Exhibit 2.1
AGREEMENT
This agreement (this “Agreement”) is dated as of September 16, 2016, by and among Axar Master Fund Ltd., a Cayman Islands exempted company (the “Purchaser”), AR Capital, LLC, a Delaware limited liability company (“AR Capital” or the “Seller”), and AR Capital Acquisition Corp., a Delaware corporation (the “Company” and together with AR Capital and the Purchaser, each a “Party” and collectively the “Parties”).
RECITALS
WHEREAS, the Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”);
WHEREAS, AR Capital owns an aggregate of 5,947,827 shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), acquired by AR Capital in a private placement prior to the Company’s initial public offering (“Founder Shares”) and 6,550,000 warrants to purchase Common Stock acquired in a private placement that occurred simultaneously with the completion of the Company’s initial public offering (the “Private Placement Warrants” and together with the Founder Shares, the “Founder Securities”);
WHEREAS, the Parties desire that (i) certain officers of the Company resign and a certain person designated by the Purchaser be appointed as an officer of the Company, (ii) certain directors of the Company resign and certain persons designated by the Purchaser be appointed as directors, (iii) AR Capital sell, and the Purchaser purchase, the Founder Securities and (iv) the Purchaser make the Loans (as defined herein) to the Company, in each case on the terms and conditions set forth herein (collectively, the “Transaction”);
WHEREAS, the Company’s Board of Directors (the “Board”) has determined that the Transaction provides the Company an increased likelihood to consummate an initial Business Combination and that it is in the best interests of the Company and its stockholders to enter into this Agreement;
WHEREAS, the Parties desire that the Company amend the Company’s amended and restated certificate of incorporation (the “Company Charter”) to (i) extend the date before the Company must consummate an initial Business Combination from October 7, 2016 to December 31, 2017 (the “Extension”) and (ii) change the Company’s name from “AR Capital Acquisition Corp.” to “Axar Acquisition Corp.” (the “Name Change”);
WHEREAS, the Parties desire that the Company amend the Investment Management Trust Agreement dated as of October 1, 2014, by and between the Company and Continental Stock Transfer & Trust Company (the “Trust Agreement”), to (i) permit distributions from the Trust Account to pay the public holders of Common Stock validly exercise their redemption rights, (ii) extend the date on which to commence liquidating the trust account in the event the Company has not consummated an initial Business Combination from October 7, 2016 to December 31, 2017 and (iii) permit the withdrawal of funds from the Trust Account to pay the Cash Dividend (as defined herein) (the “Trust Amendment”);
WHEREAS, the Parties desire that, to the extent that there are in excess of 10,000,000 Public Shares outstanding immediately after the completion of the Extension Redemptions (as defined herein), if any, the Company amend the Company Charter to effect a reverse stock split of the Common Stock using a ratio which would reduce the total number of Public Shares to 10,000,000 (the “Reverse Split”) and to immediately thereafter declare a dividend (the “Cash Dividend”) on the outstanding shares of Common Stock (payable only to holders of Public Shares) in an amount per Public Share (as defined herein) equal to (i) the amount of cash in the Trust Account in excess of $100,000,000 after giving effect to the Extension Redemptions, divided by (ii) 10,000,000;
WHEREAS, the Parties desire that the Company amend the Warrant Agreement dated as of October 1, 2014, by and between the Company and Continental Stock Transfer & Trust Company (the “Warrant Agreement”) to provide for the conversion of 12,000,000 of the outstanding warrants included as part of the units sold in the Company’s initial public offering (the “Public Warrants”), representing all of Public Warrants, into the right to receive $0.15 per Public Warrant, payable in cash or Common Stock (valued at $10.00 per share) at the discretion of the Company, automatically upon the consummation of an initial Business Combination (the “Warrant Amendment” and together with the Extension, the Name Change, the Trust Amendment, and the Reverse Split, the “Company Actions”); and
WHEREAS, the Parties desire that, following the completion of the Company Actions, the Company declare a dividend on each share of its Common Stock in the form of one-third of one warrant to purchase Common Stock, where each whole warrant entitles the holder to purchase one share of Common Stock at an exercise price of $12.50 per share (the “WarrantDividend”).
NOW, THEREFORE, in consideration of the foregoing, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:
Article 1
DEFINITIONS
The following terms, as used herein, have the following meanings:
“1933 Act” means the Securities Act of 1933, as amended.
“1934 Act” means the Securities Exchange Act of 1934, as amended.
“AR Capital” has the meaning set forth in the above.
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in the 1933 Act.
“Axelrod” means Andrew Axelrod.
“Benichou” means Lionel Benichou.
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“Board” has the meaning set forth in the recitals.
“Business Combination” has the meaning set forth in the recitals.
“Business Day” means any day other than a Saturday, Sunday or legal or bank holiday in the City of New York, State of New York. If any time period set forth in this Agreement expires on other than a Business Day, such period shall be extended to and through the next succeeding Business Day.
“Closing” has the meaning set forth in Section 2.2.
“Closing Date” has the meaning set forth in Section 2.2.
“Common Stock” has the meaning set forth in the recitals.
“Company Actions” has the meaning set forth in the recitals.
Company Charter” has the meaning set forth in the recitals.
“Company SEC Documents” means all forms, reports, schedules, statements and documents, as the same may have been amended (and, if amended, only the most recent form of such form, report, schedule, statement and document shall be deemed to be one of the “Company SEC Documents”), filed by the Company with the SEC under the 1933 Act, the 1934 Act or any other applicable securities law since its formation.
“Compensation Reimbursement Agreement” means the agreement dated October 1, 2014, between the Company and AR Capital as sponsor of the Company to pay AR Capital, as sponsor, an amount not to exceed $15,000.00 per month as reimbursement for a portion of the compensation paid to its personnel, including certain of the Company’s officers who work on the Company’s behalf, commencing on the date the Company’s securities were first listed on NASDAQ.
“Escrow Agreement” means that certain Escrow Agreement, dated as of October 1, 2014, by and among the Company, AR Capital, the Securities Escrow Agent and the other parties thereto.
“Extension” has the meaning set forth in the recitals.
“Founder Securities” has the meaning set forth in the recitals.
“Founder Shares” has the meaning set forth in the recitals.
“Founders” means Schorsch, Kahane, Radesca and Wiegenfeld.
“Fraud” means with respect to any Person (i) a false representation made by such Person, (ii) such Person’s knowledge or belief that such representation was false or was made with reckless indifference to the truth, (iii) an intent to induce, or reckless indifference to the fact that such representation could induce, a second Person to act or to refrain from acting, (iv) such second Person’s action or inaction taken in justifiable reliance upon such representation and (v) damage to such second Person as a result of such reliance.
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“Governmental Authority” means any government or political subdivisions, regulatory entity or body, commission, board, bureau, agency or instrumentality thereof, and any court, tribunal or judicial body or authority.
“Indemnified Damages” has the meaning set forth in Section 6.1.
“Initial Purchase Price”has the meaning set forth in Section 2.1.
“Insider Letter” means the letter agreement dated October 1, 2014, by and among AR Capital, the Founders and the Company.
“Kahane” means William M. Kahane.
“Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset.
“Loans” has the meaning set forth in Section 2.4.2.
“Name Change” has the meaning set forth in the recitals.
“New Management Director” has the meaning set forth inSection 2.5.2.
“New Management Officers” has the meaning set forth inSection 2.5.3.
“Party” and “Parties” has the meaning set forth in the above.
“Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization.
“Private Placement Warrants” has the meaning set forth in the recitals.
“Public Warrants” has the meaning set forth in the recitals.
“Public Shares” means the shares of Common Stock included in the units sold in the Company’s initial public offering.
“Purchase Price”has the meaning set forth in Section 2.1.
“Purchaser” has the meaning set forth in the above.
“Radesca” means Nicholas Radesca.
“Registration Rights Agreement” has the meaning set forth in Section 7.2.
“Schorsch” means Nicholas S. Schorsch.
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“SEC” means the Securities and Exchange Commission.
“Securities Escrow Agent” means Continental Stock Transfer & Trust Company.
“Seller” has the meaning set forth in the above.
“Third Party Claim” has the meaning set forth in Section 6.4.
“Transaction” has the meaning set forth in the recitals.
“Trust Account” means the account into which certain proceeds from the Company’s initial public offering of securities and sale of the Private Placement Warrants were deposited pursuant to the Trust Agreement.
“Trust Agreement” has the meaning set forth in the recitals.
“Trust Amendment” has the meaning set forth in the recitals.
