SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of
1934
(Amendment No. 3)*
RCS Capital Corporation
(Name of Issuer)
Class A Common Stock, par value $0.001 per share
(Title of Class of Securities)
74937W 102
(CUSIP Number)
Nicholas S. Schorsch
RCAP Holdings, LLC
405 Park Ave., 14th Floor
New York, NY 10022
(866) 904-2988
Copies to:
Jesse C. Galloway
American Realty Capital
405 Park Ave., 14th Floor
New York, NY 10022
(877) 373-2522
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 8, 2015
(Date of Event Which Requires Filing of
this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7 for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
CUSIP No. 74937W 102
1. |
Names of Reporting Persons
Nicholas S. Schorsch | |||
2. |
Check the Appropriate Box if a Member of a Group
(a) ¨ (b) x | |||
3. | SEC Use Only | |||
4. |
Source of Funds (See Instructions)
PF | |||
5. |
Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)
¨ | |||
6. |
Citizenship or Place of Organization
United States of America | |||
Number of Shares Beneficially Owned by Each Reporting Person With |
7. | Sole Voting Power | 21,090,475 | |
8. | Shared Voting Power | 5,000,0001 | ||
9. | Sole Dispositive Power | 21,090,475 | ||
10. | Shared Dispositive Power | 5,000,0002 | ||
11. |
Aggregate Amount Beneficially Owned by Each Reporting Person
26,090,4753 | |||
12. |
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
¨ | |||
13. |
Percent of Class Represented by Amount in Row (11)
26.9% | |||
14. |
Type of Reporting Person:
IN | |||
1 | Represents the shares of Class A common stock issuable upon conversion of the Series D-1 Preferred Stock held by AR Capital, LLC. See Items 3 and 4. |
2 | Represents the shares of Class A common stock issuable upon conversion of the Series D-1 Preferred Stock held by AR Capital, LLC. See Items 3 and 4. |
3 | Includes the 5,000,000 shares of Class A common stock issuable upon conversion of the Series D-1 Preferred Stock held by AR Capital, LLC. See Items 3 and 4. |
CUSIP No. 74937W 102
1. |
Names of Reporting Persons
William M. Kahane | |||
2. |
Check the Appropriate Box if a Member of a Group
(a) ¨ (b) x | |||
3. | SEC Use Only | |||
4. |
Source of Funds (See Instructions)
OO | |||
5. |
Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)
¨ | |||
6. |
Citizenship or Place of Organization
United States of America | |||
Number of Shares Beneficially Owned by Each Reporting Person With |
7. | Sole Voting Power | 4,480,806 | |
8. | Shared Voting Power | 5,000,0004 | ||
9. | Sole Dispositive Power | 4,480,806 | ||
10. | Shared Dispositive Power | 5,000,0005 | ||
11. |
Aggregate Amount Beneficially Owned by Each Reporting Person
9,480,8066 | |||
12. |
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
¨ | |||
13. |
Percent of Class Represented by Amount in Row (11)
9.8% | |||
14. |
Type of Reporting Person:
IN | |||
4 | Represents the shares of Class A common stock issuable upon conversion of the Series D-1 Preferred Stock held by AR Capital, LLC. See Items 3 and 4. |
5 | Represents the shares of Class A common stock issuable upon conversion of the Series D-1 Preferred Stock held by AR Capital, LLC. See Items 3 and 4. |
6 | Includes the 5,000,000 shares of Class A common stock issuable upon conversion of the Series D-1 Preferred Stock held by AR Capital, LLC. See Items 3 and 4. |
Introduction
This Amendment No. 3 (this “Amendment No. 3”) amends and supplements the Statement on Schedule 13D filed on February 17, 2015 (the “Original Schedule 13D”; the Original Schedule 13D as amended by Amendment No. 1 filed on February 20, 2015 and Amendment No. 2 filed on October 2, 2015, the “Schedule 13D”) by the Reporting Persons relating to the Class A Common Stock of the Issuer. Capitalized terms contained herein but not otherwise defined shall have the meaning ascribed to such terms in the Schedule 13D.
Item 3. | Source and Amount of Funds or Other Consideration |
Item 3 of the Schedule 13D is amended and supplemented by the following:
On November 9, 2015, pursuant to the Note Purchase Agreement (as defined in Item 4), RCAP Holdings purchased from the Issuer a senior unsecured note (the “RCAP Note”) having an aggregate principal amount of $12,000,000. As described in Item 4, under certain circumstances RCAP Holdings has the right to exchange the RCAP Note for one or more securities of the Issuer, which may include Class A Common Stock. The $12,000,000 purchase price paid for the RCAP Note pursuant to the Note Purchase Agreement was funded by a capital contribution from AR Capital, LLC (“ARC”).
On November 9, 2015, pursuant to the ARC Termination Agreement (as defined in Item 4), ARC purchased from Apollo Principal Holdings I, L.P. (“APH I”) 1,000,000 shares of 11% Series D-1 Convertible Preferred Stock of the Issuer (“Series D-1 Preferred Stock”) for a purchase price of $25,666,845. Mr. Schorsch and Mr. Kahane are the managing members of ARC, with Mr. Schorsch having a 56.02% ownership interest in ARC and Mr. Kahane having a 13.52% ownership interest in ARC. As described in Item 4, such Series D-1 Preferred Stock may, subject to certain restrictions, be converted to Class A Common Stock. The $25,666,845 purchase price paid for the Series D-1 Preferred Stock pursuant to the ARC Termination Agreement was funded from the general working capital of ARC and a loan from Mr. Schorsch.
The descriptions of the ARC Termination Agreement, the Note Purchase Agreement and the RCAP Note (each as defined below) included in this Amendment No. 3, in each case, do not purport to be complete and are qualified in their entirety by reference to the full text of the ARC Termination Agreement and the Note Purchase Agreement, which are filed as Exhibits 16 and 17, respectively, and which are incorporated herein by reference.
Item 4. | Purpose of Transaction |
Item 4 of the Schedule 13D is amended and supplemented by the following:
ARC Termination Agreement
On August 6, 2015, AMH Holdings (Cayman), L.P. (“AMH”), ARC and AR Global Investments, LLC (“AR Global”) entered into a Transaction Agreement (the “ARC Transaction Agreement”) pursuant to which ARC agreed to sell and AMH agreed to acquire a majority interest in AR Global, a new company that would own a majority of the ongoing asset management business of ARC. On August 6, 2015, Mr. Schorsch, Mr. Kahane, Peter M. Budko, Edward M. Weil, Jr. and Brian S. Block (such individuals, the “ARC Principals”) entered into a the Guaranty and Support Agreement (the “Guaranty Agreement”) with AMH to, among other things, guaranty certain obligations of ARC under the ARC Transaction Agreement.
On November 8, 2015, AMH, Apollo Management Holdings, L.P. (“Apollo Management”), APH I, ARC, AR Global and each of the ARC Principals entered into a Termination Agreement and Release (the “ARC Termination Agreement”), pursuant to which AMH and ARC agreed to terminate immediately the ARC Transaction Agreement and AMH and the ARC Principals agreed to terminate immediately the related guaranty agreement. ARC and the ARC Principals released AMH and certain related persons (including affiliates of AMH) from any claims with respect to certain matters including the (i) the ARC Transaction Agreement, the Guaranty Agreement, the Membership Interest Purchase Agreement (the “Purchase Agreement”), dated August 6, 2015, by and among the Issuer, RCS Capital Holdings, LLC (“RCS Holdings”) and Apollo Management, and the other agreements and documents contemplated thereby (collectively, the “Transaction Documents”), (ii) any breach, non-performance, action or failure to act under any of the Transaction Documents, (iii) the events leading to the termination of the ARC Transaction Agreement and the Guaranty Agreement and the execution of the amendment to the Purchase Agreement entered into by the Issuer, RCS Holdings and Apollo Management on November 8, 2015 (the “Amended Purchase Agreement”), (iv) any deliberations or negotiations in connection with the Transaction Documents, and (v) any SEC filings, public filings, periodic reports, press releases, proxy statements or other statements issued, made available or filed relating, directly or indirectly, to the transactions contemplated by the Transaction Documents. AMH released ARC, the ARC Principals and certain related persons (including affiliates of ARC and the ARC Principals) from any claims with respect to certain matters including (i) the Transaction Documents and the transactions contemplated by the Transaction Documents, (ii) any breach, non-performance, action or failure to act under any of the Transaction Documents, (iii) the Amended Purchase Agreement and the transactions contemplated thereby, (iv) the events leading to the termination of the ARC Transaction Agreement and the Guaranty Agreement and the execution of the Amended Purchase Agreement, (v) any deliberations or negotiations in connection with the Transaction Documents, and (vi) any SEC filings, public filings, periodic reports, press releases, proxy statements or other statements issued, made available or filed relating, directly or indirectly, to the transactions contemplated by the Transaction Documents.
In addition, under the ARC Termination Agreement, APH I agreed to sell to ARC on November 9, 2015 1,000,000 shares of Series D-1 Preferred Stock for $25,666,845 (representing an original purchase price of $25,000,000 plus $666,845 in accrued and unpaid dividends through November 8, 2015). The two Series D-1 Directors (as defined in the certificate of designation for the Series D-1 Preferred Stock) elected by APH I resigned from the board of directors of the Issuer (and all committees thereof) on November 6, 2015.
The foregoing description of the ARC Termination Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the ARC Termination Agreement, which is filed as Exhibit 16 hereto.
