Document:

EXHIBIT 10.3

 

EXECUTION VERSION

 

 

ASSET PURCHASE AND SALE AGREEMENT

 

This ASSET Purchase
and Sale Agreement (the “Agreement”) is entered into as of December 14, 2012 by and among ARC Properties
Operating Partnership, L.P., a Delaware limited partnership (the “Buyer”), and American Realty Capital Advisors
III, LLC, a Delaware limited liability company (the “Seller”).

 

RECITALS

 

A.           The
Seller is the advisor of American Realty Capital Trust III, Inc., a Maryland corporation (“ARCT III”) that owns
and acquires single tenant free standing commercial real estate properties that are primarily net leased on a long-term basis to
investment grade credit rated and other creditworthy tenants that elected to be treated as a real estate investment trust (“REIT”)
for U.S. federal income tax purposes commencing with the taxable year ended December 31, 2011.

 

B.           The
seller is wholly owned by American Realty Capital Trust III Special Limited Partner, LLC, a wholly owned subsidiary of ARCT III’s
sponsor, AR Capital, LLC.

 

C.           Prior
to the date of closing of the Transaction (as defined below), the day-to-day business and operations of ARCT III were and will
be managed by Seller and, in connection therewith, the Seller owned and will own the furniture, fixtures, equipment and other assets
used and to be used by ARCT III in their business and operations.

 

D.           ARCT
III is contemplating a termination of its advisory agreement with Seller in connection with a merger into a wholly-owned subsidiary
of Buyer’s general partner, American Realty Capital Properties, Inc., a Maryland corporation (“ARCP” and the
merger defined as the “Transaction”). In connection with the Transaction, the Buyer will purchase from the Seller certain
furniture, fixtures, equipment and other assets necessary for the operation of ARCP and reimburse the Seller for certain costs
and expenses as described herein as of the date of the closing of the Transaction.

 

E.           The
Seller wishes to sell and reimburse, and the Buyer wishes to purchase and accept, all of the Purchased Assets and the Reimbursed
Expenses upon the terms and subject to the conditions set forth in this Agreement.

 

AGREEMENT

 

In consideration of the
mutual agreements and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE
I

SALE AND PURCHASE OF ASSETS; CLOSING

 

1.1           Certain
Terms. Certain capitalized terms used in this Agreement are defined in Article IV.

 

1.2           Sale
and Purchase of the Purchased Assets and Payment of the Reimbursed Expenses.

 

    	 

    	 

    

 

(a)          Purchased
Assets. Upon the terms and subject to the conditions of this Agreement, the Seller hereby sells, conveys, assigns, transfers
and delivers to the Buyer, and the Buyer hereby purchases, free and clear of all Encumbrances, all right, title and interest of
the Seller in and to all of the Purchased Assets.

 

(b)          Excluded
Assets and Liabilities. Notwithstanding any other provision of this Agreement to the contrary, any Assets of the Seller other
than the Purchased Assets are not part of the sale and purchase contemplated hereunder, are excluded from the Purchased Assets
and shall remain the property of the Seller after the Closing. The Buyer does not, and shall not be deemed to, assume or otherwise
be responsible for any Liabilities of the Seller (including, without limitation, any Liabilities arising out of or relating to
the Purchased Assets), all of which shall remain Liabilities of the Seller. The Seller shall pay, perform and discharge all of
its Liabilities encumbering directly or indirectly any of the Purchased Assets in full at or prior to the Closing.

 

1.3           Payment
of Purchase Price. The total consideration for the Purchased Assets and the payment of the Reimbursed Expenses is $5,800,000.00
(the “Purchase Price”), payable in cash, by wire transfer of immediately available funds to an account designated
in writing by the Seller.

 

1.4           The
Closing. The purchase and sale provided for in this Agreement shall take place at a closing (the “Closing”)
at the offices of Proskauer Rose LLP, Eleven Times Square, New York, New York, following the closing of the Transaction and on
the same date as the closing of the Transaction.