“Trust Loans” has the meaning set forth in Section 2.4.2.
“U.S. GAAP” has the meaning set forth inSection 4.2.10.
“Warrant Amendment” has the meaning set forth in the recitals.
“Wiegenfeld” means Yoav Wiegenfeld.
“Working Capital Loan” has the meaning set forth in Section 2.4.2.
Any reference in this Agreement to (i) a statute shall be to such statute, as amended from time to time, and to the rules and regulations promulgated thereunder, and (ii) the word “including” shall mean “including, without limitation.”
Article 2
TRANSACTIONS
2.1 Sale ofFounder Securities. Upon the terms and subject to the conditions set forth in thisAgreement, at theClosing, theSellershall sell, assign, convey and deliver to thePurchaser, and thePurchasershall acquire and accept from theSeller, all of theSeller’s right, title and interest in, to and under theFounder Securities,free and clear of allLiensother thanLienson transfer imposed under applicable securities Laws. Inconsideration forthe sale of the Founder Securities, the Purchaser shall pay toAR Capital (i) at the Closing,an amount of cash equal to$10.00 (the “Initial Purchase Price”) by wire transfer to an account of AR Capital designated by AR Capital in writing prior to the Closing and (ii) upon the closing of a Business Combination, an additional amount of cash equal to 2.5% of the amount of cash held in the Trust Account immediately following the completion of any and all redemptions of Common Stock in connection with the approval by the Company’s stockholders of the Extension (the “Extension Redemptions”) and the Cash Dividend, provided that such additional amount of cash shall not be less than $1,000,000 nor more than $3,000,000 (such amount, together with the Initial Purchase Price, the “Purchase Price”) by wire transfer to an account of AR Capital designated by AR Capital in writing prior to the closing of the Business Combination.
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2.2 Closing.The closing of the sale of the Founder Securities(the “Closing”) shall take place on the first (1st) Business Day following the satisfaction of the conditions to Closing inArticle 3 (the “Closing Date”) via electronic delivery of the certificates, instruments and documents set forth inArticle 3.
2.3 Forfeiture. Upon completion of a Business Combination, the Purchaser shall automatically forfeit to the Company for zero consideration:
2.3.1 a number of Founder Shares equal to the excess (if positive) of (a) 6,000,000 over (b) 25% of the sum of (i) the total number of Public Shares outstanding immediately following the completion of the Company Actions and Extension Redemptions plus (ii) the excess of (x) the total number of shares of Common Stock issued or deemed issued, or issuable upon the conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial Business Combination, excluding any shares of Common Stock or equity-linked securities exercisable for or convertible into shares of Common Stock issued, or to be issued, to any seller in the initial Business Combination or to the Purchaser and its Affiliates, over (y) the total number of Public Shares redeemed in connection with the Business Combination (for the avoidance of doubt, no Founder Shares shall be forfeited under thisSection 2.3.1 if sum of the foregoing clauses (a) and (b) is equal to or less than zero); and
2.3.2 a number of Private Placement Warrants equal to 6,550,000 multiplied by a fraction, the numerator of which is the number of Founder Shares required to be forfeited pursuant toSection 2.3.1 and the denominator of which is 5,947,827.
2.4 Additional Agreements.
2.4.1 Equity Commitment. In connection with an initialBusiness Combination,Purchasershall commit to purchase at least $100,000,000.00 of Common Stock at a price of $10.00 per share.
2.4.2 Loans.
(i) On January 1, 2017 and the first (1st) day of each fiscal quarter commencing thereafter through the fiscal quarter in which the Company consummates an initial Business Combination or liquidates the Trust Account, the Purchaser shall loan to the Company an amount equal to the lesser of (X) $250,000.00 and (Y) $0.05 multiplied by the number of outstanding Public Shares following the completion of the Company Actions and Extension Redemptions (collectively, the “Trust Loans”), the proceeds of which shall be deposited by the Company into the Trust Account.
(ii) Following the Closing, as required (in the discretion of the Company) to satisfy the Company’s working capital and other expenses, the Purchaser shall make loans to the Company, in the aggregate amount not to exceed $2,000,000 without the approval of the Purchaser (the “Working Capital Loan” and together with the Trust Loans, the “Loans”).
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(iii) The Loans will not bear interest and will be repayable to the Purchaser upon consummation of an initial Business Combination.
2.4.3 Waivers. The Purchaser hereby waives (i) with respect to the Founder Shares to be held by it following the Closing, any right to receive the Cash Dividends or Warrant Dividends, and (ii) with respect to the Founder Warrants to be held by it following the Closing, any rights or adjustments under the Warrant Agreement in respect of the Cash Dividends or Warrant Dividends.
2.5 Private Placement Warrants. Upon the Closing, the Purchaser and the Company shall enter into an amendment to the Warrant Agreement governing the Private Placement Warrants to increase the exercise price of each Private Placement Warrant to $12.50 (subject to future adjustment as provided therein) (the “SponsorWarrant Amendment”).
2.6 Management. The following resignations and appointments of theCompany’s officers anddirectorsshall take effect on the Closing Date, unless otherwise specified herein:
2.6.1 Resignations of Officers.Kahane and Radesca shall each resign asan officer of theCompany;
2.6.2 Appointment of Officers. The Board shall appoint Axelrod as Chief Executive Officer and Executive Chairman of the Company andBenichouas Chief Financial Officer of the Company (collectively, the “New Management Officers”);
2.6.3 Appointment ofDirectors. TheBoardshall appointAxelrod as a member of the Board(the “New Management Director”); and
2.6.4 Resignation ofSchorschandKahaneasDirectors.SchorschandKahane shall each resignas a director of theCompany.
Article 3
CONDITIONS TO CLOSING
3.1 Conditions to the Obligations of the Purchaser. The obligations of the Purchaser to consummate the transactions contemplated by this Agreement are subject to the satisfaction (or waiver by the Purchaser) on or prior to Closing of each of the following conditions precedent:
3.1.1 Representations and Warranties. The representations and warranties of the Seller and the Company contained in Article 4 shall be true and correct in all material respects (except for the representations and warranties contained in Sections 4.1.1, 4.1.4, 4.2.1 and 4.2.5, which shall be true and correct in all respects) as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, which shall be true and correct in all respects as of that specified date);
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3.1.2 Approval of Company Actions. The Company Actions shall each have been approved by the requisite vote of the Company’s stockholders or warrantholders, as applicable;
3.1.3 Dividends. The Board shall have approved the Warrant Divided and, if applicable, the Cash Dividend;
3.1.4 Trust Account. There shall be at least $25,000,000 in the Trust Account upon completion of the Company Actions and Extension Redemptions;
3.1.5 Founder Securities. The Seller shall have executed and delivered to the Purchaser stock powers and/or other instruments of transfer duly conveying the Founder Securities to the Purchaser;
3.1.6 Secretary’s Certificate. TheCompanyshall have delivered to thePurchasera certificate, in the form attached hereto asExhibit A, signed byRadescaas Secretary of theCompany, attaching resolutions of theBoardapproving (i) the appointment of theNew Management Officers and(ii) the appointment of theNew Management Director;
3.1.7 Resignations of Directors and Officers. TheCompanyshall have delivered to thePurchaserthe resignations of each ofSchorsch andKahane as officers and directors of the Company and of Radesca as an officer of the Company;
3.1.8 Insider Letter Agreement. TheCompanyshall have delivered to thePurchaseranInsider Letter Agreement, in the form attached hereto as Exhibit B, executed by thePurchaserand theCompany;
3.1.9 Insider Letter Amendment. TheCompanyshall have delivered to thePurchaseran amendment to theInsider Letter, in the form attached hereto as Exhibit C, duly executed byAR Capital, theFoundersand theCompany;
3.1.10 Escrow Agreement.TheSeller and the Escrow Agentshall have delivered to thePurchaser an amendment to the Securities Escrow Agreement,in the form attached hereto as Exhibit D, duly executed bySeller, the Company and the Escrow Agent;
3.1.11 Compensation Reimbursement Agreement Termination. The Seller shall have delivered to the Purchaser a termination of the Compensation Reimbursement Agreement, effective as of the Closing Date,in the form attached hereto as Exhibit E, executed by the Seller and the Company; and
3.1.12 Registration Rights Notice. TheSellershall have delivered to thePurchaserand theCompanya notice to theCompanyfrom theSeller, in the form attached hereto as Exhibit F, with respect to the assignment of theSeller’s registration rights with respect to theFounder Securities.
