, or it, might          have affected his, her, or its settlement and release of Plaintiffs, the Class and          Plaintiffs' Counsel.  With respect to (a) any and all Released Claims against the          Released Persons, and (b) any and all Released Defendants’ Claims against          Plaintiffs, the Class and Plaintiffs’ Counsel, the Settling Parties stipulate and agree          that, upon the Effective Date, the Settling Parties shall expressly waive and each          Releasing Plaintiff Party and Released Person shall be deemed to have, and by          operation of the Judgment shall have expressly waived, the provisions, rights, and          benefits of California Civil Code §1542, which provides:                 A general release does not extend to claims that the                creditor or releasing party does not know or suspect to                exist in his or her favor at the time of executing the release                and that, if known by him or her would have materially                affected his or her settlement with the debtor or released                party.           The Settling Parties shall expressly waive and each Releasing Plaintiff Party and          Released Person shall be deemed to have, and by operation of the Judgment shall          have, expressly waived any and all provisions, rights, and benefits conferred by any          law of any state or territory of the United States, or principle of common law, which          is similar, comparable, or equivalent to California Civil Code §1542.  The Releasing          Plaintiff Parties and Released Persons acknowledge that they may hereafter discover          facts in addition to or different from those which he, she, it or their counsel now          knows or believes to be true with respect to the subject matter of the Released Claims          or Released Defendants’ Claims, but (a) the Releasing Plaintiff Parties shall          expressly fully, finally, and forever waive, compromise, settle, discharge, extinguish,          and release, and each Releasing Plaintiff Party shall be deemed to have waived,          compromised, settled, discharged, extinguished, and released, and upon the Effective          Date, and by operation of the Judgment shall have waived, compromised, settled,          discharged, extinguished, and released, fully, finally, and forever, any and all          Released Claims against the Released Persons, known or unknown, suspected or          unsuspected, contingent or non-contingent, whether or not concealed or hidden,          which now exist, or heretofore have existed, upon any theory of law or equity now          existing or coming into existence in the future, including, but not limited to, conduct          which is negligent, intentional, with or without malice, or a breach of any duty, law          or rule, without regard to the subsequent discovery or existence of such different or          additional facts, legal theories, or authorities, and (b) the Released Persons shall          expressly fully, finally, and forever waive, compromise, settle, discharge, extinguish,          and release, and upon the Effective Date, and by operation of the Judgment shall          have waived, compromised, settled, discharged, extinguished, and released, fully,          finally, and forever, any and all Released Defendants’ Claims against the Plaintiffs,          the Class and Plaintiffs’ Counsel, known or unknown, suspected or unsuspected,          contingent or non-contingent, whether or not concealed or hidden, which now exist,                                   - 24 -                

 

     Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 27 of 29                                                              EXECUTION COPY                or heretofore have existed, upon any theory of law or equity now existing or coming               into existence in the future, including, but not limited to, conduct which is negligent,               intentional, with or without malice, or a breach of any duty, law or rule, without              regard to the subsequent discovery or existence of such different or additional facts,              legal theories, or authorities.  The Settling Parties acknowledge, and the Releasing              Plaintiff Parties and Released Persons shall be deemed by operation of the Judgment              to have acknowledged, that the foregoing waiver was separately bargained for and is              an essential element of the Settlement of which this release is a part.                       THE SETTLEMENT FAIRNESS HEARING          The Court will hold a Settlement Fairness Hearing on _______, 2020, at _:__ _.m., before the   Honorable Alvin K. Hellerstein at the United States District Court for the Southern District of New   York, Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, NY 10007,   for the purpose of determining whether: (1) the Settlement as set forth in the Stipulation for  $1,025,000,000.00 in cash should be approved by the Court as fair, reasonable and adequate;  (2) Judgment as provided under the Stipulation should be entered; (3) to award Lead Counsel  attorneys’ fees and expenses out of the Settlement Fund and, if so, in what amount; (4) to award  Plaintiffs pursuant to 15 U.S.C. §78u-4(a)(4) in connection with their representation of the Class out  of the Settlement Fund and, if so, in what amount; and (5) the Plan of Allocation should be approved  by the Court.  The Court may adjourn or continue the Settlement Fairness Hearing without further  notice to Members of the Class.         Any Class Member may appear at the Settlement Fairness Hearing and be heard on any of  the foregoing matters; provided, however, that no such person shall be heard unless his, her, or its  objection is made in writing and is filed, together with proof of membership in the Class and with  copies of all other papers and briefs to be submitted by him, her, or it to the Court at the Settlement  Fairness Hearing, with the Court no later than ______, 20__, and showing proof of service on the  following counsel:         Debra J. Wyman                   Jed M. Schwartz        ROBBINS GELLER RUDMAN            MILBANK LLP          & DOWD LLP                     55 Hudson Yards        655 West Broadway, Suite 1900    New York, NY 10001        San Diego, CA  92101                                                              Attorneys for Lead Plaintiff     Attorneys for ARCP            Unless otherwise directed by the Court, any Class Member who does not make his, her or its   objection in the manner provided shall be deemed to have waived all objections to this Settlement   and shall be foreclosed from raising (in this or any other proceeding or on any appeal) any objection   and any untimely objection shall be barred.          If you hire an attorney (at your own expense) to represent you for purposes of objecting, your   attorney must serve a notice of appearance on counsel listed above and file it with the Court (at the   address set out above) by no later than _____________, 20__.                                        - 25 -    

 

     Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 28 of 29                                                              EXECUTION COPY                                    INJUNCTION         The Court has issued an order enjoining all Class Members from instituting, commencing,  maintaining or prosecuting any action in any court or tribunal that asserts Released Claims against  any Released Persons, pending final determination by the Court of whether the Settlement should be  approved.                  HOW DO I OBTAIN ADDITIONAL INFORMATION?         This Notice contains only a summary of the terms of the proposed Settlement.  The records in  this Litigation may be examined and copied at any time during regular office hours, and subject to  customary copying fees, at the Clerk of the United States District Court for the Southern District of  New York.  For a fee, all papers filed in this Litigation are available at www.pacer.gov.  In addition,  all of the Settlement documents, including the Stipulation, this Notice, the Proof of Claim and  Release and proposed Judgment may be obtained by contacting the Claims Administrator at:                                ARCP Securities Litigation                                c/o Gilardi & Co. LLC                                   P.O. Box 43434                              Providence, RI 02940-3434                        Email: info@ARCPSecuritiesLitigation.com                              Telephone:  1-866-558-9236                           www.ARCPSecuritiesLitigation.com         In addition, you may contact Rick Nelson, Shareholder Relations, Robbins Geller Rudman &  Dowd LLP, 655 West Broadway, Suite 1900, San Diego, CA 92101, 1(800)449-4900, if you have  any questions about the Litigation or the Settlement.         DO NOT WRITE TO OR TELEPHONE THE COURT FOR INFORMATION           SPECIAL NOTICE TO BANKS, BROKERS, AND OTHER NOMINEES         If you hold any ARCP Securities purchased or acquired during the Class Period, as a  nominee for a beneficial owner, then, within fourteen (14) business days after you receive this  Notice, you must either: (1) send a copy of this Notice by First-Class Mail to all such Persons; or (2)  provide a list of the names and addresses of such Persons to the Claims Administrator:                                ARCP Securities Litigation                                c/o Gilardi & Co. LLC                                   P.O. Box 43434                              Providence, RI 02940-3434                       E-mail:  info@ARCPSecuritiesLitigation.com                              Telephone:  1-866-558-9236                           www.ARCPSecuritiesLitigation.com                                           - 26 -    

 

    Case 1:15-mc-00040-AKH   Document 1272-3   Filed 09/30/19   Page 29 of 29                                                             EXECUTION COPY         If you choose to mail the Notice and Proof of Claim and Release yourself, you may obtain  from the Claims Administrator (without cost to you) as many additional copies of these documents  as you will need to complete the mailing.         Regardless of whether you choose to complete the mailing yourself or elect to have the  mailing performed for you, you may obtain reimbursement for or advancement of reasonable  administrative costs actually incurred or expected to be incurred in connection with forwarding the  Notice and which would not have been incurred but for the obligation to forward the Notice, upon  submission of appropriate documentation to the Claims Administrator.   DATED: ___________________     BY ORDER OF THE                                  UNITED STATES DISTRICT COURT                                 SOUTHERN DISTRICT OF NEW YORK                                          - 27 -   

 

Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 1 of 19                                 EXHIBIT A-2                

 

    Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 2 of 19                                                             EXECUTION COPY   UNITED STATES DISTRICT COURT  SOUTHERN DISTRICT OF NEW YORK                                           x    In re AMERICAN REALTY CAPITAL         :  Civil Action No. 1:15-mc-00040-AKH  PROPERTIES, INC. LITIGATION           :                                        :  CLASS ACTION                                        :  This Document Relates To:             :                                          :        ALL ACTIONS.                    :                                        x                              PROOF OF CLAIM AND RELEASE                                    EXHIBIT A-2               

 

     Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 3 of 19                                                              EXECUTION COPY    I.    GENERAL INSTRUCTIONS          1.    To recover as a member of the Class based on your claims in the action entitled In    re American Realty Capital Properties, Inc. Litigation, Civil Action No. 1:15-mc-00040-AKH (the   “Litigation”), you must complete and, on page __ hereof, sign this Proof of Claim and Release.  If   you fail to submit a properly addressed (as set forth in paragraph 3 below) Proof of Claim and   Release form, postmarked or received by the date shown below, your claim may be rejected and   you may be precluded from any recovery from the Net Settlement Fund created in connection with   the proposed settlement of the Litigation (the “Settlement”).1         2.    Submission of this Proof of Claim and Release form, however, does not assure that   you will share in the proceeds of the Settlement.         3.    YOU MUST MAIL OR SUBMIT ONLINE YOUR COMPLETED AND SIGNED   PROOF OF CLAIM AND RELEASE FORM, ACCOMPANIED BY COPIES OF THE   DOCUMENTS REQUESTED HEREIN, NO LATER THAN ________, 2020, TO THE COURT-  APPOINTED CLAIMS ADMINISTRATOR IN THIS CASE, AT THE FOLLOWING   ADDRESS:                                ARCP Securities Litigation                                 Claims Administrator                                c/o Gilardi & Co. LLC                                   P.O. Box 43434                              Providence, RI  02940-3434                  Online Submissions: www.ARCPSecuritiesLitigation.com                                             If you are NOT a member of the Class (as defined in the Notice of Proposed Settlement of Class    Action (the “Notice”)), DO NOT submit a Proof of Claim and Release form.                                                        1  This Proof of Claim and Release incorporates by reference the definitions in the Stipulation of   Settlement (“Stipulation”), which can be obtained at www.ARCPSecuritiesLitigation.com.                                         - 1 -    

 

    Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 4 of 19                                                             EXECUTION COPY         4.    If you are a member of the Class and you did not timely request exclusion from the   Class, you will be bound by the terms of any judgment entered in the Litigation, including the   releases provided therein, WHETHER OR NOT YOU SUBMIT A PROOF OF CLAIM AND   RELEASE FORM.   II.   CLAIMANT IDENTIFICATION         You are a member of the Class if you purchased or otherwise acquired American Realty   Capital Properties, Inc. (“ARCP”) common stock, preferred stock or debt securities between   February 28, 2013 and October 29, 2014.  Excluded from the Class are: Defendants, members of   the immediate families of each of the Defendants, any person, firm, trust, corporation, officer,   director or other individual or entity in which any Defendant has a controlling interest or which is   related to or affiliated with any Defendant, and the legal representatives, agents, affiliates, heirs,   successors-in-interest, or assigns of any such excluded party.  For the avoidance of doubt, this   exclusion does not extend to: (1) any investment company or pooled investment fund in which a   Third-Party Underwriter Defendant2 may have a direct or indirect interest, or as to which its   affiliates may act as an advisor, but of which a Third-Party Underwriter Defendant or its respective   affiliates is not a majority owner or does not hold a majority beneficial interest; or (2) any   employee benefit plan as to which a Third-Party Underwriter Defendant or its affiliates acts as an   investment advisor or otherwise may be a fiduciary; provided, however, that membership in the                                                     2  Third-Party Underwriter Defendants are defined as Barclays Capital Inc., BMO Capital  Markets Corp., Capital One Securities, Inc., Citigroup Global Markets Inc., Credit Suisse  Securities (USA) LLC, Deutsche Bank Securities Inc., Janney Montgomery Scott, LLC, JMP  Securities LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc., Ladenburg Thalmann  & Co. Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Mizuho Securities USA LLC  (f/k/a Mizuho Securities USA Inc.), Morgan Stanley & Co. LLC, Piper Jaffray & Co., PNC Capital  Markets LLC, RBS Securities Inc., Robert W. Baird & Co. Incorporated, and Wells Fargo  Securities, LLC.                                        - 2 -   

 

     Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 5 of 19                                                              EXECUTION COPY    Class by such investment company, pooled investment fund or employee benefit plan is limited to    transactions in ARCP Securities made on behalf of, or for the benefit of, persons other than persons    that are excluded from the Class by definition.  In other words, the Third-Party Underwriter    Defendants cannot make a claim on their own behalf for their ownership share in any of the above    entities.  The Class also excludes any person or entity that entered into any other settlement    agreement or otherwise provided a release to any Defendant relating to or arising from the purchase    or other acquisition of ARCP Securities prior to October 29, 2014.  Also excluded from the Class    is any Class Member that validly and timely requested exclusion in accordance with the    requirements set by the Court in connection with the Notice of Pendency of Class Action    previously provided to the Class.          Use Part I of this form entitled “Claimant Identification” to identify each purchaser or    acquirer of record (“nominee”), if different from the beneficial purchaser or acquirer of the    securities which form the basis of this claim.  THIS CLAIM MUST BE FILED BY THE ACTUAL    BENEFICIAL PURCHASER(S) OR ACQUIRER(S) OR THE LEGAL REPRESENTATIVE OF    SUCH PURCHASER(S) OR ACQUIRER(S) OF THE ARCP SECURITIES UPON WHICH    THIS CLAIM IS BASED.         All joint purchasers or acquirers must sign this claim.  Executors, administrators,   guardians, conservators and trustees must complete and sign this claim on behalf of persons   represented by them and their authority must accompany this claim and their titles or capacities    must be stated.  The Social Security (or taxpayer identification) number and telephone number of    the beneficial owner may be used in verifying the claim.  Failure to provide the foregoing    information could delay verification of your claim or result in rejection of the claim.                                          - 3 -    

 

    Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 6 of 19                                                             EXECUTION COPY         If you are acting in a representative capacity on behalf of a Class Member (for example, as   an executor, administrator, trustee, or other representative), you must submit evidence of your   current authority to act on behalf of that Class Member.  Such evidence would include, for   example, letters testamentary, letters of administration, or a copy of the trust documents.         NOTICE REGARDING ELECTRONIC FILES:  Certain claimants with large numbers of   transactions may request to, or may be requested to, submit information regarding their   transactions in electronic files.  All claimants MUST submit a manually signed paper Proof of   Claim and Release form listing all their transactions whether or not they also submit electronic   copies.  If you wish to file your claim electronically, you must contact the Claims Administrator   at edata@gilardi.com to obtain the required file layout.  No electronic files will be considered to   have been properly submitted unless the Claims Administrator issues to the claimant a written   acknowledgement of receipt and acceptance of electronically submitted data.   III.  CLAIM FORM         Use Part II of this form entitled “Schedule of Transactions in ARCP Common Stock,” Part   III of this form entitled “Schedule of Transactions in ARCP Debt Securities” and Part IV of this   form entitled “Schedule of Transactions in ARCP Preferred Stock” to supply all required details   of your transaction(s) in ARCP Securities.  If you need more space or additional schedules, attach   separate sheets giving all of the required information in substantially the same form.  Sign and   print or type your name on each additional sheet.         On the schedules, provide all of the requested information with respect to all of your   purchases and acquisitions and all of your sales of ARCP common stock, debt securities and   preferred stock between February 28, 2013 and October 28, 2014, whether such transactions   resulted in a profit or a loss.  You must also provide all of the requested information with respect                                        - 4 -   

 

     Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 7 of 19                                                              EXECUTION COPY    to all of the shares of ARCP common and preferred stock you held at the close of trading on    February 27, 2013, October 28, 2014, and January 30, 2015.  Failure to report all such transactions    may result in the rejection of your claim.         List these transactions separately and in chronological order, by trade date, beginning with   the earliest.  You must accurately provide the month, day and year of each transaction you list.         For short-sale transactions, the date of covering a “short sale” is deemed to be the date of    purchase of ARCP common stock, and the date of a “short sale” is deemed to be the date of sale    of ARCP common stock.          For each transaction, you must provide, together with this claim form, copies of    stockbroker confirmation slips, stockbroker statements, or other documents adequately evidencing    your transactions in ARCP Securities.  If any such documents are not in your possession, please    obtain a copy or equivalent documents from your broker because these documents are necessary    to prove and process your claim.  Failure to provide this documentation could delay verification    of your claim or result in rejection of your claim.                                          - 5 -    

 

    Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 8 of 19                                                             EXECUTION COPY                         UNITED STATES DISTRICT COURT                        SOUTHERN DISTRICT OF NEW YORK                   In re American Realty Capital Properties, Inc. Litigation                                                                  Civil Action No. 1:15-mc-00040-AKH                          PROOF OF CLAIM AND RELEASE         Must Be Postmarked (if mailed) or Received (if submitted online) No Later Than:                                  __________, 2020                                 Please Type or Print         REMEMBER TO ATTACH COPIES OF BROKER CONFIRMATIONS OR   OTHER   DOCUMENTATION OF YOUR TRANSACTIONS IN ARCP SECURITIES.    FAILURE TO PROVIDE THIS DOCUMENTATION COULD DELAY VERIFICATION   OF YOUR CLAIM OR RESULT IN REJECTION OF YOUR CLAIM.                                            - 6 -   

 

    Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 9 of 19                                                             EXECUTION COPY                                                                                     PART II:    SCHEDULE OF TRANSACTIONS IN ARCP COMMON STOCK         A.    Number of shares of ARCP common stock held at the close of trading on              February 27, 2013:                                                                                                    B.    Purchases or acquisitions of ARCP common stock between February 28, 2013 and              October 28, 2014, inclusive:                                                 - 7 -   

 

Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 10 of 19                                                         EXECUTION COPY                                                                                        C.    Sales of ARCP common stock between February 28, 2013 and January 30, 2015,         inclusive:                                                                                       D.    Number of shares of ARCP common stock held at the close of trading on          October 28, 2014:                                                                                     E.    Number of shares of ARCP common stock held at the close of trading on January          30, 2015:                                                                                                                     - 8 -                

 

     Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 11 of 19                                                              EXECUTION COPY          If you require additional space, attach extra schedules in the same format as above.  Sign    and print your name on each additional page.         YOU MUST READ AND SIGN THE RELEASE ON PAGE _____.  FAILURE TO   SIGN THE RELEASE MAY RESULT IN A DELAY IN PROCESSING OR THE   REJECTION OF YOUR CLAIM.                                          - 9 -    

 

     Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 12 of 19                                                              EXECUTION COPY    PART III:   SCHEDULE OF TRANSACTIONS IN ARCP DEBT SECURITIES               Purchases or Acquisitions           Trade Date      Debt Offering     Number of Units    Total Purchase        Month Day Year                    Purchased or Acquired or Acquisition                                                                   Price                                                                                                                                                                                                                                                                                                             Sales (July 25, 2013 – October 28, 2014, inclusive) of ARCP Debt Securities:           Trade Date       Debt Offering   Number of Units Sold Total Sales Price        Month Day Year                                                                                                                                                                                                                      Face value of ARCP Debt Securities held at the close of trading on October 28, 2014:     ________________________          If you require additional space, attach extra schedules in the same format as above.  Sign   and print your name on each additional page.         YOU MUST READ AND SIGN THE RELEASE ON PAGE __.  FAILURE TO SIGN   THE RELEASE MAY RESULT IN A DELAY IN PROCESSING OR THE REJECTION    OF YOUR CLAIM.                                                         - 10 -    

 

    Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 13 of 19                                                             EXECUTION COPY   PART IV:    SCHEDULE OF TRANSACTIONS IN ARCP PREFERRED STOCK         A.    Purchases or acquisitions of ARCP preferred stock between January 6, 2014 –              October 28, 2014, inclusive:                                                                                                             B.    Sales of ARCP preferred stock between January 6, 2014 – January 30, 2015,             inclusive:                                                                                                     C.    Number of shares of ARCP preferred stock held at the close of trading on             October 28, 2014:                                                                                                                                  - 11 -   

 

     Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 14 of 19                                                              EXECUTION COPY          E.    Number of shares of ARCP preferred stock held at the close of trading on January               30, 2015:                                                                                                If you require additional space, attach extra schedules in the same format as above.  Sign    and print your name on each additional page.         YOU MUST READ AND SIGN THE RELEASE ON PAGE __.  FAILURE TO SIGN   THE RELEASE MAY RESULT IN A DELAY IN PROCESSING OR THE REJECTION   OF YOUR CLAIM.   IV.   SUBMISSION TO JURISDICTION OF COURT AND        ACKNOWLEDGMENTS         I (We) submit this Proof of Claim and Release under the terms of the Stipulation described   in the Notice.  I (We) also submit to the jurisdiction of the United States District Court for the   Southern District of New York with respect to my (our) claim as a Class Member and for purposes   of enforcing the releases set forth herein.  I (We) further acknowledge that I am (we are) bound by   and subject to the terms of the Stipulation and any judgment that may be entered in the Litigation,   including the releases and the covenants set forth herein.  I (We) agree to furnish additional   information to the Claims Administrator to support this claim if requested to do so.  I (We) have   not submitted any other claim in connection with the purchase or acquisition of ARCP Securities   during the Class Period and know of no other person having done so on my (our) behalf.    V.    RELEASES         1.     I (We) hereby acknowledge full and complete satisfaction of, and do hereby fully,    finally, and forever settle, release, and discharge from the Released Claims each and all of the    Released Persons.         2.     “Released Persons” means each and all of the Defendants and their Related Parties.                                       - 12 -    

 

     Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 15 of 19                                                              EXECUTION COPY          3.    “Released Claims” means any and all rights, liabilities, suits, debts, obligations,    demands, damages, losses, judgment matters, issues, claims (including Unknown Claims), and    causes of action of every nature and description whatsoever, in law, equity, or otherwise, whether    accrued or unaccrued, fixed or contingent, liquidated or unliquidated, whether arising under    federal, state, local, statutory, common law, foreign law, or any other law, rule, or regulation, and    whether class and/or individual in nature, concerning, based on, arising out of, or in connection    with both: (i) the purchase or other acquisition of ARCP Securities by Lead Plaintiff or any other    Class Member during the period between February 28, 2013 and October 29, 2014; and (ii) the    allegations, transactions, acts, facts, matters, occurrences, disclosures, statements, filings,    representations, omissions, or events that were or could have been alleged or asserted in the    Litigation.  Released Claims do not include claims to enforce the Settlement, any shareholder    derivative claims on behalf of ARCP, or governmental agency actions against the Released    Persons.          4.    “Released Defendants’ Claims” means any and all claims and causes of action of   every nature and description whatsoever, including both known claims and Unknown Claims, that   arise out of, are based upon, or relate in any way to the institution, prosecution, or settlement of   the claims against Defendants in the Litigation, except for claims relating to the enforcement of   the Settlement.          5.    “Unknown Claims” means (a) any and all Released Claims which the Releasing   Plaintiff Parties do not know or suspect to exist in his, her, or its favor at the time of the release of  the Released Persons, which, if known by him, her, or it, might have affected his, her, or its  settlement with and release of the Released Persons, or might have affected his, her, or its  decision(s) with respect to the Settlement, including, but not limited to, whether or not to object to  this Settlement or seek exclusion from the Class; and (b) any and all Released Defendants’ Claims  that the Released Persons do not know or suspect to exist in his, her, or its favor at the time of the                                       - 13 -    

 

    Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 16 of 19                                                             EXECUTION COPY   release of the Plaintiffs, the Class and Plaintiffs’ Counsel, which, if known by him, her, or it, might  have affected his, her, or its settlement and release of Plaintiffs, the Class and Plaintiffs’ Counsel.   With respect to (a) any and all Released Claims against the Released Persons, and (b) any and all  Released Defendants’ Claims against Plaintiffs, the Class and Plaintiffs’ Counsel, the Settling  Parties stipulate and agree that, upon the Effective Date, the Settling Parties shall expressly waive  and each Releasing Plaintiff Party and Released Person shall be deemed to have, and by operation  of the Judgment shall have expressly waived, the provisions, rights, and benefits of California  Civil Code §1542, which provides:        A general release does not extend to claims that the creditor or releasing party does        not know or suspect to exist in his or her favor at the time of executing the release        and that, if known by him or her, would have materially affected his or her        settlement with the debtor or released party.   The Settling Parties shall expressly waive and each Releasing Plaintiff Party and Released Person   shall be deemed to have, and by operation of the Judgment shall have, expressly waived any and   all provisions, rights, and benefits conferred by any law of any state or territory of the United   States, or principle of common law, which is similar, comparable, or equivalent to California Civil   Code §1542.  The Releasing Plaintiff Parties and Released Persons acknowledge that they may   hereafter discover facts in addition to or different from those which he, she, it or their counsel now   knows or believes to be true with respect to the subject matter of the Released Claims or Released   Defendants’ Claims, but (a) the Releasing Plaintiff Parties shall expressly fully, finally, and forever   waive, compromise, settle, discharge, extinguish, and release, and each Releasing Plaintiff Party   shall be deemed to have waived, compromised, settled, discharged, extinguished, and released,   and upon the Effective Date, and by operation of the Judgment shall have waived, compromised,   settled, discharged, extinguished, and released, fully, finally, and forever, any and all Released   Claims against the Released Persons, known or unknown, suspected or unsuspected, contingent or   non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed,                                       - 14 -   

 

     Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 17 of 19                                                              EXECUTION COPY    upon any theory of law or equity now existing or coming into existence in the future, including,    but not limited to, conduct which is negligent, intentional, with or without malice, or a breach of    any duty, law or rule, without regard to the subsequent discovery or existence of such different or    additional facts, legal theories, or authorities, and (b) the Released Persons shall expressly fully,    finally, and forever waive, compromise, settle, discharge, extinguish, and release, and upon the    Effective Date, and by operation of the Judgment shall have waived, compromised, settled,    discharged, extinguished, and released, fully, finally, and forever, any and all Released    Defendants’ Claims against the Plaintiffs, the Class and Plaintiffs’ Counsel, known or unknown,    suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden,   which now exist, or heretofore have existed, upon any theory of law or equity now existing or   coming into existence in the future, including, but not limited to, conduct which is negligent,   intentional, with or without malice, or a breach of any duty, law or rule, without regard to the   subsequent discovery or existence of such different or additional facts, legal theories, or   authorities.  The Settling Parties acknowledge, and the Releasing Plaintiff Parties and Released   Persons shall be deemed by operation of the Judgment to have acknowledged, that the foregoing   waiver was separately bargained for and is an essential element of the Settlement of which this   release is a part.         6.    These releases shall be of no force or effect unless and until the Court approves the   Stipulation and the Settlement becomes effective on the Effective Date.         7.    I (We) hereby warrant and represent that I (we) have not assigned or transferred or   purported to assign or transfer, voluntarily or involuntarily, any claim or matter released pursuant    to this release or any other part or portion thereof.                                         - 15 -    

 

     Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 18 of 19                                                              EXECUTION COPY          8.    I (We) hereby warrant and represent that I (we) have included information about    all of my (our) purchases, acquisitions and sales of ARCP common stock, preferred stock and debt    securities during the Class Period and the number of shares of ARCP common and preferred stock   held by me (us) at the close of trading on February 27, 2013, October 28, 2014, and January 30,   2015.         I (We) declare under penalty of perjury under the laws of the United States of America that    the foregoing information supplied by the undersigned is true and correct and that the Claimant     has not previously entered into any settlement agreement or provided a release of claims to any    Defendant relating to or arising from the purchase or other acquisition of ARCP Securities prior    to October 29, 2014.                                                                                                                          - 16 -    

 

    Case 1:15-mc-00040-AKH   Document 1272-4   Filed 09/30/19   Page 19 of 19                                                                           EXECUTION COPY   THIS PROOF OF CLAIM AND RELEASE FORM MUST BE SUBMITTED ONLINE OR MAILED NO  LATER THAN ____ __, 2020,                                    ADDRESSED AS FOLLOWS:                                      ARCP Securities Litigation                                        Claims Administrator                                       c/o Gilardi & Co. LLC                                          P.O. Box 43434                                    Providence, RI  02940-3434                                       ARCPS      iti Liti ti                                                                                        - 17 -                   

 

Case 1:15-mc-00040-AKH   Document 1272-5   Filed 09/30/19   Page 1 of 5                                EXHIBIT A-3                

 

     Case 1:15-mc-00040-AKH   Document 1272-5   Filed 09/30/19   Page 2 of 5                                                             EXECUTION COPY   UNITED STATES DISTRICT COURT  SOUTHERN DISTRICT OF NEW YORK                                           x    In re AMERICAN REALTY CAPITAL         :  Civil Action No. 1:15-mc-00040-AKH  PROPERTIES, INC. LITIGATION           :                                        :  CLASS ACTION                                        :  This Document Relates To:             :                                          :        ALL ACTIONS.                    :                                        x              SUMMARY NOTICE OF PROPOSED SETTLEMENT OF CLASS ACTION                                    EXHIBIT A-3    

 

      Case 1:15-mc-00040-AKH   Document 1272-5   Filed 09/30/19   Page 3 of 5                                                              EXECUTION COPY    TO:   ALL PERSONS AND ENTITIES THAT PURCHASED OR OTHERWISE         ACQUIRED THE COMMON STOCK, PREFERRED STOCK, OR DEBT         SECURITIES OF AMERICAN REALTY CAPITAL PROPERTIES, INC.         (“ARCP”, NOW KNOWN AS VEREIT, INC.) OR ARC PROPERTIES         OPERATING PARTNERSHIP, L.P.     (NOW KNOWN AS VEREIT OPERATING         PARTNERSHIP, L.P.) (“ARCP SECURITIES”) DURING THE PERIOD         BETWEEN FEBRUARY 28, 2013 AND OCTOBER 29, 2014 (THE “CLASS         PERIOD”)   THIS NOTICE WAS AUTHORIZED BY THE COURT.  IT IS NOT A LAWYER  SOLICITATION.  PLEASE READ THIS NOTICE CAREFULLY AND IN ITS  ENTIRETY.         YOU ARE HEREBY NOTIFIED that a hearing will be held on ____________, 2020, at   __:__ _.m., before the Honorable Alvin K. Hellerstein at the Daniel Patrick Moynihan United   States Courthouse, 500 Pearl Street, New York, NY 10007, to determine whether: (1) the proposed   settlement (the “Settlement”) of the above-captioned action as set forth in the Stipulation of   Settlement (“Stipulation”)1 for $1,025,000,000.00 in cash should be approved by the Court as fair,   reasonable and adequate; (2) the Judgment as provided under the Stipulation should be entered   dismissing the Litigation with prejudice; (3) to award Lead Counsel attorneys’ fees and costs,   charges and expenses out of the Settlement Fund (as defined in the Notice of Proposed Settlement   of Class Action (“Notice”), which is discussed below) and, if so, in what amount; (4) to pay   Plaintiffs for their costs and expenses in representing the Class out of the Settlement Fund and, if   so, in what amount; and (5) the Plan of Allocation should be approved by the Court as fair,   reasonable and adequate.                                                        1  The Stipulation can be viewed and/or obtained at www.ARCPSecuritiesLitigation.com.    Capitalized terms not otherwise defined herein have the meaning given to them in the Stipulation.                                        - 1 -    

 

     Case 1:15-mc-00040-AKH   Document 1272-5   Filed 09/30/19   Page 4 of 5                                                             EXECUTION COPY         IF YOU PURCHASED OR ACQUIRED ARCP SECURITIES BETWEEN   FEBRUARY 28, 2013 AND OCTOBER 29, 2014, YOUR RIGHTS MAY BE AFFECTED BY   THE SETTLEMENT OF THIS LITIGATION.         To share in the distribution of the Settlement Fund, you must establish your rights by   submitting a Proof of Claim and Release form by mail (postmarked no later than ___________,   2020) or electronically (no later than _________, 2020).  Your failure to submit your Proof of   Claim and Release by ______, 2020, will subject your claim to rejection and preclude your   receiving any of the recovery in connection with the Settlement of this Litigation.  If you are a   Member of the Class and did not timely and validly request exclusion therefrom in accordance   with the requirements set forth by the Court in connection with the Notice of Pendency of Class   Action, you will be bound by the Settlement and any judgment and release entered in the Litigation,   including, but not limited to, the Judgment, whether or not you submit a Proof of Claim and   Release.         If you have not received a copy of the Notice, which more completely describes the   Settlement and your rights thereunder (including your right to object to the Settlement), and a   Proof of Claim and Release, you may obtain these documents, as well as a copy of the Stipulation   and other settlement documents, online at www.ARCPSecuritiesLitigation.com, or by writing to:                               ARCP Securities Litigation                               c/o Gilardi & Co. LLC                                  P.O. Box 43434                             Providence, RI  02940-3434         Inquiries should NOT be directed to Defendants, the Court, or the Clerk of the Court.         Inquiries, other than requests for the Notice or for a Proof of Claim and Release, may be   made to a representative of Lead Counsel:                                         - 2 -   