Note Purchase and Class B Share Agreement
On November 8, 2015, the Issuer and RCAP Holdings entered into a Note Purchase and Class B Share Agreement (the “Note Purchase Agreement”), pursuant to which, among other things, the Issuer agreed to sell and RCAP Holdings agreed to purchase the RCAP Note, having an aggregate principal amount of $12,000,000. The principal amount outstanding under the RCAP Note bears interest at a rate of 12% per annum until the maturity date of November 1, 2021 (the “Maturity Date”), or such other date as the principal becomes due and payable thereunder. At the option of the Issuer, interest may be payable in kind by increasing the principal amount of the RCAP Note by the amount of such interest.
Pursuant to the terms of the RCAP Note, in the event that, on or prior to the Maturity Date, the Issuer raises capital through an issuance of any securities junior to the Credit Agreements (as defined in the Note Purchase Agreement) from a third party resulting in net proceeds to the Issuer or its subsidiaries of at least $175,000,000 (a “New Financing”), RCAP Holdings will have the right to exchange the RCAP Note, in whole but not in part, for one or more securities (the “New Securities”) having, in the aggregate, terms (including economic terms) which are substantially equivalent to the terms of the securities issued in the New Financing (an “Exchange Transaction”), subject to any required regulatory approvals and any required approvals from (a) senior lenders under the Credit Agreement, (b) subordinated debt and preferred equity holders of the Issuer and (c) common stockholders of the Issuer in accordance with the rules of the New York Stock Exchange. The Issuer will use commercially reasonable efforts to obtain any such approvals that are required to consummate the Exchange Transaction. For purposes of an Exchange Transaction, the RCAP Note will be valued at the outstanding principal amount of the RCAP Note, together with all accrued and unpaid interest thereon, as of the date of the of the Exchange Transaction (the “Note Value”). On or prior to July 31, 2016 and following the consummation of an Exchange Transaction, the Issuer will have the right to purchase all, but not less than all, of the New Securities from RCAP Holdings at a cash purchase price equal to the Note Value.
Under the terms of the Note Purchase Agreement, RCAP Holdings irrevocably granted to a special committee of the Issuer’s Board of Directors comprised of certain independent directors (the “Special Committee”) a proxy (the “Class B Proxy”) to vote the one share of Class B Common Stock held by RCAP Holdings (the “Class B Share”). The Special Committee is entitled to vote the Class B Share on any two “Class B Specified Matters” (and any related transactions), with respect to one Class B Specified Matter, in connection with a transaction in which the RCAP Note is repaid (including all accrued and outstanding interest thereunder) upon consummation of such transaction (with the effectiveness of any such transaction to be subject to such repayment of the RCAP Note) and with respect to one other Class B Specified Matter, in connection with a transaction that results in net proceeds to the Company or its subsidiaries of up to $80,000,000. A Class B Specified Matter means (i) any disposal of all or substantially all the Issuer’s assets, or any consolidation, merger or entry into a business combination by the Issuer with a third person, (ii) any authorization of a new class or series of capital stock or additional shares of capital stock, or reclassification or alteration of the terms of any class or series of capital stock, or any issuance of capital stock or other equity securities (including the right to acquire capital stock or other equity securities) by the Issuer, and (iii) any amendment or modification to the certificate of incorporation or bylaws of the Issuer in connection with any matters set forth in clauses (i) and (ii) above. The Special Committee may not use the Class B Proxy to approve any Class B Specified Matter that adversely affects the voting rights of the Class B Share, except in connection with a transaction in which the RCAP Note is repaid in full, and with respect to any Class B Specified Matter (and any related transactions or series of transactions relating to any Class B Specified Matter or otherwise) each share of Class A common stock, par value $0.001 per share, of the Issuer held by RCAP Holdings or officers, employees, equityholders or affiliates of RCAP Holdings shall be treated in the same manner as each other share of Class A common stock.
Until the End Date (as defined below), RCAP Holdings is not permitted to (i) create any encumbrance, other than certain permitted encumbrances, on the Class B Share; (ii) transfer, sell, assign, gift, hedge, pledge or otherwise dispose (whether by sale, liquidation, dissolution, dividend or distribution) of, or enter into any derivative arrangement with respect to the Class B Share or any right or interest therein (or consent to any of the foregoing); (iii) enter into any contract, option or other agreement, arrangement or understanding with respect to any transfer of the Class B Share; (iv) grant any proxy, power-of-attorney or other authorization or consent with respect to the Class B Share; (v) deposit the Class B Share into a voting trust or enter into a voting agreement with respect to the Class B Share; (vi) knowingly take any other action that would reasonably be expected to restrict, limit or interfere with the performance of RCAP Holdings’ obligations under the Note Purchase Agreement or the transactions contemplated thereby or (vii) without the prior written consent of the Special Committee, vote the Class B Share on any stockholder matter at any meeting or by any written consent of the Issuer’s stockholders (clauses (i) through (vii) collectively, the “Class B Restrictions”).
The Class B Proxy will be valid from the date of the closing of the issuance and purchase of the RCAP Note (the “Closing”) until 11:59 P.M. New York time on January 31, 2016 (the “End Date”). However, if the Issuer enters into a definitive agreement with respect to a Class B Specified Matter prior to 11:59 P.M. New York time on January 31, 2016, the End Date will be automatically extended until 11:59 P.M. New York time on June 30, 2016 (and until July 31, 2016 for purposes of the Class B Restrictions).
Additionally, under the Note Purchase Agreement, RCAP Holdings has the right to nominate one director to the Issuer’s Board of Directors (the “Director Designee”), and the Class B Share will be voted in favor of the election of the Director Designee to the Board of Directors.
From the Closing until July 31, 2016, the Issuer will have the right to purchase the Class B Share from RCAP Holdings for a purchase price of $1.00 upon (i) either the repayment of the RCAP Note in full or the purchase by the Issuer of New Securities (a “Triggering Transaction”) and (ii) the release of RCAP Holdings and RCS Capital Management, LLC (and their respective subsidiaries) from their obligations as a guarantor under the Credit Agreements any other Loan Documents (as defined in the Credit Agreements) and the release of any Liens (as defined in the Credit Agreements) on their property (other than the Class B Share) created by any of the Security Documents (as defined in the Credit Agreements).
The Issuer will indemnify RCAP Holdings and its affiliates, officers, directors and employees (the “Indemnified Parties”) from and against any and liabilities, costs and expenses (including reasonable legal fees and expenses) incurred by the Indemnified Parties as a result of any claim made by any third party to the extent such claim is in connection with or arises from (i) a grant of the Class B Proxy, (ii) a Class B Specified Matter approved using the Class B Proxy, (iii) any transaction approved or entered into by the Issuer in connection with such Class B Specified Matter from the Closing until the Class B End Date, or (iv) the operation of the business of the Issuer from the Closing until the Class B End Date.
The foregoing description of the Note Purchase Agreement and the RCAP Note does not purport to be complete and is qualified in its entirety by reference to the full text of the Note Purchase Agreement, which is filed as Exhibit 17.
Series D-1 Shares Agreement
On November 8, 2015, the Issuer and ARC entered into a Series D-1 Shares Agreement pursuant to which, upon ARC’s purchase of Series D-1 Preferred Stock from APH I, ARC irrevocably granted to the Special Committee a proxy (the “Series D-1 Proxy”) to vote ARC’s shares of Series D-1 Preferred Stock. The Special Committee will be entitled to vote the Series D-1 Preferred Stock on any two “Series D-1 Specified Matters” (and any related transactions) to the extent Series D-1 Preferred Stock is entitled to a vote on such matters pursuant to the certificate of designation for the Series D-1 Preferred Stock. Series D-1 Specified Matters means (i) any consolidation, merger or entry into a business combination by the Issuer with a third person, (ii) any authorization or issuance of a new class or series of capital stock or additional shares of capital stock, or reclassification or alteration of the terms of any class or series of capital stock by the Issuer, and (iii) any amendment or modification to, or waiver of, the certificate of incorporation of the Issuer or the certificate of designation for the Series D-1 Preferred Stock in connection with any matters set forth in clauses (i) and (ii) above; provided, that with respect to any Series D-1 Specified Matter (and any related transactions or series of transactions relating to any Series D-1 Specified Matter or otherwise) each Series D-1 Share shall be treated in the same manner as each other preferred stock of the Company ranking on a parity with Series D-1 Shares.
Until the Series D-1 End Date (as defined below), ARC and its affiliates will not (i) create or permit to be created any encumbrance on the Series D-1 Preferred Stock except as provided under the Series D-1 Shares Agreement or pursuant to any applicable restrictions on transfer under the Securities Act of 1933; (ii) transfer, sell, assign, gift, hedge, pledge or otherwise dispose of, or enter into any derivative arrangement with respect to, the Series D-1 Preferred Stock or any right or interest therein (or consent to any of the foregoing); (iii) enter into any contract, option or other agreement, arrangement or understanding with respect to any transfer of the Series D-1 Preferred Stock, except as provided below; (iv) grant any proxy, power-of-attorney or other authorization or consent with respect to the Series D-1 Preferred Stock; (v) deposit the Series D-1 Preferred Stock into a voting trust or enter into a voting agreement with respect to the Series D-1 Preferred Stock; (vi) knowingly take any other action that would reasonably be expected to restrict, limit or interfere with the performance of ARC’s obligations under the Series D-1 Shares Agreement or the transactions contemplated thereby or (vii) without the prior written consent of the Special Committee, vote the Series D-1 Preferred Stock on any stockholder matter at any meeting or by any written consent of the Issuer’s stockholders (clauses (i) through (vii) collectively, the “Series D-1 Restrictions”).