3.2 Conditions to the Obligations of the Seller. The obligations of the Seller to consummate the transactions contemplated by this Agreement are subject to the satisfaction (or waiver by the Seller) on or prior to Closing of each of the following conditions precedent:
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3.2.1 Representations and Warranties. The representations and warranties of the Purchaser contained in Article 5 shall be true and correct in all material respects (except for the representation and warranty contained in Section 5.1, which shall be true and correct in all respects) as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, which shall be true and correct in all respects as of that specified date);
3.2.2 Approval of Company Actions. The Company Actions shall each have been approved by the requisite vote of the Company’s stockholders or warrantholders, as applicable;
3.2.3 Dividends. The Board shall have approved the Warrant Divided and, if applicable, the Cash Dividend;
3.2.4 Initial Purchase Price. The Purchaser shall have paid the Initial Purchase Price to the Seller;
3.2.5 Insider Letter Agreement. The Purchasershall have delivered to the SelleranInsider Letter Agreement, in the form attached hereto as Exhibit B, executed by thePurchaserand theCompany;
3.2.6 Escrow Agreement. The Seller and the Escrow Agent shall have duly executed and delivered an amendment to the Securities Escrow Agreement,in the form attached hereto as Exhibit D, duly executed bySeller, the Company and the Escrow Agent;
3.2.7 Warrant Amendment. The Purchaser, the Company and the warrant agent shall have duly executed and delivered the Sponsor Warrant Amendment; and
3.2.8 Vendor Payoff Acknowledgments. The Company shall have delivered evidence reasonably satisfactory to the Purchaser that, as of the Closing Date, the Company does not owe to any party listed on Schedule I hereto any amounts (other than amounts relating to the costs specified in clauses (i) and (ii) of Section 4.2.11).
Article 4
REPRESENTATIONS AND WARRANTIES
OF THESELLERAND THECOMPANY
4.1 Representations and Warranties of theSeller. TheSellermakes the representations and warranties contained in thisSection4.1as of the date hereof to thePurchaser, intending that thePurchaserrely on each of such representations and warranties in order to induce thePurchaserto enter into and consummate the transactions contemplated by thisAgreement.
4.1.1 Authorization of theSeller. The execution, delivery and performance by the Sellerof thisAgreementand the consummation by the Seller of the transactions contemplated herebyare within the Seller’s powers and have been duly authorized by all necessary action on the part of the Seller. Assuming the due authorization, execution and delivery of thisAgreementby eachParty, thisAgreementconstitutes a valid and bindingagreementof theSeller, enforceable against the Sellerin accordance with its terms,except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting the enforcement of rights of creditors generally and by general equitable principles.
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4.1.2 Governmental Authorization. The execution, delivery and performance of thisAgreementandthe consummation of the transactions contemplated herebyby the Sellerrequire no action by or in respect of, or filing or notice with, anyGovernmental Authority, other than compliance with any applicable requirements of the1933 Act, the1934 Actand any other applicable securities laws, whether state, federal or foreign.
4.1.3 Non-contravention. The execution, delivery and performance of thisAgreementandthe consummation of the transactions contemplated hereby (including, without limitation, the Transaction, the Company Actions, the Cash Dividend and the Warrant Dividend)by the Sellerdoes not (i) contravene, conflict with, or result in a violation or breach of any applicable law, statute, ordinance, rule, regulation, judgment, injunction, order or decree binding upon or applicable to aSelleror theFounder Securities, (ii) contravene, conflict with, or result in a violation or breach of any provision of anyagreementto which aSelleris aparty, (iii) require any consent or other action by anyPersonunder any materialagreementor other instrument binding upon aSelleror any material license, franchise, permit, certificate, approval or other similar authorization affecting the assets or business of aSelleror theFounder Securities, or (iv) result in the creation or imposition of anyLienon theFounder Securities.
4.1.4 Title to Founder Securities. Subject to the terms and provisions of theEscrow Agreement, the Sellerhas good and valid legal title to, and beneficial ownership of, theFounder Securities. Upon the sale of theFounder Securities, thePurchaserwill receive good and valid legal title to, and full beneficial ownership of, theFounder Securities, free and clear of allLiensother than (i)Lienscreated by thePurchaser; (ii) restrictions on transfer pursuant to securities laws or theEscrow Agreement; and (iii)Lienscreated by theCompany Charter. Other than theFounder Securities, the Seller has no other ownership interests in the Company including any securities convertible or exchangeable into any ownership interests of the Company.
4.1.5 Litigation. There is no litigation or other administrative or judicial proceedings pending or, to theSeller’s knowledge, threatened that would prevent aSellerfrom selling theFounder Securitiesto thePurchaser.
4.1.6 EmploymentAgreements. Neither theSeller, nor anyAffiliateof the Seller, is apartyto any employmentagreement, arrangement or understanding with theCompany.
4.1.7 Finders’ and Advisory Fees. There is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of aSellerwho would be entitled to any fee or commission from aSellerin connection with the transactions contemplated in thisAgreementfor which thePurchaseror theCompanywould be liable.
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4.2 Representations and Warranties of the Seller and theCompany. The Seller and theCompany jointlymake the representations and warranties contained in thisSection4.2as of the date hereof to thePurchaser, intending that thePurchaserrely on each of such representations and warranties in order to induce thePurchaserto enter into and consummate the transactions contemplated by thisAgreement.
4.2.1 Company Authorization. The execution, delivery and performance by theCompanyof thisAgreementand the consummation bythe Company of the transactions contemplated herebyare within theCompany’s powers and have been duly authorized by all necessary action on the part of theCompany,including any necessary action by securityholders of theCompany. Assuming the due authorization, execution and delivery of thisAgreementby eachParty, thisAgreementis the valid and binding obligation of theCompany, enforceable against theCompanyin accordance with its terms,except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting the enforcement of rights of creditors generally and by general equitable principles.
4.2.2 Corporate Existence and Power. TheCompanyis a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all corporate powers and all material governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted.
4.2.3 Governmental Authorization. The execution, delivery and performance of thisAgreementandthe consummation of the transactions contemplated herebyby theCompanyrequire no action by or in respect of, or filing with, anyGovernmental Authority, other than compliance with any applicable requirements of the1933 Act, the1934 Actand any other applicable securities laws, whether state, federal or foreign, all of which actions or filings will be timely made.
4.2.4 Non-contravention. The execution, delivery and performance of thisAgreementandthe consummation of the transactions contemplated herebyby theCompany (including, without limitation, the Transaction, the Company Actions, the Cash Dividend and the Warrant Dividend)do not (i) contravene, conflict with, or result in a violation or breach of any provision of theCompany Charteror bylaws of theCompanyor any applicable law, statute, ordinance, rule, regulation, judgment, injunction, order or decree binding upon or applicable to theCompanyor theFounder Securities, (ii) contravene, conflict with, or result in a violation or breach of any provision of any writtenagreementto which theCompanyor aSelleris aparty, (iii) require any consent or other action by anyPersonunder any materialagreementor other instrument binding upon theCompanyor any material license, franchise, permit, certificate, approval or other similar authorization affecting the assets or business of theCompany, or (iv) result in the creation or imposition of anyLienon theFounder Securitiesother than (a)Lienscreated byPurchaser; (b) restrictions on transfer pursuant to securities laws or theEscrow Agreement; and (c)Lienscreated by theCompany Charter.
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4.2.5 Capitalization. The authorized capital of theCompanyconsists of 401,000,000 shares, consisting of 400,000,000 shares ofCommon Stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share, of which 30,000,000 shares ofCommon Stockand nil shares of preferred stock are issued and outstanding. All of the issued and outstanding shares of theCompany,including theFounder Securities, have been duly authorized and validly issued and are fully paid and non-assessable and have been issued in compliance with applicable federal and state securities laws. All of thePrivate Placement Warrants and Public Warrants, consisting of6,550,000 and12,000,000 outstanding warrants, respectively,have been duly authorized and the shares ofCommon Stockunderlying thePrivate Placement Warrants and Public Warrantswill, when issued and paid for in accordance with the terms of such warrants, be duly authorized and validly issued, fully paid and non-assessable and issued in compliance with applicable federal and state securities laws. Except as contemplated by thisAgreementor as disclosed in theCompany SEC Documents, (i) no subscription, warrant, option, convertible security or other right (contingent or otherwise) to purchase or acquire any shares of capital stock of theCompanyis authorized or outstanding, (ii) there is not any commitment or offer of theCompanyto issue any subscription, warrant, option, convertible security or other such right or to issue or distribute to holders of any shares of its capital stock any evidences of indebtedness or assets of theCompanyand (iii) theCompanyhas no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any shares of its capital stock or any interest therein or to pay any dividend or make any other distribution in respect thereof. NoPersonis entitled to any preemptive or similar right with respect to the issuance of any securities of theCompanyand, except as set forth in thisAgreementor in theCompany SEC Documents, noPersonis entitled to or any rights with respect to the registration of any securities of theCompanyunder the1933 Act.