 

      Case 1:15-mc-00040-AKH   Document 1272-5   Filed 09/30/19   Page 5 of 5                                                              EXECUTION COPY                       ROBBINS GELLER RUDMAN & DOWD LLP                                     Rick Nelson                               c/o Shareholder Relations                             655 West Broadway, Suite 1900                                San Diego, CA  92101                               Telephone:  800/449-4900         IF YOU ARE A CLASS MEMBER, YOU HAVE THE RIGHT TO OBJECT TO THE   SETTLEMENT, THE PLAN OF ALLOCATION, THE REQUEST BY LEAD COUNSEL FOR   AN AWARD OF ATTORNEYS’ FEES AND EXPENSES AND/OR THE AWARDS TO   PLAINTIFFS PURSUANT TO 15 U.S.C. §77z-1(a)(4) and/or 15 U.S.C. §78u-4(a)(4) IN   CONNECTION WITH THEIR REPRESENTATION OF THE CLASS. ANY OBJECTIONS   MUST BE FILED WITH THE COURT AND SENT TO LEAD COUNSEL AND ARCP’S   COUNSEL BY _____________, 20__, IN THE MANNER AND FORM EXPLAINED IN THE   NOTICE.   DATED:  _____________________       ________________________________                                      BY ORDER OF THE                                      UNITED STATES DISTRICT COURT                                      SOUTHERN DISTRICT OF NEW YORK                                          - 3 -    

 

Case 1:15-mc-00040-AKH   Document 1272-6   Filed 09/30/19   Page 1 of 12                                    EXHIBIT B                

 

    Case 1:15-mc-00040-AKH   Document 1272-6   Filed 09/30/19   Page 2 of 12                                                             EXECUTION COPY   UNITED STATES DISTRICT COURT  SOUTHERN DISTRICT OF NEW YORK                                           x    In re AMERICAN REALTY CAPITAL         :  Civil Action No. 1:15-mc-00040-AKH  PROPERTIES, INC. LITIGATION           :                                        :  CLASS ACTION                                        :  This Document Relates To:             :                                          :        ALL ACTIONS.                    :                                        x                         [PROPOSED] ORDER AND FINAL JUDGMENT                                     EXHIBIT B      42350.00200 

 

    Case 1:15-mc-00040-AKH   Document 1272-6   Filed 09/30/19   Page 3 of 12                                                             EXECUTION COPY         On the ____ day of ________, 2020, a hearing having been held before this Court to   determine: (1) whether the terms and conditions of the Stipulation of Settlement dated September   30, 2019 (the “Stipulation”) are fair, reasonable and adequate for the settlement of all claims   asserted by the Class against the Defendants in the complaint now pending in this Court in the   above captioned action (the “Litigation”), including the release of the Released Persons, and   should be approved; (2) whether judgment should be entered dismissing the Complaint on the   merits and with prejudice in favor of the Defendants herein and as against all persons or entities   who are Members of the Class herein who have not timely and validly requested exclusion   therefrom; (3) whether to approve the Plan of Allocation as a fair and reasonable method to allocate   the settlement proceeds among the Members of the Class; (4) whether and in what amount to award   Lead Counsel fees and costs, charges and expenses; and (5) whether and in what amount to award   Plaintiffs for their costs and expenses in representing the Class; the Court having considered all   matters submitted to it at the hearing and otherwise; it appearing that a notice of the hearing   substantially in the form approved by the Court was provided to all individuals and entities,   reasonably identifiable, who purchased or otherwise acquired ARCP Securities between February   28, 2013 and October 29, 2014, as shown by the records compiled by the Claims Administrator in   connection with its providing of the Notice, at the respective addresses set forth in such records,   and that a summary notice of the hearing substantially in the form approved by the Court was   published pursuant to the Order Granting Preliminarily Approval Pursuant to Fed. R. Civ. P.   23(e)(1) and Permitting Notice to the Class as set forth in the Declaration of ______________,   and the Supplemental Declaration of _____________; the Court having considered and determined   the fairness and reasonableness of the award of attorneys’ fees and costs, charges and expenses                                         - 1 -  

 

     Case 1:15-mc-00040-AKH   Document 1272-6   Filed 09/30/19   Page 4 of 12                                                              EXECUTION COPY    requested by Lead Counsel and the request for Plaintiffs’ costs and expenses; and all capitalized   terms not otherwise defined herein having the meanings set forth and defined in the Stipulation.          NOW, THEREFORE, IT IS HEREBY ORDERED THAT:          1.    This Judgment incorporates by reference the definitions in the Stipulation, and all    terms used herein shall have the same meanings as set forth in the Stipulation, unless otherwise set    forth herein.          2.    The Court has jurisdiction over the subject matter of this Litigation, the Lead    Plaintiff, all Class Members, and Defendants.         3.    Excluded from the Class is any Class Member that validly and timely requested   exclusion, which Class Members are identified in Exhibit A hereto.  Also excluded from the Class   is any person or entity that entered into a settlement agreement or otherwise provided a release to   any Defendant relating to or arising from the purchase or other acquisition of ARCP Securities   prior to October 29, 2014, which persons and entities (to the extent known to VEREIT) are   identified in Exhibit B which shall be filed with the Court either publicly or under seal depending    upon the determination of the treatment by the Court in connection with the Settlement approval    process.          4.    Notice of the pendency of this Litigation and the proposed Settlement was given to    all Class Members who could be identified with reasonable effort.  The form and method of    notifying the Class of the pendency of the Litigation and the terms and conditions of the proposed    Settlement met the requirements of Rule 23 of the Federal Rules of Civil Procedure, the Private    Securities Litigation Reform Act of 1995 (the “PSLRA”), due process, and any other applicable    law, constituted the best notice practicable under the circumstances, and constituted due and    sufficient notice to all individuals and entities entitled thereto.                                         - 2 -  

 

     Case 1:15-mc-00040-AKH   Document 1272-6   Filed 09/30/19   Page 5 of 12                                                              EXECUTION COPY          5.    Pursuant to Federal Rule of Civil Procedure 23(e)(2), the Court hereby approves    the Settlement set forth in the Stipulation and finds that in light of the benefits to the Class, the    complexity and expense of further litigation, and the costs of continued litigation, the Settlement    is, in all respects, fair, reasonable, and adequate having considered and found that: (a) Lead    Plaintiff and Lead Counsel have adequately represented the Class; (b) the proposal was negotiated    at arm’s length; (c) the relief provided for the Class is adequate, having taken into account (i) the    costs, risks, and delay of trial and appeal; (ii) the effectiveness of any proposed method of    distributing relief to the Class, including the method of processing Class Members’ claims; (iii)    the terms of any proposed award of attorneys’ fees, including timing of payment; and (iv) any    agreement required to be identified under Rule 23(e)(2); and (d) the proposed Plan of Allocation    treats Class Members equitably relative to each other.          6.    Accordingly, the Court authorizes and directs implementation and performance of    all the terms and provisions of the Stipulation, as well as the terms and provisions hereof.  Except    as to any individual claim of those Persons (identified in Exhibit A attached hereto) who have    validly and timely requested exclusion from the Class, the Court hereby dismisses all Released    Claims of the Class, as against the Released Persons, with prejudice.  The Settling Parties are to    bear their own costs, except as to and to the extent provided in the Stipulation and herein.          7.    The releases as set forth in ¶¶4.1-4.6 of the Stipulation (the “Releases”), together   with the definitions contained in ¶¶1.1-1.42 relating thereto, are expressly incorporated herein in   all respects.  The Releases are effective as of the Effective Date.         8.    Upon the Effective Date, each of the Releasing Plaintiff Parties will be forever   barred and enjoined from commencing, instituting, prosecuting, or continuing to prosecute any   action or other proceeding in any court of law or equity, arbitration tribunal, or administrative                                         - 3 -  

 

     Case 1:15-mc-00040-AKH   Document 1272-6   Filed 09/30/19   Page 6 of 12                                                              EXECUTION COPY    forum, asserting the Released Claims against any of the Released Persons. Claims to enforce the    terms of the Stipulation are not released.         9.    Upon the Effective Date, Lead Plaintiff shall, and each and every Releasing   Plaintiff Party shall be deemed to have, and by operation of this Judgment shall have, fully, finally,   and forever waived, released, relinquished, discharged and dismissed each and every one of the   Released Claims (including Unknown Claims) against each and every one of the Released Persons   and shall forever be barred and enjoined from commencing, instituting, prosecuting, or   maintaining any and all of the Released Claims against any and all of the Released Persons,   whether or not such Releasing Plaintiff Party executes and delivers the Proof of Claim and Release   or shares in the Net Settlement Fund.  Lead Plaintiff and each Releasing Plaintiff Party are bound   by this Judgment, including, without limitation, the release of claims as set forth in the Stipulation.    The Released Claims are hereby compromised, settled, released, discharged, and dismissed as   against the Released Persons on the merits and with prejudice by virtue of the proceedings herein   and this Order and Final Judgment.  Claims to enforce the terms of the Settlement are not released.          10.   Upon the Effective Date, each of the Released Persons shall be deemed to have,    and by operation of this Judgment shall have, fully, finally, and forever released, relinquished, and    discharged Plaintiffs, the Class and Plaintiffs’ Counsel from all Released Defendants’ Claims    (including Unknown Claims).  Claims to enforce the terms of the Stipulation are not released.          11.   In the event that the Settlement becomes Final, and approval of the Derivative    Settlement is reversed or vacated on appeal, each of the contributions into the Settlement Fund    listed in ¶2.2 (i-iv) of the Stipulation shall be deemed to have been made solely by and wholly    attributable to VEREIT and, in such event, VEREIT shall retain the right to pursue against such    contributing parties listed in ¶2.2 (i-iv) of the Stipulation any contribution or similar claims relating                                         - 4 -  

 

     Case 1:15-mc-00040-AKH   Document 1272-6   Filed 09/30/19   Page 7 of 12                                                              EXECUTION COPY    to the contributions to the Settlement Fund, provided, however, that VEREIT shall not be permitted    to pursue any claim for prior advancement or indemnification of attorney’s fees or other expenses   incurred in connection with the Litigation or any other proceeding other than the Derivative   Action.         12.    Upon the Effective Date, to the fullest extent permitted by law, (i) all Persons shall    be permanently enjoined, barred and restrained from commencing, instituting, prosecuting, or    maintaining any claims, actions, or causes of action for contribution, indemnity or otherwise    against any of the Released Persons seeking as damages or otherwise the recovery of all or part of    any liability, judgment or settlement which they pay or are obligated to pay or agree to pay to the    Releasing Plaintiff Parties arising out of, relating to or concerning any acts, facts, statements or    omissions that were or could have been alleged in the Litigation, both known and Unknown    Claims, whether arising under state, federal or foreign law, as claims, cross-claims, counterclaims,   third-party claims or otherwise, in the Court or any other federal, state, or foreign court, or in any   arbitration proceeding, administrative agency proceeding, tribunal, or any other proceeding or   forum; and (ii) all Released Persons shall be permanently enjoined, barred and restrained from   commencing, instituting, prosecuting, or maintaining any claims, actions, or causes of action for   contribution, indemnity or otherwise against any Persons seeking as damages or otherwise the   recovery of all or any part of any liability, judgment or settlement which they pay or are obligated   to pay or agree to pay to the Releasing Plaintiff Parties arising out of, relating to, or concerning   any acts, facts, statements or omissions that were or could have been alleged in the Litigation, both   known and Unknown Claims, whether arising under state, federal or foreign law, as claims, cross-   claims, counterclaims, third-party claims or otherwise, in the Court or any other federal, state, or    foreign court, or in any arbitration proceeding, administrative agency proceeding, tribunal, or any                                         - 5 -  

 

    Case 1:15-mc-00040-AKH   Document 1272-6   Filed 09/30/19   Page 8 of 12                                                             EXECUTION COPY   other proceeding or forum; provided that clauses (i) and (ii) of this Paragraph shall not be   construed to modify, amend, or supersede any agreements between or among the Released Persons   with respect to claims between or among those Released Persons, including but not limited to the   Supplementary Agreements as defined in the stipulation submitted to the Court in connection with   the Derivative Settlement.         13.   Defendants have denied, and continue to deny, any and all allegations and claims   asserted in the Litigation, and Defendants have represented that they entered into the Settlement   because it would be beneficial to avoid the burden, inconvenience, and expense associated with   continuing the Litigation and the uncertainty and risks inherent in any litigation.  Neither this Order   and Final Judgment, the Stipulation, nor any of their respective terms and provisions, nor any of   the negotiations, discussions, or proceedings connected with them, nor any act performed or   document executed pursuant to or in furtherance of the Stipulation or the Settlement, nor any of   the documents or statements referred to therein, nor any payment or consideration provided for   therein, shall be:               (a)   offered or received against any of the Released Persons as evidence of, or   construed as evidence of, any presumption, concession, or admission by any of the Released   Persons with respect to the truth of any of the allegations in the Litigation or the validity of any   claim that has been or could have been asserted against any of the Released Persons in the   Litigation or in any other litigation, action, or proceeding, whether civil, criminal, or   administrative, in any court, administrative agency, or other tribunal, or the deficiency of any   defense that has been or could have been asserted in the Litigation or in any other litigation, action,   or proceeding, whether civil, criminal, or administrative in any court, administrative agency, or                                         - 6 -  

 

     Case 1:15-mc-00040-AKH   Document 1272-6   Filed 09/30/19   Page 9 of 12                                                              EXECUTION COPY    other tribunal, or of any liability, negligence, fault, or other wrongdoing of any kind by any of the    Released Persons;                (b)   offered or received against any of the Released Persons as evidence of, or    construed as evidence of, any presumption, concession, or admission of any fault,    misrepresentation, or omission with respect to any statement or written document approved or    made by any of the Released Persons, or against Lead Plaintiff or any Member of the Class as   evidence of, or construed as evidence of, any infirmity of the claims alleged by Lead Plaintiff;               (c)   offered or received against the Released Persons, Lead Plaintiff, or any   Member of the Class as evidence of, or construed as evidence of, any presumption, concession, or   admission by any of the Released Persons, Lead Plaintiff, or any Member of the Class with respect   to any liability, negligence, fault, or wrongdoing as against any of the Released Persons, Lead   Plaintiff, or any Member of the Class in any other litigation, action, or proceeding, whether civil,   criminal, or administrative, in any court, administrative agency, or other tribunal, other than such   proceedings as may be necessary to effectuate the provisions of the Stipulation or this Order and   Final Judgment; provided, however, that the Released Persons, Lead Plaintiff, and any Member of   the Class may refer to them to effectuate the liability protection granted them hereunder;                (d)   offered or received against any of the Released Persons as evidence of, or    construed as evidence of, any presumption, concession, or admission by any of the Released    Persons that the Settlement Amount represents the amount which could or would have been    recovered after trial; or                (e)   offered or received against Lead Plaintiff or any Member of the Class as    evidence of, or construed as evidence of, any presumption, concession, or admission by Lead    Plaintiff or any Member of the Class that any of their claims are without merit, or that any defenses                                         - 7 -  

 

     Case 1:15-mc-00040-AKH   Document 1272-6   Filed 09/30/19   Page 10 of 12                                                              EXECUTION COPY    asserted by the Defendants in the Litigation have any merit, or that damages recoverable in the    Litigation would not have exceeded the Settlement Fund.          14.   The Released Persons may file the Stipulation and/or this Judgment in any action    in order to support a defense, claim, or counterclaim based on principles of res judicata, collateral    estoppel, release, good faith settlement, judgment bar or reduction, or any other theory of claim    preclusion or issue preclusion or similar defense or counterclaim.         15.   The Court finds that certain Defendants have satisfied their financial obligations   under the Stipulation by paying or causing to be paid $1,025,000,000.00 plus any accrued interest   from October 15, 2019 until deposited with the Escrow Agent to the Settlement Fund, in   accordance with ¶¶2.2(i-iv) of the Stipulation.         16.   The Court finds and concludes that the Lead Plaintiff, Plaintiffs’ Counsel,   Defendants and Defendants’ Counsel have complied with each requirement of Rule 11(b) of the   Federal Rules of Civil Procedure as to any complaint, responsive pleading, dispositive motion, or   other filing.         17.   Any Plan of Allocation submitted by Lead Counsel or any order entered regarding   any attorneys’ fee and expense application or awards to Plaintiffs shall in no way disturb or affect   this Judgment and shall be considered separate from this Judgment.  Separate orders shall be   entered regarding approval of a plan of allocation and Lead Counsel’s application for an award of   attorneys’ fees and expenses, and awards to Plaintiffs.         18.   The Settling Parties are hereby authorized, without further approval of the Court,   to unanimously agree to and adopt in writing amendments, modifications, and expansions of the   Stipulation, provided that such amendments, modifications, and expansions of the Stipulation are                                          - 8 -  

 

     Case 1:15-mc-00040-AKH   Document 1272-6   Filed 09/30/19   Page 11 of 12                                                              EXECUTION COPY    not materially inconsistent with this Judgment, and do not materially limit the rights of the    Members of the Class under the Stipulation.          19.   Any appeal or any challenge affecting the approval of (a) the Plan of Allocation   submitted by Lead Counsel and/or (b) this Court’s approval regarding any attorneys’ fee and   expense applications, including any awards to Plaintiffs, shall in no way disturb or affect the   finality of the other provisions of this Order and Final Judgment nor the Effective Date of the   Settlement.         20.   Without affecting the finality of this Judgment in any way, jurisdiction is hereby   retained over Defendants, Plaintiffs and Class Members for all matters relating to the   administration, interpretation, effectuation or enforcement of the Stipulation and this Order and   Final Judgment, including administering and distributing the settlement proceeds to the Members   of the Class.         21.   In the event that the Effective Date does not occur in accordance with the terms of   the Stipulation, or is terminated pursuant to ¶2.17 of the Stipulation, ¶¶7.4, 7.5 and 7.6 of the   Stipulation shall apply and this Order and Final Judgment shall be rendered null and void to the   extent provided by and in accordance with the Stipulation and shall be vacated and may not be   introduced as evidence or reflected in any action or proceeding by any person or entity, and each   party shall be restored to his, her or its respective position as it existed prior to August 21, 2019.          22.   Without further order of the Court, the parties may agree to reasonable extensions    of time to carry out any of the provisions of the Stipulation.          23.   Defendants have provided notification to all appropriate federal and state officials    regarding the Settlement as required by 28 U.S.C. §1715.                                          - 9 -  

 

    Case 1:15-mc-00040-AKH   Document 1272-6   Filed 09/30/19   Page 12 of 12                                                             EXECUTION COPY         24.   This Litigation and all Released Claims are dismissed with prejudice.  The parties   are to bear their own costs, except as otherwise agreed to in writing by the Settling Parties or as   otherwise provided in the Stipulation or this Order and Final Judgment.         25.   There is no just reason for delay in the entry of this Order and Final Judgment and   immediate entry by the Clerk of the Court is expressly directed.   DATED: ____________________                                       THE HONORABLE ALVIN K. HELLERSTEIN                                  UNITED STATES DISTRICT JUDGE                                          - 10 -vereit9302019-ex102

                                                                          Exhibit 10.2      Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 2 of 136                                                             EXECUTION COPY   UNITED STATES DISTRICT COURT  SOUTHERN DISTRICT OF NEW YORK   JOANNE WITCHKO, Derivatively on Behalf  of Nominal Defendant AMERICAN REALTY           Lead Case No. 1:15-cv-06043-AKH  CAPITAL PROPERTIES, INC.,                                                 (Consolidated with Case No.                    Plaintiff,                   1:15-cv-08563-AKH)         v.   NICHOLAS S. SCHORSCH, et al.,                     Defendants,         -and-  AMERICAN REALTY CAPITAL  PROPERTIES, INC.,                     Nominal Defendant.                 STIPULATION AND AGREEMENT OF SETTLEMENT         This Stipulation and Agreement of Settlement dated September 27, 2019 (the   “Stipulation”) is made and entered into by and among the following Settling Parties (as defined   herein), each by and through their respective counsel: (i) plaintiffs to the above-captioned   consolidated stockholder derivative action (the “Action”), Joanne Witchko (“Witchko”), Edward   Froehner, and Jeffrey Turner as trustee for Michele Graham Turner 1995 Revocable Trust   (together, “Plaintiffs”), each acting derivatively on behalf of American Realty Capital Properties,   Inc. (n/k/a VEREIT, Inc.) (“VEREIT” or the “Company”); (ii) defendants Nicholas S. Schorsch   (“Schorsch”); Brian S. Block (“Block”); David Kay; Lisa P. McAlister (“McAlister”); Scott J.   Bowman; Peter M. Budko; Brian D. Jones; William M. Kahane (“Kahane”); Edward M. Weil   (“Weil”); Lisa Beeson; Scott P. Sealy Sr.; Thomas A. Andruskevich; Leslie D. Michelson; Edward                                        142350.00400 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 3 of 136                                                             EXECUTION COPY    G. Rendell; William G. Stanley; Bruce D. Frank; Grant Thornton LLP (“GT”); AR Capital, LLC;   and ARC Properties Advisors, LLC (collectively, the “Non-VEREIT Settling Defendants”); and   (iii) nominal defendant VEREIT (together with the Non-VEREIT Settling Defendants,   “Defendants”).         This Stipulation, subject to the approval of the United States District Court for the Southern   District of New York (the “Court”), is intended by the Settling Parties to fully, finally, and forever   compromise, resolve, discharge, and settle the Released Claims, the Defendant Parties’ Released   Claims, and the NVSD Released Claims (each as defined herein) and to result in the complete   dismissal of the Action with prejudice, upon the terms and subject to the conditions set forth herein,   and without any admission or concession as to the merits of any of the Settling Parties’ claims or   defenses.   I.    INTRODUCTION         A.    Background of the Action         VEREIT is a full-service real estate operating company which owns and manages one of   the largest portfolios of single-tenant commercial properties in the United States.  Plaintiffs have   alleged or believe that they have grounds to allege that the Non-VEREIT Settling Defendants   breached their fiduciary duties or other obligations or duties owed to VEREIT.         On November 17, 2014, plaintiff Witchko served a litigation demand pursuant to Maryland   law on the Board of Directors of VEREIT (the “Board”) asking the Board to investigate alleged   wrongdoing by certain of the Non-VEREIT Settling Defendants and sue the alleged wrongdoers   for violation of their fiduciary duties under Maryland law.  On June 18, 2015, the Board refused   the demand.           On July 31, 2015, plaintiff Witchko, derivatively on behalf of VEREIT, filed a verified   stockholder derivative complaint in the Court, initiating the Action.                                         2 

 

      Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 4 of 136                                                              EXECUTION COPY            On October 30, 2015, plaintiffs Thomas Serafin, Michele Graham Turner 1995 Revocable    Trust, Jeffrey Turner as Trustee, and Edward L. Froehner, derivatively on behalf of VEREIT, filed    a verified stockholder derivative complaint in the Court, initiating the action captioned Serafin, et    al. v. Schorsch, et al., No. 1:15-cv-08563 (the “Serafin Action”).          On December 15, 2015, the Court entered an order consolidating the Action and the Serafin    Action for all purposes and appointing Harwood Feffer LLP, now Glancy Prongay & Murray LLP,    to lead the litigation of the Derivative Action on behalf of the Plaintiffs.          On January 5, 2016, Plaintiffs designated the complaint in the Action as the operative    complaint.          On February 12, 2016, VEREIT and certain of the Non-VEREIT Settling Defendants filed    a motion to dismiss the Action pursuant to Fed. R. Civ. P. 23.1 for failure to sufficiently allege    improper refusal of demand, and under Fed. R. Civ. P. 12(b)(6) for failure to state a claim.            On March 15, 2016, Plaintiffs filed a memorandum of law in opposition to the motion to    dismiss.          On April 5, 2016, VEREIT and certain of the Non-VEREIT Settling Defendants filed a   reply memorandum of law in further support of their motion to dismiss the Action.         On June 2, 2016, the Court held oral argument on the motion to dismiss.         On June 9, 2016, the Court entered an order denying the motion to dismiss pursuant to Fed.   R. Civ. P. 23.1 because the operative complaint sufficiently alleged that plaintiff Witchko’s   demand had been improperly denied, and granting with leave to amend the motion to dismiss   pursuant to Rule 12(b)(6) because the operative complaint failed to state certain claims.            On June 30, 2016, Plaintiffs, derivatively on behalf of VEREIT, filed an amended verified    stockholder derivative complaint in the Court (the “Amended Complaint”).                                           3 

 

      Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 5 of 136                                                              EXECUTION COPY            On July 11, 2016 and July 25, 2016, Kahane, Weil, Schorsch, Block, and McAlister filed    notices of interlocutory appeal of the Court’s order granting in part and denying in part the motion   to dismiss (the “Appeals”).          On July 20, 2016, Plaintiffs moved to dismiss the Appeals for lack of appellate jurisdiction.            On July 22, 2016, VEREIT and certain of the Non-VEREIT Settling Defendants filed   answers to the Amended Complaint.         On August 1, 2016, Kahane and Weil filed their opposition to Plaintiffs’ motion to dismiss   the Appeals for lack of appellate jurisdiction.         On August 8, 2016, Plaintiffs filed their replies in further support of their motion to dismiss   the Appeals.           On August 11, 2016, in the Appeals, Kahane and Weil filed a motion for leave to file a sur-  reply or, in the alternative, strike, and sur-reply to Plaintiffs’ motion to dismiss.         On August 12, 2016, in the Appeals, Plaintiffs filed an opposition to Kahane and Weil’s   motion for leave to file the sur-reply or strike.         On September 1, 2016, VEREIT filed a motion to stay the Action.         On September 8, 2016, the Court entered an order denying VEREIT’s motion to stay the   Action.          On September 16, 2016, document discovery commenced in the Action, the consolidated    class actions pending before the Court, captioned In re American Realty Capital Properties, Inc.    Litigation, Civil Action No. 1:15-mc-00040-AKH (S.D.N.Y.) (the “Class Action”), and the then-   pending Direct Actions (defined herein) arising from substantially the same facts (together, the    “Coordinated Actions”).  Discovery in the Action was thereafter coordinated for all purposes with    discovery in the Class Action.                                           4 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 6 of 136                                                             EXECUTION COPY          During document discovery, over seventy parties and non-parties, including each of the   Non-VEREIT Settling Defendants, cumulatively produced more than 846,000 documents totaling   several million pages.           On November 15, 2016, the United States Court of Appeals for the Second Circuit entered   an order dismissing the Appeals for lack of jurisdiction.         On January 20, 2017, the office of the U.S. Attorney for the Southern District of New York   (the “Government”) moved to stay the Action and the Coordinated Actions until the conclusion of   Block’s criminal trial, scheduled for the summer of 2017.         On January 25, 2017, the Court denied the Government’s stay motion.         On May 11, 2017, the Government renewed its motion for a partial stay of discovery until   completion of Block’s criminal trial.         On May 15, 2017, the Court again denied the Government’s request for a partial stay of   discovery.         On May 31, 2017, document discovery in the Action and the then-pending Coordinated   Actions concluded.         On January 22, 2018, fact witness depositions in the Action and the then-pending   Coordinated Actions commenced.         Between January 22, 2018 and December 18, 2018, Plaintiffs’ Counsel attended thirty-four   fact depositions of witnesses, including each  individual Non-VEREIT Settling Defendant, ex-  VEREIT employees, former VEREIT directors, former VEREIT officers, current and former   employees of Grant Thornton, and third parties.  During the depositions, Plaintiffs’  Counsel   conducted non-duplicative examinations of thirty-one  of the deponents regarding related-party                                          5 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 7 of 136                                                             EXECUTION COPY    transactions, executive compensation payments, and corporate governance allegations at issue in   the Action.         On February 8, 2019, Plaintiffs filed motions for summary judgment against Block and   McAlister.  The same day, several of the Non-VEREIT Settling Defendants filed summary   judgment motions against Plaintiffs.         On March 15, 2019, the parties filed their oppositions to the motions for summary   judgment.         On April 5, 2019, the parties filed replies in support of their motions for summary   judgment.         On May 10, 2019, the Court entered an order denying the motions for summary judgment   in the Action without prejudice to renewal.         B.    Settlement Negotiations         In March 2017, certain of the parties conducted a mediation session with the Honorable   Layn R. Phillips, United States District Judge (Ret.), an experienced mediator of complex disputes.    In advance of the mediation session, Plaintiffs retained a forensic accounting expert who prepared   a report on damages in the derivative action.  Plaintiffs state that, based in part on the expert’s   report, Plaintiffs submitted a confidential mediation statement to Judge Phillips.  The first   mediation session failed to produce a settlement, although the parties expended significant time   and effort preparing for and attending the two-day mediation.         On July 16, 2019, Plaintiffs’ Counsel met with VEREIT’s Chief Executive Officer, General   Counsel, and VEREIT’s counsel.  Plaintiffs’ Counsel made a detailed presentation regarding the   claims alleged in the Action and Plaintiffs’ calculation of damages.  During the meeting, Plaintiffs’                                          6 

 

      Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 8 of 136                                                              EXECUTION COPY      Counsel answered questions from VEREIT’s Chief Executive Officer, General Counsel, and    VEREIT’s counsel regarding particular theories of harm and the calculation of damages.          On August 15, 2019, Plaintiffs’ Counsel, VEREIT’s counsel, certain of the Non-VEREIT   Settling Defendants’ counsel, and counsel for the lead plaintiff in the Class Action held a mediation   session with Judge Phillips at the office of VEREIT’s counsel.  Certain of the Settling Parties   thereafter engaged in further extensive negotiations that included numerous email exchanges and   telephonic conferences.         On August 19, 2019, the Plaintiffs met for a second time with VEREIT’s Chief Executive   Officer, General Counsel, and VEREIT’s counsel.         Over the following weeks, the parties engaged in extensive, arm’s-length negotiations   regarding the terms of a potential resolution of the Action.         On September 8, 2019, the Settling Parties signed and entered into a binding Memorandum   of Understanding setting forth certain key terms of the Settlement.   II.   PLAINTIFFS’ CLAIMS AND STATEMENT OF SETTLEMENT BENEFITS          Plaintiffs believe that the Released Claims have substantial merit.  Nonetheless, Plaintiffs   acknowledge the expense and delay of continued proceedings necessary to prosecute the claims   through trial and appeal.  Plaintiffs have also considered the uncertain outcome inherent in any   litigation, especially complex actions such as the Action, as well as the delay and difficulties of   such litigation.  Plaintiffs were also mindful of the onerous burdens of proof under, and possible   defenses to, the claims asserted.         Based upon (i) investigation into and evaluation of the facts and laws relating to the claims    released herein and alleged in the Derivative Actions, (ii) factual information to which Plaintiffs    and Plaintiffs’ Counsel had access prior to the execution of this Stipulation, (iii) the contribution    of two hundred  eighty six million five hundred thousand dollars ($286,500,000) by the Non-                                         7 

 

      Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 9 of 136                                                              EXECUTION COPY      VEREIT Settling Defendants as part of the global settlement of the claims in the Derivative    Actions and the Class Action, (iv) the Supplementary Agreements that preserve VEREIT’s control    over the settlement contributions by the Non-VEREIT Settling Defendants even if the Settlement    is overturned on appeal, (v) investigations, document review and depositions conducted during the    pendency of the Action, (vi) admissions made by and judgments obtained against certain of the   Non-VEREIT Settling Defendants, (vii) legal analysis and briefing submitted by Plaintiffs and   subsequent orders entered by the Court, (viii) advice provided by the Plaintiffs’ various consultants   and experts, including forensic accountants and individuals with expertise in corporate governance   issues, (ix) mediation sessions with Judge Phillips, and (x) Plaintiffs’ and Plaintiffs’ Counsel’s    determination (subject to the final approval by the Court) that the terms of the proposed Settlement    as set out in this Stipulation are fair, reasonable and adequate and in the best interests of VEREIT   and Current VEREIT  Stockholders, Plaintiffs have agreed to settle the Derivative Actions (as   defined herein) and to release the Released Claims pursuant to the terms of this Stipulation.    III.  THE BENEFIT OF SETTLEMENT TO VEREIT          VEREIT has determined that the Settlement confers substantial benefits upon VEREIT and    Current VEREIT  Stockholders because, for among other reasons, the Settlement reduces the    amount VEREIT is paying to settle the Class Action which in fact made the Settlement possible,    eliminates the risk of adverse judgments at trial, puts an end to timing uncertainties, and removes    the burdens and costs of the Derivative Actions and the Class Action.          VEREIT’s alleged and/or potential claims against the AR Capital Parties (as defined    herein), Block and GT that were the subject of the Derivative Actions, and the defenses that could    be asserted with respect to such claims, as well as the potential counterclaims that could be brought    against VEREIT by, in particular, GT, were a central issue in the negotiations over the amounts    that the AR Capital Parties, Block and GT would contribute to the global settlement of the claims                                          8 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 10 of 136                                                              EXECUTION COPY      that have been asserted or could have been asserted in the Derivative Actions and the Class Action.     VEREIT believes the claims being pursued in the Derivative Actions had significant value to    VEREIT and that those claims were a substantial factor behind the willingness of the AR Capital    Parties, Block and GT to make the settlement payments that they agreed to make.  The AR Capital    Parties, Block and GT made clear throughout the settlement negotiations that but for resolution of    VEREIT’s claims at issue in the Derivative Actions, they would not agree to any contribution to    the Class Settlement (as defined herein), and that GT would not agree to provide VEREIT with a    release as to counterclaims GT intended to assert against VEREIT in the Derivative Actions.     Without those contributions, VEREIT would have been required to make a substantially larger    payment to settle the Class Action, and may not, in fact, have been able to reach resolution.  In    addition, without the release from GT, VEREIT would continue to bear litigation risk, which    VEREIT sought to finally and fully resolve through the global settlement.  Consistent with the    foregoing, VEREIT believes that the claims at issue in the Derivative Actions played a significant    role in securing the settlement contributions from the AR Capital Parties, Block and GT, as well    as the releases, which VEREIT believes are in the best interest of VEREIT.          As to the Non-VEREIT Settling Defendants other than the AR Capital Parties, Block and   GT, VEREIT determined that the Settlement confers substantial benefits upon VEREIT and   Current VEREIT Stockholders because of the substantial cost of continued litigation and trial, the   risks associated with the outcome of a trial and appeal, and the risk of uncollectable judgments in   the event of a judgment favorable to VEREIT.   IV.   DEFENDANTS’ DENIALS OF WRONGDOING AND LIABILITY         The Non-VEREIT Settling Defendants have denied, and continue to deny, each and every   claim and contention alleged by Plaintiffs in the Derivative Actions, and affirm that they have   acted properly, lawfully, and in full accord with their fiduciary duties, to the extent they owed any                                          9 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 11 of 136                                                              EXECUTION COPY      such duties to VEREIT, and other legal obligations, at all times.  Further, the Non-VEREIT    Settling Defendants have denied expressly, and continue to deny, all allegations of wrongdoing,    fault, liability, or damage against them arising out of any of the conduct, statements, acts or    omissions alleged, or that could have been alleged, in the Derivative Actions, and deny that they    have ever committed or attempted to commit any violations of law, any breach of fiduciary duty    owed to VEREIT or its stockholders, or any wrongdoing whatsoever.  Had the terms of this    Stipulation not been reached, the Non-VEREIT Settling Defendants would have continued to    contest vigorously the allegations in the Derivative Actions, and the Non-VEREIT Settling    Defendants maintain that they had and have meritorious defenses to all claims alleged or claims    that could have been alleged in the Derivative Actions, as well as counterclaims against VEREIT    they believe to be meritorious.  Without admitting the validity of any of the claims that have been    asserted in the Derivative Actions, or any liability with respect thereto, the Non-VEREIT Settling    Defendants have concluded that it is desirable that the claims be settled on the terms and subject    to the conditions set forth herein.  The Non-VEREIT Settling Defendants are entering into this    Settlement because it will eliminate the uncertainty, distraction, disruption, burden, and expense    of further litigation of the Derivative Actions.1          Neither this Stipulation, nor any of its terms or provisions, nor any act performed or    document executed pursuant to or in furtherance of the Settlement: (a) is, may be construed as, or    may be used as an admission of, or evidence of, the truth or validity of any of the Released Claims,    of any claims or allegations made in the Derivative Actions, or of any purported acts or omissions    by the Non-VEREIT Settling Defendants; (b) is, may be construed as, or may be used as an                                                       1 Notwithstanding the foregoing, McAlister, and only McAlister, acknowledges, as she has at other times in the Action,   her plea of guilty to certain offenses in United States v. Lisa McAlister, 16-cr-00653 (S.D.N.Y.), and does not intend  anything in the foregoing to be inconsistent with her plea.                                          10 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 12 of 136                                                              EXECUTION COPY      admission of, or evidence of, any fault, omission, negligence, or wrongdoing by the Non-VEREIT    Settling Defendants, or any concession of liability whatsoever; or (c) is, may be construed as, or   may be used as an admission of, or evidence of, a concession by any Non-VEREIT Settling    Defendant of any infirmity in the defenses or counterclaims that any Non-VEREIT Settling   Defendant asserted or could have asserted in the Derivative Actions or otherwise.    V.    TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT          Plaintiffs, derivatively on behalf of VEREIT, the Non-VEREIT Settling Defendants, and   nominal defendant VEREIT, by and through their respective counsel or attorneys of record, hereby   stipulate and agree that, subject to approval by the Court, in consideration of the benefits flowing   to the Settling Parties hereto, the Action and all of the Released Claims shall be fully, finally, and   forever compromised, settled, released, discharged, and dismissed with prejudice, upon the terms   and subject to the conditions set forth herein as follows:          1.    Definitions          As used in this Stipulation, the following terms have the meanings specified below.  In the    event of any inconsistency between any definition set forth below and any definition set forth in    any document attached as an exhibit to this Stipulation, the definitions set forth below shall control.          1.1   “Action” means  the  consolidated  stockholder derivative actions captioned as    Witchko v. Schorsch, et al., No. 1:15-cv-06043-AKH, currently pending in the United States   District Court for the Southern District of New York.          1.2   “Amended Complaint” means the amended verified stockholder  derivative    complaint filed in the Action on June 30, 2016 by Plaintiff Joanne Witchko, derivatively on behalf    of VEREIT.                                           11 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 13 of 136                                                              EXECUTION COPY          1.3 “Appeals” means the notices of interlocutory appeal of the Court’s order granting    in part and denying in part the motion to dismiss filed  by Kahane, Weil, Schorsch, Block, and    McAlister.         1.4 R C “A  apital Parties” means Schorsch, Peter M. Budko, Kahane, Weil, AR Capital,    LLC, and ARC  Properties Advisors, LLC.          1.5 “AR Capital Parties Settlement, Contribution, and Release Agreement” means the    agreement regarding settlement, contribution, and release made and entered into on August 23,   2019, between and among VEREIT; VEREIT Operating Partnership, L.P., formerly known as    ARC Properties Operating Partnership, L.P.; Schorsch; Shelley Schorsch; Peter M. Budko;    Kahane; Weil; AR Capital, LLC; and ARC Properties Advisors, LLC, attached hereto as    Exhibit E.          1.6 “AR Capital Parties Side Letter” means the side agreement entered into on   September 8, 2019, between and among VEREIT; Nick S. Schorsch; Shelley Schorsch; Peter M.    Budko; Kahane; Weil; AR Capital, LLC; and ARC Properties Advisors, LLC, attached hereto as    Exhibit F.          1.7   “Block” means Brian S. Block.          1.8   “Block Side Agreement” means the side agreement entered into between Block and    VEREIT on September 7, 2019, attached hereto as Exhibit G.          1.9   “Board” means the Board of Directors of VEREIT.          1.10  “Class Action” means the federal securities class action lawsuit filed in the United    States District Court for the Southern District of New York, captioned In re American Realty    Capital Properties, Inc. Litigation, Civil Action No. 1:15-mc-00040-AKH.                                           12 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 14 of 136                                                              EXECUTION COPY            1.11  “Class Settlement” means the settlement of the Class Action pursuant to the terms    of a stipulation to be submitted to the Court by the parties in the Class Action contemporaneously    herewith.          1.12  “Contribution Claims” means any claims for contribution that VEREIT may have    against any of the Non-VEREIT Settling Defendants by virtue of VEREIT’s settlement of the    Class Action or settlement with any person or entity that entered into a settlement agreement with    or otherwise provided a release to VEREIT relating to or arising from the purchase or other    acquisition of ARCP Securities prior to October 29, 2014, including but not limited to settlement    of the Direct Actions.  For the avoidance of doubt, Contribution Claims do not include any claims    for contribution that VEREIT may acquire in the event this Settlement does not become Final, as    provided for in the Class Settlement.          1.13  “Coordinated Actions” means, collectively, the Class Action and the Direct   Actions.         1.14  “Court” means the United States District Court for the Southern District of New    York.          1.15  “Current VEREIT  Stockholders” means, for purposes of this Stipulation, any    Person (defined below) who owned VEREIT common stock as of the date of the execution of this   Stipulation and who continued to hold their VEREIT common stock as of the date of the Settlement   Hearing, and any of their legal representatives, heirs, successors, or assigns, excluding the Non-   VEREIT Settling Defendants, current and former officers and directors of VEREIT, members of   their immediate families, and their legal representatives, heirs, successors, or assigns, and any   entity in which the Non-VEREIT Settling Defendants have or had a controlling interest.                                           13 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 15 of 136                                                             EXECUTION COPY          1.16  “Defendants” means, collectively, the Non-VEREIT Settling Defendants and   nominal defendant VEREIT.         1.17  “Defendants’ Counsel” means the respective undersigned counsel for VEREIT and   the Non-VEREIT Settling Defendants.         1.18  “Defendant Parties’ Released Claims” means any and all claims, debts, rights, or   causes of action or liabilities, including Unknown Claims, that could be asserted in any forum by   the Released Persons or the VEREIT Released Persons against Plaintiffs, their beneficiaries, or   Plaintiffs’ Counsel that arise out of or relate in any way to the Released Claims or NVSD Released   Claims or the institution, prosecution, or settlement of the Derivative Actions.  Defendant Parties’   Released Claims shall not include claims to enforce the Settlement;  the AR Capital Parties   Settlement, Contribution, and Release Agreement; the AR Capital Parties Side Letter; the Block   Side Agreement; or the GT Side Agreement.         1.19  “Derivative Actions” means, collectively, the (i) Action; (ii) stockholder derivative   action filed in the Circuit Court for Baltimore City, Maryland, captioned Frampton v. Schorsch, et   al., No. 24-C-15-006269; (iii) stockholder derivative action filed in the Supreme Court of the State   of New York, captioned Fran Kosky Roth IRA v. Schorsch, et al., No. 653093/2016; and   (iv) stockholder derivative action filed in the United States District Court for the District of   Maryland, captioned Meloche, et al. v. Schorsch, et al., No. 1:16-cv-03366-ELH.         1.20  “Direct Actions” means Archer Capital Master Fund, L.P. et al. v. American Realty   Capital Properties, Inc., et al., No. 1:16-cv-05471-AKH (S.D.N.Y.); Atlas Master Fund, Ltd. et   al. v. American Realty Capital Properties, Inc., et al., No. 1:16-cv-05475-AKH (S.D.N.Y.);   BlackRock ACS US Equity Tracker Fund et al. v. American Realty Capital Properties, Inc., et al.,   No. 1:15-cv-08464-AKH (S.D.N.Y.); Clearline Capital Partners LP et al. v. American Realty                                          14 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 16 of 136                                                              EXECUTION COPY      Capital Properties, Inc., et al., No. 1:15-cv-08467-AKH (S.D.N.Y.); Cohen & Steers Institutional   Realty Shares, Inc. et al. v. American Realty Capital Properties, Inc., et al., No. 1:18-cv-06770-   AKH (S.D.N.Y.); Eton Park Fund, L.P. et al. v. American Realty Capital Properties, Inc., et al.,    No. 1:16-cv-09393-AKH (S.D.N.Y.); Fir Tree Capital Opportunity Master Fund, L.P. et al. v.    American Realty Capital Properties, Inc. et al., No. 1:17-cv-04975 (S.D.N.Y.); HG Vora Special   Opportunities Master Fund, Ltd. v. American Realty Capital Properties, Inc., et al., No. 1:15-cv-  04107-AKH (S.D.N.Y.); Jet Capital Master Fund, L.P., et al. v. American Realty Capital    Properties, Inc., et al., No. 1:15-cv-00307-AKH (S.D.N.Y.); Lakewood Capital Partners, LP v.    American Realty Capital Properties, Inc., et al., Index. No. 653676/2019 (N.Y. Sup. Ct.);    Pentwater Equity Opportunities Master Fund Ltd. et al. v. American Realty Capital Properties,    Inc., et al., No. 1:15-cv-08510-AKH (S.D.N.Y.); PIMCO Funds: PIMCO Diversified Income    Fund et al. v. American Realty Capital Properties, Inc., et al., No. 1:15-cv-08466-AKH   (S.D.N.Y.); Reliance Standard Life Insurance Company et al. v. American Realty Capital   Properties, Inc., et al., No. 1:17-cv-02796-AKH (S.D.N.Y.); Twin Securities, Inc. et al. v.   American Realty Capital Properties, Inc., et al., No. 1:15-cv-01291-AKH (S.D.N.Y.); and   Vanguard Specialized Funds et al v. VEREIT Incorporated, et al., 2:15-cv-02157-JAS (D. Ariz.).          1.21  “Effective Date” means the first date by which all of the events and conditions    specified in ¶ 6.1 herein have been met and have occurred.          1.22  “Fee Award” means the monetary compensation to be paid to Plaintiffs’ Counsel    for their attorneys’ fees and expenses, as detailed in ¶¶ 5.1-5.2 of this Stipulation, subject to   approval by the Court.         1.23  “Final” means, with respect to any order or Judgment of the Court, that such order   or Judgment represents a final and binding determination of all issues within its scope and has not                                           15 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 17 of 136                                                              EXECUTION COPY    been reversed, vacated, or modified in any way and is no longer subject to appellate review, either    because of disposition on appeal and conclusion of the appellate process or because of passage,    without action, of time for seeking appellate review.  Without limitation, an order or Judgment    becomes Final when: (a) either no appeal therefrom has been filed and the time has passed for any   notice of appeal to be timely filed therefrom; or (b) an appeal has been filed and either (i) the court   of appeals has either affirmed the order or Judgment or dismissed that appeal and the time for any   reconsideration or further appellate review has passed; or (ii) a higher court has granted further   appellate review and that court has either affirmed the underlying order or judgment or affirmed   the court of appeals’ decision affirming the Judgment or dismissing the appeal.  For purposes of   this paragraph, an “appeal” shall include any motion for reconsideration or petition for a writ of   certiorari or other writ that may be filed in connection with approval or disapproval of this   Settlement.  Any appeal or proceeding seeking subsequent judicial review pertaining solely to the   Fee Award shall not in any way delay, affect, or preclude the time set forth above for the Judgment   to become Final, or otherwise preclude the Judgment from becoming Final.         1.24  “Government” means the office of the U.S. Attorney for the Southern District of   New York.         1.25  “GPM” means Glancy Prongay & Murray LLP.         1.26  “GT” means Grant Thornton LLP.          1.27  “GT Side Agreement” means the side agreement entered into between GT and    VEREIT on September 9, 2019, attached hereto as Exhibit H.          1.28  “Judgment” means the final order and judgment to be rendered by the Court,   substantially in the form attached hereto as Exhibit C.          1.29  “Kahane” means William M. Kahane.                                           16 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 18 of 136                                                              EXECUTION COPY            1.30  “McAlister” means Lisa P. McAlister.          1.31  “Non-VEREIT Settling Defendants” means, collectively: Nicholas S. Schorsch;    Brian S. Block; David Kay; McAlister; Scott J. Bowman; Peter M. Budko; Brian D. Jones; Kahane;    Weil; Lisa Beeson; Scott P. Sealy Sr.; Thomas A. Andruskevich; Leslie D. Michelson; Edward G.    Rendell; William G. Stanley; Bruce D. Frank; Grant Thornton LLP; AR Capital, LLC; and ARC    Properties Advisors, LLC.          1.32  “Notice” means, collectively, the Notice to Current VEREIT  Stockholders,    substantially in the form attached hereto as Exhibit A-1 (“Long Form Notice”), and the Summary    Notice of Proposed Settlement of Stockholder Derivative Action, substantially in the form attached   hereto as Exhibit A-2 (“Summary Notice”).          1.33  “NVSD  Released Claims” means, collectively, all claims (including Unknown    Claims and claims for contribution), demands, debts, losses, damages, duties, rights, disputes,    actions, causes of action, liabilities, obligations, judgments, suits, matters, controversies,    proceedings, or issues, of any kind, nature, character, or description whatsoever (and including,    but not limited to, any claims for damages, whether compensatory, consequential, special,    punitive, exemplary, or otherwise, and any and all fees, costs, interest, expenses, or charges),    whether known or unknown, at law or in equity, that arise out of, are based upon, or relate to in    any way  any of the allegations, acts, transactions, facts, events, matters, occurrences,    representations or omissions involved, set forth, alleged or referred to, in the Derivative Actions   or the Class Action, including but not limited to all claims, demands, losses, rights, and causes of   action of any nature whatsoever that (i) have been or could have been asserted by the Non-VEREIT    Settling Defendants in the Derivative Actions, or (ii) could have been asserted by the Non-VEREIT    Settling Defendants against the VEREIT Released Persons or other Non-VEREIT Settling                                           17 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 19 of 136                                                              EXECUTION COPY      Defendants.  Notwithstanding the foregoing, “NVSD Released Claims” shall not include (i) any   rights that the Non-VEREIT Settling Defendants have or might have to advancement or   indemnification, whether under any prior written agreements with VEREIT or under applicable   law, for any claims, demands, losses or proceedings that arise out of, are based upon, or relate to   in any way the allegations, acts, transactions, facts, events, matters, occurrences, representations   or omissions involved, set forth, alleged or referred to, in the Class Action or the Derivative   Actions, including but not limited to any claims asserted or threatened to be asserted by an investor   who elects not to participate in the settlement of the Class Action or is not a member of the   settlement class, (ii) Block’s rights to advancement and indemnification by VEREIT of legal fees   and expenses incurred by Block for services rendered after September 8, 2019, in connection with   the Derivative Actions, the Class Action, and the action caption United States v. Brian Block, 16-  cr-00595 (JPO) (S.D.N.Y.), consistent with applicable law and subject to VEREIT’s rights to seek   a claw back of such fees and expenses, pursuant to the Block Side Agreement, or (iii) claims to   enforce the Settlement, the AR Capital Parties Settlement, Contribution, and Release Agreement,   the AR Capital Parties Side Letter, the Block Side Agreement, or the GT Side Agreement.    Notwithstanding the foregoing, “NVSD Released Claims” shall include any rights that the AR   Capital Parties have or may have to indemnification or advancement for any action that relates   predominantly to RCS Capital Corporation, including without limitation, the action captioned RCS   Creditor Trust v. Schorsch et al., C.A. No. 2017-0178-SG (Del. Ch.).         1.34  “Person(s)” means an individual, corporation (including all its divisions and   subsidiaries thereof), limited liability corporation, professional corporation, partnership, limited   partnership, limited liability partnership, limited liability company, joint venture, association, joint   stock company, estate, legal representative, trust, unincorporated association, government or any                                           18 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 20 of 136                                                              EXECUTION COPY      political subdivision or agency thereof, and any business or legal entity and all of their respective    spouses, heirs, beneficiaries, executors, administrators, predecessors, successors, representatives,    or assignees.         1.35   “Plaintiffs” means Joanne Witchko, Edward Froehner, and Jeffrey Turner as trustee    for Michele Graham Turner 1995 Revocable Trust.          1.36  “Plaintiffs’ Counsel” means the undersigned counsel for Plaintiffs.          1.37  “Preliminary Approval Order” means the Order to be entered by the Court,    substantially in the form of Exhibit B attached hereto, including, inter alia, preliminarily approving   the terms and conditions of the Settlement as set forth in this Stipulation, directing that the Notice   be provided to Current VEREIT Stockholders, and scheduling a Settlement Hearing to consider   whether the Settlement and Fee Award should be finally approved.         1.38  “Related Parties” means each Defendant’s respective present and former parents,   subsidiaries, divisions, controlling persons, associates, entities and affiliates and each and all of   their respective present and former employees, members, partners, principals, officers, directors,   controlling stockholders, agents, attorneys, advisors (including financial or investment advisors),   accountants, auditors, consultants, underwriters, investment bankers, commercial bankers, entities   providing fairness opinions, general or limited partners or partnerships, limited liability   companies, members, joint ventures and insurers and reinsurers of each of them; as well as the   predecessors, successors, assigns, estates, immediate family members, spouses, heirs, executors,   trusts, trustees, administrators, agents, legal or personal representatives, assigns, and assignees of   each of them, in their capacity as such.         1.39  “Released Claims” means, collectively, all claims (including Contribution Claims   and Unknown Claims), demands, debts, losses, damages, duties, rights, disputes, actions, causes                                           19 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 21 of 136                                                             EXECUTION COPY    of action, liabilities, obligations, judgments, suits, matters, controversies, proceedings, or issues,   of any kind, nature, character, or description whatsoever (and including, but not limited to, any   claims for damages, whether compensatory, consequential, special, punitive, exemplary, or   otherwise, and any and all fees, costs, interest, expenses, or charges), whether known or unknown,   at law or in equity, that arise out of, are based upon, or relate to in any way any of the allegations,   acts, transactions, facts, events, matters, occurrences, representations or omissions involved, set   forth, alleged or referred to, in the Derivative Actions or the Class Action, including but not limited   to all claims, demands, losses, rights, and causes of action of any nature whatsoever that (i) have   been or could have been asserted in the Derivative Actions, or (ii) could have been asserted by   VEREIT.  Notwithstanding the foregoing, “Released Claims” shall not include (i) claims brought   in the Class Action, (ii) claims to enforce the Settlement, or (iii) VEREIT’s right to seek a claw   back of legal fees and expenses incurred by Block after September 8, 2019, consistent with   applicable law.         1.40  “Released Person(s)” means, collectively, each and all of the Non-VEREIT Settling   Defendants and their Related Parties.         1.41  “Schorsch” means Nicholas S. Schorsch.         1.42  “Secondary Agreement” means the Secondary Agreement dated September 27,   2019, between and among VEREIT and the Non-VEREIT Settling Defendants attached hereto as   Exhibit D.         1.43  “Serafin Action” means the stockholder derivative action filed in the United States   District Court for the Southern District of New York, captioned Serafin, et al. v. Schorsch, et al.,   No. 1:15-cv-08563.         1.44  “Settlement” means the settlement of the Action as documented in this Stipulation.                                          20 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 22 of 136                                                              EXECUTION COPY            1.45  “Settlement Hearing” means a hearing by the Court to review the adequacy,    fairness, and reasonableness of the Settlement set forth in this Stipulation and to determine:    (i) whether to enter the Judgment; and (ii) all other matters properly before the Court.          1.46  “Settling Parties” means, collectively, each of the Plaintiffs (derivatively on behalf    of VEREIT), each of the Non-VEREIT Settling Defendants, and nominal defendant VEREIT.          1.47  “Stipulation” means this Stipulation and Agreement of Settlement.         1.48  “Supplementary Agreements” means, collectively, (i)  the AR Capital Parties   Settlement, Contribution, and Release Agreement; (ii) the AR Capital Parties Side Letter; (iii) the    Block Side Agreement; (iv) the GT Side Agreement; and (v) the Secondary Agreement.          1.49  “Unknown Claims” means any and all claims that were alleged or could have been    asserted in the Derivative Actions, including as counterclaims or cross-claims, by the Plaintiffs,    VEREIT, the Non-VEREIT Settling Defendants, or any VEREIT stockholder derivatively on    behalf of VEREIT, which any Plaintiff, VEREIT, any Non-VEREIT Settling Defendant, or any    VEREIT stockholder derivatively on behalf of VEREIT does not know or suspect to exist in his,    her or its favor at the time of the release of the Released Persons or the VEREIT Released Persons,    including claims which, if known by him, her or it, might have affected his, her or its settlement    with and release of the Released Persons, Plaintiffs, their beneficiaries, Plaintiffs’ Counsel, or the    VEREIT Released Persons, or might have affected his, her or its decision not to object to this    settlement.  With respect to any and all Released Claims, the Settling Parties stipulate and agree    that, upon the Effective Date, Plaintiffs, VEREIT, and Non-VEREIT Settling Defendants shall    expressly waive, and each of VEREIT’s stockholders shall be deemed to have, and by operation    of the Judgment shall have, expressly waived the provisions, rights and benefits of California Civil    Code § 1542, which provides:                                           21 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 23 of 136                                                              EXECUTION COPY                        A general release does not extend to claims that the creditor                     or releasing party does not know or suspect to exist in his or                     her favor at the time of executing the release and that, if                     known by him or her, would have materially affected his or                     her settlement with the debtor or released party.          Plaintiffs, VEREIT, and Non-VEREIT Settling Defendants shall expressly waive, and each    of VEREIT’s stockholders shall be deemed to have, and by operation of the Judgment shall have,    expressly waived any and all provisions, rights, and benefits conferred by any U.S. federal law or    any law of any state or territory of the United States, or principle of common law or foreign law,    which is similar, comparable or equivalent in effect to California Civil Code § 1542.  The Settling    Parties acknowledge that they may discover facts in addition to or different from those now known    or believed to be true by them with respect to the Released Claims, but it is the intention of the    Settling Parties to completely, fully, finally, and forever compromise, settle, release, discharge,    and extinguish any and all of the Released Claims, Defendant Parties’ Released Claims, and NVSD    Released Claims, known or unknown, which now exist, or heretofore existed, or may hereafter    exist, and without regard to the subsequent discovery of additional or different facts.  Plaintiffs,    VEREIT, and Non-VEREIT Settling Defendants acknowledge, and VEREIT’s stockholders shall    be deemed by operation of the Judgment to have acknowledged, that the foregoing waiver was    separately bargained for and was a material element of the Settlement.          1.50  “VEREIT” or the “Company” means nominal defendant American Realty Capital   Properties, Inc. (n/k/a VEREIT, Inc.) and includes all of its subsidiaries, predecessors, successors,   affiliates, officers, directors, employees, and agents.         1.51  “VEREIT Released Persons” means VEREIT and VEREIT’s parent and subsidiary   entities, and each of their respective current and former stockholders, directors, officers,    employees, agents, auditors, accountants, attorneys, advisors and underwriters, and the successors    and assigns of each of the foregoing persons and entities.                                          22 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 24 of 136                                                              EXECUTION COPY            1.52  “Weil” means Edward M. Weil.          1.53  “Witchko” means Joanne Witchko.          2.    Terms of the Settlement          2.1   The AR Capital Parties have agreed to contribute consideration with a value of two-   hundred and twenty-five million dollars ($225,000,000) (inclusive of the value of certain operating    partnership units in VEREIT Operating Partnership, L.P., and related dividends previously    surrendered by some of the AR Capital Parties as part of a settlement with the Securities and    Exchange Commission, which total $31,972,934 in value) to a global settlement to settle the Class    Action, as well as any and all claims in the Derivative Actions; Block has agreed to contribute    consideration with a value of twelve million, five hundred thousand dollars ($12,500,000) to a    global settlement to settle the Class Action, as well as any and all claims in the Derivative Actions;    and GT has agreed to contribute forty-nine million dollars ($49,000,000) to a global settlement to    settle the Class Action, as well as any and all claims in the Derivative Actions.  The Settling Parties    agree that the claims in the Derivative Actions, as well as potential counterclaims that could be   brought against VEREIT, were a central issue in the negotiations regarding the amounts that the   AR Capital Parties, Block, and GT would contribute to the global settlement.  Specifically,   VEREIT believes the claims being pursued in the Derivative Actions had significant value to   VEREIT and that those claims were a substantial factor behind the willingness of the AR Capital   Parties, Block and GT to make the settlement payments that they agreed to make.  The AR Capital   Parties, Block and GT made clear throughout the settlement negotiations that but for resolution of   VEREIT’s claims at issue in the Derivative Actions, they would not agree to any contribution to   the settlement of the Class Action, and that GT would not agree to provide VEREIT with a release   as to counterclaims GT intended to assert against VEREIT in the Derivative Actions.  Without   those contributions, VEREIT would have been required to make a substantially larger payment to                                          23 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 25 of 136                                                              EXECUTION COPY      settle the Class Action, and may not, in fact, have been able to reach resolution.  In addition,    without the release from GT, VEREIT would continue to bear litigation risk, which VEREIT    sought to finally and fully resolve through the global settlement.  Consistent with the foregoing,    VEREIT believes that the claims at issue in the Derivative Actions played a significant role in    securing the settlement contributions from the AR Capital Parties, Block and GT, as well as the    releases, which VEREIT believes are in the best interest of VEREIT and its stockholders.          3.    Procedure for Implementing the Settlement          3.1   Promptly after execution of this Stipulation, Plaintiffs shall submit this Stipulation,    together with its exhibits, to the Court and apply for entry of the Preliminary Approval Order in    the Court, substantially in the form of Exhibit B attached hereto, requesting, inter alia:    (i) preliminary approval of the Settlement set forth in this Stipulation; (ii) approval of the method    of providing notice of the proposed Settlement to Current VEREIT Stockholders; (iii) approval of   the Notice procedure set forth in ¶ 3.2; and (iv) a date for the Settlement Hearing.         3.2   Within ten (10) calendar days after the Court’s entry of the Preliminary Approval   Order, VEREIT shall cause a press release to be issued that contains the contents of the Long Form   Notice  (attached hereto as Exhibit  A-1), and referring the Current VEREIT  Stockholders to   VEREIT’s Investor Relations webpage, located at http://ir.vereit.com/, for more information, as   well as file a current report on Form 8-K with the Securities & Exchange Commission referencing   such press release.  VEREIT’s Investor Relations webpage shall include a link to the   aforementioned press release, this Stipulation, and the Preliminary Approval Order.  Within ten   (10) calendar days after the Court’s entry of the Preliminary Approval Order, VEREIT shall cause   the Summary Notice (attached hereto as Exhibit A-2) to be published once in Investor’s Business   Daily.  The Settling Parties believe the contents of the Notice and the manner of the notice                                           24 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 26 of 136                                                              EXECUTION COPY      procedures set forth in this paragraph constitute adequate and reasonable notice to Current    VEREIT Stockholders pursuant to applicable law and due process.           3.3   Plaintiffs’ Counsel shall request that the Court hold the Settlement Hearing  to    approve the Settlement and the Fee Award after the Court holds a final approval hearing to review   the adequacy, fairness, and reasonableness of the Class Settlement, but in no event fewer than    forty-five (45) calendar days after the notice described in ¶ 3.2 above is given to Current VEREIT    Stockholders.          3.4   Pending the Court’s determination as to final approval of the Settlement, Plaintiffs    and Plaintiffs’ Counsel, and all other Persons, including, but not limited to, any Current VEREIT    Stockholders, are barred and enjoined from commencing, prosecuting, instigating, or in any way    participating in the commencement or prosecution of any action asserting any Released Claims    against any of the Released Persons, in any court or tribunal, including but not limited to, any of    the Derivative Actions.          3.5   Upon entry of Judgement by the Court, VEREIT shall promptly seek to have    dismissed or otherwise terminated, to the extent they have not been already, any Derivative    Actions still pending.          4.    Releases          4.1   Upon the Effective Date, VEREIT, Plaintiffs, and each of the Current VEREIT    Stockholders shall be deemed to have, and by operation of the Judgment shall have, fully, finally,    and forever released, relinquished, and discharged the Released Claims against the Released    Persons.  VEREIT, Plaintiffs, and each of the Current VEREIT Stockholders shall be deemed to    have, and by operation of the Judgment shall have, covenanted not to sue any Released Person    with respect to any Released Claims, and shall be permanently barred and enjoined from    instituting, commencing or prosecuting the Released Claims against the Released Persons except                                          25 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 27 of 136                                                              EXECUTION COPY      to enforce the releases and other terms and conditions contained in this Stipulation and/or the    Judgment entered pursuant thereto.          4.2   Upon the Effective Date, VEREIT and each of the Released Persons shall be    deemed to have, and by operation of the Judgment shall have, fully, finally, and forever released,    relinquished and discharged each and all of Plaintiffs, their beneficiaries, and Plaintiffs’ Counsel    from any and all Defendant Parties’ Released Claims.  VEREIT and the Released Persons shall be    deemed to have, and by operation of the Judgment shall have, covenanted not to sue Plaintiffs,    their beneficiaries, or Plaintiffs’ Counsel with respect to any claims arising out of, relating to, or   in connection with their institution, prosecution, assertion, settlement, or resolution of the Action    or any Defendant Parties’ Released Claims, and shall be permanently barred and enjoined from    instituting, commencing or prosecuting the Defendant Parties’ Released Claims against Plaintiffs,    their beneficiaries, or Plaintiffs’ Counsel except to enforce the releases and other terms and    conditions contained in this Stipulation and/or the Judgment entered pursuant thereto.          4.3   Upon the Effective Date, the Non-VEREIT Settling Defendants shall be deemed to    have, and by operation of the Judgment shall have, fully, finally, and forever released,    relinquished, and discharged the NVSD Released Claims against each respective Non-VEREIT    Settling Defendant and the VEREIT Released Persons. The Non-VEREIT Settling Defendants   shall be deemed to have, and by operation of the Judgment shall have, covenanted not to sue each   respective Non-VEREIT Settling Defendant and the VEREIT Released Persons with respect to    any NVSD Released Claims, and shall be permanently barred and enjoined from instituting,   commencing or prosecuting the NVSD Released Claims against the VEREIT Released Persons    except to enforce the releases and other terms and conditions contained in this Stipulation and/or    the Judgment entered pursuant thereto.                                           26 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 28 of 136                                                             EXECUTION COPY          4.4   Notwithstanding ¶ 4.3, in the event that any Derivative Action other than the   Action, or any derivative proceeding filed subsequent to execution of this Stipulation alleging   claims that arise out of, are based upon, or relate to in any way any of the allegations, acts,   transactions, facts, events, matters, occurrences, representations or omissions involved, set forth,   alleged or referred to, in the Derivative Actions or the Class Action, is permitted to proceed against   any Non-VEREIT Settling Defendant: (i) VEREIT shall not be released from any rights of   advancement, indemnification, contribution, or any other rights that such Non-VEREIT Settling   Defendant has or may have for any claims, demand or losses (all subject to meeting applicable   laws, requirements, and standards) arising out of such derivative proceeding; and (ii) GT shall be   entitled to receive from VEREIT indemnification for and advancement of reasonable fees, costs,   and expenses incurred or paid by GT in defending such derivative proceeding, and (subject to   meeting applicable laws) amounts paid by GT in settlement of or in satisfaction of a judgment   rendered in such derivative proceeding.         4.5   Nothing herein shall in any way impair or restrict the rights of any Settling Party to   enforce the terms of the Stipulation.         5.    Payment of Plaintiffs’ Counsel’s Fees and Expenses         5.1   Plaintiffs intend to seek payment of a fee in an amount not to exceed twenty-six   million dollars ($26,000,000) and expenses through application to the Court.  VEREIT reserves   its right to object to Plaintiffs’ Counsel’s application for fees and expenses.           5.2   Not later than ten (10) business days following the date on which the Court   approves the Fee Award, VEREIT will pay Plaintiffs’ Counsel (through GPM) the amount   approved by the Court (in an amount not to exceed twenty-six million dollars ($26,000,000) and   expenses).  Such monies shall be kept by GPM in a segregated escrow account and not distributed   to GPM or anyone else until such time as the Fee Award becomes Final.  For the avoidance of                                         27 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 29 of 136                                                              EXECUTION COPY      doubt, only VEREIT is liable for the Fee Award; none of the Non-VEREIT Settling Defendants   are liable to the Plaintiffs or any other person for the Fee Award.         5.3   In the event of any failure to obtain final approval of the full amount of the Fee   Award, or upon any appeal and/or further proceedings on remand, or successful collateral attack,   which results in the Fee Award being overturned or substantially modified, Plaintiffs’ Counsel and   their successors shall be obligated to repay within fifteen (15) business days the portion of the Fee   Award held in escrow that was ultimately not awarded to Plaintiffs’ Counsel.  Plaintiffs’ Counsel    is subject to the Court’s jurisdiction for the purposes of enforcing this paragraph and the provisions    related to the Fee Award.          5.4   Payment of the Fee Award in the amount approved by the Court shall constitute    final and complete payment for Plaintiffs’ Counsel’s attorneys’ fees and expenses that have been   incurred or will be incurred in connection with the filing and prosecution of the Action and the   resolution of the claims alleged therein.  Defendants and Defendants’ Counsel shall have no    responsibility for the allocation or distribution of the Fee Award amongst Plaintiffs’  Counsel.    Defendants, including VEREIT, shall have no obligation to make any payment to any Plaintiffs’   Counsel other than the payment provided in ¶¶ 5.1-5.2 herein.         5.5   Except as otherwise provided herein, or a separate agreement concerning    advancement or indemnification among any Defendants, each of the Settling Parties shall bear his,    her, or its own costs and attorneys’ fees.  This ¶ 5.5 is not intended to affect the rights of any Non-   VEREIT Settling Defendant to indemnification or advancement of costs and attorney’s fees.          6.    Conditions of Settlement, Effect of Disapproval, Cancellation, or Termination           6.1   The Effective Date of the Settlement shall be conditioned on the occurrence of all    of the following events:                (i)   the Court’s entry of the Judgment;                                          28 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 30 of 136                                                             EXECUTION COPY                (ii)  the Judgment has become Final;               (iii) the Court’s approval of a settlement and entry of a judgment in the Class                    Action; and               (iv)  the judgment in the Class Action becomes Final.         6.2   If any condition specified in ¶ 6.1 is not met, then the Stipulation shall be canceled   and terminated subject to ¶ 6.4, and the Settling Parties shall be restored to their respective   positions in the Action as of the date immediately preceding the date of this Stipulation, unless   Plaintiffs’ Counsel and Defendants’ Counsel mutually agree in writing to proceed with the   Stipulation; provided, however, that the Court’s failure to approve the Fee Award shall not be   grounds for termination or cancellation of the Settlement.         6.3   Each of the Settling Parties shall have the right to terminate the Settlement by   providing written notice of their election to do so to all other Settling Parties within twenty (20)   calendar days of the date on which: (i) the Court refuses to approve this Stipulation, or the terms   contained herein, in any material respect; (ii) the Preliminary Approval Order is not entered in   substantially the form attached as Exhibit B hereto; (iii) the Judgment is not entered in substantially   the form attached as Exhibit C hereto; (iv) the Judgment is reversed, vacated, or substantially   modified on appeal, reconsideration, or otherwise; (v) the Court refuses to enter a judgment in the   Class Action; (vi) the judgment in the Class Action is reversed, vacated, or substantially modified   on appeal, reconsideration, or otherwise; or (vii) the Effective Date of the Settlement cannot   otherwise occur; except that such termination shall not be effective unless and until the terminating   Settling Party has, within twenty (20) calendar days of the date on which notice of the termination   event has been provided to all other Settling Parties, attempted in good faith to confer with the   other Settling Parties to attempt to remedy the issue.  Any order or proceeding relating to the Fee   Award, or any appeal from any order relating thereto or reversal or modification thereof, shall not                                          29 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 31 of 136                                                              EXECUTION COPY      operate to cancel the Stipulation, allow for the termination of the Settlement, or affect or delay the    finality of the Judgment approving the Settlement.          6.4   In the event that the Stipulation is not approved by the Court, or the Settlement is    terminated for any reason, including pursuant to ¶ 6.3 above, the Settling Parties shall be restored    to their respective positions as of the date immediately preceding the date of this Stipulation, and    all negotiations, proceedings, documents prepared and statements made in connection herewith    shall be without prejudice to the Settling Parties, shall not be deemed or construed to be an    admission by any of the Settling Parties of any act, matter, or proposition, and shall not be used in    any manner for any purpose in any subsequent proceeding in the Derivative Actions or in any other   action or proceeding.  In such event, the terms and provisions of the Stipulation, with the exception   of ¶¶ 1.1-1.53, 5.5, 6.2-6.4, 7.2, 7.4-7.16, and 7.18 herein, shall have no further force and effect   with respect to the Settling Parties and shall not be used in the Derivative Actions or in any other   proceeding for any purpose, and any judgment or orders entered by the Court in accordance with   the terms of the Stipulation shall be treated as vacated, nunc pro tunc.          7.    Miscellaneous Provision          7.1   The Settling Parties: (i) acknowledge that it is their intent to consummate this    Stipulation; and (ii) agree to cooperate to the extent reasonably necessary to effectuate and    implement all terms and conditions of the Stipulation and to exercise their best efforts to    accomplish the foregoing terms and conditions of the Stipulation.          7.2   The Settling Parties agree that the terms of the Settlement were negotiated in good    faith and at arm’s length by the Settling Parties, and reflect a settlement that was reached    voluntarily based upon adequate information and after consultation with competent legal counsel.     Except in the event of termination of the Settlement, the Settling Parties agree not to assert under    Rule 11 of the Federal Rules of Civil Procedure or any similar law, rule or regulation, that the                                          30 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 32 of 136                                                              EXECUTION COPY      Action was brought or defended in bad faith or without a reasonable basis.  The Settling Parties    also will request that the Judgment contain a finding that during the course of the Action, the    Settling Parties and their respective counsel at all times complied with the requirements of Fed. R.    Civ. P. 11 and all other similar rules of professional conduct.          7.3   While maintaining their positions that the claims and defenses asserted in the    Derivative Actions are meritorious, Plaintiffs and Plaintiffs’ Counsel, on the one hand, and    Defendants and Defendants’ Counsel, on the other hand, shall not make any public statements or    statements to the media (whether or not for attribution) that disparage the other’s business,    conduct, or reputation, or that of their counsel, based on the subject matter of the Action.     Notwithstanding the foregoing, each of the Settling Parties reserves their right to rebut, in a manner    that such party determines to be reasonable and appropriate, any contention made in any public    forum that the Action was brought or defended in bad faith or without a reasonable basis.          7.4   Whether or not the Settlement is approved by the Court, and whether or not the    Settlement is consummated, the fact and terms of this Stipulation, including any exhibits attached    hereto, all proceedings in connection with the Settlement, and any act performed or document    executed pursuant to or in furtherance of the Stipulation or the Settlement:          (a)   shall not be offered, received, or used in any way against the Settling Parties as    evidence of, or be deemed to be evidence of, a presumption, concession, or admission by any of    the Settling Parties with respect to the truth of any fact alleged by Plaintiffs or the validity, or lack   thereof, of any claim that has been or could have been asserted in the Derivative Actions or in any    litigation, or the deficiency or infirmity of any defense that has been or could have been asserted    in the Derivative Actions or in any litigation, or of any fault, wrongdoing, negligence, or liability    of any of the Released Persons or the VEREIT Released Persons;                                           31 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 33 of 136                                                              EXECUTION COPY            (b)   shall not be offered, received, or used in any way against any of the Released    Persons or the VEREIT Released Persons as evidence of, or be deemed to be evidence of, a    presumption, concession, or admission of any fault, misrepresentation or omission with respect to    any statement or written document approved, issued, or made by any Released Person or any   VEREIT Released Person, or against Plaintiffs as evidence of any infirmity in their claims;         (c)   shall not be offered, received, or used in any way against any of the Released   Persons or any of the VEREIT Released Persons as evidence of, or be deemed to be evidence of,    a presumption, concession, or admission of any liability, fault, negligence, omission or    wrongdoing, or in any way referred to for any other reason as against the Released Persons or the    VEREIT Released Persons, in any arbitration proceeding or other civil, criminal, or administrative    action or proceeding in any court, administrative agency, or other tribunal.  Neither this Stipulation    nor the Settlement, nor any act performed or document executed pursuant to or in furtherance of    this Stipulation, or the Settlement, shall be admissible in any proceeding for any purpose, except    to enforce the terms of the Settlement; provided, however, that the Released Persons and the    VEREIT Released Persons may refer to the Settlement, and file the Stipulation and/or the    Judgment, in any action that may be brought against them to effectuate the liability protections    granted to them hereunder, including, without limitation, to support a defense or claim based on    principles of res judicata, collateral estoppel, full faith and credit, release, standing, good faith    settlement, judgment bar or reduction or any other theory of claim preclusion or issue preclusion    or similar defense or claim under U.S. federal or state law or foreign law.          7.5   The exhibits to the Stipulation are material and integral parts hereof and are fully    incorporated herein by this reference.                                           32 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 34 of 136                                                              EXECUTION COPY            7.6   This Stipulation may be amended or modified only by a written instrument signed    by or on behalf of all the Settling Parties or their respective successors-in-interest.  After prior   notice to the Court, but without further order of the Court, the Settling Parties may agree to   reasonable extensions of time to carry out any provisions of this Stipulation.         7.7   With the exception of the  Supplementary Agreements,  this Stipulation and the   exhibits attached hereto represent the complete and final resolution of all disputes among the   Settling Parties with respect to the Action, constitute the entire agreement among the Settling   Parties, and supersede any and all prior negotiations, discussions, agreements, or undertakings,   whether oral or written, with respect to such matters.         7.8   The waiver by one party of any breach of the Settlement by any other party shall   not be deemed a waiver of any other prior or subsequent breach of the Settlement.  The provisions   of the Settlement may not be waived except by a writing signed by the affected party, or counsel   for that party.         7.9   The headings in this Stipulation and its exhibits are used for the purpose of   convenience only and are not meant to have legal effect.  Such headings shall not be considered a   part of this Stipulation, and neither shall they limit, modify, or affect in any way the meaning or   interpretation of this Stipulation.         7.10  This Stipulation and the Settlement shall be binding upon, and inure to the benefit   of, the successors and assigns of the Settling Parties, the Released Persons, and the VEREIT   Released Persons.  The Settling Parties agree that this Stipulation will run to their respective   successors-in-interest, and they further agree that any planned, proposed or actual sale, merger or   change-in-control of VEREIT shall not void this Stipulation, and that in the event of a planned,   proposed or actual sale, merger or change-in-control of VEREIT, they will continue to seek final                                           33 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 35 of 136                                                             EXECUTION COPY    approval of this Stipulation expeditiously, including, but not limited to, the Settlement terms   reflected in this Stipulation and the Fee Award.         7.11  The Stipulation and the exhibits attached hereto shall be considered to have been   negotiated, executed, and delivered, and to be wholly performed, in the State of New York and the   rights and obligations of the Settling Parties to the Stipulation shall be construed and enforced in   accordance with, and governed by, the internal, substantive laws of the State of New York without   giving effect to that State’s choice of law principles.  No representations, warranties, or   inducements have been made to any party concerning the Stipulation or its exhibits other than the   representations, warranties, and covenants contained and memorialized in such documents.         7.12  This Stipulation shall not be construed more strictly against one Settling Party than   another merely by virtue of the fact that it, or any part of it, may have been prepared by counsel   for one of the Settling Parties, it being recognized that it is the result of arm’s-length negotiations   among the Settling Parties and all Settling Parties have contributed substantially and materially to   the preparation of this Stipulation.         7.13  All agreements made and orders entered during the course of the Derivative Actions   relating to the confidentiality of information and documents shall survive this Stipulation.         7.14  Nothing in this Stipulation, or the negotiations or proceedings relating to the   Settlement, is intended to or shall be deemed to constitute a waiver of any applicable privilege or   immunity, including, without limitation, the attorney-client privilege, the joint defense privilege,   the accountants’ privilege, or work product immunity; further, all information and documents   transmitted between Plaintiffs’ Counsel and Defendants’ Counsel in connection with the   Settlement shall be kept confidential and shall be inadmissible in any proceeding in any U.S.                                          34 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 36 of 136                                                             EXECUTION COPY    federal or state court or other tribunal or otherwise, in accordance with Rule 408 of the Federal   Rules of Evidence as if such Rule applied in all respects in any such proceeding or forum.         7.15  The Settling Parties intend that the Court retain jurisdiction for the purpose of   effectuating and enforcing the terms of the Settlement.         7.16  Each counsel or other Person executing the Stipulation or its exhibits on behalf of   any of the Settling Parties hereby warrants that such Person has the full authority to do so.  The   Stipulation shall be binding upon, and inure to the benefit of, the successors and assigns of the   Settling Parties and their Related Parties.         7.17  Any notice required by this Stipulation shall be submitted by overnight mail and   email to each of the signatories below.         7.18  The Stipulation may be executed in one or more counterparts, including by   signature transmitted via facsimile, or by a .pdf/.tif image of the signature transmitted via e-mail.    All executed counterparts and each of them shall be deemed to be one and the same instrument.           IN WITNESS WHEREOF, the Settling Parties hereto have caused this Stipulation to be   executed, by their duly authorized attorneys, as of September 27, 2019.                                                                     35 