As a condition to any transfer of any Series D-1 Preferred Stock to a transferee (including any affiliate of ARC), or the transfer or assignment to any transferee (including any affiliate of ARC) of ARC’s rights to acquire any Series D-1 Preferred Stock, such transferee (and any subsequent transferee thereof) must (i) assume in writing all of ARC’s obligations under the Series D-1 Shares Agreement and deliver to the Issuer a proxy with respect to the Series D-1 Preferred Stock transferred to such transferee.
The Series D-1 Proxy will be valid until 11:59 P.M. New York time on January 31, 2016 (the “Series D-1 End Date”). However, if the Issuer enters into a definitive agreement with respect to a Series D-1 Specified Matter prior to 11:59 P.M. New York time on January 31, 2016, the Series D-1 End Date will be automatically extended until 11:59 P.M. New York time on June 30, 2016 (and until July 31, 2016 for purposes of the Series D-1 Restrictions).
The foregoing description of the Series D-1 Shares Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Series D-1 Shares Agreement, which is filed as Exhibit 18 hereto.
The holders of shares of Series D-1 Preferred Stock have the right, at their option at any time and from time to time, to convert some or all of their shares of Series D-1 Preferred Stock into the number of shares of the Issuer’s Class A Common Stock obtained by dividing the aggregate liquidation preference of such shares plus an amount equal to all accrued and unpaid dividends from the date immediately following the immediately preceding dividend payment date to the date of conversion by an initial conversion price of $5.00, which will be adjustable upon the occurrence of certain events and transactions to prevent dilution. Series D-1 Preferred Stock generally has the right to vote on an as converted basis with the holders of the Class A common stock. However, holders of Series D-1 Preferred Stock are restricted from accepting Class A Common Stock issuable upon conversion of the Series D-1 Preferred Stock or having voting rights with respect to the Series D-1 Preferred Stock that would result in the ownership of an aggregate amount of Class A Common Stock, when taken together with any other Class A Common Stock then held by such holder and persons aggregated with such holder under FINRA rules, in excess of 24.9% of the outstanding Class A Common Stock or in excess of 24.9% of the voting power, unless such ownership of Class A Common Stock or voting power in excess of the 24.9% cap is duly approved in advance by FINRA.
The foregoing description of the Series D-1 Preferred Stock conversion and voting rights does not purport to be complete and is qualified in its entirety by reference to the full text of the certificate of designation for the Series D-1 Preferred Stock. For more information regarding these and other material terms of the Series D-1 Preferred Stock, please refer to the Issuer’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015, filed on August 11, 2015.
Release
On November 8, 2015, ARC, the ARC Principals, the Issuer, RCS Holdings and Luxor Capital Partners LP (“Luxor”) entered into a Release pursuant to which (a) ARC and the ARC Principals released the Issuer, RCS Holdings and certain related person (including affiliates of the Issuer (other than ARC and its related parties) and Luxor and certain related persons (including affiliates of Luxor), (b) the Issuer and RCS Holdings released ARC, the ARC Principals and certain related persons (including affiliates of ARC and the ARC Principals) and Luxor and certain related persons (including affiliates of Luxor) and (c) Luxor released ARC, the ARC Principals and certain related persons (including affiliates of ARC and the ARC Principals) and the Issuer, RCS Holdings and certain related persons (including affiliates of the Issuer (other than ARC and its related parties)) from any claims with respect to certain matters including the (i) the Transaction Documents and transactions contemplated by the Transaction Documents, (ii) any breach, non-performance, action or failure to act under any of the Transaction Documents, (iii) the Amended Purchase Agreement and the transactions contemplated thereby, (iv) the events leading to the termination of the ARC Transaction Agreement and the related guaranty agreement and the execution of the Amended Purchase Agreement, (v) any deliberations or negotiations in connection with the Transaction Documents, and (vi) any SEC filings, public filings, periodic reports, press releases, proxy statements or other statements issued, made available or filed relating, directly or indirectly, to the transactions contemplated by the Transaction Documents.
Pursuant to the Release, each of the Issuer and RCS Holdings agrees to defend, indemnify and hold harmless ARC, the ARC Principals and certain related parties (including affiliates of ARC and the ARC Principals) from and against any and all damages, losses, liabilities, claims, demands, suits, judgments, costs and expenses (including reasonable legal fees and expenses) incurred or suffered by the indemnified parties as a result of any claim made by any third party to the extent such claim relates primarily to or arises from changes to the Purchase Agreement reflected in the Amended Purchase Agreement (the “Indemnifiable Claims”) and upon request of ARC, the Issuer shall advance reasonable expenses in connection with any defense of any Indemnifiable Claim or any action or proceeding arising therefrom. The right of the indemnified parties to any indemnification or advancement of expenses shall be subordinated as to payment to (and only to) both (i) the First Lien Credit Agreement of the Issuer and (ii) the Second Lien Credit Agreement of the Issuer, each dated as of April 29, 2014, as amended.
The foregoing description of the Release does not purport to be complete and is qualified in its entirety by reference to the full text of the Release, which is filed as Exhibit 19 hereto.
Item 5. | Interest in Securities of the Issuer |
Item 5(a) and (b) of the Schedule 13D is amended and restated as follows:
(a) Rows 11-13 of the cover page of this Schedule 13D with respect to each Reporting Person is incorporated herein by reference. If Messrs. Schorsch and Kahane comprise a group, then such group would beneficially own 30,571,281 shares of Class A Common Stock (including 5,000,000 shares of Class A Common Stock issuable upon conversion of Series D-1 Preferred Stock), which represents 31.5% of the outstanding Class A Common Stock.
The percentage of Class A Common Stock beneficially owned is based on an aggregate of 96,954,619 shares of Class A Common Stock, consisting of the sum of 91,954,619 shares of Class A Common Stock outstanding as of November 12, 2015, as provided by the Issuer and 5,000,000 shares of Class A common stock issuable upon conversion of the shares of Series D-1 Preferred Stock held by ARC.
(b) Rows 7-10 of the cover page of this Schedule 13D with respect to each Reporting Person is incorporated herein by reference.
Item 5(c) of the Schedule 13D is amended and supplemented with the information contained in Item 3 of this Amendment No. 3, which is hereby incorporated by reference.
Item 6. | Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer |
Item 6 of the Schedule 13D is amended and supplemented with the information contained in Item 4 of this Amendment No. 3, which is hereby incorporated by reference.
Item 7. | Material to be Filed as Exhibits |
Exhibit 16 | Termination Agreement and Release, dated as of November 8, 2015, by and between AMH, Apollo Management, APH I, ARC, AR Global and the ARC Principals. |
Exhibit 17 | Note Purchase and Class B Share Agreement, dated as of November 8, 2015, by and between the Issuer and RCAP Holdings. |
Exhibit 18 | Series D-1 Shares Agreement, dated as of November 8, 2015, by and between the Issuer and ARC. |
Exhibit 19 | Release, dated as of November 8, 2015, by and among ARC, the ARC Principals, the Issuer, RCS Holdings and Luxor. |
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
November 13, 2015
/s/ Nicholas S. Schorsch | |||
/s/ William M. Kahane |
Exhibit 16
TERMINATION AGREEMENT AND RELEASE
This TERMINATION AGREEMENT AND RELEASE, dated as of November 8, 2015 (this “Agreement”), is entered into by and among (i) AMH Holdings (Cayman), L.P. (“AMH”), Apollo Management Holdings, L.P. (“Apollo Management”) and Apollo Principal Holdings I, L.P., (“APH I”), (ii) AR Capital, LLC (“AR Capital”) and AR Global Investments, LLC (“AR Global”) and (iii) Nicholas S. Schorsch, Peter M. Budko, William M. Kahane, Edward M. Weil, Jr. and Brian S. Block (each, an “ARC Principal” and collectively, the “ARC Principals”). Each of the foregoing are collectively referred to herein as the “Parties” and each individually as a “Party.” Capitalized terms used but not defined in this Agreement shall have the respective meanings given to them in the Transaction Agreement (as defined below).
RECITALS
A. On August 6, 2015 (i) AMH, AR Capital and AR Global entered into a Transaction Agreement (the “Transaction Agreement”) and (ii) AMH and each of Nicholas S. Schorsch, Peter M. Budko, William M. Kahane, Edward M. Weil, Jr. and Brian S. Block entered into a Guaranty and Support Agreement (the “Guaranty Agreement”).
B. The parties to the Transaction Agreement and Guaranty Agreement have determined that they desire to terminate such agreements on the terms and conditions set forth herein.
C. In connection with such termination, APH I desires to sell, and AR Capital desires to purchase, 1,000,000 shares of Series D-1 Preferred Stock, par value $0.001 per share (the “Preferred Stock”) of RCS Capital Corporation (“RCAP”).
D. On August 6, 2015 Apollo Management Holdings, L.P., RCAP and RCS Holdings entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”), and the parties to the Purchase Agreement are amending the Purchase Agreement as of the date hereof (the “Amended Purchase Agreement”).
NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, the Parties hereto hereby agree as follows:
AGREEMENT
1. Termination of Transaction Agreement and Guaranty Agreement. AMH and AR Capital hereby mutually agree in accordance with Section 6.1(a) of the Transaction Agreement that the Transaction Agreement is hereby immediately terminated and shall be of no further force or effect. AMH and the ARC Principals hereby mutually agree that, in accordance with Section 5.13 of the Guaranty Agreement, the Guaranty Agreement is hereby immediately terminated and shall be of no further force or effect. For the avoidance of doubt, the Confidentiality Agreement shall continue to remain in full force and effect in accordance with its terms.