4.2.6 SECFilings. TheCompanyhas filed or furnished (as applicable) allCompany SEC Documentswith theSECthat have been required to be so filed or furnished (as applicable) by it under applicable law at or prior to the time so required. As of its filing date, eachCompany SEC Documentcomplied, as to form and content in all material respects with the applicable requirements of the1933 Act, the1934 Act, and all other applicable securities laws as the case may be, and did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.
4.2.7 Listing. Common Stock is listed on the NASDAQ Stock Market. There is no action or proceeding pending, or to the Company’s Knowledge, threatened against the Company by the NASDAQ Stock Market with respect to any intention by such entity to prohibit or terminate the listing of the Company on the NASDAQ Stock Market.
4.2.8 Contracts.Schedule I hereto contains a complete list of all contracts of the Company (“Company Contracts”) other than (i) non-disclosure agreements, (ii) contracts that have been filed with the SEC via EDGAR and that are publicly available, (iii) engagement letters with independent registered public accounting firms and (iv) contracts relating to the purchase of goods or services for not more than $10,000. True and correct copies of the Company Contracts have been made available to Purchaser, together with all amendments, exhibits, attachments, waivers or other changes thereto.
4.2.9 No Material Change. Since June 30, 2016 there has not been any material change in the capital, assets, liabilities or obligations (absolute, accrued, contingent or otherwise) of theCompanyfrom the position of theCompanydisclosed in theCompany SEC Documents.
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4.2.10 Financial Statements. The financial statements of theCompanyincluded in theCompany SEC Documentsfairly presented, in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), consistently applied, the financial position and condition, the results of operations, changes in stockholders’ equity and cash flows and the other information purported to be shown therein of theCompanyas at the dates thereof and for the periods then ended and reflect all assets, liabilities and obligations (absolute, accrued, contingent or otherwise) of theCompanyas at the dates thereof required to be disclosed byU.S. GAAP, and include all adjustments necessary for a fair presentation; provided, however, that the unauditedCompanyfinancial statements do not include all footnotes or normal year-endclosingadjustments in accordance with GAAP.
4.2.11 Liabilities. As of the Closing Date, except for (i) up to $250,000 of costs relating to the preparation and filing of the Company’s proxy statement and the solicitation of proxies in connection with the Company Actions and (ii) legal and accounting fees relating to the preparation, review and filing of the Company’s Form 10-Q for the quarter ending September 30, 2016, theCompany will not have any liabilities for borrowed money or for goods or services purchased or committed for or other amounts payable that, if paid by theCompany, would reduce the cash held outside theTrust Accountbelow $0.00.
4.2.12 Finders’ and Advisory Fees. There is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of theCompanywho would be entitled to any fee or commission from theCompanyin connection with the transactions contemplated in thisAgreementfor which thePurchaseror theCompanywould be liable.
4.2.13 Compensation Reimbursement. Other than amountspayable by theCompany to AR Capitalpursuant to theCompensation Reimbursement Agreement (it being understood and agreed that all such amounts shall be forgiven and fully discharged upon execution of the termination of the Compensation Reimbursement Agreement contemplated by Section 3.1.11 herein), no other amounts are, or to theCompany’s knowledge will, after the date hereof, be payable by theCompanyto anyPersonas compensation reimbursement or otherwise in any manner related to any services provided by any suchPersonto theCompany.
4.2.14 No Proceedings. There are no actions, suits, proceedings or inquiries pending, or to theCompany’s knowledge, threatened against or affecting theCompanyat law or in equity or before or by any federal, state, municipal or other governmental department, commission,board, bureau, agency or instrumentality which in any manner adversely affects, or may in any manner adversely affect, the business, operations, capital, assets, liabilities and obligations (absolute, accrued, contingent or otherwise), condition (financial or otherwise) or results of operations of theCompanyor which may affect the sale of theFounder Securities.
4.2.15 Trust Account. As of the close of business on theBusiness Daypreceding (x) the date of thisAgreement and (y) the Closing Date, the balance in theTrust Accountwas at least $240,000,000.
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Article 5
REPRESENTATIONS AND WARRANTIES
OF THEPURCHASER
The Purchaser makes the representations and warranties contained in thisArticle 5 as of the date hereof to the Company and the Seller intending that the Company and the Seller rely on each of such representations and warranties in order to induce the Company and the Seller to enter into and consummate the transactions contemplated by this Agreement.
5.1 Authorization. The execution, delivery and performance by thePurchaserof thisAgreementand the consummation bythe Purchaser of the transactions contemplated herebyare within thePurchaser’s power and have been duly authorized by all necessary action. Assuming the due authorization, execution and delivery of thisAgreementby eachParty, thisAgreementconstitutes a valid and bindingagreementof thePurchaser, enforceable against thePurchaserin accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting the enforcement of rights of creditors generally and by general equitable principles.
5.2 Governmental Authorization. The execution, delivery and performance by thePurchaserof thisAgreementand the consummation bythe Purchaser of the transactions contemplated herebyrequire no action by or in respect of, or filing with, anyGovernmental Authority, other than compliance with any applicable requirements of the1933 Act, the1934 Actand any other applicable securities laws, whether state, federal or foreign.
5.3 Investment Representations.
5.3.1 Acknowledgment. ThePurchaserunderstands and agrees that theFounder Securitieshave not been registered under the1933 Actor the securities laws of any state of the U.S. and that the sale of theFounder Securitieswill be effected in reliance upon one or more exemptions from registration afforded under the1933 Act.
5.3.2 Status. ThePurchaserrepresents and warrants to theSellerthat thePurchaseris an “accredited investor” as defined in Rule 501 promulgated under the1933 Act. ThePurchaserunderstands that theFounder Securitieswill be sold to thePurchaserin reliance upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of thePurchaserset forth in thisAgreement, in order that theSellermay determine the applicability and availability of the exemptions from registration on which theSelleris relying.
5.3.3 Transfers. ThePurchaserwill not transfer any or all of theFounder Securitiesabsent an effective registration statement under the1933 Actand applicable state securities law covering the disposition of suchFounder Securities, without first providing the Company, upon the request of the Company, with an opinion of counsel (which counsel and opinion are reasonably satisfactory to theCompany) to the effect that such transfer will be exempt from the registration and the prospectus delivery requirements of the1933 Actand the registration or qualification requirements of any applicable U.S. state securities laws.
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5.4 Purchaser Review. ThePurchaserhas reviewed theCompany SEC Documents,includingthe exhibits thereto. ThePurchaseris not relying on any other information concerning theCompanyor theFounder Securitiesin connection with acceptance of theFounder Securities, other than as set forth herein.
5.5 Purchaserfor Own Account. ThisAgreementis made with thePurchaserin reliance upon thePurchaser’s representation toSellerand theCompany, which by thePurchaser’s execution of thisAgreement, thePurchaserhereby confirms, that theFounder Securitiesto be acquired by thePurchaserwill be acquired for investment forPurchaser’s own accounts, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and thatPurchaserhas no present intention of selling, granting any participation in, or otherwise distributing the same.Purchaserdoes not presently have any contract, undertaking,agreementor arrangement with anyPersonto sell, transfer or grant participations to suchPersonor to any thirdPerson, with respect to any of theFounder Securities.Purchaserhas not been formed for the specific purpose of acquiring theFounder Securities.
5.6 Finders’ and Advisory Fees. There is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of thePurchaserwho would be entitled to any fee or commission from theCompanyin connection with the transactions contemplated in thisAgreementfor whichSellerwould be liable.
Article 6
INDEMNIFICATION
6.1 Indemnification bySellerof thePurchaser. From and after the date of thisAgreement,Sellershall indemnify, defend and hold harmless thePurchaser, theCompanyand their respective officers,directors, shareholders, employees, agents andAffiliatesand their successors and assigns against any loss, claim, damage, cost, obligation, liability, penalty and expense,includingall legal and other expenses reasonably incurred in connection with investigating or defending against any such loss, claim, damage, cost, obligation, liability, penalty or expense or action in respect of such matters (collectively referred to as “Indemnified Damages”) arising out of or resulting from (i) any breach or default of any representation or warranty by, or covenant oragreementof, theSellercontained in thisAgreementor in anyagreementor instrument delivered pursuant hereto or (ii) any claim by a third party arising out of or resulting from the Fraud, gross negligence or willful misconduct of the Seller in connection with the operation of the Company prior to the Closing Date,provided that such claim is made prior to the first anniversary of the Closing Date.