 

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     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 41 of 136                                                               EXBCU'IION  COPY  EXEÇUTED    ANDéGR]EED:   GLANCY   PRONGAY   & MURIìAY LLP,  OTT   MILBANK LLP" on behall'ol'VEREIT  behalf of Joanne Witchko, Edward Froehner,  and .leff}ey Turner as trustee fbr Michele  Grahaln 'lurner 1995 Revocable Trust   By                                       By:   PAUL, WEISS, RIþ-KIND,  WHARTON    &     KIRKLAND & ELLIS LLP. on behalf     o1'  GARRISON   Ll-P. on behall'of Nicholas S. David Kay  Schorsch    B                                        By   KELLOGG. I-{ANSEN. TODD.  F'IGI]L &      PETRILLO KLEIN & BOXER    LLP. on behalf  FREDERICK, P.L.L.C..  or-r bel-ralf of AR of Lisa Beeson  Capital. LLC, ARC Properties Advisors. LLC,  Scott J. Borvman,  Peter M. Budko, Brian D.  Jones. William M. Kahane, and Edward M.  Weil   By                                       B)'   STEPTOE   & JOIINSON  LLP. on behalf of  WEIL, GOTSIJAL   &. MANGES LLP, ON  Brian Block                              belialf of Tholnas A. Andruskevich,  Leslie D.                                           Michelson,  Edward G. Rendell. William G.                                           Stanley, and llrr"rce D. F'rank   By                                       Bv   MOIìRIS, MANNING   & I\4ARTIN LLP. on    SIDLEY  AUSTIN LLP. on behalf of Grant  behall'ol Scott P. Sealy Sr.             Thornton LLP    13v                                      By   ZUCKERMAN    SPAEDER LLP.  on behalf of  Lisa McAlister   Il)'                                         36

 

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    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 43 of 136                                                             EXECUTION COPY   EXECUTED AND AGREED:  GLANCY PRONGAY & MURRAY LLP, on          MILBANK LLP, on behalf of VEREIT  behalf of Joanne Witchko, Edward Froehner,  and  Jeffrey  Turner  as  trustee  for  Michele  Graham Turner 1995 Revocable Trust   By:                                      By:   PAUL,  WEISS,  RIFKIND,  WHARTON  &      KIRKLAND  &  ELLIS  LLP,  on  behalf  of  GARRISON  LLP,  on  behalf  of  Nicholas  S. David Kay  Schorsch   By:                                      By:   KELLOGG, HANSEN, TODD, FIGEL &           PETRILLO KLEIN & BOXER LLP, on behalf  FREDERICK,  P.L.L.C.,  on  behalf  of  AR of Lisa Beeson  Capital, LLC, ARC Properties Advisors, LLC,  Scott J. Bowman, Peter M. Budko, Brian D.  Jones,  William  M.  Kahane,  and  Edward  M.  Weil   By:                                      By:   STEPTOE  &  JOHNSON  LLP,  on  behalf  of WEIL,  GOTSHAL  &  MANGES  LLP,  on  Brian Block                              behalf of Thomas A. Andruskevich, Leslie D.                                           Michelson,  Edward  G.  Rendell,  William  G.                                           Stanley, and Bruce D. Frank   By:                                      By:   MORRIS, MANNING & MARTIN LLP, on         SIDLEY  AUSTIN  LLP,  on  behalf  of  Grant  behalf of Scott P. Sealy Sr.             Thornton LLP   By:                                      By:   ZUCKERMAN SPAEDER LLP, on behalf of  Lisa McAlister   By:                                          36 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 44 of 136                                                             EXECUTION COPY   EXECUTED AND AGREED:  GLANCY PRONGAY & MURRAY LLP, on          MILBANK LLP, on behalf of VEREIT  behalf of Joanne Witchko, Edward Froehner,  and Jeffrey Turner as trustee for Michele  Graham Turner 1995 Revocable Trust   By:                                      By:   PAUL, WEISS, RIFKIND, WHARTON       &    KIRKLAND & ELLIS LLP, on behalf of  GARRISON LLP, on behalf of Nicholas S.   David Kay  Schorsch   By:                                      By:   KELLOGG, HANSEN, TODD, FIGEL &           PETRILLO KLEIN & BOXER LLP, on behalf  FREDERICK, P.L.L.C., on behalf of AR     of Lisa Beeson  Capital, LLC, ARC Properties Advisors, LLC,  Scott J. Bowman, Peter M. Budko, Brian D.  Jones, William M. Kahane, and Edward M.  Weil   By:                                      By:   STEPTOE & JOHNSON LLP, on behalf of      WEIL, GOTSHAL & MANGES LLP, on  Brian Block                              behalf of Thomas A. Andruskevich, Leslie D.                                           Michelson, Edward G. Rendell, William G.                                           Stanley, and Bruce D. Frank   By:                                      By:   MORRIS, MANNING & MARTIN LLP, on         SIDLEY AUSTIN LLP, on behalf of Grant  behalf of Scott P. Sealy Sr.             Thornton LLP   By:                                      By:   ZUCKERMAN SPAEDER LLP, on behalf of  Lisa McAlister   By:                                          36 

 

  Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 45 of 136                                                                   EXECUTION COPY  EXECUTED     AND AGREED:  GLANCY    PRONGAY   & MURRAY    LLP, on    MILBANK    LLP, on behalf of VEREIT  behalf of Joanne Witchko, Edward Froehner,  and Jeffrey Tumer  as trustee for Michele  Graham Turner 1995 Revocable Trust    PAUL,  WEISS,  R[FKIND,  WHARTON     &     KIRKLAND    & ELLIS LLP, on behalf    of  GARRISON LLP,    on behalf of Nicholas S.  David Kay  Schorsch    KELLOGG, HANSEN,  TODD,     FIGEL &        PETRILLO   KLEIN & BOXER  LLP.  on behalf  FREDERICK,    P.L.L.C., on behalf of AR    of Lisa Beeson  Capital, LLC, ARC Properties Advisors, LLC,  Scott J. Bowman, Peter M. Budko, Brian D.  Jones, William M. Kahane, and Edward M.  Weil    STEPTOE & JOHNSON      LLP, on behalf of   WEIL, GOTSHAL      & MANGES     LLP,  on  Brian Block                                behalf of Thomas A. Andruskevich, Leslie D.                                             Michelson, Edward G. Rendell, William G.                                             Stanley,  and Bruce D. Frank   B   MORR[S, MANNING     & MARTIN    LLP, ON    SIDLEY   AUSTIN  LLP, on behalf of Grant  behalf of Scott P. Sealy Sr.               Thornton LLP    ZUCKERMAN     SPAEDER   LLP, on hhalf of  Lisa McAlister                                           36

 

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Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 48 of 136             EXHIBIT A-1                                   42350.00400