2. Mutual Releases; Covenants Not to Sue.
(a) AR Capital and the ARC Principals, for and on behalf of themselves and the ARC Related Parties (as defined below), do hereby unequivocally release and discharge AMH and any of its former and current subsidiaries, equity holders, controlling persons, directors, officers, employees, agents, Affiliates, members, managers, general or limited partners, successors or assignees or any former or current subsidiary, equity holder, controlling person, director, officer, employee, agent, Affiliate, member, manager, general or limited partner, successor or assignee of any of the foregoing (collectively, the “Apollo Related Parties”), from any and all past, present or future liabilities, actions, claims or damages of any kind or nature, in law, equity or otherwise, asserted or that could have been asserted, under any Applicable Law or otherwise, whether known or unknown, suspected or unsuspected, foreseen or unforeseen, anticipated or unanticipated, disclosed or undisclosed, accrued or unaccrued, apparent or not apparent, foreseen or unforeseen, matured or not matured, liquidated or not liquidated, fixed or contingent, whether or not concealed or hidden, from the beginning of time until the date of execution of this Agreement, that in any way arises from or out of, are based upon, or are in connection with or relate in any way to or involve, directly or indirectly, any of the actions, transactions, occurrences, statements, representations, misrepresentations, omissions, allegations, facts, practices, events, claims or any other matters, things or causes whatsoever, or any series thereof, that were, could have been, or in the future can or might be alleged, asserted, set forth, claimed, embraced, involved, or referred to in, or related to, directly or indirectly: (i) the Transaction Agreement, the Guaranty Agreement, the Purchase Agreement and the other agreements and documents contemplated hereby or thereby (collectively, the “Transaction Documents”), (ii) any breach, non-performance, action or failure to act under any of the Transaction Documents, (iii) the events leading to the termination of the Transaction Agreement and the Guarantee Agreement and the execution of the Amended Purchase Agreement, (iv) any deliberations or negotiations in connection with the Transaction Documents, and (v) any SEC filings, public filings, periodic reports, press releases, proxy statements or other statements issued, made available or filed relating, directly or indirectly, to the transactions contemplated by the Transaction Documents (collectively, the “ARC Released Claims”); provided, however, that no Party shall be released from any breach, non-performance, action or failure to act under this Agreement occurring on or after the date hereof.
(b) AMH, for and on behalf of itself and the Apollo Related Parties, does hereby unequivocally release and discharge AR Capital, the ARC Principals and any of their former and current subsidiaries, equity holders, controlling persons, directors, officers, employees, agents, Affiliates, members, managers, general or limited partners, spouses, heirs, trusts, trustees, successors, assignees, or any former or current subsidiary, equity holder, controlling person, director, officer, employee, agent, Affiliate, member, manager, general or limited partner, successor or assignee of any of the foregoing (collectively, the “ARC Related Parties” and, together with the Apollo Related Parties, the “Related Parties”), from any and all past, present or future liabilities, actions, claims or damages of any kind or nature, in law, equity or otherwise, asserted or that could have been asserted, under any Applicable Law or otherwise, whether known or unknown, suspected or unsuspected, foreseen or unforeseen, anticipated or unanticipated, disclosed or undisclosed, accrued or unaccrued, apparent or not apparent, foreseen or unforeseen, matured or not matured, liquidated or not liquidated, fixed or contingent, whether or not concealed or hidden, from the beginning of time until the date of execution of this Agreement, that in any way arises from or out of, are based upon, or are in connection with or relate in any way to or involve, directly or indirectly, any of the actions, transactions, occurrences, statements, representations, misrepresentations, omissions, allegations, facts, practices, events, claims or any other matters, things or causes whatsoever, or any series thereof, that were, could have been, or in the future can or might be alleged, asserted, set forth, claimed, embraced, involved, or referred to in, or related to, directly or indirectly: (i) the Transaction Documents and the transactions contemplated by the Transaction Documents, (ii) any breach, non-performance, action or failure to act under any of the Transaction Documents, (iii) the Amended Purchase Agreement and the transactions contemplated thereby, (iv) the events leading to the termination of the Transaction Agreement and the Guarantee Agreement and the execution of the Amended Purchase Agreement, (v) any deliberations or negotiations in connection with the Transaction Documents, and (vi) any SEC filings, public filings, periodic reports, press releases, proxy statements or other statements issued, made available or filed relating, directly or indirectly, to the transactions contemplated by the Transaction Documents (collectively, the “Apollo Released Claims” and, together with the ARC Released Claims, the “Released Claims”); provided, however, that no Party shall be released from any breach, non-performance, action or failure to act under this Agreement occurring on or after the date hereof. Notwithstanding anything herein to the contrary this Section 2(b) will only become effective upon the consummation of the purchase by AR Capital of the Preferred Stock pursuant to Section 5 hereof.
(c) It is understood and agreed that, except as provided in the provisos to Section 2(a) and Section 2(b), the preceding paragraphs are a full and final release covering all known as well as unknown or unanticipated debts, claims or damages of each of the Parties and their respective Related Parties relating to or arising out of the Transaction Documents. Therefore, each of the Parties expressly waives any rights it may have under any statute or common law principle under which a general release does not extend to claims which such Party does not know or suspect to exist in its favor at the time of executing the release, which if known by such Party must have affected such Party’s settlement with the other, including, without limitation, Section 1542 of the California Civil Code, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
In connection with such waiver and relinquishment, the Parties acknowledge that they or their attorneys or agents may hereafter discover claims or facts in addition to or different from those which they now know or believe to exist with respect to the Released Claims, but that it is their intention hereby fully, finally and forever to settle and release all of the Released Claims. In furtherance of this intention, the releases herein given shall be and remain in effect as full and complete mutual releases with regard to the Released Claims notwithstanding the discovery or existence of any such additional or different claim or fact.
(d) Each Party, on behalf of itself and its respective Related Parties, hereby covenants to each other Party and their respective Related Parties not to, with respect to any Released Claim, directly or indirectly encourage or solicit or voluntarily assist or participate in any way in the investigation, filing, reporting or prosecution by such Party or its Related Parties or any third party of a suit, arbitration, mediation, or claim against any other Party and/or its Related Parties relating to any Released Claim. The covenants contained in this Section 2 shall survive this Agreement indefinitely regardless of any statute of limitations.
3. Non-Disparagement. Each Party agrees to not, directly or indirectly, make or ratify any statement, public or private, oral or written (including concerning the Transaction Documents, the participation or involvement of the Parties in the transactions contemplated by the Transaction Documents or the reasons for or any of the events or circumstances surrounding the termination of the transactions contemplated by the Transaction Documents) that disparages the business reputation of the other Parties or their respective Related Parties; provided that nothing herein will prevent a party from making truthful statements as may be required by Applicable Law.
4. Public Announcements. The initial press release concerning this Agreement and the termination of the Transaction Agreement and Guaranty Agreement shall be a joint press release in the form agreed by the Parties as set forth on Annex A and thereafter the Parties shall consult with each other (and obtain the other party’s consent) before any Party (or its Affiliates) issues any press release or otherwise makes any public statements with respect to the transactions contemplated by this Agreement, except (a) as may be required by Applicable Law if the party issuing such press release or other public statement has, to the extent practicable, provided the other party with an opportunity to review and comment or (b) any press release or other public statement that is consistent in all material respects with previous press releases, public disclosures or public statements made by a party hereto in accordance with this Agreement, in each case under this clause (b) to the extent such disclosure is still accurate.
5. Purchase and Sale. The Parties irrevocably agree that on Monday, November 9, 2015, (i) APH I shall sell, assign and transfer to AR Capital 1,000,000 shares of the Preferred Stock, free and clear of all Liens (other than Liens arising as a result of this Agreement or under applicable securities laws) and (ii) as full consideration therefor AR Capital shall pay to APH I, by wire transfer of immediately available funds to the account previously designated by APH I in writing, the amount of $$25,666,845 (representing an original purchase price of $25,000,000 plus $666,845 in accrued and unpaid dividends through November 8, 2015. The ARC Principals hereby jointly and severally guarantee the full and timely payment by AR Capital of the amount set forth in clause (ii) of the preceding sentence. APH I shall cause the two Series D-1 Directors (as defined in the certificate of designation for the Preferred Stock) elected by APH I to resign from the board of directors of RCAP (and all committees thereof), effective as of the date hereof.
6. Certain Transactions.
(a) Until June 30, 2016, AR Capital will not, nor will it permit any of its Affiliates (including the Guarantors), and will use reasonable best efforts to not permit any of its or its Affiliates’ officers, directors or employees to enter into any agreement with any single buyer with respect to the purchase of more than 12.5% of the aggregate assets of the Business or Subject Companies taken as a whole (which purchase may include advisory contracts or capital stock of one or more Subject Companies) or any merger or business combination involving AR Capital (other than any transactions between or among AR Capital and/or its Affiliates (including employees) and any recapitalization transactions, internal reorganizations or any foreign re-domiciliations); provided that the foregoing shall not restrict any Fund from entering into or consummating any transaction or series of related transactions involving a merger, consolidation, reorganization, business combination, purchase or sale (of equity or assets) of such Fund, including, in any such transaction or series of related transactions, the internalization, consolidation or sale of the Subject Company (or the assets of the Subject Company) that is the advisor to such Fund so long as (i) such transaction with such Subject Company is not undertaken in connection with one or more related transactions involving another Fund and the same (or a related) counterparty and (ii) the counterparty is not any of the competitors listed on Annex B or any affiliate thereof.