 

1.5           Payment
of Purchase Price; Closing Deliveries.

 

(a)          At
or prior to the Closing, the Seller shall deliver to the Buyer:

 

(i)          the
Purchased Assets;

 

(ii)         a
Bill of Sale and General Assignment in the form of Exhibit A hereto dated the Closing Date and duly executed by the Seller;

 

(iii)        such
other bills of sale, assignments, deeds, certificates of title, documents and other instruments of transfer and conveyance as may
reasonably be requested by the Buyer to convey title to the Purchased Assets, each in form and substance satisfactory to the Buyer
dated the Closing Date and duly executed by the Seller;

 

(iv)        releases
of all Encumbrances, if any, on the Purchased Assets; and

 

(v)         such
other documents as the Buyer may reasonably request to effect the transactions contemplated by this Agreement.

 

(b)          At
or prior to the Closing, the Buyer shall deliver to the Seller the Purchase Price in accordance with Section 1.3.

 

1.6           AS-IS.
EXCEPT AS EXPRESSLY SET FORTH HEREIN, THE PURCHASED ASSETS ARE BEING PURCHASED AND SOLD ON AN “AS-IS” BASIS, FREE AND
CLEAR OF ANY ENCUMBRANCES, WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY KIND OR NATURE, EITHER EXPRESS, IMPLIED OR OTHERWISE.

 

    	2

    	 

    

 

ARTICLE
II

 

REPRESENTATIONS
AND WARRANTIES

 

The Seller represents
and warrants to the Buyer as of the date hereof as follows:

 

2.1           Organization,
Good Standing and Qualification. The Seller is a limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware.

 

2.2           Authorization;
Enforceability. The Seller has full power and authority to execute and deliver this Agreement and the other Transaction Documents
to which it is a party and to perform its obligations hereunder and thereunder. All limited liability company and other action
on the part of the Seller, its managers and officers necessary for the authorization, execution and delivery of this Agreement
and the other Transaction Documents and the performance of all obligations of the Seller hereunder and thereunder has been taken.
This Agreement and the other Transaction Documents to which the Seller is a party, each constitutes, or when executed and delivered
will constitute, a valid and legally binding obligation of the Seller, enforceable in accordance with its terms.

 

2.3           No
Conflict. The execution, delivery and performance of this Agreement and the other Transaction Documents to which the Seller
is a party and the consummation of the transactions contemplated hereby and thereby will not result in any violation or be in conflict
with or constitute, with or without the passage of time or giving of notice, a default under any provision of the Seller’s
certificate of formation or operating agreement, any Order or Contract to which the Seller is a party or by which it is bound or,
to the knowledge of the Seller, any provision of any Legal Requirement applicable to the Seller.

 

2.4           Governmental
Authorities; Consents. No approval, Order, authorization, registration, qualification, designation, declaration or filing of
or with, or notice to, or other Consent of, any Governmental Body or other Person on the part of the Seller is required in connection
with the execution and delivery of this Agreement or the other Transaction Documents and the consummation of the transactions contemplated
hereby or thereby.

 

2.5           Litigation.
There is no Proceeding pending or currently threatened against the Seller that questions the validity of this Agreement or the
right of the Seller to enter into or consummate, or seeks to enjoin or obtain damages with respect to, the transactions contemplated
hereby or by any of the other Transaction Documents, nor is the Seller aware that there is any basis for any of the foregoing.

 

2.6           Title
to Purchased Assets. The Seller owns the Purchased Assets free and clear of all Encumbrances and the Buyer, by this Agreement
and the other Transaction Documents, will acquire good and marketable title to all of the Purchased Assets, free of all Encumbrances.
No third party, including, without limitation, any former owner of any capital stock of the Seller, has the basis for any claims
against the Purchased Assets or the Seller in connection therewith.

 

2.7           Brokers’
Fees. No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission
in connection with the transactions contemplated by this Agreement based on arrangements made by the Seller or any of its Affiliates.

 

2.8           Cost
of Purchased Assets. The Purchased Assets are being sold pursuant to this Agreement at the Seller’s cost therefor.