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 49 of 136   UNITED STATES DISTRICT COURT  SOUTHERN DISTRICT OF NEW YORK                                               JOANNE WITCHKO, Derivatively on Behalf     of Nominal Defendant AMERICAN REALTY           Lead Case No. 1:15-cv-06043-AKH  CAPITAL PROPERTIES, INC.,                                                                       (Consolidated with Case No.                    Plaintiff,                   1:15-cv-08563-AKH)                                                   v.                                                                              NICHOLAS S. SCHORSCH, et al.,                      Defendants,          -and-    AMERICAN REALTY CAPITAL  PROPERTIES, INC.,                      Nominal Defendant.                                               NOTICE TO CURRENT VEREIT STOCKHOLDERS   TO:   ALL OWNERS OF VEREIT, INC.      (“VEREIT”)  (F/K/A AMERICAN REALTY        CAPITAL PROPERTIES INC.        (“ARCP”))  COMMON STOCK         (TICKER        SYMBOL: VER) AND PREFERRED STOCK (TICKER SYMBOL: VERPF) AS OF       SEPTEMBER 27, 2019, WHO CONTINUE TO OWN SUCH SHARES.        PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY.  YOUR       RIGHTS MAY BE AFFECTED.        THIS NOTICE RELATES TO A PROPOSED       SETTLEMENT AND DISMISSAL OF STOCKHOLDER DERIVATIVE       LITIGATION AND CONTAINS IMPORTANT INFORMATION REGARDING       YOUR RIGHTS.  YOUR RIGHTS MAY               BE AFFECTED BY LEGAL       PROCEEDINGS IN THIS ACTION.        IF THE COURT APPROVES THE SETTLEMENT AND DISMISSAL OF THE       ACTION, STOCKHOLDERS OF VEREIT WILL BE FOREVER BARRED FROM       CONTESTING THE APPROVAL OF THE PROPOSED SETTLEMENT AND       FROM PURSUING THE SETTLED CLAIMS.        THE COURT HAS MADE NO FINDINGS OR DETERMINATIONS       RESPECTING THE MERITS OF THE ACTION.          THE RECITATION OF THE       BACKGROUND AND CIRCUMSTANCES OF THE SETTLEMENT CONTAINED                                         1 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 50 of 136          HEREIN DOES NOT CONSTITUTE THE FINDINGS OF THE COURT.              IT IS         BASED ON REPRESENTATIONS MADE TO THE COURT BY COUNSEL FOR        THE PARTIES.          YOU ARE HEREBY NOTIFIED, pursuant to Federal Rule of Civil Procedure 23.1 and    an Order from the Honorable Alvin K. Hellerstein of the U.S. District Court for the Southern    District of New York (the “Court”), that a proposed settlement agreement has been reached among    Plaintiffs,1 derivatively on behalf of VEREIT, VEREIT, and the Non-VEREIT Settling     Defendants in connection with the above-captioned consolidated stockholder derivative action    titled Witchko v. Schorsch, et al., No. 1:15-cv-06043-AKH (S.D.N.Y.) (the “Action”).          Plaintiffs filed the Action derivatively on behalf of VEREIT to remedy the alleged harm    caused to the Company by certain of the Non-VEREIT Settling Defendants’ alleged breaches of    their fiduciary duties or other obligations or duties owed to VEREIT.  The proposed Settlement, if    approved by the Court, would fully, finally and forever resolve the Action on the terms set forth    in the Stipulation and summarized in this Notice, including the dismissal of the Action with    prejudice.          As explained below, a Settlement Hearing shall be held before the Court on __________    at __:__ _.m., before the Honorable Alvin K. Hellerstein, at the U.S. District Court for the Southern    District of New York, Courtroom 14D, 500 Pearl Street, New York, New York 10007, to determine    whether, inter alia, the proposed Settlement is fair, reasonable, and adequate, and should be finally   approved by the Court and whether Plaintiffs’ Counsel’s Fee Award,  should be finally approved.    You have the right to object to the Settlement and the Fee Award, in the manner provided herein.                                                        1    For purposes of this Notice, the Court incorporates by reference the definitions in the Settling Parties’  Stipulation and Agreement of Settlement, fully executed as of September 27, 2019 (the “Stipulation”), and all   capitalized terms used herein, unless otherwise defined herein, shall have the same meanings as set forth in the   Stipulation.  A copy of the Stipulation may be inspected at the Clerk of the Court’s Office for the United States District   Court for the Southern District of New York, 500 Pearl Street, New York, NY 10007 or by visiting the investor  relations portion of VEREIT’s website at http://ir.VEREIT.com.                                          2 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 51 of 136    If you fail to object in the manner provided herein at least twenty-one (21) calendar days prior to    the Settlement Hearing, you will be deemed to have waived your objections and will be forever    bound by the Judgment to be entered and the releases to be given, unless otherwise ordered by the    Court.          This Notice is not intended to be and should not be construed as an expression of any    opinion by the Court with respect to the merits of the claims made in the Action, but is merely to    advise one of the proposed Settlement and of one’s rights if he, she or it owned VEREIT stock as    of September 27, 2019 and continues to hold VEREIT stock through the date of the filing of the    objection (“Current VEREIT Stockholder”).    I.    INTRODUCTION          A.    Background of the Action          VEREIT is a full-service real estate operating company which owns and manages one of    the largest portfolios of single-tenant commercial properties in the United States.  Plaintiffs have    alleged or believe that they have grounds to allege that the Non-VEREIT Settling Defendants    breached their fiduciary duties or other obligations or duties owed to VEREIT.           On November 17, 2014, plaintiff Witchko served a litigation demand pursuant to Maryland    law on the Board of Directors of VEREIT (the “Board”) asking the Board to investigate alleged    wrongdoing by certain of the Non-VEREIT Settling Defendants and sue the alleged wrongdoers    for violation of their fiduciary duties under Maryland law.  On June 18, 2015, the Board refused    the demand.          On July 31, 2015, plaintiff Witchko, derivatively on behalf of VEREIT, filed a verified   stockholder derivative complaint in the Court, initiating the Action.         On October 30, 2015, plaintiffs Thomas Serafin, Michele Graham Turner 1995 Revocable   Trust, Jeffrey Turner as Trustee, and Edward L. Froehner, derivatively on behalf of VEREIT, filed                                          3 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 52 of 136    a verified stockholder derivative complaint in the Court, initiating the action captioned Serafin, et    al. v. Schorsch, et al., No. 1:15-cv-08563 (the “Serafin Action”).          On December 15, 2015, the Court entered an order consolidating the Action and the Serafin    Action for all purposes and appointing Harwood Feffer LLP, now Glancy Prongay & Murray LLP,    to lead the litigation of the Derivative Action on behalf of the Plaintiffs.          On January 5, 2016, Plaintiffs designated the complaint in the Action as the operative    complaint.          On February 12, 2016, VEREIT and certain of the Non-VEREIT Settling Defendants filed    a motion to dismiss the Action pursuant to Fed. R. Civ. P. 23.1 for failure to sufficiently allege    improper refusal of demand, and under Fed. R. Civ. P. 12(b)(6) for failure to state a claim.            On March 15, 2016, Plaintiffs filed a memorandum of law in opposition to the motion to    dismiss.          On April 5, 2016, VEREIT and certain of the Non-VEREIT Settling Defendants filed a    reply memorandum of law in further support of their motion to dismiss the Action.          On June 2, 2016, the Court held oral argument on the motion to dismiss.          On June 9, 2016, the Court entered an order denying the motion to dismiss pursuant to Fed.    R. Civ. P. 23.1 because the operative complaint sufficiently alleged that plaintiff Witchko’s    demand had been improperly denied, and granting with leave to amend the motion to dismiss    pursuant to Rule 12(b)(6) because the operative complaint failed to state certain claims.          On June 30, 2016, Plaintiffs, derivatively on behalf of VEREIT, filed an amended verified   stockholder derivative complaint in the Court (the “Amended Complaint”).                                           4 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 53 of 136          On July 11, 2016 and July 25, 2016, Kahane, Weil, Schorsch, Block, and McAlister filed    notices of interlocutory appeal of the Court’s order granting in part and denying in part the motion    to dismiss (the “Appeals”).          On July 20, 2016, Plaintiffs moved to dismiss the Appeals for lack of appellate jurisdiction.           On July 22, 2016, VEREIT and certain of the Non-VEREIT Settling Defendants filed   answers to the Amended Complaint.         On August 1, 2016, Kahane and Weil filed their opposition to Plaintiffs’ motion to dismiss   the Appeals for lack of appellate jurisdiction.         On August 8, 2016, Plaintiffs filed their replies in further support of their motion to dismiss   the Appeals.         On August 11, 2016, in the Appeals, Kahane and Weil filed a motion for leave to file a sur-  reply or, in the alternative, strike, and sur-reply to Plaintiffs’ motion to dismiss.         On August 12, 2016, in the Appeals, Plaintiffs filed an opposition to Kahane and Weil’s   motion for leave to file the sur-reply or strike.          On September 1, 2016, VEREIT filed a motion to stay the Action.         On September 8, 2016, the Court entered an order denying VEREIT’s motion to stay the   Action.          On September 16, 2016, document discovery commenced in the Action, the consolidated    class actions pending before the Court, captioned In re American Realty Capital Properties, Inc.   Litigation, Civil Action No. 1:15-mc-00040-AKH (S.D.N.Y.) (the “Class Action”), and the then-   pending Direct Actions arising from substantially the same facts (together, the “Coordinated    Actions”).  Discovery in the Action was thereafter coordinated for all purposes with discovery in    the Class Action.                                           5 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 54 of 136          During document discovery, over seventy parties and non-parties, including each of the    Non-VEREIT Settling Defendants, cumulatively produced more than 846,000 documents totaling    several million pages.           On November 15, 2016, the United States Court of Appeals for the Second Circuit entered    an order dismissing the Appeals for lack of jurisdiction.          On January 20, 2017, the office of the U.S. Attorney for the Southern District of New York    (the “Government”) moved to stay the Action and the Coordinated Actions until the conclusion of    Block’s criminal trial, scheduled for the summer of 2017.          On January 25, 2017, the Court denied the Government’s stay motion.          On May 11, 2017, the Government renewed its motion for a partial stay of discovery until    completion of Block’s criminal trial.           On May 15, 2017, the Court again denied the Government’s request for a partial stay of    discovery.          On May 31, 2017, document discovery in the Action and the then-pending Coordinated   Actions concluded.         On January 22, 2018, fact witness depositions in the Action and the then-pending   Coordinated Actions commenced.         Between January 22, 2018 and December 18, 2018, Plaintiffs’ Counsel attended thirty-four    fact depositions of witnesses including each individual Non-VEREIT Settling Defendant, ex-   VEREIT employees, former VEREIT directors, former VEREIT officers, current and former    employees of Grant Thornton, and third parties.  During the depositions, Plaintiffs’ Counsel    conducted non-duplicative examinations of thirty-one of the deponents regarding related-party                                           6 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 55 of 136    transactions, executive compensation payments, and corporate governance allegations at issue in    the Action.          On February 8, 2019, Plaintiffs filed motions for summary judgment against Block and    McAlister.  The same day, several of the Non-VEREIT Settling Defendants filed summary    judgment motions against  Plaintiffs.          On March 15, 2019, the parties filed their oppositions  to  the motions for summary   judgment.On April 5, 2019, the parties filed replies in support of their motions for summary   judgment.          On May 10, 2019, the Court entered an order denying the motions for summary judgment   in the Action without prejudice to renewal.         B.    Settlement Negotiations         In March 2017, certain of the parties conducted a mediation session with the Honorable   Layn R. Phillips, United States District Judge (Ret.), an experienced mediator of complex disputes.    In advance of the mediation session, Plaintiffs retained a forensic accounting expert who prepared   a report on damages in the derivative action.  Plaintiffs state that, based in part on the expert’s   report, Plaintiffs submitted a confidential mediation statement to Judge Phillips.  The first   mediation session failed to produce a settlement, although the parties expended significant time   and effort preparing for and attending the two-day mediation.         On July 16, 2019, Plaintiffs’ Counsel met with VEREIT’s Chief Executive Officer, General   Counsel, and VEREIT’s counsel.  Plaintiffs’ Counsel made a detailed presentation regarding the   claims alleged in the Action and Plaintiffs’ calculation of damages.  During the meeting, Plaintiffs’   Counsel answered questions from VEREIT’s Chief Executive Officer, General Counsel, and   VEREIT’s counsel regarding particular theories of harm and the calculation of damages.                                           7 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 56 of 136          On August 15, 2019, Plaintiffs’ Counsel, VEREIT’s counsel, certain of the Non-VEREIT   Settling Defendants’ counsel, and counsel for the lead plaintiff in the Class Action held a mediation   session with Judge Phillips at the office of VEREIT’s counsel.  Certain of the Settling Parties    thereafter engaged in further extensive negotiations that included numerous email exchanges and    telephonic conferences.          On August 19, 2019, the Plaintiffs met for a second time with VEREIT’s Chief Executive    Officer, General Counsel, and VEREIT’s counsel.          Over the following weeks, the parties engaged in extensive, arm’s-length negotiations    regarding the terms of a potential resolution of the Action.          On September 8, 2019, the Settling Parties signed and entered into a binding Memorandum    of Understanding setting forth certain key terms of the Settlement.    II.   PLAINTIFFS’ CLAIMS AND STATEMENT OF SETTLEMENT BENEFITS            Plaintiffs believe that the Released Claims have substantial merit.  Nonetheless, Plaintiffs   acknowledge the expense and delay of continued proceedings necessary to prosecute the claims   through trial and appeal.  Plaintiffs have also considered the uncertain outcome inherent in any   litigation, especially complex actions such as the Action, as well as the delay and difficulties of   such litigation.  Plaintiffs were also mindful of the onerous burdens of proof under, and possible   defenses to, the claims asserted.         Based upon (i) investigation into and evaluation of the facts and laws relating to the claims    released herein and alleged in the Derivative Actions, (ii) factual information to which Plaintiffs    and Plaintiffs’ Counsel had access prior to the execution of this Stipulation, (iii) the contribution    of two hundred  eighty six million five hundred thousand dollars ($286,500,000) by the Non-   VEREIT Settling Defendants as part of the global settlement of the claims in the Derivative    Actions and the Class Action, (iv) the Supplementary Agreements that preserve VEREIT’s control                                          8 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 57 of 136    over the settlement contributions by the Non-VEREIT Settling Defendants even if the Settlement    is overturned on appeal, (v) investigations, document review and depositions conducted during the    pendency of the Action, (vi) admissions made by and judgments obtained against certain of the    Non-VEREIT Settling Defendants, (vii) legal analysis and briefing submitted by Plaintiffs and    subsequent orders entered by the Court, (viii) advice provided by the Plaintiffs’ various consultants    and experts, including forensic accountants and individuals with expertise in corporate governance    issues, (ix) mediation sessions with Judge Phillips, and (x) Plaintiffs’ and Plaintiffs’ Counsel’s    determination (subject to the final approval by the Court) that the terms of the proposed Settlement    as set out in this Stipulation are fair, reasonable and adequate and in the best interests of VEREIT    and Current VEREIT Stockholders, Plaintiffs have agreed to settle the Derivative Actions (as   defined herein) and to release the Released Claims pursuant to the terms of this Stipulation.    III.  THE BENEFIT OF SETTLEMENT TO VEREIT          VEREIT has determined that the Settlement confers substantial benefits upon VEREIT and    Current VEREIT  Stockholders because, for among other reasons, the Settlement reduces the    amount VEREIT is paying to settle the Class Action which in fact made the Settlement possible,    eliminates the risk of adverse judgments at trial, puts an end to timing uncertainties, and removes    the burdens and costs of the Derivative Actions and the Class Action.          VEREIT’s alleged and/or potential claims against the AR Capital Parties, Block and GT    that were the subject of the Derivative Actions, and the defenses that could be asserted with respect    to such claims, as well as the potential counterclaims that could be brought against VEREIT by,    in particular, GT, were a central issue in the negotiations over the amounts that the AR Capital    Parties, Block and GT would contribute to the global settlement of the claims that have been    asserted or could have been asserted in the Derivative Actions and the Class Action.  VEREIT    believes the claims being pursued in the Derivative Actions had significant value to VEREIT and                                          9 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 58 of 136    that those claims were a substantial factor behind the willingness of the AR Capital Parties, Block    and GT to make the settlement payments that they agreed to make.  The AR Capital Parties, Block    and GT made clear throughout the settlement negotiations that but for resolution of VEREIT’s    claims at issue in the Derivative Actions, they would not agree to any contribution to the Class    Settlement, and that GT would not agree to provide VEREIT with a release as to counterclaims    GT intended to assert against VEREIT in the Derivative Actions.  Without those contributions,    VEREIT would have been required to make a substantially larger payment to settle the Class    Action, and may not, in fact, have been able to reach resolution.  In addition, without the release    from GT, VEREIT would continue to bear litigation risk, which VEREIT sought to finally and    fully resolve through the global settlement.  Consistent with the foregoing, VEREIT believes that    the claims at issue in the Derivative Actions played a significant role in securing the settlement    contributions from the AR Capital Parties, Block and GT, as well as the releases, which VEREIT    believes are in the best interest of VEREIT.          As to the Non-VEREIT Settling Defendants other than the AR Capital Parties, Block and    GT, VEREIT determined that the Settlement confers substantial benefits upon VEREIT and    Current VEREIT Stockholders because of the substantial cost of continued litigation and trial, the   risks associated with the outcome of a trial and appeal, and the risk of uncollectable judgments in   the event of a judgment favorable to VEREIT.   IV.   DEFENDANTS’ DENIALS OF WRONGDOING AND LIABILITY         The Non-VEREIT Settling Defendants have denied, and continue to deny, each and every   claim and contention alleged by Plaintiffs in the Derivative Actions and affirm that they have acted    properly, lawfully, and in full accord with their fiduciary duties, to the extent they owed any such    duties to VEREIT, and other legal obligations, at all times.  Further, the Non-VEREIT Settling    Defendants have denied expressly, and continue to deny, all allegations of wrongdoing, fault,                                          10 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 59 of 136    liability, or damage against them arising out of any of the conduct, statements, acts or omissions    alleged, or that could have been alleged, in the Derivative Actions and deny that they have ever   committed or attempted to commit any violations of law, any breach of fiduciary duty owed to   VEREIT or its stockholders, or any wrongdoing whatsoever.  Had the terms of the Stipulation not   been reached, the Non-VEREIT Settling Defendants would have continued to contest vigorously   the allegations in the Derivative Actions, and the Non-VEREIT Settling Defendants maintain that   they had and have meritorious defenses to all claims alleged or claims that could have been alleged   in the Derivative Actions, as well as counterclaims against VEREIT they believe to be meritorious.    Without admitting the validity of any of the claims that have been asserted in the Derivative   Actions, or any liability with respect thereto, the Non-VEREIT Settling Defendants have   concluded that it is desirable that the claims be settled on the terms and subject to the conditions   set forth herein.  The Non-VEREIT Settling Defendants are entering into this Settlement because   it will eliminate the uncertainty, distraction, disruption, burden, and expense of further litigation   of the Derivative Actions.2            Neither the Stipulation, nor any of its terms or provisions, nor any act performed or    document executed pursuant to or in furtherance of the Settlement: (a) is, may be construed as, or    may be used as an admission of, or evidence of, the truth or validity of any of the Released Claims,    of any claims or allegations made in the Derivative Actions, or of any purported acts or omissions    by the Non-VEREIT Settling Defendants; (b) is, may be construed as, or may be used as an    admission of, or evidence of, any fault, omission, negligence, or wrongdoing by the Non-VEREIT    Settling Defendants, or any concession of liability whatsoever; or (c) is, may be construed as, or                                                       2 Notwithstanding the foregoing, McAlister, and only McAlister, acknolwedges, as she has at other times in the Action,   her plea of guilty to certain offenses in United States v. Lisa McAlister, 16-cr-00653 (S.D.N.Y.), and does not intend  anything in the foregoing to be inconsistent with her plea.                                           11 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 60 of 136    may be used as an admission of, or evidence of, a concession by any Non-VEREIT Settling    Defendant of any infirmity in the defenses or counterclaims that any Non-VEREIT Settling    Defendant asserted or could have asserted in the Derivative Actions or otherwise.    V.    THE SETTLEMENT HEARING          The Settlement Hearing will be held before the Honorable Alvin K. Hellerstein  on    _______________ at __:__ _.m. in Courtroom 14D of the U.S. District Court for the Southern   District of New York, 500 Pearl Street, New York, New York 10007 to determine: (i) whether the   proposed Settlement, upon the terms set forth in the Stipulation, should be finally approved in all   respects as fair, reasonable, and adequate; (ii) whether the Judgment approving the Settlement,   substantially in the form of Exhibit C attached to the Stipulation, should be entered, dismissing the   Action with prejudice and releasing and enjoining the prosecution of any and all Released Claims;   and (iii) whether Plaintiffs’ Counsel’s Fee Award should be finally approved.  At the Settlement   Hearing, the Court may hear or consider such other matters as the Court may deem necessary and   appropriate.  The Court may adjourn the date of the Settlement Hearing without further notice to   Current VEREIT Stockholders, and the Settlement Hearing may be continued by the Court at the   Settlement Hearing, or at any adjourned session thereof, without further notice.   VI.   THE TERMS OF SETTLEMENT         The AR Capital Parties have agreed to contribute consideration with a value of two-  hundred and twenty-five million dollars ($225,000,000) (inclusive of the value of certain operating   partnership units in VEREIT Operating Partnership, L.P., and related dividends previously   surrendered by some of the AR Capital Parties as part of a settlement with the Securities and   Exchange Commission, which total $31,972,934 in value) to a global settlement to settle the Class   Action, as well as any and all claims in the Derivative Actions; Block has agreed to contribute   consideration with a value of twelve million, five hundred thousand dollars ($12,500,000) to a                                          12 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 61 of 136    global settlement to settle the Class Action, as well as any and all claims in the Derivative Actions;    and GT has agreed to contribute forty-nine million dollars ($49,000,000) to a global settlement to    settle the Class Action, as well as any and all claims in the Derivative Actions.  The Settling Parties    agree that the claims in the Derivative Actions, as well as potential counterclaims that could be    brought against VEREIT, were a central issue in the negotiations regarding the amounts that the    AR Capital Parties, Block, and GT would contribute to the global settlement.  Specifically,    VEREIT believes the claims being pursued in the Derivative Actions had significant value to    VEREIT and that those claims were a substantial factor behind the willingness of the AR Capital    Parties, Block and GT to make the settlement payments that they agreed to make.  The AR Capital    Parties, Block and GT made clear throughout the settlement negotiations that but for resolution of    VEREIT’s claims at issue in the Derivative Actions, they would not agree to any contribution to   the settlement of the Class Action, and that GT would not agree to provide VEREIT with a release   as to counterclaims GT intended to assert against VEREIT in the Derivative Actions.  Without   those contributions, VEREIT would have been required to make a substantially larger payment to   settle the Class Action, and may not, in fact, have been able to reach resolution.  In addition,   without the release from GT, VEREIT would continue to bear litigation risk, which VEREIT   sought to finally and fully resolve through the global settlement.  Consistent with the foregoing,   VEREIT believes that the claims at issue in the Derivative Actions played a significant role in   securing the settlement contributions from the AR Capital Parties, Block and GT, as well as the   releases, which VEREIT believes are in the best interest of VEREIT and its stockholders.   VII.  DISMISSAL AND RELEASES         In connection with the Court’s approval of the Settlement, the Settling Parties will jointly   request entry of the Judgment by the Court, dismissing with prejudice all claims that Plaintiffs                                           13 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 62 of 136    have alleged in the Action and any other Released Claims, as well as Defendants’ Released Claims    and the NVSD Released Claims.         Upon the Effective Date, VEREIT, Plaintiffs, and each of the Current VEREIT   Stockholders shall be deemed to have, and by operation of the Judgment shall have, fully, finally,   and forever released, relinquished, and discharged the Released Claims against the Released   Persons.  VEREIT, Plaintiffs, and each of the Current VEREIT Stockholders shall be deemed to   have, and by operation of the Judgment shall have, covenanted not to sue any Released Person   with respect to any Released Claims, and shall be permanently barred and enjoined from   instituting, commencing or prosecuting the Released Claims against the Released Persons except   to enforce the releases and other terms and conditions contained in this Stipulation and/or the   Judgment entered pursuant thereto.         Upon the Effective Date, VEREIT and each of the Released Persons shall be deemed to   have, and by operation of the Judgment shall have, fully, finally, and forever released, relinquished   and discharged each and all of Plaintiffs, their beneficiaries, and Plaintiffs’ Counsel from any and    all Defendant Parties’ Released Claims.  VEREIT and the Released Persons shall be deemed to    have, and by operation of the Judgment shall have, covenanted not to sue Plaintiffs, their    beneficiaries, or Plaintiffs’ Counsel with respect to any claims arising out of, relating to, or in    connection with their institution, prosecution, assertion, settlement, or resolution of the Action or    any Defendant Parties’ Released Claims, and shall be permanently barred and enjoined from    instituting, commencing or prosecuting the Defendant Parties’ Released Claims against Plaintiffs,    their beneficiaries, or Plaintiffs’ Counsel except to enforce the releases and other terms and    conditions contained in the Stipulation and/or the Judgment entered pursuant thereto.                                           14 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 63 of 136          Upon the Effective Date, the Non-VEREIT Settling Defendants shall be deemed to have,   and by operation of the Judgment shall have, fully, finally, and forever released, relinquished, and   discharged the NVSD Released Claims against each respective Non-VEREIT Settling Defendant   and the VEREIT Released Persons. The Non-VEREIT Settling Defendants shall be deemed to   have, and by operation of the Judgment shall have, covenanted not to sue each respective Non-  VEREIT Settling Defendant and the VEREIT Released Persons with respect to any NVSD   Released Claims, and shall be permanently barred and enjoined from instituting, commencing or   prosecuting the NVSD Released Claims against the VEREIT Released Persons except to enforce   the releases and other terms and conditions contained in the Stipulation and/or the Judgment   entered pursuant thereto.         Notwithstanding the foregoing, in the event that any Derivative Action other than the   Action, or any derivative proceeding filed subsequent to execution of the Stipulation alleging   claims that arise out of, are based upon, or relate to in any way any of the allegations, acts,   transactions, facts, events, matters, occurrences, representations or omissions involved, set forth,   alleged or referred to, in the Derivative Actions or the Class Action, is permitted to proceed against   any Non-VEREIT Settling Defendant: (i) VEREIT shall not be released from any rights of   advancement, indemnification, contribution, or any other rights that such Non-VEREIT Settling   Defendant has or may have for any claims, demand or losses (all subject to meeting applicable   laws, requirements, and standards) arising out of such derivative proceeding; and (ii) GT shall be   entitled to receive from VEREIT indemnification for and advancement of reasonable fees, costs,   and expenses incurred or paid by GT in defending such derivative proceeding, and (subject to   meeting applicable laws) amounts paid by GT in settlement of or in satisfaction of a judgment   rendered in such derivative proceeding.                                           15 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 64 of 136    VIII. PAYMENT OF PLAINTIFFS’ COUNSEL’S FEES AND EXPENSES          Plaintiffs intend to seek payment of a fee in an amount not to exceed twenty-six million   dollars ($26,000,000) and expenses through application to the Court.  VEREIT reserves its right   to object to Plaintiffs’ Counsel’s application for fees and expenses.         Not later than ten (10) business days following the date on which the Court approves the   Fee Award, VEREIT will pay Plaintiffs’ Counsel (through GPM) the amount approved by the   Court (in an amount not to exceed twenty-six million dollars ($26,000,000) and expenses).  Such   monies shall be kept by GPM in a segregated escrow account and not distributed to GPM or anyone   else until such time as the Fee Award becomes Final.  For the avoidance of doubt, only VEREIT   is liable for the Fee Award; none of the Non-VEREIT Settling Defendants are liable to the   Plaintiffs or any other person for the Fee Award.         In the event of any failure to obtain final approval of the full amount of the Fee Award, or   upon any appeal and/or further proceedings on remand, or successful collateral attack, which   results in the Fee Award being overturned or substantially modified, Plaintiffs’ Counsel and their   successors shall be obligated to repay within fifteen (15) business days the portion of the Fee   Award held in escrow that was ultimately not awarded to Plaintiffs’ Counsel.  Plaintiffs’ Counsel   is subject to the Court’s jurisdiction for the purposes of enforcing this paragraph and the provisions   related to the Fee Award.         Payment of the Fee Award in the amount approved by the Court shall constitute final and   complete payment for Plaintiffs’ Counsel’s attorneys’ fees and expenses that have been incurred   or will be incurred in connection with the filing and prosecution of the Action and the resolution   of the claims alleged therein.  Defendants and Defendants’ Counsel shall have no responsibility   for the allocation or distribution of the Fee Award amongst Plaintiffs’ Counsel. Defendants,                                           16 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 65 of 136    including VEREIT, shall have no obligation to make any payment to any Plaintiffs’ Counsel other    than the payment provided in ¶¶ 5.1-5.2 of the Stipulation.          Except as otherwise provided in the Stipulation, or a separate agreement concerning    advancement or indemnification among any Defendants, each of the Settling Parties shall bear his,    her, or its own costs and attorneys’ fees.  The Stipulation ¶ 5.5 is not intended to affect the rights    of any Non-VEREIT Settling Defendant to indemnification or advancement of costs and attorney’s   fees.    IX.   THE RIGHT TO OBJECT AND/OR BE HEARD AT THE SETTLEMENT         HEARING          Any Current VEREIT Stockholder may object and/or appear and show cause, if he, she, or    it has any concern, why the Settlement should not be approved as fair, reasonable, and adequate,    why Judgment should not be entered thereon, or why the Fee Award, should not be finally    approved; provided, however, unless otherwise ordered by the Court, that no Current VEREIT    Stockholder shall be heard or entitled to contest the approval of the terms and conditions of the    Settlement, or, if approved, the Judgment to be entered approving the Settlement, or the Fee    Award, unless that Stockholder has, at least twenty-one (21) calendar days prior to the Settlement   Hearing: (1) filed with the Clerk of the Court a written objection to the Settlement setting forth:   (a) the stockholder’s name, legal address, telephone number and e-mail address;  (b) proof of    ownership of VEREIT common stock on September 27, 2019 and through the date of filing of the    objection, including the number of shares of VEREIT common stock held and the date of purchase;    (c) the nature of the objection; including any and all documentation or evidence in support of such    objection; (d) the identities of any cases, by name, court, and docket number, in which the    stockholder or his, her, or its attorney has objected to a settlement in the last three years; and (e)    the signature of the stockholder making the objection or his, her, or its counsel; and (2) if a Current                                           17 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 66 of 136   VEREIT Stockholder intends to appear and requests to be heard at the Settlement Hearing, such   stockholder must have, in addition to the requirements of (1) above, filed with the Clerk of the   Court: (a) a written notice of such stockholder’s intention to appear at the Settlement Hearing; (b)   a statement that indicates the basis for such appearance; (c) the identities of any witnesses the   stockholder intends to call at the Settlement Hearing and a statement as to the subjects of their   testimony; and (d) any and all evidence that would be presented at the Settlement Hearing.  If a   Current VEREIT Stockholder files a written objection and/or written notice of intent to appear,   such stockholder must also simultaneously serve copies of such notice, proof, statement, and   documentation, together with copies of any other papers or briefs such stockholder files with the   Court (either by hand delivery or by first class mail) upon each of the following:   Robert I. Harwood                        Scott A. Edelman   Matthew M. Houston                       Antonia M. Apps   Benjamin I. Sachs-Michaels               Jed M. Schwartz   GLANCY PRONGAY & MURRAY LLP              Jonathan Ohring  712 Fifth Avenue, 31st Floor             MILBANK LLP  New York, NY 10019                       55 Hudson Yards  Tel: (212) 935-7400                      New York, New York 10001                                           Tel: (212) 530-5000                                             Plaintiff’s Counsel                      Counsel for Nominal Defendant American                                           Realty Capital Properties, Inc. (n/k/a                                            VEREIT, Inc.)                                             Theodore V. Wells Jr.                    James P. Gillespie   Daniel J. Kramer                         Beth Mueller  Lorin L. Reisner                         KIRKLAND & ELLIS LLP  Audra J. Soloway                         1301 Pennsylvania Avenue  Christopher L. Filburn                   NW Washington, D.C. 20004  PAUL, WEISS, RIFKIND, WHARTON &          Tel: (202) 389-5000  GARRISON LLP                               1285 Avenue of the Americas   New York, NY 10019-6064  Tel: (212) 373-3000  Counsel for Nicholas S. Schorsch         Counsel for David Kay                                                                                     18 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 67 of 136   Reid M. Figel                            Guy Petrillo   Rebecca A. Beynon                        Dan Goldman  Andrew E. Goldsmith                      PETRILLO KLEIN & BOXER LLP  Bradley E. Oppenheimer                   655 Third Avenue, 22nd Floor   KELLOGG, HANSEN, TODD, FIGEL &           New York, NY 10017   FREDERICK, P.L.L.C.                      Tel: (212) 370-0330  1615 M Street N.W., Suite 400              Washington, D.C. 20036  Tel: (202) 326-7900                                             Counsel for AR Capital LLC, ARC          Counsel for Lisa Beeson  Properties Advisors LLC, Scott J. Bowman,   Peter M. Budko, Brian D. Jones, William  M. Kahane, and Edward M. Weil                                             John P. MacNaughton                      Gary F. Bendinger  Eric A. Larson                           SIDLEY AUSTIN LLP  1600 Atlanta Financial Center            787 Seventh Avenue   343 Peachtree Road, N.E.                 New York, NY 10019  Atlanta, GA 30326                        Tel: (212) 839-5300  Tel: (404) 233-7000                                                                 Bruce R. Braun                                            Melanie E. Walker                                            Kendra L. Stead                                            SIDLEY AUSTIN LLP                                           One South Dearborn                                            Chicago, IL 60603                                           Tel: (312) 853-7000                                             Counsel for Scott P. Sealy, Sr.           Counsel for Grant Thornton LLP                                             Christopher L. Garcia                    Michael C. Miller   Richard W. Slack                         Michael G. Scavelli  Evert J. Christensen, Jr.                STEPTOE & JOHNSON LLP  Adam Bookman                             1114 Avenue of the Americas   Raquel Kellert                           New York, NY 10036   WEIL, GOTSHAL & MANGES LLP               Tel: (212) 506-3900  767 Fifth Avenue                           New York, NY 10153                                             Counsel for Thomas A. Andruskevich,      Counsel for Brian Block  Leslie D. Michelson, Edward G. Rendell,   William G. Stanley, and Bruce D. Frank                                          19 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 68 of 136   Adam L. Fotiades                           ZUCKERMAN SPAEDER LLP  1800 M Street NW, Suite 1000  Washington, DC 20036-5807  Tel: (202) 778-1800    Daniel P. Moylan  ZUCKERMAN SPAEDER LLP  100 East Pratt Street, Suite 2440  Baltimore, MD 21202-1031  Tel: (410) 332-0444                                             Counsel for Lisa McAlister          Any Current VEREIT Stockholder who does not make his, her, or its objection in the   manner provided herein shall be deemed to have waived such objection and shall forever be   foreclosed from making any objection to the fairness, reasonableness, or adequacy of the   Settlement and the Fee Award, as set forth in the Stipulation, unless otherwise ordered by the   Court, but shall be forever bound by the Judgment to be entered, the dismissal of the Action with   prejudice, and any and all of the releases set forth in the Stipulation.   X.    CONDITIONS FOR SETTLEMENT         The Settlement is conditioned upon the occurrence of certain events described in the   Stipulation, which requires, among other things: (1) entry of the requested Judgment by the Court;   (2) the Judgment has become Final; (3) the Court’s approval of a settlement and entry of a   judgment in the Class Action, and (4) such approved judgment in the Class Action becoming Final.   XI.   EXAMINATION OF PAPERS AND INQUIRIES         This Notice contains only a summary of the terms of the Settlement.  For a more detailed   statement of the matters involved in the Action, reference is made to the Stipulation, which may   be inspected at the Clerk of the Court’s Office, U.S. District Court for the Southern District of   New York, 500 Pearl Street, New York 10007, during business hours of each business day or by   visiting the investor relations portion of VEREIT’s website at http://ir.VEREIT.com/.                                         20 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 69 of 136         Any other inquiries regarding the Settlement or the Action should be addressed in writing   to Counsel for Plaintiffs in the Action:  Matthew M. Houston, Esq., Glancy Prongay & Murray   LLP, 712 Fifth Avenue, 31st Floor, New York, NY 10019, Telephone: (212) 935-7400.                  PLEASE DO NOT TELEPHONE THE COURT REGARDING THIS NOTICE.                                          21 

 

Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 70 of 136             EXHIBIT A-2                                   42350.00400

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 71 of 136   UNITED STATES DISTRICT COURT  SOUTHERN DISTRICT OF NEW YORK                                                    JOANNE WITCHKO, Derivatively on Behalf of        Nominal Defendant AMERICAN REALTY CAPITAL        PROPERTIES, INC.,                                Lead Case No. 1:15-cv-06043-                                                            AKH              Plaintiff,                                                                                           (Consolidated with Case No.        v.                                             1:15-cv-08563-AKH)                                                                 NICHOLAS S. SCHORSCH, et al.,                                  Defendants,    and          AMERICAN REALTY CAPITAL PROPERTIES,  INC.,                Nominal Defendant.                   SUMMARY NOTICE OF PROPOSED SETTLEMENT OF                       STOCKHOLDER DERIVATIVE ACTION    TO:   ALL OWNERS OF VEREIT, INC.      (“VEREIT”)  (F/K/A AMERICAN REALTY        CAPITAL PROPERTIES INC. (“ARCP”)) COMMON STOCK                 (TICKER        SYMBOL:   VER) AND PREFERRED STOCK (TICKER SYMBOL: VERPF)            AS        OF SEPTEMBER 27, 2019, WHO CONTINUE TO OWN SUCH SHARES.         PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY.  YOUR        RIGHTS MAY BE AFFECTED.       THIS NOTICE RELATES TO A PROPOSED       SETTLEMENT AND DISMISSAL OF STOCKHOLDER DERIVATIVE       LITIGATION AND CONTAINS IMPORTANT INFORMATION REGARDING       YOUR RIGHTS.  YOUR RIGHTS MAY BE AFFECTED BY LEGAL        PROCEEDINGS IN THIS ACTION.         IF THE COURT APPROVES THE SETTLEMENT AND DISMISSAL OF THE        ACTION, STOCKHOLDERS OF VEREIT WILL BE              FOREVER BARRED        FROM CONTESTING THE APPROVAL OF THE PROPOSED SETTLEMENT        AND FROM PURSUING THE SETTLED CLAIMS.         THE COURT HAS MADE NO FINDINGS OR DETERMINATIONS        RESPECTING THE    MERITS OF THE ACTION.      THE RECITATION OF THE       BACKGROUND AND CIRCUMSTANCES OF THE SETTLEMENT                                        42350.00400                                        1 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 72 of 136                                                                                          CONTAINED HEREIN DOES NOT CONSTITUTE THE FINDINGS OF THE         COURT.   IT IS BASED ON REPRESENTATIONS MADE TO THE COURT BY        COUNSEL FOR THE PARTIES.          PLEASE  TAKE  NOTICE  that the consolidated stockholder derivative action captioned   Witchko v. Schorsch, et al., Case No. 1:15-cv-06043-AKH (the “Action”) is being settled and the   parties  have entered  into  a Stipulation  of Settlement, dated September  27,  2019 (the   “Stipulation”).  The terms of the proposed settlement of the Action are set forth in the Stipulation   and all capitalized terms herein have the same meaning as defined in the Stipulation.  This notice   should be read in conjunction with, and is qualified in its entirety by reference to, the text of the   Stipulation, which has been filed with the Court.  A further notice describing the Action along   with the text of the Stipulation is available on VEREIT’s Investor Relations webpage, located at   http://ir.VEREIT.com/.                  The AR Capital Parties  have agreed to  contribute  consideration with  a  value  of two-  hundred and twenty-five million  dollars  ($225,000,000)  (inclusive  of  the  value of certain   operating  partnership  units in  VEREIT Operating  Partnership,  L.P.,  and related  dividends   previously surrendered by  some  of  the AR Capital Parties as part  of  a settlement with  the   Securities and Exchange Commission, which total $31,972,934 in value) to a global settlement to   settle any and all claims in the Derivative Actions, as well as the Class Action; Block has agreed   to  contribute  consideration with  a  value  of twelve million, five  hundred  thousand  dollars   ($12,500,000) to  a global settlement to settle any and all claims in  the Derivative  Actions, as   well as  the Class Action; and GT has agreed to  contribute forty-nine million  dollars   ($49,000,000) to  a global settlement to settle any and all claims in  the Derivative  Actions, as   well as the Class Action.                  IF YOU  ARE  A  CURRENT   RECORD   OR  BENEFICIAL   OWNER    OF VEREIT   COMMON    STOCK   OR  PREFERRED   STOCK   AS  OF  SEPTEMBER  27,  2019, YOUR   RIGHTS MAY BE AFFECTED BY PROCEEDINGS IN THIS LITIGATION.                  On [DATE] at  _______,  a hearing  (the “Settlement Hearing”) will  be held before  the   Honorable Alvin K. Hellerstein in Courtroom 14D of the U.S. District Court for the Southern   District of New York, 500 Pearl Street, New York, New York 10007 to determine: (i) whether   the proposed Settlement, upon the terms set forth in the Stipulation, should be finally approved   in all respects as fair, reasonable, and adequate; (ii)  whether  the  Judgment  approving  the   Settlement, substantially in the form of Exhibit C attached to the Stipulation, should be entered,   dismissing the Action with prejudice and releasing and enjoining the prosecution of any and all   Released Claims, Defendant Parties’ Released Claims, and NVSD Released Claims; and (iii)   whether Plaintiffs’ Counsel’s Fee Award should be finally approved.  At the Settlement Hearing,   the  Court may hear  or  consider such  other matters as  the  Court may deem necessary and   appropriate.  The Court may adjourn the date of the Settlement Hearing without further notice to   Current VEREIT Stockholders, and the Settlement Hearing may be continued by the Court at the   Settlement Hearing, or at any adjourned session thereof, without further notice.                  Any Current VEREIT Stockholder as of September 27, 2019 shall have a right to appear   and to  be heard at  the Settlement Hearing.  However,  no  stockholder shall  be heard at  the  Settlement Hearing  unless, at least twenty-one  (21) calendar days  prior to  the date  of  the                                          2     