6.2 Indemnification by theCompanyof thePurchaser. From and after the date of thisAgreement, theCompanyshall indemnify, defend and hold harmless thePurchaserand its officers,directors, shareholders, employees, agents andAffiliatesand its successors and assigns against anyIndemnified Damagesarising out of or resulting from any breach or default of any representation or warranty by, or covenant oragreementof, theCompanycontained in thisAgreementor in anyagreementor instrument delivered pursuant hereto
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6.3 Indemnification by thePurchaserof theSeller. From and after the date of thisAgreement, thePurchasershall indemnify, defend and hold harmless theSellerand its officers,directors, shareholders, employees, agents andAffiliatesand its successors and assigns against anyIndemnified Damagesarising out of or resulting from (i) any breach or default of any representation or warranty by, or covenant or agreement of, the Purchaser contained in this Agreement or in any agreement or instrument delivered pursuant hereto or (ii) any claim by a third party arising out of or resulting from the Fraud, gross negligence or willful misconduct of the Purchaser in connection with the operation of the Company after the Closing Date until the first anniversary of the Closing Date.
6.4 Indemnification by theCompanyof theSeller. From and after the date of thisAgreement, theCompanyshall indemnify, defend and hold harmless theSellerand its officers,directors, shareholders, employees, agents andAffiliatesand its successors and assigns against anyIndemnified Damagesarising out of or resulting from any claim by a thirdparty(a “Third Party Claim”) arising out of or resulting from the operation of theCompanyafter the Closing Date.
6.5 Notice of Indemnification. Upon receipt by an indemnifiedpartyof notice of the commencement against it of any action involving aThird Party Claim, such indemnifiedparty, if a claim in respect of such action is to be made by it against any indemnifyingpartyunder thisArticle 6, shall promptly notify in writing the indemnifyingpartyof such commencement;provided,however, that the failure to promptly notify the indemnifyingpartyshall not relieve the indemnifyingpartyfrom its obligations underArticle 6except to the extent that it is materially prejudiced by such failure. In case any such action is brought against any indemnifiedparty, and it notifies an indemnifyingpartyof such commencement, the indemnifyingpartywill be entitled to participate in the defense and, to the extent that it may wish, jointly with any other indemnifyingpartysimilarly notified, assume the defense of the action, with counsel reasonably satisfactory to such indemnifiedparty, and after notice from the indemnifyingpartyto such indemnifiedpartyof its election to assume the defense, the indemnifyingpartywill not be liable to such indemnifiedpartyunder thisArticle 6for any legal or other expenses subsequently incurred by such indemnifiedpartyin connection with the defense other than reasonable costs of investigation. Any such indemnifyingpartyshall not be liable to any such indemnifiedpartyon account of any settlement of any claim or action effected without the written consent of such indemnifyingparty. The indemnifyingpartywill not settle or compromise any claim or action without the written consent of the indemnifiedparty(which consent shall not be unreasonably withheld).
6.6 Company CharterProtections;Directors’ and Officers’ Liability Insurance.
6.6.1 All rights to exculpation or indemnification for acts or omissions occurring through the date hereof now existing in favor of any of the officers anddirectorsof theCompanyprior tothe consummation of the transactions contemplated herebyas provided in theCompany Charteror bylaws of theCompanyshall survive the execution of thisAgreementand theClosingand shall continue in full force and effect in accordance with their terms and shall not be amended by theCompanyto eliminate or reduce such rights except to the extent required by law.
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6.6.2 Until the earlier of (i) the date on which the Company consummates a Business Combination and (ii) the date on which the Company dissolves and liquidates prior to the consummation of a Business Combination, the Company shall cause to be maintained in effect the current policies of directors’ and officers’ liability insurance maintained by the Company (or policies of at least the same coverage and amounts containing terms and conditions which are no less advantageous to the Company’s current directors and officers), with respect to claims arising from facts and events that occurred through the Closing.
6.6.3 If theCompanyor any of its successors or assigns (i) consolidates with or merges into any otherPersonand shall not be the continuing or surviving entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to anyPerson, then, in each such case, to the extent necessary, proper provision shall be made so that the successors and assigns of theCompanyassume the obligations set forth in this Section6.6.
6.7 Limitations on Indemnification.
6.7.1 No indemnifiedpartyshall be entitled to recover from an indemnifyingpartyfor, and the indemnifiedpartieswaive any right to recover, punitive, special, indirect or exemplary damages arising in connection with or with respect to any claim under thisAgreement, except as may be awarded in connection to aThird Party Claim.
6.7.2 No indemnifiedpartywho has been determined by a court of competent jurisdiction in a final judgment from which no appeal can be made to have engaged in anyFraud, willful misconduct or gross negligence shall be entitled, to the extent that theIndemnified Damageswere caused by such activity, to claim indemnification from anyPerson.
6.7.3 In the event any indemnification claim is brought against theSeller, thePurchaserexpressly agrees that its recourse against the Selleris expressly limited to the full amount of the Purchase Price that would be payable upon the closing of an initial Business Combination, except in the case ofFraud, willful misconduct or gross negligence by the Seller.
6.7.4 In the event any indemnification claim is brought against thePurchaser, the Sellerexpressly agrees that its recourse against thePurchaseris expressly limited to the full amount of the Purchase Price that would be payable upon the closing of an initial Business Combination, except in the case ofFraud, willful misconduct or gross negligence by the Purchaser.
6.7.5 Each Party hereby acknowledges and agrees that, from and after the Closing, the sole and exclusive remedy of such Party, with respect to any and all claims for Indemnified Damages arising out of or relating to this Agreement shall be pursuant and subject to the requirements of the indemnification provisions set forth in this Article 6. Notwithstanding any of the foregoing, nothing contained in this Article 6 or elsewhere in this Agreement shall in any way impair, modify or otherwise any Party’s right to bring any claim or proceeding against any other Party based upon such other Party’s Fraud, willful misconduct or gross negligence.
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Article 7
COVENANTS
7.1 Releases.
7.1.1 TheSellerhereby releases theCompanyand each of its officers, directorsand shareholders from any claims theSellermay have now or in the future, whether contractual, statutory or otherwise, against any of theCompany, its officers, directorsor shareholders relating to theCompanyor its securities,including(i) the formation of theCompany, (ii) the operation of theCompany(includingagreements between theSellerand theCompany) up to the Closing and (iii) the dismissal of theSelleror any of its officers,directorsor employees as an officer, director or employee of theCompany, as applicable. Notwithstanding the foregoing, nothing herein shall be construed as a waiver or release of (x) any claim for indemnification that theSellermay have against theCompanyregardless of whether such claim arises after the Closing or (y) any rights under thisAgreementor any of the agreements executed and delivered pursuant hereto.
7.1.2 TheCompanyhereby releases the Sellerand their respective officers, directorsand shareholders from any claims theCompanymay have now or in the future, whether contractual, statutory or otherwise, against any of theSellerand their respective officers,directorsand shareholders relating to theCompanyor its securities,including (i) the formation of theCompanyand (ii) the operation of theCompany(includingagreements between theSellerand theCompany) up to the Closing. Notwithstanding the foregoing, nothing herein shall be construed as a waiver or release of any rights under thisAgreementor any of the agreements executed and delivered pursuant hereto.
7.1.3 Nothing contained herein shall preclude theCompanyor theSellerfrom being named as a defendant or co-defendant in anyThird Party Claimwith respect to their actions prior to the date hereof.
7.1.4 No Party shall be released in the event of Fraud, willful misconduct or gross negligence of that Party.
7.2 Assignment of Registration Rights. The Sellerhereby assigns to thePurchaserthe Seller’s rights and obligations under that certainRegistration Rights Agreementdated as of October 1, 2014, by and among theCompanyand each of thepartiesexecuting a signature page thereto (the “Registration Rights Agreement”) with respect to theFounder Securities.
7.3 Delivery of Records. Promptly after the request of thePurchaser, AR Capitalshall deliver all of theCompany’s organization documents, minute and stock record books and the corporate seal, books of account, general, financial, tax and personnel records, invoices, shipping records, supplier lists, correspondence and other documents, records and files and computer software and programs to a location designated by thePurchaser.AR Capitalshall not retain copies of the foregoing, except for archiving and legal recordkeeping purposes.