(b) Until June 30, 2016, AMH will not, nor will it permit any of its Affiliates, and will use reasonable best efforts to not permit any of its or its Affiliates’ officers, directors, employees to (A) directly or indirectly solicit or encourage (including through any representatives, agents, investment banks or advisors) or enter into any agreement with respect to (i) the purchase of all or a significant portion of the assets or entities of any Fund or (ii) the alteration of any Advisory Contract or the status of any relationship between any Subject Company and any Fund, in each case without the prior written consent of the board of directors of the Fund in connection with a process approved by the board of directors, or (B) request any waiver, consent or permission from any Fund, board of directors of any Fund or other person to take any action described in clauses (A)(i) or (A)(ii) above, provided that this restriction will terminate in the event that any unrelated third party makes a public proposal with respect to any of the foregoing matters.
(c) The Parties hereby agree that the term of the obligations set forth in Section 20 of the Confidentiality Agreement (as provided in the amendment dated February 20, 2015) shall be extended to survive until February 15, 2016.
(d) The Parties agree that each dealer manager agreement between Realty Capital Securities LLC and any issuer sponsored by AR Capital that remains in effect at the time of the closing of the Amended Purchase Agreement will be amended such that the first reference to "six months" in the first sentence of Section 10 (c) thereof will be replace by "twelve months".
7. Representations of the Parties.
(a) Each Party represents and warrants to the other Parties as follows:
(i) Such Party has the requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by such Party of this Agreement, the performance of its obligations hereunder and its consummation of the transactions contemplated hereby have been duly and validly authorized and approved by all necessary action of such Party, as applicable, and no other action on the part of such Party, is necessary to authorize the execution and delivery by such Party of this Agreement, the performance by it of its obligations hereunder and its consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by such Party, and, assuming the due authorization, execution and delivery by the other Parties, constitute legal and binding obligations of such Party, enforceable against such Party in accordance with its terms, except as (a) the enforceability hereof may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (b) the availability of equitable remedies may be limited by equitable principles of general applicability.
(ii) The execution and delivery by such Party of this Agreement does not, and the consummation of the transactions contemplated hereby and the performance of its obligations hereunder will not (with or without the giving of notice, the termination of any grace period or both): (a) violate, conflict with, or result in a breach or default under any provision of the Organizational Documents of such Party, as applicable or (b) (x) violate any Applicable Law, (y) violate, result in a violation or breach by such Party of, or cause the termination, acceleration or cancellation or the loss, impairment or alteration of any right or benefit under, or conflict with or constitute a default (or give rise to a right of termination, acceleration, cancellation or the loss, impairment or alteration of any right or benefit) under, any Contract (other than the Purchase Agreement) to which such Party is a party or by which any of its respective properties is bound, whether with the passage of time, giving of notice, or both or (z) result in the creation of any Lien on the assets or properties of such Party, except, in the cases of clauses (x), (y) and (z), for any such violation, breach, termination, acceleration, conflict, default or Lien as would not, individually or in the aggregate, prohibit or materially impair the ability of such Party to consummate the transactions contemplated by this Agreement or perform its obligations hereunder on a timely basis.
(b) APH I represents and warrants to AR Capital that it holds of record and owns beneficially 1,000,000 shares of Preferred Stock (which is all of the Preferred Stock that APH I and its Affiliates acquired from RCS Capital Corporation) and that pursuant to Section 5 hereof APH I will transfer and deliver to AR Capital good and valid title to all 1,000,000 shares of Preferred Stock, free and clear of any Lien (other than Liens arising as a result of this Agreement or under applicable securities laws).
(c) Each of AMH and Apollo Management represent and warrant to AR Capital that (x) a true, correct and complete copy of the Amended Purchase Agreement has been provided to AR Capital and (y) other than the Amended Purchase Agreement, there are no written agreements, side letters or arrangements between or among (A) RCAP (or any of its controlled Affiliates), one the one hand, and AMH (or any of its Affiliates) or (B) Luxor (or any of its Affiliates), one the one hand, and AMH (or any of its Affiliates) in each case of (A) or (B), with respect to, or in a anyway relating to, (i) the termination of the Transaction Agreement or the Guarantee Agreement, (ii) the Amended Purchase Agreement, (iii) the Note Purchase Agreement, dated as of the date hereof, between Affiliates of Luxor and/or (iv) the Note Purchase and Class B Share Agreement, dated as of the date hereof, between RCAP Holdings, LLC and RCAP.
(d) AR Capital represents and warrants to AMH, Apollo Management and APH I that it has fully complied with the covenant set forth in Section 4.7 of the Transaction Agreement through the date hereof. Each ARC Principal represents and warrants to AMH, Apollo Management and APH I that it has fully complied with the covenant set forth in Section 2.2 of the Guaranty Agreement through the date hereof. For the avoidance of doubt, the Parties acknowledge that prior to the date hereof the Parties have been mutually engaged in discussions involving both Parties regarding transactions involving certain Funds (for example, the New York REIT, Inc.).
8. AR Global Name. The Parties each acknowledge and agree that AR Capital shall retain all right, title and interest in and to the AR Global name and any intellectual property connected therewith, including, without limitation, the names “AR Global” and “AR Global Investments,” or any designs, logos, domain names, trademarks or copyrights developed by or for the benefit of AR Global, including any registrations and applications therefor, any renewals of the registrations, and all other corresponding rights that are or may be secured under the laws of the United States or any foreign country, now or hereafter in effect (the “IP Rights”). The IP Rights shall be for AR Capital’s own use and enjoyment, and for the use and enjoyment of AR Capital’s successors, assigns, or other legal representatives, as fully and entirely as the same would have been held and enjoyed by any Party individually or the Parties collectively if this Agreement had not been made
9. Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed given if delivered personally, mailed by registered or certified mail with postage prepaid and return receipt requested or sent by commercial overnight courier, courier fees prepaid (if available; otherwise, by the next best class of service available), to the parties at the following addresses:
If to AR Capital or any of the ARC Principals, addressed as follows:
405 Park Avenue, 14th Floor
New York, NY 10022
Attn: | Jesse C. Galloway |
Email: | jgalloway@arlcap.com |
with copies (which shall not constitute notice) to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
Attention: | Lee Meyerson |
Elizabeth Cooper
Email: | lmeyerson@stblaw.com |
ecooper@stblaw.com
If to AMH, Apollo Management or APH I, to it at:
9 West 57th Street, 43rd Floor
New York, New York 10019
Attn: | John J. Suydam |
Email: | jsuydam@ApolloLP.com |
with a copy (which shall not constitute notice) to:
Debevoise & Plimpton LLP
919 Third Avenue
New York, NY 10022
Attn: | Jeffery J. Rosen |
Gregory V. Gooding
Email: | jrosen@debevoise.com |
ggooding@debevoise.com
or to such other Person or address as any party shall specify by notice in writing to the other parties in accordance with this Section 9. All such notices or other communications shall be deemed to have been received on the date of the personal delivery, on the third Business Day after the mailing or dispatch thereof, or in the case of electronic mail or facsimile transmission, on the date received, subject to confirmation of receipt; provided that notice of change of address shall be effective only upon receipt.
10. Entire Agreement. This Agreement and the Confidentiality Agreement constitute the entire agreement and supersede all other prior agreements and understandings, both written and oral, of the parties with respect to the subject matter hereof.
11. Amendments and Waiver. This Agreement may not be amended except by an instrument or instruments in writing signed and delivered on behalf of each of the Parties. Any Party that is entitled to the benefits hereof may waive compliance with any of the agreements of any other Party contained herein. Any agreement on the part of a Party to any such waiver shall be valid if set forth in an instrument in writing signed and delivered on behalf of such party. Waivers shall operate to waive only the specific matter described in the writing and shall not impair the rights of the party granting the waiver in other respects or at other times. A party’s waiver of a breach of a provision of this Agreement, or failure (on one or more occasions) to enforce a provision of, or to exercise a right under, this Agreement, shall not constitute a waiver of a similar breach, or of such provision or right other than as explicitly waived.
12. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
13. Governing Law. This Agreement shall be governed in all respects (including as to validity, interpretation and effect) by the internal laws of the State of New York, without giving effect to any conflict of laws rules or principles that would require or permit the application of another jurisdiction’s laws.
14. Jurisdiction of Disputes. Each party hereby irrevocably agrees that any action or proceeding arising out of any dispute in connection with this Agreement, any rights or obligations hereunder or the performance of such rights or obligations shall be brought exclusively in the courts of the State of New York located in the Borough of Manhattan or the federal courts of the United States of America located in the Southern District of New York (and appellate courts thereof) and hereby expressly submits to the personal jurisdiction and venue of such courts for the purposes thereof and expressly waives any claim of improper venue and any claim that such courts are an inconvenient forum. Each party hereby irrevocably consents to the service of process of any of the aforementioned courts in any such suit, action or proceeding by the mailing of copies thereof by registered or certified mail or by overnight courier service, postage prepaid, to its address set forth in Section 9.
15. Waiver of Jury Trail. Each Party hereby waives all rights to a jury trial with respect to any action or claim arising out of any dispute in connection with this Agreement, any rights or obligations hereunder or the performance of such rights and obligations. Each Party (i) certifies that no representative, agent or attorney of any Party has represented, expressly or otherwise, that such Party would not, in the event of litigation, seek to enforce the foregoing waivers and (ii) acknowledges that the other Parties have been induced to enter into this Agreement and the transactions contemplated hereby by, among other things, the waivers and certifications contained herein.
16. No Assignment; Binding Effect. Neither this Agreement nor any right, interest or obligation hereunder may be assigned by any Party hereto without the prior written consent of the other Parties hereto and any attempt to do so shall be void, except for assignments and transfers by operation of any laws. Subject to the preceding sentence, this Agreement is binding upon, inures to the benefit of and is enforceable by the Parties and their respective successors and assigns.