 

    	3

    	 

    

 

ARTICLE
III

 

CERTAIN
OTHER AGREEMENTS

 

3.1           Tax
Matters. All transfer, documentary, sales, use, stamp, registration and other taxes, and all conveyance fees, recording charges
and other fees and charges (including any penalties and interest), incurred in connection with the transactions contemplated by
this Agreement shall be paid when due by the Seller.

 

ARTICLE
IV

 

DEFINITIONS

 

4.1           Certain
Definitions. In this Agreement, the following terms have the meanings set forth below, which shall be equally applicable to
both the singular and plural forms. Any agreement referred to below shall mean such agreement as amended, supplemented and modified
from time to time to the extent permitted by the applicable provisions thereof and by this Agreement.

 

“Affiliate”
means, when used with reference to a specified Person, (i) any Person that directly or indirectly controls or is controlled
by or is under common control with the specified Person or any other Affiliate of such Person, (ii) any Person that is an
officer, director, trustee, general partner, manager or managing member of the specified Person or of which the specified Person
or any other Affiliate of such Person is an officer, director, trustee, general partner, manager or managing member, (iii) any
Person that, directly or indirectly, is the beneficial owner of 10% or more of any class of the outstanding voting securities of
the specified Person or any other Affiliate of such Person (iv) such Person’s relatives, including such Person’s spouse
or domestic partner (and relatives of such spouse or domestic partner), parents, siblings and lineal descendants if such Person
is an individual, and (v) with respect to any Person that is a trust, the trustees and beneficiaries of such Person.

 

“Agreement”
means this Asset Purchase and Sale Agreement.

 

“ARCP”
has the meaning set forth in the recitals of this Agreement.

 

“ARCT III”
has the meaning set forth in the recitals of this Agreement.

 

“Assets”
means all properties, assets and rights of every kind, nature and description whatsoever whether tangible or intangible, real,
personal or mixed, fixed or contingent, choate or inchoate, known or unknown, wherever located of the Seller.

 

“Buyer”
has the meaning set forth in the first paragraph of this Agreement.

 

“Closing”
has the meaning set forth in Section 1.4

. 

“Closing Date”
means the date and time as of which the Closing actually takes place.

 

“Consent”
means any approval, consent, ratification, waiver, or other authorization of, notice to or registration, qualification, designation,
declaration or filing with any Person.

 

“Contract”
means any agreement, contract, purchase order, statement of work, option, license, instrument, mortgage, obligation, commitment,
arrangement, promise, or undertaking (whether written or oral and whether express or implied) that is legally binding.

 

    	4

    	 

    

 

“Encumbrance”
means any charge, claim, community property interest, condition, easement, covenant, Contract, commitment, warrant, demand, encumbrance,
equitable interest, lien, mortgage, option, purchase right, pledge, security interest, right of first refusal, or other rights
of third parties or restriction of any kind, including, without limitation, any restriction on use, voting, transfer, receipt of
income or dividends, or exercise of any other attribute of ownership.

 

“Governmental
Body” means any federal, state, local, municipal, foreign, or other governmental or quasi-governmental authority.

 

“Indemnified
Persons” has the meaning set forth in Section 5.1.

 

“Legal Requirement”
means any federal, state, local, municipal, foreign, international, multinational, or other statute, law, Order, constitution,
rule, regulation, ordinance, principle of common law, treaty or other requirement of any Governmental Body.

 

“Liability”
means any liabilities or obligations of any kind whatsoever (whether known or unknown, asserted or unasserted, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, due or to become due, and whether or not reflected or required by United States
generally accepted accounting principles to be reflected as such).

 

“Losses”
has the meaning set forth in Section 5.1

. 

“Order”
means any award, decision, injunction, judgment, order, decree, ruling, subpoena, or verdict entered, issued, made, or rendered
by any court, administrative agency, or other Governmental Body or by any referee, arbitrator or mediator.

 

“Person”
means any individual, corporation, general or limited partnership, limited liability company, joint venture, estate, trust, association,
organization, labor union, or other entity or Governmental Body.

 

“Proceeding”
means any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative, investigative
or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any court or other Governmental Body
or referee, trustee, arbitrator or mediator.