7.4 Further Assurances. EachPartyagrees that it will execute and deliver, or cause to be executed and delivered, on or after the date of thisAgreement, all such other documents and instruments as are reasonably required for the performance of suchParty’s obligations hereunder and will take all commercially reasonable actions as may be necessary to consummatethe transactions contemplated herebyand to effectuate the provisions and purposes hereof. In addition, without limiting the foregoing, the Selleragrees to cooperate with theCompanyand thePurchaserwith respect to all filings that theCompanyor thePurchaserelects to make or is required by law to make in connection withthe transactions contemplated hereby.
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Article 8
MISCELLANEOUS
8.1 Notices. All notices, demands or requests provided for or permitted to be given pursuant to thisAgreementmust be in writing and shall be delivered or sent, with the copies indicated, by personal delivery, facsimile (with confirmation of receipt by intended recipient and additional copy sent by overnight delivery service) or overnight delivery service (by a reputable international carrier) to thePartiesas follows (or at such other address as aPartymay specify by notice given pursuant to this Section):
| To the Seller: | AR Capital, LLC |
| 405 Park Avenue, 14th Floor | |
| New York, New York 10022 | |
| Attention: Legal Department | |
| Facsimile: (646) 861-7804 | |
| To the Company: | AR Capital Acquisition Corp. |
| 405 Park Avenue, 14th Floor | |
| New York, New York 10022 | |
| Attention: Legal Department | |
| Facsimile: (646) 861-7743 | |
| In either case, with a copy to: | Winston & Strawn LLP |
| 200 Park Ave. | |
| New York, New York 10166 | |
| Attention: Joel Rubinstein, Esq. | |
| Facsimile: (212) 294-4700 | |
| To the Purchaser: | Axar Master Fund Ltd. |
| c/o Axar Capital Management LP | |
| 1330 Avenue of the Americas, Sixth Floor | |
| New York, NY 10019 | |
| Attention: Andrew Axelrod | |
Facsimile: (212) 956-3127 | |
| With a copy to: | Sidley Austin LLP One South Dearborn Street Chicago, IL 60603 Attention: Daniel F. Spies, Esq. and Michael P. Heinz, Esq. Facsimile: (312) 853-7036 |
All notices shall be deemed given and received upon their delivery to the addresses for the respective Party(ies), with the copies indicated, as provided in this Section.
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8.2 EntireAgreement. ThisAgreementcontains the sole and entire bindingagreementamong thePartieswith respect to the subject matter hereof and supersedes any and all other prior written or oral agreements among them.
8.3 Amendment. No amendment or modification of thisAgreementshall be valid unless in writing and duly executed by thePartiesaffected by the amendment or modification.
8.4 Binding Effect. ThisAgreementshall be binding upon and inure to the benefit of thePartiesand their respective representatives, heirs, successors and permitted assigns.
8.5 Waiver. Waiver by anyPartyof any breach of any provision of thisAgreementshall not be considered as or constitute a continuing waiver or a waiver of any other breach of the same or any other provision of thisAgreement.
8.6 Captions. The captions contained in thisAgreementare inserted only as a matter of convenience or reference and in no way define, limit, extend or describe the scope of thisAgreementor the intent of any of its provisions.
8.7 Construction. In the construction of thisAgreement, whether or not so expressed, words used in the singular or in the plural, respectively, include both the plural and the singular and the masculine, feminine and neuter genders include all other genders. Since allPartieshave engaged in the drafting of thisAgreement, no presumption of construction against anyPartyshall apply.
8.8 Section References. All references contained in thisAgreementto Sections shall be deemed to be references to Sections of thisAgreement, except to the extent that any such reference specifically refers to another document. All references to Sections shall be deemed also to refer to all subsections of such Sections, if any.
8.9 Severability. In the event that any portion of thisAgreementis illegal or unenforceable, it shall affect no other provisions of thisAgreement, and the remainder of thisAgreementshall be valid and enforceable in accordance with its terms.
8.10 Assignment. Neither thisAgreementnor any rights under thisAgreementmay be assigned by anyPartywithout the written consent of all otherParties; provided, however, thePurchasermay assign thisAgreementto anAffiliateorAffiliatesof thePurchaser.
8.11 Governing Law. ThisAgreementand the interpretation of its terms shall be governed by the laws of the State of Delaware, without application of conflicts of law principles.
8.12 Attorneys’ Fees. TheCompany, theSellerand thePurchasershall pay their respective attorneys’ fees and expenses for the negotiation and preparation of thisAgreementand the other agreements contemplated by thisAgreement, except that, if the Closing does not occur by October 7, 2016, the Purchaser agrees to reimburse the Company for $50,000 of legal expenses incurred in connection with the negotiation and preparation of this Agreement.
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8.13 Public Disclosure. NoPartyshall make any public disclosure or publicity release pertaining to the existence of the subject matter contained in thisAgreementwithout notifying and consulting with the otherParties; provided, however, that notwithstanding the foregoing, eachPartyshall be permitted to make required filings with theSEC. Prior to the Closing, theCompany shall not makeany SEC filings in which the Purchaser is identified without Purchaser’s prior consent, which shall not be unreasonably withheld.
8.14 Currency. All monetary amounts in thisAgreementare stated in United States dollars ($) and shall be paid in that currency. No changes shall be made in any of such amounts based upon changes in the value of the United States dollar against any other currency.
8.15 Execution in Counterparts; Facsimile Signatures. ThisAgreementand any amendment, waiver or consent hereto may be executed by thePartiesin separate counterparts, each of which, when so executed and delivered, shall be an original, but all such counterparts shall together constitute one and the same instrument. All such counterparts may be delivered among thePartiesby facsimile or other electronic transmission, which shall not affect the validity thereof.
8.16 Trust AccountWaiver. ThePurchaserhereby waives any right, title, interest or claim of any kind in or to any monies in theTrust Accountit may have now or in the future as a result of, or arising out of, any negotiations, contracts or agreements with theCompanyand will not seek recourse against theTrust Accountfor any reason whatsoever, except for the right to receive amounts from theTrust Accountin respect of any Public Sharesowned by thePurchaserin accordance with theCompany Charter.
[Remainder of page intentionally left blank; signature page to follow.]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date set forth above.
| SELLER: | ||
| AR CAPITAL, LLC | ||
| By: | /s/ Edward Michael Weil, Jr. | |
| Name: Edward Michael Weil, Jr. | ||
| Title: CEO | ||
[Signature Page to Transfer Agreement]
IN WITNESS WHEREOF, thePartieshave executed thisAgreementas of the date set forth above.
| COMPANY: | ||
| AR CAPITAL ACQUISITION CORP. | ||
| By: | /s/ William Kahane | |
| Name: William Kahane | ||
| Title: CEO | ||
[Signature Page to Transfer Agreement]
IN WITNESS WHEREOF, thePartieshave executed thisAgreementas of the date set forth above.
| PURCHASER: | ||
| AXAR MASTER FUND LTD. | ||
| By: Axar Capital Management LP, its investment manager | ||
| By: Axar GP LLC, its general partner | ||
| By: | /s/ Andrew Axelrod | |
| Name: Andrew Axelrod | ||
| Title: Sole Member | ||
| Date: | ||
[Signature Page to Transfer Agreement]
SCHEDULE I
Contracts
Exhibit A
Secretary’s Certificate
Exhibit B
Form of Insider Letter Agreement
October [ ], 2016
[ ]
[Address]
Re:Agreement of New Sponsor
Ladies and Gentlemen:
In connection with the consummation of the transactions contemplated by that certain Agreement, dated September 16, 2016, by and among the undersigned, AR Capital Acquisition Corp. (the “Company”) and AR Capital, LLC (“ARC LLC”), the undersigned hereby agrees as follows (certain capitalized terms used herein are defined in paragraph 8 hereof):
1. If the Company seeks stockholder approval of a proposed Business Combination, then in connection with such proposed Business Combination, the undersigned will vote all Founder Shares and any shares acquired by it in the secondary public market in favor of such proposed Business Combination.