17. Third-Party Beneficiaries. Each Party acknowledges and agrees that the ARC Related Parties and the Apollo Related Parties are express third-party beneficiaries of the releases of such Related Parties and covenants not to sue such Related Parties contained in Section 3 of this Agreement and are entitled to enforce rights under such section to the same extent that such Related Parties could enforce such rights if they were a party to this Agreement. Except as provided in the preceding sentence, there are no third-party beneficiaries to this Agreement.
18. Headings. The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.
19. Specific Performance. The Parties agree that if any of the provisions of this Agreement were not performed by the Parties in accordance with their specific terms or were otherwise breached thereby, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and that each Party will be entitled to specific performance to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which it may be entitled at law or in equity.
20. Counterparts; Effectiveness. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.
[signature page follows]
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.
AMH Holdings (Cayman), L.P. | ||
By: | AMH Holdings GP, Ltd., its general partner | |
By: | Apollo Management Holdings GP, LLC, its sole director | |
By: | /s/ John Suydam | |
Name: John Suydam | ||
Title: Vice President | ||
Apollo Management Holdings, L.P. | ||
By: | Apollo Management Holdings GP, LLC, its general partner | |
By: | /s/ John Suydam | |
Name: John Suydam | ||
Title: Vice President | ||
Apollo Principal Holdings I, L.P. | ||
By: | Apollo Principal Holdings I GP, LLC, its general partner | |
By: | /s/ John Suydam | |
Name: John Suydam | ||
Title: Vice President |
AR Capital, LLC | ||
By: | /s/ William M. Kahane | |
Name: William M. Kahane | ||
Title: Managing Member | ||
AR Global Investments, LLC | ||
By: | /s/ William M. Kahane | |
Name: William M. Kahane | ||
Title: Managing Member | ||
By: | /s/ Nicholas S. Schorsch | |
Nicholas S. Schorsch | ||
By: | /s/ Peter M. Budko | |
Peter M. Budko | ||
By: | /s/ William M. Kahane | |
William M. Kahane | ||
By: | /s/ Edward M. Weil, Jr. | |
Edward M. Weil, Jr. | ||
By: | /s/ Brian S. Block | |
Brian S. Block |
Exhibit 17
Execution Version
NOTE PURCHASE AND
CLASS B SHARE AGREEMENT
This NOTE PURCHASE AND CLASS B SHARE AGREEMENT (this “Agreement”), dated as of November 8, 2015, is by and among RCAP Holdings, LLC, a Delaware limited liability company (“RCAP”), and RCS Capital Corporation, a Delaware corporation (the “Company”).
WHEREAS, RCAP is the owner of one (1) Class B common share, $0.001 par value, of the Company (the “Class B Share”); and
WHEREAS, the parties desire to enter into this Agreement in respect of (i) the purchase and issuance of the RCAP Note (as defined below) and (ii) certain matters related to the Class B Share as provided herein.
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:
ARTICLE I
NOTE PURCHASE
1.1. Purchase.
(a) On the terms and subject to the conditions set forth in this Agreement, at the Closing (as defined below), the Company shall sell to RCAP, and RCAP shall purchase from the Company, a senior unsecured promissory note in the aggregate principal amount of $12,000,000, in the form attached hereto as Exhibit A (the “RCAP Note”).
(b) Subject to the satisfaction or waiver of the conditions set forth in Article II, at the closing of the issuance and purchase of the RCAP Note (the “Closing” and the date on which the Closing actually occurs is the “Closing Date”), which shall take place on the day on which the conditions set forth in Article II are first satisfied or, to the extent permitted, waived (other than any condition which by its nature is to be satisfied at the Closing, but subject to satisfaction or waiver of all such conditions):
(i) The Company shall issue to RCAP the RCAP Note; and
(ii) RCAP shall pay to the Company by wire transfer of immediately available funds to the account of the Company designated by the Company in writing an amount equal to $12,000,000.
ARTICLE II
CLOSING CONDITIONS
2.1. Mutual Conditions.(a) The respective obligations of the Company and RCAP to consummate the Closing are subject to the satisfaction (or waiver in writing by the parties hereto), as of the Closing, of the following condition:
(i) There shall be no (A) injunction, restraining order or decree of any nature of any governmental authority of competent jurisdiction in effect that restrains or prohibits the consummation of the transactions contemplated hereby or (B) pending action, suit or proceeding brought by any governmental authority which seeks to restrain the consummation of the transactions contemplated hereby.
2.2 RCAP Conditions.
(a) The obligations of RCAP to consummate the Closing are subject to the satisfaction (or waiver in writing by RCAP) as of the Closing of each of the following conditions:
(i) The representations and warranties of the Company set forth in Article V shall be true and correct in all material respects as of the Closing Date as though made at and as of the Closing Date.
(ii) The Company shall have performed and complied with in all material respects all covenants and agreements contained in this Agreement to be performed or complied with by it prior to or at the Closing.
(iii) Luxor and its affiliates shall have purchased the Luxor Notes in accordance with the Luxor NPA concurrently with the Closing (each undefined term as defined in Section 5.1 below).
(v) The Company shall have delivered to RCAP Luxor’s and Apollo Principal Holdings I, L.P.’s consents relating to the transactions contemplated hereby.
(vi) The Company shall have delivered to RCAP executed amendments to the First Lien Credit Agreement and Second Lien Credit Agreements, each dated as of April 29, 2014, as amended (together, the “Credit Agreements”), attached hereto as Exhibit E.
2.2 Company Conditions.
(a) The obligations of the Company to consummate the Closing are subject to the satisfaction (or waiver in writing by the Company) as of the Closing of each of the following conditions:
(i) The representations and warranties of RCAP set forth in Article IV shall be true and correct in all material respects as of the Closing Date as though made at and as of the Closing Date.
(ii) RCAP shall have performed and complied with in all material respects all covenants and agreements contained in this Agreement to be performed or complied with by it prior to or at the Closing.
(v) RCAP shall have executed and delivered to the Company an irrevocable proxy in the form attached hereto as Exhibit B with respect to the Class B Share.
2 |
ARTICLE III
VOTING AGREEMENT AND GRANT OF IRREVOCABLE PROXY
3.1. Proxy; Indemnity.
(a) At the Closing, RCAP shall irrevocably grant to, and appoints, the Special Committee of the Board of Directors of the Company (the “Board”) comprised of Mark Auerbach, Doug Wood and C. Thomas McMillen (the “Committee”) (and if any member of such Committee no longer serves on such Committee for any reason, then the remaining member or members of such Committee, in each case acting by a majority, and if none of the three individuals named above serve on the Committee, the Board may then appoint such other independent director(s) to the Committee that are reasonably acceptable to RCAP and Luxor), RCAP’s proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of RCAP, to vote or cause to be voted the Class B Share (in person or by proxy), as RCAP would be required to vote the Class B Share on any two Class B Specified Matters and to exercise all powers that RCAP would be entitled to exercise on any such matters if personally present, at any annual, special or other meeting of the stockholders of the Company and at any adjournment or adjournments thereof, and to execute any written consent of stockholders on behalf of RCAP in lieu of such meeting or otherwise; provided, however, that the Committee may not use the Proxy to approve any Class B Specified Matter, except (i) with respect to any Class B Specified Matter, in connection with a transaction in which the RCAP Note is repaid (including all accrued and outstanding interest thereunder) upon consummation of such transaction, with the effectiveness of any such transaction to be subject to such repayment of the RCAP Note, or (ii) with respect to one other Class B Specified Matter, in connection with a transaction that results in net proceeds to the Company or its subsidiaries of up to $80,000,000 (which, for the avoidance of doubt, shall not require repayment of the RCAP Note); provided, further, that to the extent the first or the second Class B Specified Matter requires one or more votes of the Company stockholders in order to effectuate an agreed, specific transaction (or any related transaction or a series of related transactions, including (x) any amendments to the certificate of incorporation or bylaws of the Company necessitated by such transactions and (y) any required approvals of the stockholders of the Company in accordance with the rules of the New York Stock Exchange), then such additional stockholder votes shall all be deemed to relate to one Class B Specified Matter and the Committee may use the Proxy in connection with any such additional stockholder votes. The proxy set forth in this Section 3.1(a) is hereinafter referred to as the “Proxy”.
(b) “Class B Specified Matters” means (i) any disposal of all or substantially all the Company’s assets, or any consolidation, merger or entry into a business combination by the Company with a third person, (ii) any authorization of a new class or series of capital stock or additional shares of capital stock, or reclassification or alteration of the terms of any class or series of capital stock, or any issuance of capital stock or other equity securities (including the right to acquire capital stock or other equity securities) by the Company, and (iii) any amendment or modification to the certificate of incorporation or bylaws of the Company in connection with any matters set forth in clauses (i) and (ii) above; provided, however, that the Committee may not use the Proxy to approve any Class B Specified Matter that adversely affects the voting rights of the Class B Share, except in connection with a transaction in which the RCAP Note is repaid (including all accrued and outstanding interest thereunder) upon consummation of such transaction, with the effectiveness of any such transaction to be subject to such repayment of the RCAP Note; provided, further, that with respect to any Class B Specified Matter (and any related transactions or series of transactions relating to any Class B Specified Matter or otherwise) each share of Class A common stock, par value $0.001 per share, of the Company held by RCAP or officers, employees, equityholders or affiliate of RCAP shall be treated in the same manner as each other share of Class A common stock.