 

“Purchase Price”
has the meaning set forth in Section 1.3.

 

“Purchased Assets”
means the Assets set forth on Exhibit B hereto.

 

“Reimbursed
Expenses” means the costs and expenses set forth on Exhibit B hereto.

 

“Seller”
has the meaning set forth in the first paragraph hereof.

 

“Transaction”
has the meaning set forth in the recitals of this Agreement.

 

“Transaction Documents”
means this Agreement, the Bill of Sale and General Assignment and all other instruments and certificates contemplated hereunder
to be delivered by any party hereto at or prior to the Closing.

 

    	5

    	 

    

 

ARTICLE
V

 

MISCELLANEOUS

 

5.1           Indemnification.
The Seller shall indemnify, defend and hold harmless the Buyer and its Affiliates, and their respective stockholders, members,
partners, managers, officers, directors, employees, representatives, controlling persons, counsel, agents, successors and assigns
(collectively, “Indemnified Persons”), from and against, and will pay to any Indemnified Person the amount of,
any and all claims, demands, Proceedings, losses, damages, penalties, Liabilities, obligations, settlement payments, costs and
expenses of every kind whatsoever (including, without limitation, costs of investigating, preparing or defending any such claim
or Proceeding and reasonable legal fees and disbursements), as and when incurred by such Indemnified Person and whether or not
involving a third party claim (collectively, “Losses”), incurred or suffered by any of the Indemnified Persons,
arising out of or relating to (i) any inaccuracy of any representation or warranty, (ii) any breach of any covenant or
agreement of the Seller contained in this Agreement or any other Transaction Document (including all schedules, exhibits and annexes
hereto and thereto), (iii) taxes owed by the Seller or any of its Affiliates relating to the Purchased Assets and/or the transactions
contemplated by this Agreement, (iv) any Liability of the Seller related to the Purchased Assets and/or the transactions contemplated
by this Agreement, and (v) third party claims against the Purchased Assets or against the Indemnified Persons in respect thereof
arising out of or relating to events occurring on or before the Closing Date. All representations, warranties and covenants of
the parties contained in this Agreement shall survive the Closing Date.

 

5.2           Notices.
All notices, requests, communications and demands to or upon the respective parties hereto to be effective shall be in writing
(including by fax), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered
against receipt or upon actual receipt of (i) personal delivery, (ii) delivery by reputable overnight courier, (iii) delivery
by facsimile transmission with telephonic confirmation or (iv) delivery by registered or certified mail, postage prepaid, return
receipt requested, addressed as set forth below (or to such other address as may be hereafter notified by the respective parties
hereto in accordance with this Section 5.2):

 

	 	The Buyer:	ARC Properties Operating Partnership, L.P.
	 	 	405 Park Avenue, 15th Floor
	 	 	New York, New York 10022
	 	 	Facsimile No.:  (212) 421-5799
	 	 	Attention:  Nicholas S. Schorsch
	 	 	 
	 	 	with a copy to:
	 	 	 
	 	 	Proskauer Rose LLP
	 	 	Eleven Times Square
	 	 	New York, New York 10036
	 	 	Facsimile No.:  (212) 969-2900
	 	 	Attention:  Peter M. Fass, Esq.
	 	 	Steven L. Lichtenfeld, Esq.
	 	 	 
	 	The Seller:	American Realty Capital Advisors III, LLC
	 	 	405 Park Avenue, 15th Floor
	 	 	New York, New York 10022
	 	 	Facsimile No.:  (212) 421-5799
	 	 	Attention:  Edward M. Weil, Jr.
	 	 	 

    

    	6

    	 

    

 

	 	 	with a copy to:
	 	 	 
	 	 	Proskauer Rose LLP
	 	 	Eleven Times Square
	 	 	New York, New York 10036
	 	 	Facsimile No.:  (212) 969-2900
	 	 	Attention:  Peter M. Fass, Esq.
	 	 	Steven L. Lichtenfeld, Esq.