2. The undersigned hereby agrees that in the event that the Company fails to consummate a Business Combination by December 31, 2017 or such later period approved by the Company’s stockholders in accordance with the Company’s amended and restated certificate of incorporation (the “Outside Date”), the undersigned shall take all reasonable steps to cause the Company to (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem 100% of the Common Stock sold as part of the Units in the Public Offering (the “Offering Shares”), at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest not previously released to the Company to pay its franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and other requirements of applicable law. The undersigned agrees to not propose any amendment to the Company’s amended and restated certificate of incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of the Offering Shares if the Company does not complete a Business Combination by the Outside Date, unless the Company provides its public stockholders with the opportunity to redeem their shares of Common Stock upon approval of any such amendment at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and income taxes, divided by the number of then outstanding public shares.
The undersigned agrees that it has no right, title, interest or claim of any kind in or to any monies held in the Trust Account or any other asset of the Company as a result of any liquidation of the Company with respect to the Founder Shares. The undersigned hereby further waives, with respect to any shares of the Common Stock held by it, him or her, any redemption rights it, he or she may have in connection with the consummation of a Business Combination, including, without limitation, any such rights available in the context of a stockholder vote to approve such Business Combination or in the context of a tender offer made by the Company to purchase shares of the Common Stock (although the undersigned shall be entitled to redemption and liquidation rights with respect to any shares of Common Stock (other than the Founder Shares) it holds if the Company fails to consummate a Business Combination by the Outside Date).
3. In the event of the liquidation of the Trust Account, the undersigned (the “Indemnitor”) agrees to indemnify and hold harmless the Company against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all legal or other expenses reasonably incurred in investigating, preparing or defending against any litigation, whether pending or threatened, or any claim whatsoever) to which the Company may become subject as a result of any claim by (i) any third party for services rendered or products sold to the Company or (ii) a prospective target business with which the Company has entered into an acquisition agreement (a “Target”);provided,however, that such indemnification of the Company by the Indemnitor shall apply only to the extent necessary to ensure that such claims by a third party for services rendered (other than the Company’s independent public accountants) or products sold to the Company or a Target do not reduce the amount of funds in the Trust Account,provided,further, that such indemnification of the Company by the Indemnitor shall apply only if such third party or Target has not executed an agreement waiving claims against and all rights to seek access to the Trust Account whether or not such agreement is enforceable. In the event that any such executed waiver is deemed to be unenforceable against such third party, the Indemnitor shall not be responsible for any liability as a result of any such third party claims. Notwithstanding any of the foregoing, such indemnification of the Company by the Indemnitor shall not apply as to any claims under the Company’s obligation to indemnify the underwriters of the Public Offering (the “Underwriters”) against certain liabilities, including liabilities under the Securities Act of 1933, as amended. The Indemnitor shall have the right to defend against any such claim with counsel of its choice reasonably satisfactory to the Company if, within 15 days following written receipt of notice of the claim to the Indemnitor, the Indemnitor notifies the Company in writing that it shall undertake such defense.
4. The undersigned hereby agrees not to participate in the formation of, or become an officer or director of, any other blank check company that is formed in the United States until the Company has entered into a definitive agreement with respect to a Business Combination or the Company has failed to complete a Business Combination by the Outside Date.
5. (a) The undersigned acknowledges that the Founder Shares are held in an escrow account maintained in New York, New York by Continental Stock Transfer & Trust Company, acting as escrow agent. Subject to certain limited exceptions, the undersigned agrees not to transfer, assign, sell or release the shares from escrow until one year after the date of the consummation of a Business Combination or earlier if, subsequent to a Business Combination, (i) the last sale price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing at least 150 days after the consummation of a Business Combination or (ii) the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property (the “Lock-up”).
(b) The undersigned agrees that it shall not effectuate any Transfer of Private Placement Warrants, or Common Stock underlying such warrants, until 30 days after the completion of a Business Combination.
(c) Notwithstanding the provisions set forth in paragraphs 6(a) and (b), Transfers of the Founder Shares, Private Placement Warrants and shares of Common Stock underlying the Private Placement Warrants are permitted (a) to the Company’s officers or directors, any affiliates or family members of any of the Company’s officers or directors, any members of the undersigned or its affiliates, or any affiliates of the undersigned, (b) in the case of an individual, by gift to a member of the individual’s immediate family, to a trust, the beneficiary of which is a member of the individual’s immediate family or an affiliate of such person, or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private sales or transfers made in connection with the consummation of a Business Combination at prices no greater than the price at which the securities were originally purchased; (f) by virtue of the laws of the state of Delaware or the undersigned’s limited liability company agreement upon dissolution of the undersigned; (g) in the event of the Company’s liquidation prior to the completion of a Business Combination; or (h) in the event of completion of a liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property subsequent to the completion of a Business Combination;provided,however, that in the case of clauses (a) through (f) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions.
6. Neither the undersigned nor any affiliate of the undersigned, nor any director or officer of the Company, shall receive any finder’s fee, reimbursement, consulting fee, monies in respect of any repayment of a loan or other compensation prior to, or in connection with any services rendered in order to effectuate the consummation of the Company’s initial Business Combination (regardless of the type of transaction that it is), other than reimbursement for any reasonable out-of-pocket expenses related to identifying, investigating and completing an initial Business Combination, so long as no proceeds of the Public Offering held in the Trust Account may be applied to the payment of such expenses prior to the consummation of a Business Combination; and repayment of loans, if any, and on such terms as to be determined by the Company from time to time, made by the undersigned or an affiliate of the undersigned or certain of the Company’s officers and directors to finance transaction costs in connection with an intended initial Business Combination, provided, that, if the Company does not consummate an initial Business Combination, a portion of the working capital held outside the Trust Account may be used by the Company to repay such loaned amounts so long as no proceeds from the Trust Account are used for such repayment.
7. The undersigned has full right and power, without violating any agreement to which it is bound (including, without limitation, any non-competition or non-solicitation agreement with any employer or former employer) to enter into this Letter Agreement.
8. As used herein, (i) “Business Combination” shall mean a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving the Company and one or more businesses; (ii) “Founder Shares” shall mean the shares of the Common Stock of the Company issued prior to the consummation of the Public Offering; (iii) “Private PlacementWarrants ” shall mean the Warrants to purchase 6,550,000 shares of Common Stock that were acquired by ARC LLC for an aggregate purchase price of $6.55 million, or $1.00 per Warrant, in a private placement that occurred simultaneously with the consummation of the Public Offering; (iv) “Public Offering” means the initial public offering of the Company that closed on October 7, 2014; (v) “Public Stockholders” shall mean the holders of securities issued in the Public Offering; and (vi) “Transfer” shall mean the (a) sale of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder with respect to, any security, (b) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement of any intention to effect any transaction specified in clause (a) or (b).
9. This Letter Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior understandings, agreements, or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby. This Letter Agreement may not be changed, amended, modified or waived (other than to correct a typographical error) as to any particular provision, except by a written instrument executed by all parties hereto.
10. No party hereto may assign either this Letter Agreement or any of its rights, interests, or obligations hereunder without the prior written consent of the other party. Any purported assignment in violation of this paragraph shall be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee. This Letter Agreement shall be binding on the undersigned and each of its successors, heirs and assigns.
11. This Letter Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The parties hereto (i) all agree that any action, proceeding, claim or dispute arising out of, or relating in any way to, this Letter Agreement shall be brought and enforced in the courts of New York City, in the State of New York, and irrevocably submits to such jurisdiction and venue, which jurisdiction and venue shall be exclusive and (ii) waives any objection to such exclusive jurisdiction and venue or that such courts represent an inconvenient forum.
12. Any notice, consent or request to be given in connection with any of the terms or provisions of this Letter Agreement shall be in writing and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by hand delivery or facsimile transmission.
13. This Letter Agreement shall terminate on the earlier of (i) the expiration of the Lock-up or (ii) the liquidation of the Company.
[Signature page follows]
| Sincerely, | |||||
| AXAR MASTER FUND LTD. | |||||
| By: | |||||
| Name: | |||||
| Title: | |||||
| Acknowledged and Agreed: | |||||
| AR CAPITAL ACQUISITION CORP. | |||||
| By: | |||||
| Name: | |||||
| Title: | |||||
Exhibit C
Form of Insider Letter Amendment
October [ ], 2016
[ ]
[Address]
Re:Agreement of New Sponsor
Ladies and Gentlemen:
In connection with the consummation of the transactions contemplated by that certain Agreement, dated September 16, 2016, by and among the undersigned, AR Capital Acquisition Corp. (the “Company”) and AR Capital, LLC (“ARC LLC”), the undersigned hereby agrees as follows (certain capitalized terms used herein are defined in paragraph 8 hereof):
1. If the Company seeks stockholder approval of a proposed Business Combination, then in connection with such proposed Business Combination, the undersigned will vote all Founder Shares and any shares acquired by it in the secondary public market in favor of such proposed Business Combination.