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(c) The Proxy shall be irrevocable, shall be deemed to be coupled with an interest sufficient in law to support an irrevocable proxy and shall revoke any and all prior proxies granted by RCAP with respect to the Class B Share. The Proxy shall (i) be subject to the rights and remedies of the Collateral Agent (the “First Lien Collateral Agent”) under the Security Documents (each undefined term as defined in the First Lien Credit Agreement) and the Collateral Agent (the “Second Lien Collateral Agent”) under the Security Documents (each undefined term as defined in the First Lien Credit Agreement). The Proxy shall be valid from the Closing Date and until 11:59 P.M. New York time on January 31, 2016 (the “End Date”); provided that (i) if the Company enters into a definitive agreement with respect to a Class B Specified Matter prior to 11:59 P.M. New York time on January 31, 2016, the End Date shall be automatically extended until 11:59 P.M. New York time on June 30, 2016 (and, in the case of Section 6.1, on July 31, 2016), in which case such extended date shall be the “End Date” for all purposes of this Agreement and (ii) notwithstanding the foregoing, the Proxy shall terminate automatically upon the occurrence and during the continuance of an Event of Default and the provision by the First Lien Collateral Agent or the Second Lien Collateral Agent, as applicable, of notice to the Borrower of the exercise of remedies by the First Lien Collateral Agent or the Second Lien Collateral Agent, as applicable, under the security documents described above, provided that such notice shall be deemed to have been given immediately upon the occurrence of an Event of Default under Section 7.01(g) or (h) under either of such credit agreements. The First Lien Collateral Agent and Second Lien Collateral Agreement, and the Secured Parties under each of the credit agreements referred to above, are intended to be third party beneficiaries of this paragraph and have relied on this paragraph. The Company hereby agrees to recognize the Proxy. RCAP shall take such further action or execute such other instrument as may be reasonably requested by the Company to effectuate the intent of the Proxy.
(d) From and following the Closing, the Company agrees to defend, indemnify and hold harmless RCAP and its affiliates, officers, directors and employees (the “Indemnified Parties”) from and against any and all damages, losses, liabilities, claims, demands, suits, judgments, costs and expenses (including reasonable legal fees and expenses) incurred or suffered by the Indemnified Parties as a result of any claim made by any third party to the extent such claim is in connection with, relates to or arises from (i) a grant of the Proxy, (ii) a Class B Specified Matter approved using the Proxy pursuant to this Agreement, (iii) any transaction approved or entered into by the Company in connection with such Class B Specified Matter during the period from the Closing until the End Date (regardless of when such transaction is consummated), or (iv) the operation of the business of the Company during the period from the Closing until the End Date (the “Indemnifiable Claims”). From and following the Closing, upon request of RCAP, the Company shall advance reasonable expenses in connection with any defense of any Indemnifiable Claim or any action or proceeding arising therefrom.
3.2. Director Designee. From and following the Closing, RCAP shall have the right to nominate one director to the Board (the “Director Designee”), who shall initially be Edward M. Weil, Jr., and the Class B Share shall be voted in favor of the election of the Director Designee to the Board. It is understood and agreed that in the event that a vacancy is created at any time as a result of the retirement, resignation, removal (with or without cause), death or disability of the Director Designee, then RCAP shall have the right to designate a replacement Director Designee to fill such vacancy. The Company shall cause any successor Director Designee to be appointed as a director of the Company effective as of the time the preceding Director Designee is no longer a member of the Board. Notwithstanding the foregoing, the Company shall not be obligated to cause to be appointed to the Board (or to be included in the Board’s slate of nominees to be approved by the Company’s shareholders) a Director Designee in the event that the Committee makes a final determination, in good faith, after receiving advice from a reputable outside legal counsel, that the Director Designee would not be qualified under any applicable law, or regulation or rules of any self-regulatory organization to serve as a director of the Company; provided that RCAP and the Director Designee (i) have been provided all documents and information provided to and prepared by the Committee relating to such determination, (ii) have been afforded a reasonable time to consult with legal counsel and (iii) have had the opportunity to present any relevant information to the Committee. This Section 3.2 shall terminate and be of no further force and effect immediately when RCAP or its affiliates no longer have beneficial ownership of the Class B Share (including as a result of a purchase of the Class B Share by the Company pursuant to Section 6.3).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF RCAP
RCAP represents and warrants to the Company as follows:
4.1. Organization; Authorization; Binding Agreement. RCAP is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is formed and the consummation of the transactions contemplated hereby are within RCAP’s organizational powers and have been duly authorized by all necessary organizational actions on the part of RCAP. RCAP has full power and authority to execute, deliver and perform this Agreement. This Agreement has been duly and validly executed and delivered by RCAP, and constitutes a legal, valid and binding obligation of RCAP enforceable against RCAP in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally and general equitable principles (whether considered in an action in equity or at law).
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4.2. Non-Contravention. The execution and delivery of this Agreement by RCAP does not, and the performance by RCAP of RCAP’s obligations hereunder and the consummation by RCAP of the transactions contemplated hereby will not (i) violate any law applicable to RCAP, (ii) require any consent, approval, order, authorization or other action by, or filing with or notice to, any person (including any governmental entity) under, constitute a default (with or without the giving of notice or the lapse of time or both) under, or give rise to any right of termination, cancellation or acceleration under, or result in the creation of any Encumbrances on the Class B Share pursuant to, any contract, agreement, trust, commitment, order, judgment, writ, stipulation, settlement, award, decree or other instrument binding on RCAP or any applicable law, or (iii) violate any provision of RCAP’s organizational documents, in each case, except as would not reasonably be expected to adversely affect the ability of RCAP to perform its obligations under this Agreement in any material respect.
4.3. Ownership of Class B Share. RCAP is the legal or beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of the Class B Share and has good and marketable title to the Class B Share free and clear of any liens, claims, proxies, voting trusts or agreements, options, rights, understandings or arrangements or any other encumbrances or restrictions whatsoever on title, transfer or exercise of any rights of a stockholder in respect of the Class B Share (collectively, “Encumbrances”), except as provided hereunder, under the Collateral Agreements (as defined in the Credit Agreements) or pursuant to any applicable restrictions on transfer under the Securities Act of 1933, as amended (collectively, “Permitted Encumbrances”). Except pursuant to this Agreement, no person has any contractual or other right or obligation to purchase or otherwise acquire the Class B Share.
4.4. Voting Power. RCAP has full voting power, with respect to the Class B Share and full power of disposition, full power to issue instructions with respect to the matters set forth herein and full power to agree to all of the matters set forth in this Agreement, in each case with respect to the Class B Share. The Class B Share is not subject to any proxy, voting trust or other agreement or arrangement with respect to the voting of the Class B Share, except as provided hereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to RCAP as follows:
5.1 Side Agreements. Except for the Note Purchase Agreement, dated as of the date hereof, among Luxor Capital Partners, LP (“Luxor”) and its affiliates (the “Luxor NPA”) and the notes, in the form attached to the Luxor NPA, to be issued thereunder at the Closing (the “Luxor Notes”), true, correct and complete copies of which have been made available to RCAP, there are no agreements, side letters or arrangements between the Company, on the one hand, and Luxor or any of its affiliates, on the other hand, with respect to the subject matter of the Luxor NPA (the “Luxor Transaction”).
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ARTICLE VI
COVENANTS
6.1. Restrictions. Until the End Date, RCAP shall not, directly or indirectly, (i) create or permit to exist any Encumbrance, other than Permitted Encumbrances, on the Class B Share, (ii) transfer, sell, assign, gift, hedge, pledge or otherwise dispose (whether by sale, liquidation, dissolution, dividend or distribution) of, or enter into any derivative arrangement with respect to (collectively, “Transfer”), the Class B Share or any right or interest therein (or consent to any of the foregoing), (iii) enter into any contract, option or other agreement, arrangement or understanding with respect to any Transfer of the Class B Share or any right or interest therein, (iv) grant or permit the grant of any proxy, power-of-attorney or other authorization or consent in or with respect to the Class B Share, (v) deposit or permit the deposit of the Class B Share into a voting trust or enter into a voting agreement or arrangement with respect to the Class B Share, (vi) knowingly take any other action that would reasonably be expected to restrict, limit or interfere with the performance of RCAP’s obligations hereunder or the transactions contemplated hereby or (vii) without the prior written consent of the Committee, vote or cause to be voted the Class B Share (in person or by proxy), on any stockholder matter at any annual, special or other meeting of the stockholders of the Company and at any adjournment or adjournments thereof, or execute any written consent of stockholders in lieu of such meeting or otherwise. Any attempted Transfer of the Class B Share or any interest therein or any attempted exercise of the voting power with respect to the Class B Share in violation of this Section 6.1 shall be null and void. If any involuntary Transfer of the Class B Share shall occur (including, if applicable, a sale by RCAP’s trustee in any bankruptcy, or a sale to a purchaser at any creditor’s or court sale), the transferee (which term, as used herein, shall include any and all transferees and subsequent transferees of the initial transferee) shall take and hold the Class B Share subject to all of the obligations, restrictions, liabilities and rights under this Agreement.
6.2. Adjustments. Until the End Date, in the event (a) of any stock split, stock dividend, merger, amalgamation, reorganization, recapitalization, reclassification, combination, exchange of shares or the like of the capital stock of the Company on, of or affecting the Class B Share or (b) that RCAP shall become the beneficial owner of any additional Class B common shares of the Company, then the terms of this Agreement and the Proxy shall apply to the Class B or similar shares held by RCAP immediately following the effectiveness of the events described in clause (a) or RCAP becoming the beneficial owner thereof as described in clause (b), as though, in either case, they were Class B Share hereunder.