 

5.3           Expenses.
Except with respect to the Reimbursed Expenses, each of the parties will bear its own costs and expenses (including legal fees
and expenses) incurred in connection with this Agreement and the transactions contemplated hereby.

 

5.4           No
Third-Party Beneficiaries. Subject to Sections 5.1, 5.11 and 5.14, this Agreement shall not confer any
rights or remedies upon any Person other than the parties hereto and their respective successors and permitted assigns.

 

5.5           Consent
to Jurisdiction; Service of Process. Each party to this Agreement irrevocably consents and agrees that any Proceeding commenced
by it arising out of or relating to this Agreement or any of the Transaction Documents shall be brought only in the United States
District Court for the Southern District of New York or, in the event such court does not have subject matter jurisdiction over
such Proceeding, in courts of the State of New York sitting in the Borough of Manhattan, City of New York. Each party hereby (i) irrevocably
accepts and submits to the jurisdiction of each of the aforesaid courts in personam, (ii) irrevocably and unconditionally
waives any objection to the laying of venue in either of the aforesaid courts, and (iii) irrevocably and unconditionally waives
and agrees not to plead or assert the claim that either of the aforesaid courts is not a convenient forum with respect to any such
Proceeding or other similar defense or doctrine. Process in any such Proceeding may be served on any party in any manner provided
by law.

 

5.6           Governing
Law. This Agreement will be governed by the internal laws of the State of New York.

 

5.7           Further
Assurances. The parties agree, without further consideration, (i) to furnish upon request to each other such further information,
(ii) to execute and deliver to each other such other documents, and (iii) to do such other acts and things, all as the other party
may reasonably request for the purpose of carrying out the intent of this Agreement and the transactions contemplated by this Agreement
and the other Transaction Documents. From and after the Closing, all mail, payments or other amounts, checks, documents and packages
pertaining to the Purchased Assets received by the Seller shall be promptly delivered (unopened, if applicable) by the Seller to
the Buyer.

 

5.8           Release.
Effective as of the Closing, the Seller, on behalf of itself and each of its Affiliates, hereby releases and forever discharges
the Purchased Assets and the Buyer in connection therewith from any and all Proceedings, Contracts and Liabilities of any nature
whatsoever, in law or in equity, arising out of events occurring on or prior to the Closing.

 

5.9           Amendments
and Waivers. No amendment or waiver of any provision of this Agreement shall be valid unless in writing and signed by the party
to be charged with such amendment or waiver. No waiver by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation,
or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

 

    	7

    	 

    

 

5.10         Entire
Agreement. This Agreement supersedes all prior agreements between the parties with respect to its subject matter and constitutes
(together with the other Transaction Documents and any other documents referred to in this Agreement) a complete and exclusive
statement of the terms of the agreement between the parties with respect to its subject matter. The exhibits identified in and
attached to this Agreement are incorporated herein by reference and shall be deemed as fully a part hereof as if set forth herein
in full.

 

5.11         Assignments,
Successors and No Third-Party Rights. The Seller may not assign any of its rights or obligations under this Agreement without
the prior consent of the Buyer except that the Buyer may assign any of its rights under this Agreement to any Affiliate of the
Buyer. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit
of the successors and permitted assigns of the parties. Except as expressly provided in Sections 5.1 and 5.14, nothing
expressed or referred to in this Agreement will be construed to give any Person other than the parties hereto any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement.

 

5.12         Severability.
Any term of this Agreement which would be invalid or unenforceable as written shall be deemed limited in scope and/or duration
to the extent necessary to render it enforceable. The determination of any court that any provision is invalid or unenforceable
shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity of the offending term
or provision in any other situation or in any other jurisdiction.

 

5.13         Construction.
The parties have participated jointly in the drafting of this Agreement, and each party was represented by counsel in the negotiation
of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue
of the authorship of any of the provisions of this Agreement.