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 73 of 136                                                                                    Settlement Hearing, such stockholder has filed with the Court and delivered to counsel for the  Parties  a written  notice  of  objection in accordance with  the requirements  below.  Only  stockholders who have filed and delivered validly and timely written notices of objection will be  entitled to be heard at the Settlement Hearing unless the Court orders otherwise.                Any written notice of objection must contain the following information:                1.    Your name, legal address, telephone number, and e-mail address;         2.    Proof  of  ownership  of VEREIT  common stock  on September  27,  2019 and         through the date of the filing of the objection, including the number of shares of VEREIT         common stock held and the date of purchase;         3.     Nature  of  the  objection,  including any and all  documentation  or evidence in         support of such objection;           4.    Identities  of any cases, by name,  court, and  docket  number, in which  the         stockholder or his, her, or its attorney has objected to a settlement in the last three years;          5.    If a Current VEREIT Stockholder intends to appear and requests to be heard at the         Settlement Hearing, such stockholder must have, in addition to the requirements of (1)         through (4)  above,  filed with  the Clerk  of the  Court: (a)  a written  notice  of such         stockholder’s intention to appear at the Settlement Hearing; (b) a statement that indicates         the basis for such appearance; (c) the identities of any witnesses the stockholder intends         to call at the Settlement Hearing and a statement as to the subjects of their testimony; and         (d) any and all evidence that would be presented at the Settlement Hearing (appearance is         not required if you  have  lodged your  objection with  the  Court). If  a Current VEREIT         Stockholder files  a written  objection  and/or written  notice  of  intent to appear, such         stockholder must also simultaneously serve copies of such notice, proof, statement, and         documentation, together with copies of any other papers or briefs such stockholder files         with the Court (either by hand delivery or by first class mail) upon counsel listed below.          6.    Signature of the stockholder making the objection.          If you wish to object to the settlement, you must file a written objection setting forth the   grounds for such objection and the information listed above with the Court on or before [DATE]   21 calendar days before the Settlement Hearing, with service to: (a) counsel to Plaintiffs in the   Action, Matthew M. Houston, Glancy Prongay & Murray LLP, 712 Fifth Avenue, New York,  NY  10019;  (b) counsel to Defendants American Realty Capital Properties, Inc. and ARC   Properties Operating Partnership, L.P., Jed M. Schwartz, Milbank LLP, 55 Hudson Yards, New   York, NY 10001; (c) counsel to Defendants AR Capital, LLC, ARC Properties Advisors, LLC,  Scott J. Bowman, Peter M. Budko, Brian D. Jones, William M. Kahane, and Edward M. Weil,  Reid M. Figel, Kellogg, Hansen, Todd, Figel & Frederick, P.L.L.C., 1615 M Street N.W., Suite  400, Washington, D.C. 20036; (d) counsel to Defendant Lisa Beeson, Guy Petrillo, Petrillo Klein  & Boxer LLP, 655 Third Avenue, 22nd Floor, New York, NY 10017; (e) counsel to Defendant  Brian S. Block, Michael C. Miller, Steptoe & Johnson, LLP, 1114 Avenue of the Americas, New  York, NY  10036;  (f) counsel to Defendant Grant  Thornton LLP, Melanie E. Walker, Sidley                                          3     

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 74 of 136                                                                                  Austin LLP, One South Dearborn, Chicago, IL 60603; (g) counsel to Defendant David Kay, Beth  Mueller, Kirkland & Ellis LLP, 1301 Pennsylvania Avenue, N.W. Washington, DC 20004; (h)  counsel to Defendant Lisa P. McAlister, Adam L. Fotiades, Zuckerman Spaeder LLP, 1800 M  Street NW, Suite 1000, Washington, DC 20036; (i) counsel to Defendant Nicholas S. Schorsch,  Audra J.  Soloway, Paul, Weiss,  Rifkind,  Wharton  & Garrison LLP,  1285  Avenue  of  the  Americas, New  York, NY  10019-6064;  (j)  counsel to Defendant Scott P. Sealy, Sr.,  John P.  MacNaughton, Morris, Manning & Martin LLP, 3343 Peachtree Road, N.E., Suite 1600, Atlanta,  GA  30326;  (k)  counsel to Defendants  Thomas A.  Andruskevich, Bruce D.  Frank, Leslie D.  Michelson, Edward G. Rendell and William G. Stanley, Christopher L. Garcia, Weil, Gotshal &  Manges LLP, 767 Fifth Avenue, New York, NY 10153.                 Unless  the  Court orders otherwise, your  objection will  not  be  considered  unless it is  timely filed with the Court and delivered to the above counsel.  Any Person or entity who fails  to object in the manner  provided  shall  be deemed to have waived such  objection  and shall  forever be foreclosed from making any objection to the fairness, reasonableness, or adequacy  of the proposed settlement as set forth in the Stipulation and the Final Judgment Order, or to  the award of attorneys’ fees and expenses to Plaintiff’s Counsel, unless otherwise ordered by  the  Court.  VEREIT  stockholders who have no  objection to the settlement  do  not need to  appear at the Settlement Hearing or take any other action.          Inquiries may be made to Plaintiffs’ Counsel: Glancy Prongay & Murray LLP, 712 Fifth  Avenue, New York, NY 10019.          PLEASE DO NOT CONTACT THE COURT REGARDING THIS NOTICE         DATED: ______________________, 2019     BY  ORDER   OF  THE  DISTRICT  COURT,                                          UNITED  STATES   DISTRICT  COURT  FOR                                          THE   SOUTHERN    DISTRICT   OF   NEW                                          YORK                                            4    

 

Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 75 of 136             EXHIBIT B                                   42350.00400

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 76 of 136    UNITED STATES DISTRICT COURT   SOUTHERN DISTRICT OF NEW YORK                                                  JOANNE WITCHKO, Derivatively on Behalf      of Nominal Defendant AMERICAN REALTY           Lead Case No. 1:15-cv-06043-AKH   CAPITAL PROPERTIES, INC.,                                                                        (Consolidated with Case No.                     Plaintiff,                   1:15-cv-08563-AKH)                                                     v.                                                                                NICHOLAS S. SCHORSCH, et al.,                        Defendants,            -and-      AMERICAN REALTY CAPITAL   PROPERTIES, INC.,                        Nominal Defendant.                                                      [PROPOSED] ORDER PRELIMINARILY APPROVING              DERIVATIVE SETTLEMENT AND PROVIDING FOR NOTICE           WHEREAS, the parties to the above-captioned consolidated stockholder derivative action   (the “Action”) have made an application, pursuant to Federal Rule of Civil Procedure 23.1, for an    order: (i) preliminarily approving the Stipulation and Agreement of Settlement dated September    27, 2019 (the “Stipulation”), which, together with the exhibits annexed thereto, sets forth the terms    and conditions for the proposed settlement and dismissal of the Action with prejudice; and    (ii) approving the form and content of the Notice to Current VEREIT Stockholders, substantially   in the form attached to the Stipulation as Exhibit A-1 (“Long Form Notice”), and the Summary    Notice of Proposed Settlement of Stockholder Derivative Action, substantially in the form attached    to the Stipulation as Exhibit A-2 (“Summary Notice”) (collectively, “Notice”);                                            1 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 77 of 136          WHEREAS, all capitalized terms contained herein shall have the same meanings as set    forth in the Stipulation (unless otherwise defined herein); and          WHEREAS, the Court has read and considered the Stipulation and the exhibits annexed    thereto, and all Settling Parties have consented to the entry of this Preliminary Approval Order.          NOW THEREFORE, IT IS HEREBY ORDERED:          1.    The Court does hereby preliminarily approve, subject to further consideration at the    Settlement Hearing described below, the Stipulation and the Settlement set forth therein, including    the terms and conditions for settlement and dismissal with prejudice of the Action.          2.    A hearing (the “Settlement Hearing”) shall be held before the Court and the    Honorable Alvin K. Hellerstein on _______________, 2020 at __:__ _.m.,1 at the U.S. District    Court for the Southern District of New York, Courtroom 14D, 500 Pearl Street, New York, New    York 10007, to determine: (i) whether the terms and conditions of the Settlement set forth in the    Stipulation are fair, reasonable, and adequate to VEREIT and Current VEREIT Stockholders and    should be finally approved by the Court; (ii) whether a Judgment finally approving the Settlement,    substantially in the form of Exhibit C attached to the Stipulation, should be entered, dismissing the    Action with prejudice and releasing and enjoining the prosecution of any and all Released Claims,    Defendant Parties’ Released Claims, and NVSD Released Claims, except as otherwise set forth in    the Stipulation; and (iii) whether the Fee Award should be finally approved.  At the Settlement    Hearing, the Court may hear or consider such other matters as the Court may deem necessary and    appropriate.                                                        1 The Settling Parties respectfully request that the Settlement Hearing be scheduled at least forty-five (45) days after  the deadline for providing notice of the proposed Settlement to Current VEREIT Stockholders, but in no event before  the settlement hearing in the Class Action.                                          2 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 78 of 136          3.    The Court approves, as to form and content, the Long Form Notice attached as    Exhibit A-1 to the Stipulation and the Summary Notice attached as Exhibit A-2 to the Stipulation,    and finds that the posting of the Long Form Notice and the Summary Notice substantially in the    manner and form set forth in this Order meets the requirements of Federal Rule of Civil Procedure    23.1 and due process, is the best notice practicable under the circumstances, and shall constitute    due and sufficient notice to Current VEREIT Stockholders and all other Persons entitled thereto.          4.    Within ten (10) calendar days after the Court’s entry of the Preliminary Approval    Order, VEREIT shall cause a press release to be issued that contains the contents of the Long Form    Notice, and referring the Current VEREIT Stockholders to VEREIT’s Investor Relations webpage,    located at http://ir.vereit.com/, for more information, as well as file a current report on Form 8-K   with the Securities & Exchange Commission referencing such press release.  VEREIT’s Investor   Relations webpage shall include a link to the aforementioned press release, the Stipulation, and   the Preliminary Approval Order.  In addition, within ten (10) calendar days after the Court’s entry   of the Preliminary Approval Order, VEREIT shall cause the Summary Notice to be published once   in Investor’s Business Daily.         5.    All papers in support of the Settlement and the Fee Award shall be filed with the   Court and served at least thirty-five (35) calendar days prior to the Settlement Hearing, any papers   in opposition to the Settlement or the Fee Award shall be filed with the Court and served at least   twenty-one (21) calendar days prior to the Settlement Hearing, and any reply papers shall be filed   with the Court at least seven (7) calendar days prior to the Settlement Hearing.           6.    Any Current VEREIT Stockholder may object and/or appear and show cause, if he,   she, or it has any concern regarding why the Settlement should not be finally approved as fair,   reasonable, and adequate, why the Judgment should not be entered thereon, or why the Fee Award                                           3 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 79 of 136    should not be finally approved; provided, however, that unless otherwise ordered by the Court, no    Current VEREIT Stockholder shall be heard or entitled to contest the approval of the terms and   conditions of the Settlement, or, if approved, the Judgment to be entered thereon approving the   same, or the Fee Award, unless that stockholder has, at least twenty-one (21) calendar days prior    to the Settlement Hearing: (1) filed with the Clerk of the Court a written objection to the Settlement    setting forth: (a) the stockholder’s name, legal address, telephone number and e-mail address;    (b) proof of ownership of VEREIT common stock on September 27, 2019 and through the date of    the filing of the objection, including the number of shares of VEREIT common stock held and the    date of purchase; (c) the nature of the objection; including any and all documentation or evidence    in support of such objection; (d) the identities of any cases, by name, court, and docket number, in    which the stockholder or his, her, or its attorney has objected to a settlement in the last three years;    and (e) the signature of the stockholder making the objection or his, her, or its counsel; and (2) if    a Current VEREIT Stockholder intends to appear and requests to be heard at the Settlement    Hearing, such stockholder must have, in addition to the requirements of (1) above, filed with the    Clerk of the Court: (a) a written notice of such stockholder’s intention to appear at the Settlement    Hearing; (b) a statement that indicates the basis for such appearance; (c) the identities of any    witnesses the stockholder intends to call at the Settlement Hearing and a statement as to the    subjects of their testimony; and (d) any and all evidence that would be presented at the Settlement    Hearing.  If a Current VEREIT Stockholder files a written objection and/or written notice of intent   to appear, such stockholder must also simultaneously serve copies of such notice, proof, statement,   and documentation, together with copies of any other papers or briefs such stockholder files with   the Court (either by hand delivery or by first class mail) upon each of the following:                                           4 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 80 of 136   Robert I. Harwood                        Scott A. Edelman   Matthew M. Houston                       Antonia M. Apps   Benjamin I. Sachs-Michaels               Jed M. Schwartz   GLANCY PRONGAY & MURRAY LLP              Jonathan Ohring  712 Fifth Avenue, 31st Floor             MILBANK LLP  New York, NY 10019                       55 Hudson Yards  Tel: (212) 935-7400                      New York, New York 10001                                           Tel: (212) 530-5000                                             Plaintiff’s Counsel                      Counsel for Nominal Defendant American                                           Realty Capital Properties, Inc. (n/k/a                                            VEREIT, Inc.)                                             Theodore V. Wells Jr.                    James P. Gillespie   Daniel J. Kramer                         Beth Mueller  Lorin L. Reisner                         KIRKLAND & ELLIS LLP  Audra J. Soloway                         1301 Pennsylvania Avenue NW   Christopher L. Filburn                   Washington, D.C. 20004  PAUL, WEISS, RIFKIND, WHARTON &          Tel: (202) 389-5000  GARRISON LLP                               1285 Avenue of the Americas   New York, NY 10019-6064  Tel: (212) 373-3000                                             Counsel for Nicholas S. Schorsch         Counsel for David Kay                                             Reid M. Figel                            Guy Petrillo   Rebecca A. Beynon                        Dan Goldman  Andrew E. Goldsmith                      PETRILLO KLEIN & BOXER LLP  Bradley E. Oppenheimer                   655 Third Avenue, 22nd Floor   KELLOGG, HANSEN, TODD, FIGEL &           New York, NY 10017   FREDERICK, P.L.L.C.                      Tel: (212) 370-0330  1615 M Street N.W., Suite 400              Washington, D.C. 20036  Tel: (202) 326-7900                                             Counsel for AR Capital, LLC, ARC         Counsel for Lisa Beeson  Properties Advisors, LLC, Scott J. Bowman,   Peter M. Budko, Brian D. Jones, William  M. Kahane, and Edward M. Weil                                          5 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 81 of 136   John P. MacNaughton                      Gary F. Bendinger  Eric A. Larson                           SIDLEY AUSTIN LLP  1600 Atlanta Financial Center            787 Seventh Avenue   343 Peachtree Road, N.E.                 New York, NY 10019  Atlanta, GA 30326                        Tel: (212) 839-5300  Tel: (404) 233-7000                                                                 Bruce R. Braun                                            Melanie E. Walker                                            Kendra L. Stead                                            SIDLEY AUSTIN LLP                                           One South Dearborn                                            Chicago, IL 60603                                           Tel: (312) 853-7000                                             Counsel for Scott P. Sealy, Sr.           Counsel for Grant Thornton LLP                                             Christopher L. Garcia                    Michael C. Miller   Richard W. Slack                         Michael G. Scavelli  Evert J. Christensen, Jr.                STEPTOE & JOHNSON LLP  Adam Bookman                             1114 Avenue of the Americas   Raquel Kellert                           New York, NY 10036   WEIL, GOTSHAL & MANGES LLP               Tel: (212) 506-3900  767 Fifth Avenue                           New York, NY 10153                                             Counsel for Thomas A. Andruskevich,      Counsel for Brian Block  Leslie D. Michelson, Edward G. Rendell,   William G. Stanley, and Bruce D. Frank                                             Adam L. Fotiades  ZUCKERMAN SPAEDER LLP  1800 M Street NW, Suite 1000  Washington, DC 20036-5807  Tel: (202) 778-1800    Daniel P. Moylan  ZUCKERMAN SPAEDER LLP  100 East Pratt Street, Suite 2440  Baltimore, MD 21202-1031  Tel: (410) 332-0444                                             Counsel for Lisa McAlister                                                  6 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 82 of 136          Any Current VEREIT Stockholder who does not make his, her, or its objection in the    manner provided herein shall be deemed to have waived such objection and shall forever be    foreclosed from making any objection to the fairness, reasonableness, or adequacy of the    Settlement and the Fee Award as set forth in the Stipulation, unless otherwise ordered by the Court,    but shall be forever bound by the Judgment to be entered, the dismissal of the Action with    prejudice, and any and all of the releases set forth in the Stipulation.          7.    At least ten (10) business days prior to the Settlement Hearing, VEREIT’s Counsel    shall serve on Matthew M. Houston, Glancy Prongay & Murray LLP, 712 Fifth Avenue, 31st Floor,   New York, NY 10019 and file with the Court, proof, by affidavit or declaration, of the publication,   filing, and posting of the Notice.         8.    All Current VEREIT Stockholders shall be bound by all orders, determinations, and   judgments in the Action concerning the Settlement, whether favorable or unfavorable to Current   VEREIT Stockholders.         9.    Pending final determination of whether the Settlement should be approved, none of    Plaintiffs, Plaintiffs’ Counsel, VEREIT or any Current VEREIT Stockholders or other Persons    shall commence, continue, or prosecute, or in any way instigate or participate in the    commencement, continuation, or prosecution of, any action or proceeding asserting any Released    Claims against any of the Non-VEREIT Settling Defendants, or any other Released Person, in any    court or tribunal.          10.   Pending final determination of whether the Settlement should be approved, the    Non-VEREIT Settling Defendants shall not commence, continue, prosecute, or in any way    instigate or participate in the commencement, continuation, or prosecution of, any action or                                           7 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 83 of 136    proceeding asserting any NVSD Released Claims against VEREIT Released Persons, in any court   or tribunal.         11.   The fact and terms of the Stipulation, including any exhibits attached thereto, all   proceedings in connection with the Settlement, and any act performed or document executed   pursuant to or in furtherance of the Stipulation or the Settlement:         (a)   shall not be offered, received, or used in any way against the Settling Parties as         evidence of, or be deemed to be evidence of, a presumption, concession, or admission by         any of the Settling Parties with respect to the truth of any fact alleged by Plaintiffs or the         validity, or lack thereof, of any claim that has been or could have been asserted in the         Derivative Actions or in any litigation, or the deficiency or infirmity of any defense that         has been or could have been asserted in the Derivative Actions or in any litigation, or of         any fault, wrongdoing, negligence, or liability of any of the Released Persons or VEREIT         Released Persons;         (b)   shall not be offered, received, or used in any way against any of the Released         Persons or VEREIT Released Persons as evidence of, or be deemed to be evidence of, a         presumption, concession, or admission of any fault, misrepresentation or omission with         respect to any statement or written document approved, issued, or made by any Released         Person or VEREIT Released Persons, or against Plaintiffs as evidence of any infirmity in         their claims; or         (c)   shall not be offered, received, or used in any way against any of the Released         Persons or VEREIT Released Persons as evidence of, or be deemed to be evidence of, a         presumption, concession, or admission of any liability, fault, negligence, omission or         wrongdoing, or in any way referred to for any other reason as against the Released Persons                                           8 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 84 of 136          or VEREIT Released Persons, in any arbitration proceeding or other civil, criminal, or          administrative action or proceeding in any court, administrative agency, or other tribunal.          Neither the Stipulation nor the Settlement, nor any act performed or document executed          pursuant to or in furtherance thereof, shall be admissible in any proceeding for any purpose,          except to enforce the terms of the Settlement; provided, however, the Released Persons and          VEREIT Released Persons may refer to the Settlement, and file the Stipulation and/or the          Judgment, in any action that may be brought against them to effectuate the liability          protections granted them thereunder, including, without limitation, to support a defense or          claim based on principles of res judicata, collateral estoppel, full faith and credit, release,          standing, good faith settlement, judgment bar or reduction or any other theory of claim          preclusion or issue preclusion or similar defense or claim under U.S. federal or state law          or foreign law.          12.   If the Stipulation is terminated pursuant to its terms, or the Effective Date does not    otherwise occur, all proceedings in the Action will revert to their status as of the date immediately    preceding the date of the Stipulation.          13.   The Court reserves the right to adjourn the date of the Settlement Hearing or modify    any other dates set forth herein without further notice to Current VEREIT Stockholders, and retains   jurisdiction to consider all further applications arising out of or connected with the Settlement.     The Court may approve the Settlement and any of its terms, with such modifications as may be    agreed to by the Settling Parties, if appropriate, without further notice to Current VEREIT    Stockholders.          IT IS SO ORDERED.    DATED:  ______________________      __________________________________________                                          HONORABLE ALVIN K. HELLERSTEIN                                           9 

 

Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 85 of 136                                           10 

 

Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 86 of 136             EXHIBIT C                                   42350.00400

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 87 of 136    UNITED STATES DISTRICT COURT   SOUTHERN DISTRICT OF NEW YORK    JOANNE WITCHKO, Derivatively on Behalf   of Nominal Defendant AMERICAN REALTY           Lead Case No. 1:15-cv-06043-AKH   CAPITAL PROPERTIES, INC.,                                                  (Consolidated with Case No.                     Plaintiff,                   1:15-cv-08563-AKH)          v.    NICHOLAS S. SCHORSCH, et al.,                      Defendants,          -and-   AMERICAN REALTY CAPITAL   PROPERTIES, INC.,                      Nominal Defendant.        [PROPOSED] FINAL ORDER AND JUDGMENT APPROVING SETTLEMENT          This  matter  came  before  the  Court  for  hearing  pursuant  to  this  Court’s  Order    Preliminarily Approving  Derivative  Settlement and  Providing  for  Notice, dated _______    (the “Preliminary Approval Order”), on the application of the Settling Parties for final approval    of the Settlement set forth in the Stipulation and Agreement of Settlement dated September 27,    2019 (the “Stipulation”). Due  and adequate  notice  having  been  given  to  Current VEREIT    Stockholders as required in the Preliminary Approval Order, and the Court having considered all   papers filed and proceedings had herein and otherwise being fully informed of the premises and   good  cause  appearing  therefore,  IT IS  HEREBY  ORDERED,  ADJUDGED,  AND  DECREED   that:                                           1 

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 88 of 136          1.    This Final Order and Judgment (“Judgment”) incorporates by reference the    definitions in the Stipulation, and except where otherwise specified herein, all capitalized terms    used herein shall have the same meanings as set forth in the Stipulation.          2.    This Court has jurisdiction over the subject matter of the Action, including all   matters necessary to effectuate the Settlement.          3.    The Court finds that the Settlement set forth in the Stipulation is fair, reasonable,   and adequate as to each of the Settling Parties and Current VEREIT Stockholders, and hereby    finally approves the Settlement in all respects and orders the Settling Parties to perform its terms    to the extent the Settling Parties have not already done so.          4.    The Action, all claims contained therein, and any other Released Claims, any    NVSD Released Claims, and any Defendant Parties’ Released Claims, are hereby ordered as fully,    finally, and forever compromised, settled, released, discharged and dismissed on the merits and    with prejudice by virtue of the proceedings herein and this Judgment.  The Settling Parties are to    bear their own costs, except as otherwise provided in the Stipulation.          5.    Upon the Effective Date, VEREIT, Plaintiffs, and each of VEREIT’s stockholders    shall be deemed to have, and by operation of this Judgment shall have, fully, finally, and forever    released, relinquished, and discharged the Released Claims against the Released Persons.     VEREIT, Plaintiffs, and each of VEREIT’s stockholders shall be deemed to have, and by operation    of this Judgment shall have, covenanted not to sue any Released Person with respect to any    Released Claims, and shall be permanently barred and enjoined from instituting, commencing or    prosecuting the Released Claims against the Released Persons except to enforce the releases and    other terms and conditions contained in the Stipulation and/or this Judgment entered pursuant    thereto.                                           2 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 89 of 136         6.    Upon the Effective Date, VEREIT and each of the Released Persons shall be   deemed to have, and by operation of this Judgment shall have, fully, finally, and forever released,   relinquished and discharged each and all of Plaintiffs, their beneficiaries, and Plaintiffs’ Counsel   from any and all Defendant Parties’ Released Claims.  VEREIT and the Released Persons shall be   deemed to have, and by operation of this Judgment shall have, covenanted not to sue Plaintiffs,   their beneficiaries, or Plaintiffs’ Counsel with respect to any claims arising out of, relating to, or   in connection with their institution, prosecution, assertion, settlement, or resolution of the Action   or any Defendant Parties’ Released Claims, and shall be permanently barred and enjoined from   instituting, commencing or prosecuting the Defendant Parties’ Released Claims against Plaintiffs,   their beneficiaries, or Plaintiffs’  Counsel except to enforce the releases and other terms and   conditions contained in the Stipulation and/or this Judgment entered pursuant thereto.         7.    Upon the Effective Date, the Non-VEREIT Settling Defendants shall be deemed to   have, and by operation of this  Judgment shall have, fully, finally, and forever released,   relinquished, and discharged the NVSD Released Claims against each respective Non-VEREIT   Settling Defendant and the VEREIT Released Persons. The Non-VEREIT Settling Defendants   shall be deemed to have, and by operation of this Judgment shall have, covenanted not to sue each   respective Non-VEREIT Settling Defendant and the VEREIT Released Persons with respect to   any NVSD Released Claims, and shall be permanently barred and enjoined from instituting,   commencing or prosecuting the NVSD Released Claims against the VEREIT Released Persons   except to enforce the releases and other terms and conditions contained in the Stipulation and/or   this Judgment entered pursuant thereto.         8.    Notwithstanding Paragraph 7 of this Judgment, in the event that any Derivative   Action other than the Action, or any derivative proceeding filed subsequent to execution of the                                          3 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 90 of 136   Stipulation alleging claims that arise out of, are based upon, or relate to in any way any of the   allegations, acts, transactions, facts, events, matters, occurrences, representations or omissions   involved, set forth, alleged or referred to, in the Derivative Actions or Class Action, is permitted   to proceed against any Non-VEREIT Settling Defendant: (i) VEREIT shall not be released from   any rights of advancement, indemnification, contribution, or any other rights that such Non-  VEREIT Settling Defendant has or may have for any claims, demand or losses (all subject to   meeting applicable laws, requirements, and standards) arising out of such derivative proceeding;   and (ii) GT shall be entitled to receive from VEREIT indemnification for and advancement of   reasonable fees, costs, and expenses incurred or paid by GT in defending such derivative   proceeding, and (subject to meeting applicable laws) amounts paid by GT in settlement of or in   satisfaction of a judgment rendered in such derivative proceeding.         9.    Nothing herein shall in any way impair or restrict the rights of any Settling Party to   enforce the terms of the Supplementary Agreements.         10.   The Court finds that Notice was made in accordance with the Preliminary Approval   Order and provided the best notice practicable under the circumstances to all Persons entitled to   such notice, and said notice fully satisfied the requirements of Federal Rule of Civil Procedure   23.1 and the requirements of due process.         11.   The Court finds that during the course of the Action, the Settling Parties and their   counsel at all times complied with Federal Rule of Civil Procedure 11.         12.   The Court finds that the Fee Award of __________ dollars ($________.00) is fair   and reasonable, in accordance with the Stipulation, and finally approves the Fee Award.                                          4 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 91 of 136         13.   This Judgment, the fact and terms of the Stipulation, including any exhibits attached   thereto, all proceedings in connection with the Settlement, and any act performed or document   executed pursuant to or in furtherance of the Stipulation or the Settlement:         (a)   shall not be offered, received, or used in any way against the Settling Parties as         evidence of, or be deemed to be evidence of, a presumption, concession, or admission by         any of the Settling Parties with respect to the truth of any fact alleged by Plaintiffs or the         validity, or lack thereof, of any claim that has been or could have been asserted in the         Derivative Actions or in any litigation, or the deficiency or infirmity of any defense that         has been or could have been asserted in the Derivative Actions or in any litigation, or of        any fault, wrongdoing, negligence, or liability of any of the Released Persons or VEREIT        Released Persons;        (b)   shall not be offered, received, or used in any way against any of the Released        Persons or VEREIT Released Persons as evidence of, or be deemed to be evidence of, a         presumption, concession, or admission of any fault, misrepresentation or omission with         respect to any statement or written document approved, issued, or made by any Released         Person or VEREIT Released Persons, or against Plaintiffs as evidence of any infirmity in        their claims; or        (c)   shall not be offered, received, or used in any way against any of the Released        Persons or VEREIT Released Persons as evidence of, or be deemed to be evidence of, a         presumption, concession, or admission of any liability, fault, negligence, omission or         wrongdoing, or in any way referred to for any other reason as against the Released Persons         or VEREIT Released Persons, in any arbitration proceeding or other civil, criminal, or         administrative action or proceeding in any court, administrative agency, or other tribunal.                                          5 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 92 of 136         None of this Judgment, the Stipulation, or the Settlement, nor any act performed or         document executed pursuant to or in furtherance thereof, shall be admissible in any        proceeding for any purpose, except to enforce the terms of the Settlement; provided,        however, that the Released Persons and VEREIT Released Persons may refer to the         Settlement, the Stipulation, and the Judgment,  and may file the Stipulation and/or this         Judgment, in any action to effectuate the liability protections granted them thereunder,         including, without limitation, to support a defense or claim based on principles of res         judicata, collateral estoppel, full faith and credit, release, standing, good faith settlement,        judgment bar or reduction or any other theory of claim preclusion or issue preclusion or        similar defense or claim under U.S. federal or state law or foreign law.         14.   Without affecting the finality of this Judgment in any way, the Court hereby retains   continuing jurisdiction over: (a) implementation of the Settlement; and (b) all Settling Parties for   the purpose of construing, enforcing, and administering the Stipulation and this Judgment,   including, if necessary, setting aside and vacating this Judgment, on motion of a Settling Party, to   the extent consistent with and in accordance with the Stipulation if the Effective Date fails to occur   in accordance with the Stipulation.         15.   This Judgment is a final, appealable judgment and should be entered forthwith by   the Clerk in accordance with Federal Rule of Civil Procedure 58.         IT IS SO ORDERED.   DATED:                                       __________________________________________                                         HONORABLE ALVIN K. HELLERSTEIN                                          6 

 

Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 93 of 136             EXHIBIT D                                   42350.00400

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 94 of 136                                                              EXECUTION COPY                             SECONDARY AGREEMENT          This  springing  Secondary  Agreement  (“Secondary  Agreement”),  dated  as  of   September 27, 2019 (the “Effective Date”), is entered into by and between:                  A.    VEREIT, Inc. (“VEREIT”);                   B.    Nicholas  S.  Schorsch  (“Schorsch”);  Peter  M.  Budko  (“Budko”);  William  M.               Kahane  (“Kahane”);  Edward  M.  Weil  (“Weil”);  AR  Capital,  LLC  and ARC               Properties Advisors, LLC (together, the “AR Capital Parties”); Scott J. Bowman;               Brian D. Jones; David Kay; Lisa P. McAlister; Lisa Beeson; Scott P. Sealy, Sr.;               Thomas A. Andruskevich; Leslie D. Michelson; Edward G. Rendell; William G.               Stanley;  Bruce  D.  Frank;  Brian  S.  Block  (“Block”);  and  Grant  Thornton  LLP               (“GT”) (collectively, with all other individuals and entities listed in Paragraph B,               the “Derivative Defendants”).             Each of VEREIT and the Derivative Defendants is referred to as a “Party” and collectively   as the “Parties”.  Although they are not a Party to this Secondary Agreement, each of Joanne   Witchko,  Edward  Froehner,  and  Jeffrey  Turner  as  trustee  for  Michele  Graham  Turner  1995   Revocable Trust (“Witchko Derivative Plaintiffs”), through their undersigned attorneys, approves   of the terms contained herein.                                              RECITALS          As a preamble to this Secondary Agreement, the Parties state as follows:          A.    WHEREAS,  on  September  8,  2019,  the  Parties,  and  the  Witchko  Derivative   Plaintiffs, entered into a binding Memorandum of Understanding reflecting the intent of the Parties   and the Witchko Derivative Plaintiffs to fully and finally resolve all of the claims that have been   or  could  have  been  asserted  on  behalf of VEREIT against the Derivative  Defendants  (the   “Derivative Settlement”), including but not limited to claims that have been or could have been   asserted on behalf of VEREIT against  the  Derivative  Defendants in  (i)  the  consolidated   shareholder derivative actions captioned as Witchko v. Schorsch, et al., No. 1:15-cv-06043-AKH   (the “Witchko Action”), currently pending in the United States District Court for the Southern   District of New York (the “Court”), (ii) the shareholder derivative action filed in the Circuit Court   for  Baltimore  City,  Maryland,  captioned Frampton v. Schorsch, et al., No.  24-C-15-006269,   (iii) the  shareholder  derivative  action  filed  in  the  Supreme  Court  of  the  State  of  New  York,   captioned Fran Kosky Roth IRA v. Schorsch, et al., No. 653093/2016, and (iv) the shareholder   derivative action filed in the United States District Court for the District of Maryland, captioned   Meloche, et al. v. Schorsch, et al.,  No.  1:16-cv-03366-ELH  (collectively,  the  “Derivative   Actions”).          B.    WHEREAS,    the  Parties  and  the  Witchko  Derivative  Plaintiffs  have  contemporaneously herewith submitted to the Court a Stipulation and Agreement of Settlement  (“Stipulation”) seeking a final judgment of the Court resolving the Witchko Action, and the claims   that have been or could have been asserted on behalf of VEREIT against the Derivative Defendants     42350.00200                                         1