2. The undersigned hereby agrees that in the event that the Company fails to consummate a Business Combination by December 31, 2017 or such later period approved by the Company’s stockholders in accordance with the Company’s amended and restated certificate of incorporation (the “Outside Date”), the undersigned shall take all reasonable steps to cause the Company to (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem 100% of the Common Stock sold as part of the Units in the Public Offering (the “Offering Shares”), at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest not previously released to the Company to pay its franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and other requirements of applicable law. The undersigned agrees to not propose any amendment to the Company’s amended and restated certificate of incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of the Offering Shares if the Company does not complete a Business Combination by the Outside Date, unless the Company provides its public stockholders with the opportunity to redeem their shares of Common Stock upon approval of any such amendment at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and income taxes, divided by the number of then outstanding public shares.
The undersigned agrees that it has no right, title, interest or claim of any kind in or to any monies held in the Trust Account or any other asset of the Company as a result of any liquidation of the Company with respect to the Founder Shares. The undersigned hereby further waives, with respect to any shares of the Common Stock held by it, him or her, any redemption rights it, he or she may have in connection with the consummation of a Business Combination, including, without limitation, any such rights available in the context of a stockholder vote to approve such Business Combination or in the context of a tender offer made by the Company to purchase shares of the Common Stock (although the undersigned shall be entitled to redemption and liquidation rights with respect to any shares of Common Stock (other than the Founder Shares) it holds if the Company fails to consummate a Business Combination by the Outside Date).
3. In the event of the liquidation of the Trust Account, the undersigned (the “Indemnitor”) agrees to indemnify and hold harmless the Company against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all legal or other expenses reasonably incurred in investigating, preparing or defending against any litigation, whether pending or threatened, or any claim whatsoever) to which the Company may become subject as a result of any claim by (i) any third party for services rendered or products sold to the Company or (ii) a prospective target business with which the Company has entered into an acquisition agreement (a “Target”);provided,however, that such indemnification of the Company by the Indemnitor shall apply only to the extent necessary to ensure that such claims by a third party for services rendered (other than the Company’s independent public accountants) or products sold to the Company or a Target do not reduce the amount of funds in the Trust Account,provided,further, that such indemnification of the Company by the Indemnitor shall apply only if such third party or Target has not executed an agreement waiving claims against and all rights to seek access to the Trust Account whether or not such agreement is enforceable. In the event that any such executed waiver is deemed to be unenforceable against such third party, the Indemnitor shall not be responsible for any liability as a result of any such third party claims. Notwithstanding any of the foregoing, such indemnification of the Company by the Indemnitor shall not apply as to any claims under the Company’s obligation to indemnify the underwriters of the Public Offering (the “Underwriters”) against certain liabilities, including liabilities under the Securities Act of 1933, as amended. The Indemnitor shall have the right to defend against any such claim with counsel of its choice reasonably satisfactory to the Company if, within 15 days following written receipt of notice of the claim to the Indemnitor, the Indemnitor notifies the Company in writing that it shall undertake such defense.
4. The undersigned hereby agrees not to participate in the formation of, or become an officer or director of, any other blank check company that is formed in the United States until the Company has entered into a definitive agreement with respect to a Business Combination or the Company has failed to complete a Business Combination by the Outside Date.
5. (a) The undersigned acknowledges that the Founder Shares are held in an escrow account maintained in New York, New York by Continental Stock Transfer & Trust Company, acting as escrow agent. Subject to certain limited exceptions, the undersigned agrees not to transfer, assign, sell or release the shares from escrow until one year after the date of the consummation of a Business Combination or earlier if, subsequent to a Business Combination, (i) the last sale price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing at least 150 days after the consummation of a Business Combination or (ii) the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property (the “Lock-up”).
(b) The undersigned agrees that it shall not effectuate any Transfer of Private Placement Warrants, or Common Stock underlying such warrants, until 30 days after the completion of a Business Combination.
(c) Notwithstanding the provisions set forth in paragraphs 6(a) and (b), Transfers of the Founder Shares, Private Placement Warrants and shares of Common Stock underlying the Private Placement Warrants are permitted (a) to the Company’s officers or directors, any affiliates or family members of any of the Company’s officers or directors, any members of the undersigned or its affiliates, or any affiliates of the undersigned, (b) in the case of an individual, by gift to a member of the individual’s immediate family, to a trust, the beneficiary of which is a member of the individual’s immediate family or an affiliate of such person, or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private sales or transfers made in connection with the consummation of a Business Combination at prices no greater than the price at which the securities were originally purchased; (f) by virtue of the laws of the state of Delaware or the undersigned’s limited liability company agreement upon dissolution of the undersigned; (g) in the event of the Company’s liquidation prior to the completion of a Business Combination; or (h) in the event of completion of a liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property subsequent to the completion of a Business Combination;provided,however, that in the case of clauses (a) through (f) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions.
6. Neither the undersigned nor any affiliate of the undersigned, nor any director or officer of the Company, shall receive any finder’s fee, reimbursement, consulting fee, monies in respect of any repayment of a loan or other compensation prior to, or in connection with any services rendered in order to effectuate the consummation of the Company’s initial Business Combination (regardless of the type of transaction that it is), other than reimbursement for any reasonable out-of-pocket expenses related to identifying, investigating and completing an initial Business Combination, so long as no proceeds of the Public Offering held in the Trust Account may be applied to the payment of such expenses prior to the consummation of a Business Combination; and repayment of loans, if any, and on such terms as to be determined by the Company from time to time, made by the undersigned or an affiliate of the undersigned or certain of the Company’s officers and directors to finance transaction costs in connection with an intended initial Business Combination, provided, that, if the Company does not consummate an initial Business Combination, a portion of the working capital held outside the Trust Account may be used by the Company to repay such loaned amounts so long as no proceeds from the Trust Account are used for such repayment.
7. The undersigned has full right and power, without violating any agreement to which it is bound (including, without limitation, any non-competition or non-solicitation agreement with any employer or former employer) to enter into this Letter Agreement.
8. As used herein, (i) “Business Combination” shall mean a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving the Company and one or more businesses; (ii) “Founder Shares” shall mean the shares of the Common Stock of the Company issued prior to the consummation of the Public Offering; (iii) “Private PlacementWarrants ” shall mean the Warrants to purchase 6,550,000 shares of Common Stock that were acquired by ARC LLC for an aggregate purchase price of $6.55 million, or $1.00 per Warrant, in a private placement that occurred simultaneously with the consummation of the Public Offering; (iv) “Public Offering” means the initial public offering of the Company that closed on October 7, 2014; (v) “Public Stockholders” shall mean the holders of securities issued in the Public Offering; and (vi) “Transfer” shall mean the (a) sale of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder with respect to, any security, (b) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement of any intention to effect any transaction specified in clause (a) or (b).
9. This Letter Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior understandings, agreements, or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby. This Letter Agreement may not be changed, amended, modified or waived (other than to correct a typographical error) as to any particular provision, except by a written instrument executed by all parties hereto.
10. No party hereto may assign either this Letter Agreement or any of its rights, interests, or obligations hereunder without the prior written consent of the other party. Any purported assignment in violation of this paragraph shall be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee. This Letter Agreement shall be binding on the undersigned and each of its successors, heirs and assigns.
11. This Letter Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The parties hereto (i) all agree that any action, proceeding, claim or dispute arising out of, or relating in any way to, this Letter Agreement shall be brought and enforced in the courts of New York City, in the State of New York, and irrevocably submits to such jurisdiction and venue, which jurisdiction and venue shall be exclusive and (ii) waives any objection to such exclusive jurisdiction and venue or that such courts represent an inconvenient forum.
12. Any notice, consent or request to be given in connection with any of the terms or provisions of this Letter Agreement shall be in writing and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by hand delivery or facsimile transmission.
13. This Letter Agreement shall terminate on the earlier of (i) the expiration of the Lock-up or (ii) the liquidation of the Company.
[Signature page follows]
| Sincerely, | |||||
| AXAR MASTER FUND LTD. | |||||
| By: | |||||
| Name: | |||||
| Title: | |||||
| Acknowledged and Agreed: | |||||
| AR CAPITAL ACQUISITION CORP. | |||||
| By: | |||||
| Name: | |||||
| Title: | |||||
Exhibit D
Form of Securities Escrow Agreement Amendment
Exhibit E
Form of Compensation Reimbursement Agreement Termination