 

5.14         Waiver
of Legal Conflicts. Each of the Seller and the Buyer acknowledges and agrees that, at their request, Proskauer Rose LLP acted
as counsel to both such parties in connection with this Agreement, the other Transaction Documents, the sale of the Purchased Assets
and the payment of the Reimbursed Expenses. Accordingly, each of the parties agrees to, and does, waive any conflict of interest
which may be deemed to arise as the result of such representation and agrees not to seek to disqualify or otherwise prevent Proskauer
Rose LLP from representing the other party hereto (or any other clients of Proskauer Rose LLP) in any matters by reason of its
work on, or representation of, such party in connection with this Agreement, the other Transaction Documents, the purchase and
sale of the Purchased Assets and the payment of the Reimbursed Expenses, or its possession of confidential information relating
to such party. Proskauer Rose LLP shall be entitled to rely upon this Section 5.14 as a third party beneficiary hereof.

 

5.15         Counterparts;
Facsimile. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of
which, taken together, shall constitute one and the same instrument. Original signatures hereto and to other Transaction Documents
may be delivered by facsimile which shall be deemed originals.

 

* * *

 

    	8

    	 

    

 

IN WITNESS WHEREOF,
the parties have executed and delivered this Agreement as of the date first written above.

 

	 	BUYER:
	 	 
	 	ARC Properties operating partnership,
    l.p.
	 	 
	 	By: 	AMERICAN REALTY CAPITAL PROPERTIES, INC.
	 	 	its general partner
	 	 	 
	 	By:	/s/ Nicholas S. Schorsch
	 	 	Name: Nicholas S. Schorsch
	 	 	Title:   Chief Executive Officer
	 	 	 
	 	SELLER:
	 	 	 
	 	AMERICAN REALTY CAPITAL ADVISORS III, LLC
	 	 	 
	 	By:	AMERICAN REALTY CAPITAL TRUST III SPECIAL
	 	LIMITED PARTNER, LLC
	 	 	its sole member
	 	 	 
	 	By: 	AR Capital, LLC
	 	 	its managing member
	 	 	 
	 	By:	/s/ Edward M. Weil, Jr.
	 	 	Name: Edward M. Weil, Jr.
	 	 	Title:  Authorized Signatory

 

    	 

    	 

    

 

Exhibit A

 

BILL OF SALE AND GENERAL ASSIGNMENT

 

KNOW ALL MEN BY THESE
PRESENTS, that American Realty Capital Advisors III, LLC, a Delaware limited liability company (the “Seller”),
for and in consideration of the sum of One and No/100 Dollars ($1.00) and other good and valuable consideration paid to it by ARC
Properties Operating Partnership, L.P., a Delaware limited partnership (the “Buyer”), pursuant to that certain
Asset Purchase and Sale Agreement (the “Purchase Agreement”), dated as of December 14, 2012, by and between
the Buyer and the Seller, the receipt and sufficiency of which are hereby acknowledged, does hereby sell, convey, transfer, grant,
assign and deliver to the Buyer, on the terms and subject to the conditions in the Purchase Agreement, all of its right, title
and interest in and to all of the Purchased Assets. Capitalized terms used but not defined herein have the meanings given to them
in the Purchase Agreement.

 

TO HAVE AND TO HOLD,
all and singular, the aforesaid Purchased Assets unto the Buyer, its successors and assigns forever for it and their own use forever.

 

The Seller covenants
and agrees to warrant and defend the sale, conveyance, transfer, grant, assignment and delivery of the Purchased Assets hereby
made against all persons whomsoever, and to take all steps reasonably necessary to establish the record of the Buyer’s title
to the Purchased Assets.

 

IN WITNESS WHEREOF,
the Seller has executed and delivered this Bill of Sale and General Assignment as of this [ ] day of [ ], 2013.