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 95 of 136                                                             EXECUTION COPY   in the Derivative Actions, in accordance with the terms and provisions  of  the  Stipulation  (the  “Judgment”);         C.    WHEREAS, recognizing VEREIT’s ability to settle and compromise claims that  have been or could have been asserted in the Derivative Actions (see, e.g., Wolf v. Barkes, 348  F.2d 994 (2d Cir. 1965)), the Parties have entered into this Secondary Agreement to settle and  compromise those claims in the event that the Judgment is reversed or vacated on appeal;          D.    NOW,  THEREFORE,  in  consideration  of  the  mutual  promises,  covenants,  obligations,  agreements,  conditions,  and  undertakings  set  forth  herein,  as  well  as  other  consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending  to be legally bound, hereby agree as follows:                             TERMS AND CONDITIONS          1.    No  Admission.   No  Party  admits  any  factual  or  legal  assertion  that  has  been  advanced  in  the  Derivative  Actions,  and  this  Secondary  Agreement  shall  not  constitute  or  be  deemed an admission by any Party with respect to any factual or legal assertion that has been  advanced in the Derivative Actions.         2.    Class Settlement and Derivative Settlement.  Concurrently with the Derivative  Settlement, VEREIT and certain of the Derivative Defendants have agreed to settle the action  captioned In re American Realty Capital Properties, Inc. Litigation, Civil Action No. 1:15-mc- 00040-AKH (the “Class Action” and related “Class Settlement”).  GT has agreed to contribute  forty-nine million dollars ($49,000,000) to a global settlement to settle the Class Action, as well  as  any  and  all  claims  in  the  Derivative  Actions  (the  “GT  Contribution”).   Certain  Derivative  Defendants, including Schorsch, Budko, Kahane, and Weil (“ARC Individuals”) as well as the AR  Capital Parties (collectively, the “ARC Parties”) have agreed to contribute consideration with a  value of two-hundred and twenty-five million dollars ($225,000,000) (inclusive of the value of  certain operating partnership units in VEREIT Operating Partnership, L.P., and related dividends  previously surrendered by some of the ARC Individuals as part of a settlement with the Securities  and Exchange Commission, which total $31,972,934 in value) to a global settlement to settle the  Class Action, as well as any and all claims in the Derivative Actions (the “ARC Contribution”).   Block has agreed to contribute consideration with a value of twelve million, five hundred thousand  dollars ($12,500,000) to a global settlement to settle the Class Action, as well as any and all claims  in the Derivative Actions (the “Block Contribution”).           3.    Conditions Precedent.                 a.    This Secondary Agreement shall have no force and effect in any respect to                    any Derivative Defendant or VEREIT unless the Court enters the Judgment.               b.    In the event that the Court enters the Judgment, the Secondary Agreement                    shall  have  force  and  effect  with  respect  to  VEREIT  and  any  particular                    Derivative Defendant only if the Judgment is reversed, modified, or vacated                    (in whole or in part) by the United States Court of Appeals for the Second                    Circuit or the Supreme Court of the United States as to VEREIT or as to    42350.00200                                        2

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 96 of 136                                                             EXECUTION COPY                     that  particular  Derivative  Defendant,  who  thereafter  shall  be  an                   “Unresolved Defendant.”  Notwithstanding the foregoing, this Secondary                    Agreement shall have no force and effect with respect to VEREIT or any                    Derivative Defendant if the United States Court of Appeals for the Second                    Circuit or the Supreme Court of the United States reverses, modifies, or                   vacates  provisions  of  the  Judgment  concerning  only  the  Fee  Award  (as                   defined in the Stipulation).              c.    For  the  avoidance  of  doubt,  if  any  of  the  ARC  Parties  becomes  an                   Unresolved  Defendant  then  each  of  the  ARC  Parties  shall  become an                   Unresolved Defendant within the meaning of this Secondary Agreement.        4.    Reimbursement and Payment of Settlement Consideration.                 a.    If the ARC Parties become Unresolved Defendants, the ARC Parties shall                    be  deemed  to  have  been  immediately  reimbursed  by  VEREIT  for  the                    amount of the ARC Contribution, and the ARC Parties shall immediately                    thereafter be deemed to have paid such amounts to VEREIT.  Solely for                    United States federal and applicable state and local income tax purposes,                    any deemed reimbursement and payment pursuant to this Paragraph 4(a)                    shall be treated by the ARC Parties as a refund of the ARC Contribution to                    the  ARC  Parties  in  accordance  with  the  terms  and  provisions  of the                    Stipulation  followed  by  a  payment  by  the  ARC  Parties  to  VEREIT in                    settlement of, and allocable to, the Derivative Actions.               b.    If Block becomes an Unresolved Defendant, Block shall be deemed to have                    been  immediately  reimbursed  by  VEREIT  for  the  amount  of  the  Block                    Contribution, and Block shall immediately thereafter be deemed to have                    paid such amounts to VEREIT.               c.    If GT becomes an Unresolved Defendant, GT shall be deemed to have been                    immediately  reimbursed  by  VEREIT  for  the  amount  of  the  GT                    Contribution, and GT shall immediately thereafter be deemed to have paid                    such amounts to VEREIT.               d.    In the event that any Derivative Action other than the Witchko Action, or                    any derivative proceeding filed subsequent to execution of the Stipulation                    alleging claims that arise out of, are based upon, or relate to in any way any                    of  the  allegations,  acts,  transactions,  facts,  events,  matters,  occurrences,                    representations or omissions involved, set forth, alleged or referred to, in                    the Derivative Actions or the Class Action, is permitted to proceed against                    any  Unresolved  Defendant:  (i) VEREIT  shall  not  be  released  from any                    rights of advancement, indemnification, contribution, or any other rights                    that such Unresolved Defendant has or may have for any claims, demand or                    losses (all subject to meeting applicable laws, requirements, and standards)                    arising out of such derivative proceeding; and (ii) GT shall be entitled to                    receive from VEREIT indemnification for and advancement of reasonable    42350.00200                                        3

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 97 of 136                                                             EXECUTION COPY                     fees,  costs,  and  expenses  incurred  or  paid  by  GT  in  defending  such                    derivative proceeding, and (subject to meeting applicable laws) amounts                    paid by GT in settlement of or in satisfaction of a judgment rendered in such                    derivative proceeding.         5.    Releases.  Upon this Secondary Agreement coming into full force and effect, the  following releases between VEREIT and any Unresolved Defendant (each an “Unresolved Party”  and collectively the “Unresolved Parties”) shall automatically and irrevocably be deemed to be  valid, in full force and effect, and binding on the Unresolved Parties:               a.    Unresolved Defendants Releases.  The Unresolved Defendants shall be        deemed to have fully, finally, and forever released, relinquished, and discharged the NVSD        Released  Claims  (as  defined  in  the  Stipulation)  against  each  respective  Non-VEREIT        Settling Defendant (as defined in the Stipulation) and the VEREIT Released Persons (as        defined  in  the  Stipulation).  The  Unresolved  Defendants  shall  be  deemed  to  have        covenanted not to sue each respective Non-VEREIT Settling Defendant and the VEREIT        Released Persons with respect to any NVSD Released Claims, and shall be permanently        barred  and  enjoined  from  instituting,  commencing  or  prosecuting  the  NVSD  Released        Claims against the VEREIT Released Persons except to enforce the  releases  and other        terms and conditions contained in this Secondary Agreement.               b.    VEREIT Releases.  VEREIT shall be deemed to have fully, finally, and        forever  released,  relinquished, and  discharged  the  Released  Claims  (as  defined  in  the        Stipulation)  against  the  Unresolved  Defendants.   VEREIT  shall  be  deemed  to  have        covenanted not to sue any Unresolved Defendant with respect to any Released Claims, and        shall be permanently barred and enjoined from instituting, commencing or prosecuting the        Released Claims against the Unresolved Defendants except to enforce the releases and        other terms and conditions contained in this Secondary Agreement.               c.    Dismissal.  VEREIT shall promptly seek to have dismissed or otherwise        terminated, to the extent they have not been already, the Derivative Actions.  In the event        that,  subsequent  to  the  execution  of  this  agreement,  any  derivative  proceeding  is  filed        alleging  claims  that  arise  out  of,  are  based  upon,  or  relate  to  in  any  way  any  of  the        allegations,  acts,  transactions,  facts,  events,  matters,  occurrences,  representations  or        omissions involved, set forth, alleged or referred to, in the Derivative Actions or the Class        Action,  VEREIT  shall  promptly  seek  to  have  dismissed  or  otherwise  terminated  such        subsequent derivative proceeding.         6.    Unknown Claims.  The Parties acknowledge that there is a risk that subsequent to  the execution of this Secondary Agreement, a Party may discover, incur, or suffer from claims that  were unknown or unanticipated at the time this Settlement Agreement was executed, including,  without  limitation,  unknown  or  unanticipated  claims  which,  if  known,  may  have  materially  affected a Party’s decision to execute this Settlement Agreement (the “Unknown Claims”).  The  Parties acknowledge that, subject to any exceptions set forth in this Secondary Agreement, they  are  assuming  the  risk  of  such  Unknown  Claims.   The  Parties  expressly  waive  the  benefits  of  California Civil Code § 1542, which provides:    42350.00200                                        4

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 98 of 136                                                             EXECUTION COPY         A general release does not extend to claims that the creditor or releasing party does not        know or suspect to exist in his or her favor at the time of executing the release and that, if        known by him or her, would have materially affected his or her settlement with the debtor        or released party.   The Parties likewise expressly waive the benefits conferred by any law or principle of common  law that, similar or equivalent to California Civil Code § 1542, preserves claims not known or  suspected to exist in their favor which, if known or anticipated, would have materially affected the  execution of this Secondary Agreement.  The Parties hereby represent that they are not aware of  any such Unknown Claims at this time, and the Parties agree that this representation is a material  term of this release of Unknown Claims.         7.    Survival.  Anything else in this Secondary Agreement notwithstanding, the Parties  do not release any Party from any claims related to the enforcement of this Secondary Agreement.         8.    Confidentiality.  The Parties agree that there will be no public announcements or  disclosure regarding this Secondary Agreement until its terms and contents are disclosed to the  Court.         9.    Binding Effect.  The Parties intend for this Secondary Agreement to be binding to  the fullest extent allowable under law.          10.    Headings.  The headings set forth in this Secondary Agreement have been inserted  for  the  convenience  of  reference  only.   Such  headings  shall  not be considered a part of this  Secondary Agreement, and neither shall they limit, modify, or affect in any way the meaning or  interpretation of this Secondary Agreement.         11.   Severability.  If any provision of this Secondary Agreement, other than Paragraphs  1 through 7, is determined by a final, non-appealable judgment of a court of competent jurisdiction  to  be illegal,  invalid,  or  unenforceable,  such  determination shall not affect the balance of this  Secondary  Agreement,  which  shall  remain  in  full  force  and  effect  as  such  illegal,  invalid,  or  unenforceable provision shall be deemed severable.  If one or more of Paragraphs 1 through 7 is  determined by a final, non-appealable judgment of a court of competent jurisdiction to be illegal,  invalid, or unenforceable, Paragraph 12 will remain in full force and effect.         12.   Impact of Invalidity.  In the event that this Secondary Agreement is determined  by a final, non-appealable judgment of a court of competent jurisdiction to be illegal, invalid, or  unenforceable in its entirety or as to any of Paragraphs 1 through 7, then:               a.    VEREIT  shall  deposit  one  hundred  ninety-three  million,  twenty-seven                    thousand, and sixty-six dollars ($193,027,066) into an escrow account that                    (along  with  interest  earned  thereon)  shall  remain  under  VEREIT’s  sole                    possession,  custody,  and  control pending  the  resolution  of  any litigation                    between any of the ARC Parties and VEREIT;               b.    VEREIT  shall  deposit  twelve  million,  five  hundred  thousand  dollars                    ($12,500,000)  into  an  escrow  account  that  (along  with  interest earned                    thereon)  shall  remain  under  VEREIT’s  sole  possession,  custody, and    42350.00200                                        5

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 99 of 136                                                             EXECUTION COPY                     control  pending  the  resolution of  any  litigation  between  Block and                    VEREIT;               c.    VEREIT  shall  deposit  forty-nine  million  dollars  ($49,000,000)  into  an                    escrow account that (along with interest earned thereon) shall remain under                    VEREIT’s sole possession, custody, and control pending the resolution of                    any litigation between GT and VEREIT; and               d.    any releases provided by VEREIT to Derivative Defendants, any releases                    provided by Derivative Defendants to VEREIT, and any releases provided                    by Derivative Defendants to each other, shall be null and void.  For the                    avoidance of doubt, VEREIT shall be entitled to pursue any and all claims                    against the Derivative Defendants, including but not limited to, claims for                    contribution  in  respect  of  the  Class  Settlement,  and  the  Derivative                   Defendants  shall  be  entitled  to  assert  any  rights  to  indemnification  or                   advancement of fees that they would have otherwise been entitled to assert,                   and  GT  shall  be  entitled  to  pursue  its  claims.   Nothing  in  this                    Paragraph 12(d) shall affect the terms agreed to in any separate agreement                    by any of the Parties to the Stipulation.         13.   Drafter.  None of the Parties to this Secondary Agreement shall be considered to  be the drafter of this Settlement Agreement or any of its provisions for the purpose of any statute,  case law, or rule of interpretation or construction that would or might cause any provision to be  construed against the drafter.         14.   Governing Law.  This Secondary Agreement is governed by the laws of the State  of New York, without regard to any principles of conflicts of law.         15.   Disputes  Regarding  the  Secondary  Agreement.   Any  dispute  regarding  the  interpretation or implementation or operation of this Secondary Agreement shall be decided by the  Hon.  Layn  Phillips,  acting  as  arbitrator,  whose  determinations  shall  be  binding  and  non- appealable.         16.   Counterparts.  This Secondary Agreement may be executed in counterparts and,  as so executed, shall constitute one and the same agreement, and shall be binding on the Parties.   A copy, PDF, or facsimile of a signature on this Settlement Agreement shall have the same force  and effect as an original signature.                               [Execution Pages Follow]        42350.00200                                        6

 

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  Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 106 of 136                                                                   EXECUTION COPY  EXECUTED    AND AGREED:   PAUL, WEISS,   R[FK[ND,  WHARTON     &     MILBANK   LLP. on behalf of VEREIT  GARRISON LLP, on behalf   of Nicholas S.  Schorsch    KELLOGG, HANSEN,  TODD,    FIGEL  &        KIRKLAND    & ELLIS LLP, on behalf of  FREDERICK, P.L.L.C., ou behalf of AR       David Kay  Capital, LLC, ARC Properties Advisors, LLC,  Scott  J. Bowman, Peter M. Budko, Brian D.  Jones, William M. Kahane, and Edward M.  Weil    STEPTOE   & JOHNSON    LLP, on behalf of   PETRILLO  KLEIN  & BOXER LLP,  on behalf  Brian Block                                of Lisa Beeson    Ry:    MORRIS, MANNING     & MARTIN   LLP, ON     WEIL, GOTSHAL     & MANGES LLP,      ON  behalf of Scott P. Sealy, Sr.              behalf of Thomas A. Andruskevich, Leslie D,                                             Michelsoa, Edward G. Rendell, William G.                                             Stanley,  and Bruce D. Frank   By                                         By:   ZUCKERMAN  SPAEDERLLP, onbehalf of         SIDLEY AUSTIN    LLP, on behalf of Grant  Lisa McAlister                             Thornton LLP    By:                                            7

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 107 of 136                                                             EXECUTION COPY   EXECUTED AND AGREED:  PAUL,  WEISS,  RIFKIND,  WHARTON  &      MILBANK LLP, on behalf of VEREIT  GARRISON  LLP,  on  behalf  of  Nicholas  S.  Schorsch   By:                                      By:   KELLOGG, HANSEN, TODD, FIGEL &           KIRKLAND  &  ELLIS   LLP,  on  behalf  of  FREDERICK,  P.L.L.C.,  on  behalf  of  AR David Kay  Capital, LLC, ARC Properties Advisors, LLC,  Scott J. Bowman, Peter M. Budko, Brian D.  Jones,  William  M.  Kahane,  and  Edward  M.  Weil   By:                                      By:   STEPTOE  &  JOHNSON  LLP,  on  behalf  of PETRILLO KLEIN & BOXER LLP, on behalf  Brian Block                              of Lisa Beeson    By:                                      By:   MORRIS, MANNING & MARTIN LLP, on         WEIL,  GOTSHAL  &  MANGES  LLP,  on  behalf of Scott P. Sealy, Sr.            behalf of Thomas A. Andruskevich, Leslie D.                                           Michelson,  Edward  G.  Rendell,  William  G.                                           Stanley, and Bruce D. Frank   By:                                      By:   ZUCKERMAN SPAEDER LLP, on behalf of      SIDLEY  AUSTIN  LLP,  on  behalf  of  Grant  Lisa McAlister                           Thornton LLP    By: ___________________________          By:    42350.00200                           7

 

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Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 111 of 136             EXHIBIT E                                   42350.00400

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 112 of 136                                                               DATED: 8/23/2019                                                              EXECUTION COPY      AGREEMENT REGARDING SETTLEMENT, CONTRIBUTION, AND RELEASE          This binding Agreement Regarding Settlement, Contribution, and Release (the “Settlement   Agreement”) is made and entered into between and among (i) VEREIT, Inc., formerly known as   American  Realty  Capital  Properties,  Inc.,  and  VEREIT  Operating Partnership,  L.P.,  formerly   known as ARC Properties Operating Partnership, L.P. (“VEREIT OP” and, with VEREIT, Inc.,   collectively “VEREIT”), (ii) Nicholas S. Schorsch, Shelley Schorsch, Peter M. Budko, William   K. Kahane, Edward M. Weil, AR Capital, LLC (“AR Capital”), and ARC Properties Advisors,   LLC (together, the “AR Capital Parties”).  Each of the foregoing individually is referred to as a   “Party” and collectively they are referred to as the “Parties”.                                             RECITALS            WHEREAS, many of the Parties are parties to one or all of (i) the action captioned In re   American Realty Capital Properties, Inc. Litigation,  Civil  Action  No.  1:15-mc-00040-AKH   (S.D.N.Y.)  (the  “Class  Action”),  currently  pending  in  the  United  States  District  Court  for  the   Southern  District  of  New  York  (the  “Court”),  and  (ii)  the  consolidated  actions  captioned  as   Witchko v. Schorsch, No. 1:15-cv-06043-AKH (S.D.N.Y.), currently pending in the Court, the  action captioned as Frampton v. Schorsch, No. 24-C-15-006269 (Md. Cir. Ct.), currently pending  in the Circuit Court for Baltimore City, Maryland, the action captioned as Fran Kosky Roth IRA v.  Schorsch, No. 653093/2016 (N.Y. Sup. Ct.), currently pending in the Supreme Court of the State  of New York, and the action captioned as Meloche v. Schorsch, No. 1:16-cv-03366-ELH (D. Md.),  currently pending in the United States District Court for the District of Maryland (together, the  “Derivative Actions” and with the Class Action, the “Actions”);                  WHEREAS, with the exception of the matters specifically identified and described herein,   the Parties wish to fully and finally resolve all claims, demands, losses, rights, and causes of action   of any nature whatsoever that (i) VEREIT has against any of the AR Capital Parties, and (ii) that   any  of  the  AR  Capital  Parties  has  against  VEREIT,  including  but  not  limited  to,  all  claims,   demands, losses, rights, and causes of action of any nature whatsoever that arise out of, are based   upon,  or  relate  to  in  any  way  any of  the  allegations,  acts,  transactions,  facts,  events,  matters,   occurrences, representations or omissions involved, set forth, alleged or referred to, in the Actions;                   WHEREAS, the Parties have not reached agreement with the plaintiffs in the Derivative   Actions,  and  final  consummation  of the agreement set forth herein  is  contingent  upon  a  final   resolution of the Derivative Actions being achieved; and                  WHEREAS, the Parties have reached agreement on the terms and conditions for which   the AR Capital Parties would contribute to a fund to settle the Actions (“Settlement Fund”).                  NOW THEREFORE, in consideration of the mutual promises, covenants, obligations,   agreements,  conditions,  and  undertakings  set  forth  herein,  as  well  as  other  considerations,  the   receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally   bound, hereby agree as follows:    

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 113 of 136                                                                                                                                             EXECUTION COPY                               TERMS AND CONDITIONS          1.    AR Capital Settlement Amount.  The Parties agree that the AR Capital Parties  collectively shall contribute $225,000,000 to the Settlement Fund (the “AR Capital Settlement  Amount”), which amount shall represent the AR Capital Parties’ sole contribution to the settlement  of  the  Actions.   VEREIT  acknowledges  that  the  AR  Capital  Parties  already  have  funded  $31,972,934 of the AR Capital Settlement Amount.  The balance of the AR Capital Settlement  Amount will be paid by the AR Capital Parties at the same time that VEREIT provides funds to  settle the Class Action pursuant to an agreement to be reached by the plaintiffs in the Class Action,  VEREIT, and the AR Capital Parties (“Plaintiffs’ Settlement Agreement”).         2.    Source of Funds.  The AR Capital Parties may fund the AR Capital Settlement  Amount  with  any  combination,  at  their  election,  of  (i)  cash,  (ii)  surrender  and  assignment  to  VEREIT of any of the 19,644,581 operating partnership units in VEREIT OP (“OP Units”) owned  or controlled by the AR Capital Parties, (iii) dividends/distributions on account of the OP Units,  and (iv) interest on dividends/distributions (in an amount no greater than the limit in Paragraph 5  of this Settlement Agreement).         3.    Valuation of OP Units.  To the extent that any of the AR Capital Parties fund the  AR Capital Settlement Amount with OP Units as described in clause (ii) of Paragraph 2, each OP  Unit will be valued based on the volume weighted average price of VEREIT common stock on the  fifth trading day after the agreement to settle the Class Action is publicly announced.  No later  than three (3) days after such trading day, the AR Capital Parties shall provide notice to VEREIT  of the number of OP Units, amount of dividends/distributions, amount of interest, and amount of  cash that they will elect to use to fund the AR Capital Settlement Amount in accordance with  Paragraph 2.         4.    Valuation of Dividends/Distributions.  The Parties agree that the value of the  dividends/distributions referred to in clause (iii) of Paragraph 2 is $42,684,838 as of the date of  execution of this Settlement Agreement, and that such value is subject to upward adjustment for  dividends/distributions  on  the  OP  Units  designated  as  being  used  to  fund  the  AR  Capital  Settlement Amount based on any additional dividends/distributions declared by VEREIT to its  common shareholders for which the record date occurs before the date of funding as described in  Paragraph 1.  For the avoidance of doubt, this upward adjustment for dividends/distributions on  the OP Units designated as being used to fund the AR Capital Settlement Amount will include the  dividend/distribution announced by VEREIT on August 5, 2019, scheduled to be paid on October  15, 2019.         5.    Valuation  of  Interest.  The Parties agree that the value of interest on  dividends/distributions referred to in clause (iv) of Paragraph 2 is $2,500,000.         6.    Side A Insurance Proceeds.                 a.    VEREIT  acknowledges  that  the  AR  Capital  Parties  will  seek  to  recover        proceeds under the following excess difference in conditions insurance policies covering a        policy period from February 7, 2014 through February 7, 2015 (the “Side A Policies”): (i)        Westchester Fire Insurance Company Policy No. G243714402002, (ii) STARR Policy No.    42350.0020042350.00200                                        2

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 114 of 136                                                                                                                                             EXECUTION COPY           SISIXFL21156814,  (iii)  RSUI  Policy  No.  NHS655965,  and  (iv)  AXIS  Policy  No.        MNH779259/01/2014.  VEREIT will cooperate fully with the AR Capital Parties in their        pursuit of coverage under the Side A Policies, including providing written confirmation as       soon as practicable to the Side A insurers which parties VEREIT does not believe it has a       duty to indemnify.  The AR Capital Parties shall be entitled to obtain such proceeds under       the Side A Policies (in an allocation to be determined by the AR Capital Parties), if and       only if, in the event that the Actions are settled, the AR Capital Parties have used their best       efforts to obtain for VEREIT from the insurance carriers who issued the Side A Policies,       full and complete releases from all claims, demands, losses, rights, and causes of action of        any nature whatsoever that arise out of, are based upon, or relate to in any way any of the        Side A Policies, that could potentially be brought against VEREIT.                 b.    In  the  event  the  AR  Capital  Parties  cannot  obtain  the  settlement  and/or       release contemplated in Paragraph 6.a, and VEREIT is made a party or threatened to be       made a party to any action by the insurers that issued or hold the Side A Policies (or anyone       acting at their direction, collectively the “Side A insurers”) or in connection with any third        party discovery to which VEREIT is subject in connection with the litigation between the        Side A Insurers and the AR Capital Parties:                     i.    the AR Capital Parties, jointly and severally, agree to indemnify and              hold harmless VEREIT and VEREIT’s directors, officers, employees, and agents              (collectively, the “Indemnitees”) from and against any losses, claims, damages or              liabilities  (including,  without  limitation,  advancement  and  indemnification  of             reasonable  legal  fees  and  other  expenses  incurred  in  connection  with  any  suit,             action or proceeding or any claim asserted as such fees and expenses are incurred,             joint or several, to which any of the Indemnitees may become subject, insofar as             such losses, claims, damages or liabilities) arising out of or are based upon any             action related to the Side A Policies;                    ii.   at their election, the AR Capital Parties may assume control of the             defense against any such losses, claims, damages or liabilities.  If the AR Capital             Parties assume control of the defense of such claim, VEREIT shall have the right             to  employ  separate  counsel  (selected  in  its  reasonable  discretion subject to             subsection (iv) below) and to participate in the defense thereof and have fees of             separate counsel advanced by the AR Capital Parties, if (i) the AR Capital Parties             have failed diligently to pursue or defend such claim or (ii) if the AR Capital Parties             counsel  determines  that  a  conflict  of  interest  has  arisen  that requires  separate             representation.  If VEREIT believes, contrary to the view of the AR Capital Parties’              counsel, that a conflict of interest has arisen, the General Counsel of VEREIT and              the Deputy General Counsel of AR Global shall meet and confer to resolve any              disagreement.   If  they  are  unable  to  resolve  such  disagreement,  VEREIT  may              invoke the dispute resolution procedures of Paragraph 21 for binding arbitration;              the prevailing party attorneys’ fees provision of Paragraph 22 shall apply to any              such arbitration; and                     iii.  in the event the AR Capital Parties do not assume control of the              defense of such claim, the AR Capital Parties will advance all costs and expenses    42350.0020042350.00200                                        3

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 115 of 136                                                                                                                                             EXECUTION COPY                 (including, without limitation, legal fees and other expenses incurred in connection              with any suit, action or proceeding) incurred by any of the Indemnitees arising out              of or related to the foregoing; and                     iv.   if VEREIT retains as outside counsel Milbank LLP and seeks any              indemnification or advancement of reasonable attorneys’ fees as provided for under              Paragraph  6(b),  VEREIT  agrees  that  it  will  not  seek  indemnification  or              advancement  at  a  rate  that  exceeds  a  ten  (10)  %  discount  on  Milbank  LLP’s              standard rates.               c.    VEREIT shall have no obligation to advance to the AR Capital Parties, or        to indemnify the AR Capital Parties for, any fees or expenses, legal or otherwise, incurred        in connection with litigating against, or negotiating or settling with, the insurers that issued        the Side A Policies.               d.    Each of the AR Capital Parties represent and warrant that, as of the date of        this  Agreement,  other  than  as  set  forth  in  this  Agreement, they are not aware of any        threatened or pending action by any insurer against VEREIT relating to the Actions.         7.     SEC Disgorgement or Penalties.  For the avoidance of doubt, to the extent that  VEREIT recovers or receives any of the disgorgement or penalty amounts paid by the AR Capital  Parties or Brian Block to the U.S. Securities and Exchange Commission (“SEC”) in connection  with the matter captioned SEC v. AR Capital, LLC, Nicholas Schorsch and Brian Block, 19 Civ.  6603 (S.D.N.Y.) (the “SEC Action”), such amounts are intended to be for the benefit of VEREIT  only and will not be credited in any way towards the obligation of the AR Capital Parties to fund  the AR Capital Settlement Amount.  This Paragraph 7 does not apply to the OP Units already  surrendered to VEREIT with the value of $31,972,934, as referenced in Paragraph 1 hereof.         8.    ARCT III & ARCT IV Insurance.  For the avoidance of doubt, the Parties agree  that, with respect to amounts received going forward from XL Specialty Insurance Company under  Management Liability and Company Reimbursement Insurance Policy Numbers ELU125019-12  and ELU127059-12 issued to American Realty Capital Trust III, Inc., and American Realty Capital  Trust IV, Inc., respectively (the “ARCT III/IV Insurance”):               a. the AR Capital Parties will receive the first $2,270,887.52 of any such amounts,        such that the amount of $2,270,887.52 to be received by the AR Capital Parties and the        amount of $567,721.88 previously received by VEREIT, which together will comprise the        first $2,838,609.40 paid out of the ARCT III/IV Insurance, will have been split between        the Parties, with 80% going to the AR Capital Parties and 20% going to VEREIT; and               b. the Parties will split all amounts received from the ARCT III/IV Insurance above        and beyond this initial $2,838,609.40, with 80% of such amounts going to the AR Capital        Parties and 20% of such amounts going to VEREIT.    42350.0020042350.00200                                        4

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 116 of 136                                                                                                                                               EXECUTION COPY             9.    Conditions Precedent.  In the event that either of the following two conditions:                i.   that the Court shall have finally approved settlement of the Class Action         pursuant to Federal Rule of Civil Procedure 23, with such approval becoming final after         exhaustion of any appeals or the time for such appeals having expired; or                ii.  that  the  courts  shall  have  finally  approved  resolutions  of the  Derivative        Actions  pursuant  to  Federal  Rule  of  Civil  Procedure  23.1  or  applicable  state  laws  and        procedures, or otherwise have dismissed the Derivative Actions, with such orders resolving        the Derivative Actions becoming final after exhaustion of any appeals or the time for such        appeals having expired;   are not met and are no longer capable of being met, then the Settlement Agreement shall be null  and void and of no force and effect in any respect except that the Parties will revert to the original  positions that they were in before any amounts transferred in Paragraph 2 above or Paragraph 13  below.  The Parties agree to use reasonable efforts to ensure that any exchange provides each Party  with value equivalent to that it possessed at the time of execution of this Settlement Agreement,  and that any disputes over value will be subject to binding arbitration before Layn Philips.         10.   Releases;  Unknown  Claims.   Upon  the  occurrence  of  all  of  the  conditions   precedent set forth in this Settlement Agreement (including those in Paragraph 9), the following   releases shall automatically and irrevocably be deemed to be valid, in full force and effect, and   binding on the Parties:                a.    AR  Capital  Parties  Releases.   The  AR  Capital  Parties,  on  behalf  of         themselves and their descendants, successors, heirs, legatees, devisees or trusts or family         limited partnerships created for the benefit of any of the foregoing, as well as on behalf of        the  AR  Capital  Parties’  parent  and  subsidiary  entities,  and  any  of  the  aforementioned        parties’ directors, officers, employees, agents, attorneys, advisors, and the successors and        assigns  of  each  of  the  foregoing  persons  and  entities  (collectively,  the  “AR  Capital         Released Parties”) hereby fully, finally, and forever compromise, settle, release, resolve,         relinquish, waive, and discharge VEREIT and VEREIT’s parent and subsidiary entities,         and each of their respective current and former shareholders, directors, officers, employees,         agents, auditors, accountants, attorneys, advisors and underwriters, and the successors and        assigns of each of the foregoing persons and entities (collectively, the “VEREIT Released         Parties”), from and against any and all claims, causes of action, liabilities, remedies, losses,         or obligations of every nature and description, whether known or unknown, whether or not         inchoate, whether arising under federal, state, common or foreign law, whether class or        individual in nature that the AR Capital Released Parties have or might have against any        of  the  VEREIT  Released  Parties,  including,  but  not  limited  to, all  rights,  claims,  or        obligations arising under (i) the Conformed Articles of Amendment and Restatement for        American Realty Capital Properties, Inc., (ii) the Bylaws of American  Realty  Capital        Properties, Inc., (iii) the Third Amended and Restated Agreement of Limited Partnership        of  ARC  Properties  Operating  Partnership,  L.P.,  (iv)  the  indemnification  agreements        between VEREIT, on the one hand, and the individual AR Capital Parties, on the other        hand,  (v)  the  employment  agreements  between  VEREIT,  on  the  one hand,  and  the        individual  AR  Capital  Parties,  on  the  other  hand,  (vi)  the  Amended  and  Restated     42350.0020042350.00200                                         5