 

	 	SELLER:
	 	 
	 	AMERICAN REALTY CAPITAL ADVISORS III, LLC
	 	 
	 	By:	 
	 	 	Name: 
	 	 	Title:  Manager

 

    	 

    	 

    

 

Exhibit B

 

Purchased Assets and Reimbursed Expenses

 

Capitalized Furniture, Fixtures and Equipment

 

Tenant Improvements

Office fit out - principally NYC and Dresher, PA
& Jenkintown, PA

Includes common area, kitchens, bathrooms, IT cabling

Server room configuration

Office Furniture and Fixtures

Desks

Credenzas

Chairs

Conference tables and chairs

Hardware

Laptops

Desktops

Routers and switches

Storage Area Network (SAN)

Mobile devices

iPads

Software (license, support, maintenance)

Microsoft Office/ Outlook

MRI

Virtual Premise

System back-up

Security/ firewall

Anti-Virus

FAS Fixed Assets

Concur

Cvent

Equipment

VOIP telephones and related hardware/software

TV presentation screens

SmartBoard

Binding machine

Postage machine

Printers

Kitchen appliances and other

 

The above items are principally located within our New York,
NY, Jenkintown, PA, Dresher, PA and Boston, MA offices.

 

    	 

    	 

    

 

Capitalized and Other Soft Costs

 

Marketing:

Web site and related development

Collaboration with marketing consultants

Collateral (hard card, property photos,

etc.)

Logo design

General marketing efforts

 

Software Customization:

 

MRI (Accounting & Asset Management)

Virtual Premise

FAS Fixed Assets

Concur

Cvent

MS Office and related

 

    	 

    	 

    

 

Transaction/Offering Related Costs

 

Legal:

Preparation of various documents and filings -

Form S-4

Investor communications and press releases

Form 8-K's

Section 16 filings

Coordination with Proskauer/attorneys

 

Accounting:

Preparation of various documents and filings -

Form S-4 (including pro forma schedules)

Investor communications and press releases

Form 8-K's

Section 16 filings

 

Investor Relations (BD Operations):

Retail client record reconfiguration

Conversion of CRM database to interface

with new transfer agent requirements

Analysis and communication to participating

independent broker-dealers and investment advisors

Investor outreach and communications

 

Marketing and Event Planning:

Preparing presentation material

Coordination of roadshow and related events

 

Executive Management (and support personnel):

Negotiations with bankers

Review of various documents

Road show efforts

 

    	 

    	 

    

 

Transaction Costs - Merger

 

American Realty Capital Advisors III, LLC has developed
procedures and processes that were developed over the past two years that are being provided to ARCP in connection with the transaction
with ARCP. ARCP will benefit from these existing critical items and would have otherwise spent significant time and cost to obtain
them. Amounts below are a portion of the estimated costs incurred by American Realty Capital Advisors III, LLC.

 

Human Resources:

Employee Handbook development and continuous updates

401(k) implementation and administration

Payroll set up and related tax withholding and remittance
procedures

Space planning and facility coordination

General HR practices and compliance

 

Information Technology:

Disaster recovery

System architecture

Back-up systems

Help desk support

Vendor project management

Vendor transition services

 

Accounting & Finance:

Process and Procedures Manual development

Sarbanes-Oxley practices

Month-end closing checklist and procedures

Treasury and cash management procedures

 

Asset & Property Management:

Process and Procedures Manual development

Concur bill payment configurationAPOLLO MEDICAL HOLDINGS, INC.

 

AMENDMENT TO SENIOR SUBORDINATED CONVERTIBLE
PROMISSORY NOTE 

OFAPOLLO MEDICAL HOLDINGS, INC.

 

This Amendment (this “Amendment”)
to the Convertible Promissory Note of Apollo Medical Holdings (“the Note”), Inc. dated October 16, 2009, issued by
Apollo Medical Holdings, Inc., Inc., a Delaware corporation (the “Company”) to _________________________________________________
(the “Holder” and together with the Company, the “Parties”), is made as of October 29, 2012. Unless otherwise
defined herein, capitalized terms shall have the meanings ascribed to them in the Note.

 

WHEREAS, in consideration of the Holder’s willingness
to enter into the Amendment, the Company and Holder have agreed to amend the Note such that it shall be convertible into Common
Stock of the Company at a fixed conversion price of $0.11485 until maturity of the Note.

 

WHEREAS, in consideration of the Holder’s Note Modification,
the Company and Holder have agreed to amend the Note such that the maturity of the Note shall be January 31, 2016.