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 117 of 136                                                                                                                                             EXECUTION COPY           Management  Agreement  by  and  between  American  Realty Capital  Properties,  Inc.  and        ARC  Properties  Advisors,  LLC,  dated  as  of  February  28,  2013  (the  “Management        Agreement”),  (vii)  the  Acquisition  and  Capital  Services  Agreement  by  and  between        American Realty Capital Properties, Inc. and American Realty Capital II, LLC, dated as of        September  6,  2011  (the  “Services  Agreement”),  (viii)  any  successor,  predecessor,  or        amended  contracts,  or  any  other  contracts,  agreements,  or  other  legally  operative        documents, and (ix) Maryland, Delaware, or New York state law.  Notwithstanding the        foregoing, the AR Capital Released Parties do not release any rights to advancement or        indemnification, whether under any prior written agreements with VEREIT including the        foregoing  (i)  through  (ix)  or  under  applicable  law,  for  any  claims,  demands,  losses  or        proceedings that arise out of, are based upon, or relate to in any way the allegations, acts,        transactions, facts, events, matters, occurrences, representations or omissions involved, set        forth, alleged or referred to, in the Actions, including but not limited to any claims asserted        or threatened to be asserted by an investor who elects not to participate in the settlement of        the Class Action or is not a member of the settlement class, including but not limited to the        claims asserted in the matters of Jet Capital Master Fund, L.P. v. American Realty Capital        Properties, Inc.,  No.  15  Civ.  307  (S.D.N.Y.)  and Lakewood Capital Partners, L.P. v.       American Realty Capital Properties, Inc., Index No. 653676-2019 (N.Y. Sup. Ct.) (the Jet        Capital and Lakewood actions, collectively, the “Opt-Out Actions”), and VEREIT will not        seek  any  separate  contribution  from  the  AR  Capital  Released  Parties  in  any  future        settlements of any such matters.  Each of the AR Capital Parties represent and warrant that,        as of the date of this Agreement, other than the Opt-Out Actions, they have not been sued        in any action, and they are not aware of any threatened action or pending investigation that        is unknown to VEREIT, that could give rise to advancement or indemnification under the        prior  sentence.   For  the  avoidance  of  doubt,  the  AR  Capital  Parties  agree  not  to  seek        indemnification or advancement for any action that relates predominantly to RCS Capital        Corporation,  including  without  limitation,  the  action  captioned RCS Creditor Trust v.        Schorsch et al., C.A. No. 2017-0178-SG (Del. Ch.).  The Parties also agree that unless and        until the AR Capital Parties obtain the release for VEREIT from the insurers that issued        the Side A Policies as contemplated in Paragraph 6.a, the AR Capital Parties’ rights to        indemnification (if any) for amounts paid out under the Side A Policies remain in full force        and effect, including, but not limited to, any rights of subrogation granted to the insurers        that issued the Side A Policies.  The Parties further agree that no release in this clause or        any other provision of this Settlement Agreement will limit the AR Capital Parties rights        to enforce Paragraphs 12 and 13 of this Settlement Agreement.               b.    VEREIT Releases.  VEREIT, on behalf of themselves and their parent and        subsidiary entities, and the successors and assigns of each of the foregoing persons and        entities (collectively, the “VEREIT Releasing Parties”) hereby fully, finally, and forever        compromise,  settle,  release,  resolve,  relinquish,  waive,  and  discharge  the  AR  Capital        Released Parties (as defined above) from and against any and all claims, causes of action,        liabilities, remedies, losses, or obligations of every nature and description, whether known        or unknown, whether or not inchoate, whether arising under federal, state, common or        foreign law, whether class or individual in nature that the VEREIT Releasing Parties have        or might have against any of the AR Capital Released Parties.  For the avoidance of any        doubt, pursuant to the foregoing VEREIT fully, finally and forever releases any rights,    42350.0020042350.00200                                        6

 

     Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 118 of 136                                                                                                                                               EXECUTION COPY             remedies, claims or causes of action related to the Subject Shares, as defined in Paragraph         9 of the Schorsch Agreement, dated December 12, 2014.                c.    Unknown Claims.  The Parties hereto acknowledge that there is a risk that         subsequent to the execution of this Settlement Agreement, a Party may discover, incur, or         suffer  from  claims  which  were  unknown  or  unanticipated  at  the  time  this  Settlement         Agreement was executed, including, without limitation, unknown or unanticipated claims         which, if known, may have materially affected a Party’s decision to execute this Settlement         Agreement (the “Unknown Claims”).  The Parties acknowledge that, subject to exceptions         set forth in the above clauses of this paragraph, they are assuming the risk of such Unknown         Claims.  The Parties expressly waive the benefits of any law that preserves claims not         known  or  suspected  to exist  in  their  favor  which,  if  known  or anticipated,  would  have         materially  affected  the  execution  of  this  Settlement  Agreement.  The Parties hereby         represent that they are not aware of any such Unknown Claims at this time, and the Parties         agree that this representation is a material term of this release of Unknown Claims.               d.    Bar Order.  VEREIT hereby agrees that, in connection with any resolution         of the Class Action involving entry of a bar order under the Private Securities Litigation         Reform Act or other applicable law, it will not seek any releases of claims against the AR         Capital Releasing Parties that are broader in scope than the releases set forth in subsection         (a) of this Paragraph.                e.    Survival.  Anything else in this Settlement Agreement notwithstanding, the         Parties  do  not  release  any  Party  from  any  claims  related  to  the  enforcement  of  this         Settlement Agreement.          11.   Covenant Not to Sue.  The AR Capital Released Parties covenant and agree not to   bring or maintain any claim against the VEREIT Releasing Parties that is released by Paragraph   10 of this Settlement Agreement.  The VEREIT Releasing Parties covenant and agree not to bring   or maintain any claim against the AR Capital Released Parties that is released by Paragraph 10 of   this Settlement Agreement.          12.   Fitracks.  The Parties agree that they will continue to comply with the orders of   the Delaware Court in the matter of Edward M. Weil v. VEREIT Operating Partnership, L.P., No.   CA 02017-0613-JTL, regarding fees incurred by counsel to the AR Capital Parties, including any   fees incurred through the date on which the conditions of Paragraph 9 of this Settlement Agreement   are met, but only for fees incurred (i) in connection with the Actions until the date on which the   conditions of Paragraph 9 of this Settlement Agreement are met, (ii) in connection with the Opt-  Out  Actions  until  such  time  as  resolution  of  the  Opt-Out  Actions  is  completed,  and  (iii)  in  connection with any newly filed action contemplated by the continuing indemnity set forth in  Paragraph 10.a.         13.   Sources Not Used to Fund Settlement.                a.    OP Units.  With respect to any existing OP Units held by the AR Capital         Released Parties not used by the AR Capital Parties to fund the AR Capital Settlement         Amount  (the  “Remaining  OP  Units”),  the  Parties  agree  that  VEREIT  will  redeem  the     42350.0020042350.00200                                         7

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 119 of 136                                                                                                                                             EXECUTION COPY           Remaining OP Units for cash or stock, at the election of VEREIT as set forth herein.  For        Remaining OP Units redeemed for cash, VEREIT will pay to the AR Capital Parties cash,        at the per-unit value as determined by the formula provided in Paragraph 3, on the date of        funding as described in Paragraph 1.  For Remaining OP Units redeemed  for common        stock, VEREIT will take the steps necessary to convert the OP Units and issue the common        stock  to  the  AR  Capital  Parties  on  the  later  of  (i)  the  date  of  funding  as  described  in        Paragraph  1  or  (ii)  the  first  business  day  following  January  1,  2020.   The  Parties  will        cooperate to agree upon the necessary and appropriate documentation to effectuate any        such  redemption,  including  any  redemption  notice  in  accordance with  the  Limited        Partnership Agreement of VEREIT Operating Partnership.               b.    Dividends/Distributions.  VEREIT agrees that to the extent any        dividends/distributions identified in Paragraph 2(iii) are not used by the AR Capital Parties        to fund the AR Capital Settlement Amount (the “Remaining Dividends/Distributions”),        such Remaining Dividends/Distributions will be paid to the AR Capital Parties on the date        of  funding  as  described  in  Paragraph  1.   The  value  of  the  Remaining        Dividends/Distributions is subject to upward adjustment for dividends/distributions on the        Remaining OP Units based on any additional dividends/distributions declared by VEREIT        to its common shareholders for which the record date occurs before the date of funding as       described in Paragraph 1.              c.    Interest.  VEREIT agrees that to the extent any interest is not used by the        AR Capital Parties to fund the AR Capital Settlement Amount (the “Remaining Interest”),        such Remaining Interest will be paid to the AR Capital Parties on the date of funding as        described in Paragraph 1.               d.    No  Defenses.   VEREIT  hereby  waives  any  argument  for  avoiding        compliance with the terms of this Paragraph 13 based on any claims or causes of actions        that were or could have been asserted in the Actions, including but not limited to any claims        for contribution, cross-claims, or claims that might have been brought by plaintiffs in the        Derivative Actions.         14.   Non-Disparagement.  Neither VEREIT nor the AR Capital Parties shall (i) make  any statement or comment which disparages, denigrates, impugns, or discredits any Party hereto,  or its business skills, practices, procedures or policies, relations with past or present employees, or  compliance or non-compliance with any laws or regulations, or (ii) act in any manner which is  intended to or does damage to business or personal reputation of any Party hereto; provided, that  nothing in clause (ii) shall limit any Party from conducting its business and affairs in the ordinary  course  even  if  such  ordinary  course  activity  has  or  may  have  an  adverse  effect  on  any  Party.  Nothing contained herein shall prohibit  any Party  from giving a  truthful response  to any  duly  served subpoena or discovery request in a pending litigation.  In addition, nothing contained herein  shall  prohibit  any  Party  from  making  truthful  statements  in  connection  with  any  litigation  concerning  the  Side  A  Policies  referred  to  in  Paragraph  6  hereof,  or  in  connection  with  any  communications with any regulator or government agency, or to any court in connection with any  matter, including the SEC Action.    42350.0020042350.00200                                        8

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 120 of 136                                                                                                                                             EXECUTION COPY           15.   Requirement to Reach Agreement in the Actions.  Notwithstanding any other  provision in this Settlement Agreement, unless agreement is reached within 15 calendar days of  the execution of this Settlement Agreement by all of the Parties to this Settlement Agreement on  the one hand, with all of the plaintiffs in the Actions on the other hand, to resolve all of the Actions  to the full satisfaction of all of the Parties to this Settlement Agreement, subject to agreement for  extensions of this period in writing among the Parties, then this Settlement Agreement will be  deemed terminated, will be null and void and will have no further force or effect.         16.   Binding Effect.  This Settlement Agreement, including the releases herein, shall  be binding upon and inure to the benefit of the Parties and their respective legal representatives,  successors, and assigns, and the other specified persons who are the beneficiaries of the releases.   Notwithstanding the foregoing, the terms of this Settlement Agreement may be enforced solely by  the  Parties  or  any  legal  representative,  successor,  or  assignee  of  any  Party  to  this  Settlement  Agreement, including by such person on behalf of any released person or entity that is not a party  to this Settlement Agreement.         17.   Entire  Agreement;  Written  Modifications  Only.   This  Settlement  Agreement  constitutes the entire agreement and understanding of the Parties relating to the subject matter  described herein, and shall supersede any prior and contemporaneous undertakings of the Parties  in  connection  therewith.   No  Party  has  made  any  representation or  warranty  to  another  Party  concerning the subject matter of the Settlement Agreement, except as expressly set forth herein.  This Settlement Agreement may not be altered, amended, or modified in any respect whatsoever,  except by a writing duly executed by the Parties.  This provision cannot be waived by subsequent  parol agreement or any actions or conduct of the Parties.         18.   Knowledge, Non-Reliance, and Assumption of Risk.  Each Party acknowledges,  represents  and  warrants  that  it  has  read  the  Settlement  Agreement  and  has  consulted  with  its  attorneys concerning the terms, conditions, and consequences of the Settlement Agreement, and,  based  on  that  review,  fully  comprehends  the  legal  and  practical  import  of  the  Settlement  Agreement.  Each Party further acknowledges and represents that such Party is entering into the  Settlement  Agreement  voluntarily  and  in  reliance  upon  its  respective  judgment,  belief,  and  knowledge of the Settlement Agreement, and on the advice of its own selected attorneys.         19.   Severability.  If any provision of this Settlement Agreement, other than Paragraphs  1  through  15,  is  determined  by  a  final,  non-appealable  judgment  of  a  court  of  competent  jurisdiction to be illegal, invalid, or unenforceable, such determination shall not affect the balance  of this Settlement Agreement, which shall remain in full force and effect as such illegal, invalid,  or unenforceable provision shall be deemed severable.         20.   Drafter.  None of the Parties to this Settlement Agreement shall be considered to  be the drafter of this Settlement Agreement or any of its provisions for the purpose of any statute,  case law, or rule of interpretation or construction that would or might cause any provision to be  construed against the drafter.         21.   Choice  of  Law;  Binding  Arbitration.   This  Settlement  Agreement  shall  be  governed by and construed, enforced, and performed in accordance with the law of the State of  New York, without regard to any otherwise applicable rules relating to conflicts of laws.  With    42350.0020042350.00200                                        9

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 121 of 136                                                                                                                                             EXECUTION COPY     respect to any dispute between the Parties regarding, related to, or arising out of this Settlement  Agreement, the Parties agree to submit to the exclusive jurisdiction of Judge Layn R. Phillips of  Phillips ADR for binding arbitration.  Any petition to confirm or vacate an award arising from  such arbitration shall be brought in the United States District Court for the Southern District of  New York, if it has or can acquire jurisdiction, or if it does not or cannot acquire jurisdiction, then  the courts of the State of New York in New York County.         22.   Prevailing  Party  Attorneys’  Fees.   Should  any  Party  institute  any  action  or  proceeding to enforce any provision of this Settlement Agreement or for damages by reason of any  alleged breach of any provision of this Settlement Agreement, the prevailing Party shall be entitled  to  recover  from  the  other  Party  all  costs  and  expenses  (including  reasonable  attorneys’  fees)  incurred by such prevailing Party in connection with such action or proceeding.         23.   Authority.  Each person signing this Settlement Agreement hereby represents and  warrants that she or he is authorized to sign this Settlement Agreement on behalf of the applicable  Party or Parties listed below.          24.   Headings. The headings set forth in this Settlement Agreement have been inserted  for  the  convenience  of  reference  only.   Such  headings  shall  not be considered a part of this  Settlement Agreement, and neither shall they limit, modify, or affect in any way the meaning or  interpretation of this Settlement Agreement.         25.   Counterparts.  This Settlement Agreement may be executed in counterparts and,  as so executed, shall constitute one and the same agreement, and shall be binding on the Parties.   A copy, PDF, or facsimile of a signature on this Settlement Agreement shall have the same force  and effect as an original signature                               [Execution Pages Follow]    42350.0020042350.00200                                        10

 

Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 122 of 136                                                         EXECUTION COPY

 

Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 123 of 136                                                                       EXECUTION COPY     Edward M. Weil, Jr.      Chief Executive Officer     Edward M. Weil, Jr.      Chief Executive Officer

 

Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 124 of 136             EXHIBIT F                                   42350.00400

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 125 of 136                                                     EXECUTION COPY 9/8/2019                     SIDE LETTER TO SETTLEMENT AGREEMENT         Reference is made to the Agreement Regarding Settlement, Contribution, and Release (the  “Settlement  Agreement”),  executed on  August  23,  2019,  between  and  among  the  undersigned  Parties.   Capitalized  terms  used  herein  have  the  same  meaning  as  provided  in  the  Settlement  Agreement.  This side letter, dated September 8, 2019 (the “Side Letter”), is executed between and  among the Parties to the Settlement Agreement.  The Parties hereby agree as follows:         1.    Class Action Payment.  The Parties agree that VEREIT will be solely responsible  for funding $31,972,934 of the $225,000,000 set forth in paragraph 2(a)(ii) of the memorandum  of understanding with the plaintiffs in the Class Action (the “Class MOU”).         2.    Derivative Actions.  With respect to the Derivative Actions, the Parties agree, in  addition to the applicable terms of the Settlement Agreement, that:               a. the final release agreed to for the Derivative Action before the Court (Witchko)                 will be drafted to make clear that (i) the release includes all claims that were or                 could have been brought in any of the Derivative Actions and (ii) in the event                 that any Derivative Action is not resolved, VEREIT will provide advancement                 and indemnification to the AR Capital Parties to the fullest extent permitted                 under the Parties’ prior written agreements or applicable law;               b. VEREIT  will  argue,  in  any  Derivative  Action  that  is  not  resolved,  that  the                 release described in Paragraph 2(a) should extinguish such Derivative Action;               c. in the event any Derivative Action remains unresolved following Paragraphs                 2(a) and 2(b), VEREIT will (i) enter into a separate settlement agreement to                 resolve any such Derivative Action based entirely on the AR Capital Parties’                 prior payment of the AR Capital Settlement Amount and (ii) take the position                 in any such Derivative Action that no further contribution is required from the                 AR Capital Parties to resolve such Derivative Action;               d. in the event any Derivative Action remains unresolved following Paragraphs                 2(a), 2(b) and 2(c), VEREIT will take the position in any such Derivative Action                 that the AR Capital Settlement Amount must be credited as having been paid                 by the AR Capital Parties to any future resolution of such Derivative Action;                e. in the event any Derivative Action remains unresolved following Paragraphs                 2(a),  2(b),  2(c)  and  2(d),  and  a final,  non-appealable  judgment  is  rendered                 against any one or more of the AR Capital Parties, which the AR Capital Parties                 are  required  to  pay,  then  the  AR  Capital  Parties  shall  be  entitled  to                 reimbursement of that portion of their previous contributions to the Settlement                 Fund  necessary  to  fund  such  judgment  up  to  a  maximum  amount  of $225                 million.    For the avoidance of doubt, no such reimbursement will be required                 to the extent that the AR Capital Parties are reimbursed by VEREIT pursuant                 to some other agreement, right of indemnification or otherwise; 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 126 of 136                                                     EXECUTION COPY 9/8/2019                  f. the  Settlement  Agreement  shall  not  terminate  (and  therefore,  shall  not  be                 deemed to be null and void or of no force or effect) on account of the fact that                 resolution of any of the Derivative Actions, other than the Witchko Action, has                 not been finally approved by the court in which such action is pending and is                 not capable of being so approved.         3.    Secondary Agreement.  In the event that the Secondary Agreement, as defined in  the memorandum of understanding for the Derivative Action before the Court (the “Derivative  MOU”),  is  determined  to  be  invalid  and  the  circumstances  set  forth  in  Paragraph  9(d)  of  the  Derivative MOU become operative, the Parties agree that in connection with any resolution of, or  judgment in, any litigation between the ARC Parties and VEREIT, VEREIT will apply a credit to  any amount owed by the ARC Parties as part of the litigation, whether by settlement or litigation,  of  $31,972,934,  representing  the  value  of  the  OP  Units  and  associated  dividends/distributions  surrendered to VEREIT  in connection with the settlement entered into by certain of the ARC  Parties with the Securities and Exchange Commission in July 2019.         4.    OP Unit Disposition.  VEREIT represents that, for any OP Units surrendered by  the  AR  Capital  Parties  to  fund  the  AR  Capital  Settlement  Amount  under  Paragraph  2  of  the  Settlement  Agreement,  VEREIT’s  current  intention  is  to  cancel  such  OP  Units  at  the  time  of  funding  as  provided  in  Paragraph  1  of  the  Settlement  Agreement.   VEREIT  agrees  to  use  commercially reasonable efforts to effectuate its current intention as stated in this Paragraph.         5.    OP Unit Dividends/Distributions.  The Parties agree that, to the extent that the  AR Capital Parties elect to fund the AR Capital Settlement Amount with dividends/distributions  as described in Clause (iii) of Paragraph 2 of the Settlement Agreement, VEREIT shall treat such  dividends/distributions as distributions with respect to the OP Units for U.S. federal income tax  purposes and shall take no position inconsistent with such treatment.         6.    Remaining OP Units.  The Parties agree that at the time the AR Capital Parties  provide notice to VEREIT of the OP Units to be used to fund the AR Capital Settlement Amount  as provided in Paragraph 3 of the Settlement Agreement, the AR Capital Parties will provide notice  of:  (i)  how  many  OP  Units  should  be  cancelled  and  used  directly  to  fund  the  settlement  (the  “Cancelled OP Units”); and (ii) how many OP Units should be redeemed in exchange for the cash  value as determined in Paragraph 3 of the Settlement Agreement (the “Redeemed OP Units”).  The  Redeemed OP Units cannot exceed 5 million units.  No later than 10:00a.m. EST two (2) business  days before the funding date as defined in Paragraph 2 of the Class MOU, the AR Capital Parties  will  specify  (i)  what  portion  of  the  Redeemed  OP  Units  will  be used  to  fund  the  AR  Capital  Settlement Amount and (ii) what portion of the Redeemed OP Units will not be used to fund the  AR Capital Settlement Amount.  No later than 10:00a.m. EST on the business day prior to the  funding date as defined in Paragraph 2 of the Class MOU, VEREIT will (i) pay the cash value (as  determined by Paragraph 3 of the Settlement Agreement) of the portion of the Redeemed OP Units  used to fund the AR Capital Settlement Amount into an escrow account designated by counsel for  the  AR  Capital  Parties  for  use solely  in  connection  with  funding  the  AR  Capital  Settlement  Amount and (ii) pay the cash value (as determined by Paragraph 3 of the Settlement Agreement)  of the portion of the Redeemed OP Units not used to fund the AR Capital Settlement Amount  directly to the AR Capital Parties as specified by their counsel.  As long as the AR Capital Parties  provide a FIRPTA Certificate as defined in, and in accordance with, Section 8.04(e) of the Third                                         2 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 127 of 136                                                     EXECUTION COPY 9/8/2019      Amended and Restated Agreement of Limited Partnership of VEREIT Operating Partnership, LP,  VEREIT agrees that it will not withhold any portion of these amounts for U.S. federal, state or  local income tax purposes, nor any portion of any amounts paid pursuant to Paragraph 13 of the  Settlement Agreement for U.S. federal, state or local income tax purposes.  The Parties agree that  the total cash value of the Cancelled OP Units and the Redeemed OP Units will not exceed $200  million.  Any OP Units not included as Cancelled OP Units or Redeemed OP Units will be treated  as Remaining OP Units in accordance with Paragraph 13(a) of the Settlement Agreement.  For all  Remaining OP Units for which the AR Capital Parties elect to redeem on the date provided in  Paragraph 3 of the Settlement Agreement other than the Redeemed OP Units:               a. if VEREIT elects to redeem for cash, at its discretion, such redemption will be                 subject to the terms of Paragraph 13(a) of the Settlement Agreement; and               b. if VEREIT elects to redeem for common stock, VEREIT will take the steps                 necessary to convert the Remaining OP Units and issue common stock to the                 AR Capital Parties by either, at the election of the AR Capital Parties, (i) the                 date of funding as defined in paragraph 1 of the Settlement Agreement or (ii)                 the first business day following January 1, 2020.  The AR Capital Parties must                 provide notice of whether they choose option (i) or (ii) in this paragraph at the                 time  they  provide  the  notice  required  by  paragraph  3  of  the  Settlement                 Agreement.         7.    Retained OP Units.  The Parties agree that the AR Capital Parties are not required  to provide notice of redemption of all Remaining OP Units on the date provided in Paragraph 3 of  the  Settlement  Agreement,  and  that  the  AR  Capital  Parties  may  retain  possession  of  certain  Remaining OP Units (the “Retained OP Units”).  As to the Retained OP Units, the Parties agree:               a.    Upon receipt of written notice of a redemption of all or any portion of the                    Retained OP Units, VEREIT will redeem such Retained OP Units per the                    terms of Section 8.04(a) of VEREIT’s limited partnership agreement as it                    exists on the date of execution of this Side Letter; provided that, for any                    redemption made pursuant to this Paragraph, VEREIT hereby waives any                    and  all  rights  under  Paragraphs  8.04(b)  and  (d)  of  the  VEREIT  limited                    partnership  agreement  as  it  exists  on  the  date  of  execution  of this  Side                    Letter, subject to any change required by law.               b.    VEREIT acknowledges that the releases provided by VEREIT to the AR                    Capital  Parties  in  paragraph  10(b)  of  the  Settlement  Agreement include                    releases of any rights or claims to return of the Retained OP Units.  VEREIT                    expressly  waives  any  argument  for  avoiding  compliance  with  this                    Paragraph of the Side Letter based on any claims or causes of action that                    were or could have been asserted in the Actions, including but not limited                    to any claims for contribution, cross-claims, or claims that might have been                    brought by plaintiffs in the Derivative Actions.              c.    To  the  extent  legally  permissible  under  U.S.  federal  income  tax laws,                    VEREIT will continue to treat each of the AR Capital Parties that holds                                         3 

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 128 of 136                                                     EXECUTION COPY 9/8/2019                        Retained OP Units as having a deficit restoration obligation under Section                    5.06(d)  of  the  Third  Amended  and  Restated  Agreement  of  Limited                    Partnership  of  VEREIT  Operating Partnership,  L.P.  (the  “LPA”)  and  a                    corresponding debt allocation at least equal to the amount of such deficit                    restoration obligation.  VEREIT and the AR Capital Parties agree to work                    in good faith to execute within seven (7) days following the execution of                    this Side Letter, but in any event no later than one day prior to the date of                    funding  under  this  Side  Letter,  a  side  letter  (the  “DRO  Side  Letter”)  to                    increase  the  AR  Capital  Parties’  deficit  restoration  obligations  under                    Section 5.06(d) of the LPA to an amount not to exceed $92,000,000.  The                    Parties agree that the deficit restoration obligations under the DRO Side                    Letter  are  intended  to comply  with  Treasury Regulations  Section  1.704-                   1(b)(2)(ii).         8.    Interest on Class Settlement.  The Parties agree that to the extent any obligation  to pay interest under paragraph 2(a)(ii) of the memorandum of understanding entered into with the  plaintiffs in the Class Action arises, that VEREIT will reimburse the AR Capital Parties for such  interest obligation on (i) the $31,972,934 already deemed to be in VEREIT’s custody, and (ii) 50%  of such obligation on the remaining $193,027,066, with such reimbursement provided to the AR  Capital Parties no later than one (1) business day after such amounts come due.         9.    Conflict  with  Class  and  Derivative  Memoranda  of  Understanding.  Contemporaneously  herewith, the Parties are  entering  into the  Class  MOU  and  the  Derivative  MOU (collectively, the “MOUs”).  The Parties agree that to the extent there is any conflict between  the MOUs (or the further definitive agreements contemplated by the MOUs) and a provision of  the Settlement Agreement that has not been modified by this Side Letter, the MOUs (or the further  definitive agreements contemplated by the MOUs) shall control.         10.   Requirement  to  Reach  Agreement  in  the  Actions.   The  Parties  agree  that  Paragraph 15 of the Settlement Agreement, including its heading, shall be amended as follows:               a. the  word  “Actions”  is  replaced  with  the  phrase  “the  Class  Action  and  the                 Witchko Action”; and               b. the phrase “15 calendar days” is replaced with the phrase “20 calendar days”.         11.   Written Modifications Only.  The Parties agree that this Side Letter constitutes a  written modification as permitted by Paragraph 17 of the Settlement Agreement.           12.   Incorporation of Terms.  The Parties agree to incorporate the terms of Paragraphs  16, and 18 through 25 of the Settlement Agreement into this Side Letter, and agree that those terms  will apply as though they had been separately set out in this Side Letter.                               [Execution Pages Follow]                                                                                     4 

 

Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 129 of 136

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19EXECUTIO   PageN 130COP ofY 1369/8/2019    EXECUTED AND AGREED:    VEREIT, INC.    By:                                       NICHOLAS  S. SCHORSCH   Title:    VEREIT OPERATING PARTNERSHIP,   L.P.    By:  VEREIT, INC.                                             SHELLEY  SCHORSCH    By:   Title:    AR CAPITAL, LLC                                             PETER M. BUDKO    By:   Title:    ARC PROPERTIES ADVISORS, LLC    By:                                       WILLIAM M. KAHANE   Title:                                               EDWARD M. WEIL 

 

Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 131 of 136             EXHIBIT G                                   42350.00400

 

 Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 132 of 136        SIDE LETTER AGREEMENT BETWEEN           BRIAN BLOCK AND VEREIT,       INC.                                   September 7,  2019   This email reflects the terms on which Br1an Block and VEREIT have agreed to settle  the class and derivative actions, consistent with the terms of the Derivative MOU and  the Class MOU  that are being entered into contemporaneously herewith:          First, the releases are set forth in the Class MOU and Derivative MOU.         Additionally, Brian has been released or will be released from any settled or         pending opt-out actions, including Jet Capital and Lakewood.      •   Second, Brian agrees that, as part of a Global Settlement, he will surrender to         VEREIT the 631,872 ARCP   OP  units that he claims to own (the "OP Units") and        to relinquish to VEREIT his rights to the dividends allegedly due and payable on        the aforementioned ARCP   OP  units in the amount of $1,369,577. The OP Units        will be valued based on the average trading price of one share of VEREIT         common  stock on the flfth trading day after the agreement to settle the class         action is publicly announced.      •   Third, Brian agrees that, as part of a Global Settlement, he will also pay to         VERE IT cash sufficient to bring the value of the OP Units and cash to a total of         $12.5 million.      •   Fourth, Brian agrees that, as part of a Global Settlement, he will release VEREIT        from all claims that he has against VEREIT and its affiliates, including but not         limited to his claims related to the accrued benefits that he alleges they have        failed to pay to him - in particular approximately $20,000 in expense         reimbursements and  $1,400,000 in life insurance premium payments, payments        that were specifically contemplated by ARCP in Brian's resignation letter. For         your reference, we have excerpted the relevant passage of the resignation letter        below:             o  I hereby confirm that beginning immediately I am not entitled to any               payments or benefits of any kind from the Company, other than (a) any               earned and unpaid Base Salary, expense reimbursements,    and pay in               lieu of any accrued but unused vacation, in each case, due and owing only               up to and including October 27, 2014, and (b) other accrued and vested               benefits due in accordance with the Company's retirement, pension or               benefit plans (other than the Retention Award, the OPP Award and any               other Equity Unit awards referenced in the Employment Agreement.)                   •  Section 5(d)(iv) under the heading "BENEFITS," states in relevant                     part that "As soon as practicable after the Effective Date, the                     Company shall  purchase an additional whole life policy on the life of                      the Executive in the amount of $7.5 million." In addition 1 on the                                            - 1 - 4811-2652-6626v2 

 

 Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 133 of 136                       night of October 28, 2014, Mr. Block had contemporaneous                     conversations with Nicholas Schorsch, David Kay, and Richard                      Silfen who confirmed that the life insurance policy was covered by                     this provision.      •   Fifth, VEREIT agrees that following the date on which all parties sign the         Memorandum of Understanding memorializing the terms of the Global Settlement         ("MOU" "MOU   Execution Date") VERE IT will promptly meet any advancement         obligations for legal fees and expenses incurred by Brian on any date up to and         including the MOU Execution Date ("Pre-MOU  Fees and Expenses") consistent         with past practice and procedures that VEREIT has employed until the MOU         Execution Date for advancing fees. VERE IT agrees to surrender whatever rights         it has to clawback any Pre-MOU Fees and Expenses and  Block releases any         claim to any amounts that were deducted by VEREIT for invoices already paid as         of the MOU Execution Date. VE REIT  agrees that it will continue to indemnify         and advance funds sufficient to cover the legal fees and expenses incurred by         Brian for services rendered after the MOU Execution Date ("Post-MOU Fees and         Expenses") in connection with the pending criminal matter and the actions that         are the subject of this Global Settlement, consistent with past practices and         procedures, but VERE IT will maintain its rights to seek a claw back of the Post-        MOU  Fees and  Expenses consistent with applicable law. Otherwise, Brian will         release any further claims to indemnity or advancement.      •   Sixth, Brian agrees to waive and release any claim of any kind whatsoever on         any insurance policy that might be used to satisfy any or all of a settlement,        judgment,  or verdict in any action arising from or related to the subject matters at         issue in the actions listed in Paragraph "Firsf' above, including, but not limited to,         the following excess difference in conditions insurance policies covering a policy         period from February 7, 2014 through February 7, 2015: (i) Westchester Fire         Insurance Company Policy No. G243714402002,    (ii) STARR Policy No.         SISIXFL21156814,  (iii) RSUI Policy No. NHS655965, and (iv) AXIS Policy No.         MN H779259/01 /2014.      •  Finally, VEREIT represents that it has not assigned, subrogated, or in any way        transferred or encumbered any rights it has to pursue damages from Brian,         including, but not limited to VEREIT's rights to seek a clawback of Pre-MOU         Fees and Expenses and  Post-MOU   Fees and Expenses.    EXECUTED AND AGREED:                                            - 2 - 4811-2 652-6626v2 

 

  Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 134 of 136                                             MILBANK LLP, on behalf ofVEREIT                                        . 3 .  4811-2652-6626v2 

 

Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 135 of 136             EXHIBIT H                                   42350.00400

 

    Case 1:15-cv-06043-AKH   Document 287-1   Filed 10/02/19   Page 136 of 136   Notwithstanding Paragraph 12 of the Memorandum of Understanding among the parties to the  Derivative Actions (Derivative Action MOU), Grant Thornton and VEREIT enter into this side  agreement which contains the following additional terms, which are binding between the parties.  The defined terms of the Derivative MOU shall have the same meaning here.    The parties agree that:       (1) After the execution of the Derivative Action MOU, VEREIT and its counsel will use      commercially reasonable efforts to settle or otherwise terminate any Derivative Action      naming Grant Thornton prior to the approval of the Derivative Settlement or the Secondary      Agreement becoming effective as set forth in Paragraph 4 of the Derivative MOU.       (2) VEREIT has had or will seek to have its Board of Directors exercise its reasonable      business judgment to determine whether it is in the best interests of VEREIT to resolve      claims asserted against Grant Thornton in any Derivative Action naming Grant Thornton      on the terms as set forth in the Derivative MOU, given, among other things, the strength      and weakness of VEREIT’s claims and defenses against Grant Thornton, the strength and      weakness of the defenses and counterclaims of Grant Thornton, the value of finality of the      matters arising from the events in question and the value of avoiding additional time and      expense of continued litigation.

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