 

NOW, THEREFORE, for this and other good and valuable consideration,
the receipt of which is

hereby acknowledged, the parties agree as follows:

 

		1.	Amendments.

		a)	Section 1-, the “Due Date” of the Note shall be changed from “January 31, 2013” to “January 31,
2016”

		b)	Section 3(c)-“Conversion Price Adjustment” shall be deleted in its entirety and replaced with “The shares
of Common Stock underlying the Note will be adjusted for stock splits, stock dividends, and/or similar transactions.”

		c)	Section 3 (d)- shall be changed from “$0.125” to “$0.11485”

 

		2.	Full Force and Effect. To the extent not expressly amended hereby, the Note remains in full force and effect.

 

		3.	Entire Agreement. This Amendment, together with the Note (to the extent not amended hereby) and all exhibits and amendments
thereto, represents the entire agreement of the parties and shall supersede any and all previous contracts, arrangements or understandings
between the parties with respect to the subject matter herein.

 

		4.	Governing Law. This Amendment shall be governed by and construed and interpreted under the laws of the State of Delaware, without
giving effect to that body of laws pertaining to conflict of laws.

 

		5.	Modification. This Amendment may not be altered, amended or modified in any way except by written consent of the Company and
the Holder. Waiver of any term or provision of this Amendment or forbearance to enforce any term or provision by any party shall
not constitute a waiver as to any subsequent breach or failure of the same term or provision or a waiver of any other term or provision
of this Amendment.

 

		6.	Counterparts. This Amendment may be executed in counterparts, each of which shall be declared an original, but all of which
together shall constitute one and the same instrument.

 

 

[Signature Pages to Follow]

 

    	1

    	 

    

 

 

IN WITNESS WHEREOF, the Company has caused this Note to be executed
by its officers thereunto duly authorized as of the date first written above.

 

 

	 	APOLLO MEDICAL HOLDINGS,
INC.,
	 	 
	 	a Delaware corporation
	 	 
	 	By: 	
	 	 	Warren Hosseinion, M.D
Chief Executive Officer
	 	 	 
	 	HOLDER
	 	 	 
	 		 
	 	 	 

 

    	2

    	 

    

 

EXHIBIT A

TO

NOTE

 

NOTICE OF EXERCISE

 

To Be Executed by the Holder

 

in Order to Exercise the Note

 

The undersigned Holder hereby elects to
purchase _______ Shares pursuant to the attached Note, and requests that certificates for securities be issued in the name of:

 

__________________________________________________________

 

(Please type or print name and address)

 

__________________________________________________________

 

__________________________________________________________

 

__________________________________________________________

 

(Social Security or Tax Identification Number)

 

and delivered

 

to:_________________________________________________________________

 

___________________________________________________________________.

 

(Please type or print
name and address if different from above)

 

If such number of Shares being purchased
hereby shall not be all the Shares that may be purchased pursuant to the attached Note, a new Note for the balance of such Shares
shall be registered in the name of, and delivered to, the Holder at the address set forth below.

 

In full payment of the purchase price with
respect to the Shares purchased and transfer taxes, if any, the undersigned hereby tenders payment of $__________ by check, money
order or wire transfer payable in United States currency to the order of [________________].

 

	 	HOLDER:	 
	 	 	 	 
	Dated:	By:	/s/ 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 

 

 

    	3

    	 

    
 

EXHIBIT B

 

TO

 

NOTE

 

FORM OF ASSIGNMENT

 

(To be signed only on
transfer of Warrant)

 

For value received, the undersigned hereby
sells, assigns, and transfers unto _____________ the right represented by the within Note to purchase ______ shares of Common Stock
of _________, Inc., a Delaware corporation, to which the within Note relates, and appoints ____________________ Attorney to transfer
such right on the books of ____________, Inc., a Delaware corporation, with full power of substitution of premises.

 

	 	 	 
	 	 	 	 
	Dated:	By:	/s/ 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	
        (signature must conform to name

         

        of holder as specified on the fact of the Note)

         
	 
	 	 	
         

         

        Address:

         
	 

 

 

 

 

Signed in the presence of :

 

 

 

Dated:

 

    	4

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