6.3. Right to Purchase the Class B Share. From and after the Closing and until July 31, 2016, upon (a)(i) the payment and discharge of the unpaid principal and interest on the RCAP Note in full, or (ii) the purchase by the Company of the New Securities (as defined in the RCAP Note) from RCAP pursuant to Section 3.2 of the RCAP Note (a “Triggering Transaction”) and (b) the release of RCAP and RCS Capital Management, LLC (and their respective subsidiaries) from their obligations as a Guarantor under the Credit Agreements and under any other Loan Documents (as defined in the Credit Agreements) and the release of any Liens (as defined in the Credit Agreements) on their property (other than the Class B Share) created by any of the Security Documents (as defined in the Credit Agreements), the Company shall have the right, at its option and upon two (2) days’ prior written notice to RCAP, to purchase the Class B Share from RCAP (and RCAP shall transfer the Class B Share to the Company free and clear of any Encumbrance, other than Permitted Encumbrances) at a purchase price of $1.00 (the “Purchase Transaction”). The Purchase Transaction may be consummated, at the Company’s election, either concurrently with or as soon as practicable after a Triggering Transaction or by definitive agreement subject to the consummation of a Triggering Transaction. At the closing of the Purchase Transaction, RCAP shall deliver to the Company such instructions, authorizations, or other instruments to effectuate the transfer of the book-entry Class B Share.
ARTICLE VII
TERMINATION
7.1 Termination. The obligation to consummate the Closing may be terminated and the Closing abandoned at any time prior to the Closing:
(a) By mutual written consent of RCAP and the Company; or
(b) By RCAP or the Company upon written notice given to the other party in the event that the Closing shall not have taken place on or prior to December 31, 2015; provided that no party shall have the right to terminate this Agreement pursuant to this Section 7.1(b) if such party has breached any covenant or agreement hereunder and such breach has resulted in the failure of the Closing to occur on or prior to December 31, 2015.
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7.2 Effect of Termination. In the event of the termination of this Agreement as provided in Section 7.1, this Agreement shall become void and of no further force and effect, and there shall be no duties, liabilities or obligations of any kind or nature whatsoever on the part of any party hereto to the other party based either upon this Agreement or the transactions contemplated hereby, provided that no such termination (nor any provision of this Agreement) shall relieve any party from liability for any damages for fraud or any willful and material breach of this Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1. Notices. All notices, requests or other communications required or permitted to be delivered hereunder shall be delivered in writing:
If to the Company:
RCS Capital Corporation
405 Park Ave, 14th floor
New York, NY 10022
Attention: General Counsel
Facsimile: 646-861-7743
E-mail: JTanaka@rcscapital.com
With copy (which shall not constitute notice) to:
Dechert LLP
1095 Avenue of the Americas
New York, NY 10036
Attention: Martin Nussbaum
Telephone: 212-698-3596
Facsimile: 212-698-0496
E-mail: Martin.Nussbaum@dechert.com
If to RCAP:
RCAP Holdings, LLC
405 Park Avenue, 14th Floor
New York, NY 10022
Attention: Jesse C. Galloway
Facsimile: 646-861-7804
Email: jgalloway@arlcap.com
With copies (which shall not constitute notice) to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
Attention: Lee Meyerson
Elizabeth Cooper
Facsimile: 212-455-2502
Email: lmeyerson@stblaw.com
ecooper@stblaw.com
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Notices if (i) mailed by certified or registered mail or sent by hand or overnight courier service shall be deemed to have been given when received, (ii) sent by facsimile during the recipient’s normal business hours shall be deemed to have been given when sent (and if sent after normal business hours shall be deemed to have been given at the opening of the recipient’s business on the next business say) and (iii) sent by e-mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment).
8.2. Amendments and Waivers. Any provision of this Agreement may be amended or waived if such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
8.3. Binding Effect; Benefit; Assignment. The parties hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit of the other parties, in accordance with and subject to the terms of this Agreement, and this Agreement is not intended to, and does not, confer upon any person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein, except that the Committee is the intended third party beneficiary of Sections 3.1 and 6.1(vii). Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties (whether by operation of law or otherwise) without the prior written consent of the other party, except to the extent that such rights, interests or obligations are assigned pursuant to an involuntary Transfer as provided in Section 6.1. No assignment by any party shall relieve such party of any of its obligations hereunder. Subject to the foregoing, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.
8.4. Governing law; Waiver of Jury Trial.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS.
(b) EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.
8.5. Counterparts; Delivery by Facsimile or Email. This Agreement may be executed by facsimile and in one or more counterparts, and by the different parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. This Agreement, and any amendments hereto, waivers hereof or consents or notifications hereunder, to the extent signed and delivered by means of a facsimile machine or by email with facsimile, scan PDF or equivalent attachment, shall be treated in all manner and respects as an original contract and shall be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person.
8.6. Entire Agreement. This Agreement, and the documents and agreements referred to herein, constitutes the entire agreement of the parties and supersedes all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof and thereof.
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8.7. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the end that transactions contemplated hereby are fulfilled to the greatest extent possible.
8.8. Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof, and, accordingly, that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity. In any proceeding for specific performance, the parties will waive the defense of adequacy of a remedy at law, and the parties waive any requirement for the securing or posting of any bond in connection with the remedies referred to in this Section 8.8.
8.9 Headings. The Section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
8.10. Mutual Drafting. Each party has participated in the drafting of this Agreement, which each party acknowledges is the result of extensive negotiations between the parties; accordingly, 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 provisions of this Agreement.
8.11. Further Assurances. The parties will execute and deliver, or cause to be executed and delivered, all further documents and instruments and use their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations, to perform their respective obligations under this Agreement.
8.12. No Ownership Interest. Except as otherwise provided herein (including in Section 6.3), nothing contained in this Agreement shall be deemed to vest in the Committee or the Company any direct or indirect ownership or incidence of ownership of or with respect to the Class B Share, and all rights, ownership and economic benefits of and relating to the Class B Share shall remain vested in and belong to RCAP.
8.13. Public Announcements. The initial press release concerning this Agreement shall be a press release in the form agreed by the parties hereto and thereafter the parties hereto shall consult with each other (and obtain the other party’s consent) before any party (or its affiliates) issues any press release or otherwise makes any public statements with respect to the transactions contemplated by this Agreement, except (a) as may be required by any applicable law, regulation or rule of any governmental authority, stock exchange or self-regulatory organization to which a party is subject if the party issuing such press release or other public statement has, to the extent practicable, provided the other parties with a reasonable opportunity to review and comment or (b) any press release or other public statement that is consistent in all material respects with previous press releases, public disclosures or public statements made by a party in accordance with this Agreement, in each case under this clause (b) to the extent such disclosure is still accurate.
8.14. Receivables. Exhibit C sets forth each of the receivables owed as of October 31, 2015 by the Company or its subsidiaries to RCAP and/or its affiliates for which an invoice has been sent to the Company (the “RCAP Receivables”). In the event that any of the RCAP Receivables are not paid in full within the later of (i) 30 days after the invoice was first sent to the Company and (ii) November 30, 2015, RCAP shall have the right to set-off any amount of Company receivables RCAP or its affiliates owe to the Company (the “Company Receivables”) (which receivables as of October 31, 2015 are set forth on Exhibit D) by the amount of such unpaid RCAP Receivables (for the avoidance of doubt, any amounts payable under the RCAP Note shall not be considered RCAP Receivables for the purposes of this Section 8.14). In the event that any of the Company Receivables are not paid in full within the later of (x) 30 days after the invoice was first sent to RCAP and (ii) November 30, 2015, the Company shall have the right to set-off any amount of RCAP Receivables by the amount of such unpaid Company Receivables.
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8.15. Luxor NPA. The Company shall not agree to amend or modify any provision of the Luxor NPA without the prior written consent of RCAP. Any such amendment or modification without such consent shall be null and void.
8.16. Sublease. As soon as practicable following the Closing, in connection with the Company’s requested amendment to the services agreement between the Company and AR Capital, LLC, the Company and AR Capital, LLC shall, and RCAP shall cause AR Capital, LLC to, enter into a sublease (in the form attached as Exhibit F) for the concourse, 8th floor south and 12th floor of the premises located at 405 Park Avenue, New York, NY occupied by the Company and its subsidiaries. The term of such sublease shall be coterminous with the underlying lease, but terminable by either party upon twelve month notice.
8.17. Guaranty. The Company shall use commercially reasonable efforts to have RCAP and RCS Capital Management, LLC (and their respective subsidiaries) released from their obligations as a Guarantor under the Credit Agreements and under any other Loan Documents (as defined in the Credit Agreements) and for any Liens (as defined in the Credit Agreements) on their property (other than the Class B Share) created by any of the Security Documents (as defined in the Credit Agreements) to be automatically released, effective upon the Company’s repayment of the RCAP Note in full.
[Signature Page Follows]
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The parties are executing this Agreement on the date set forth in the introductory clause.
RCAP Holdings, LLC | |||
By: | /s/ William M. Kahane | ||
Name: | William M. Kahane | ||
Title: | Managing Member | ||
RCS Capital Corporation | |||
By: | /s/ Brian D. Jones | ||
Name: | Brian D. Jones | ||
Title: | Chief Financial Officer |
[Signature Page to Note Purchase and Class B Share Agreement]
EXHIBIT A
FORM OF RCAP NOTE
[See attached]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD UNLESS REGISTERED PURSUANT TO THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
SENIOR UNSECURED PROMISSORY NOTE
New York, NY | |
$12,000,000 | November [ ], 2015 |
RCS CAPITAL CORPORATION
FOR VALUE RECEIVED, and subject to the terms and conditions set forth herein, RCS Capital Corporation, a Delaware corporation (the “Issuer”), hereby promises to pay to the order of RCAP Holdings, LLC, a Delaware limited liability company (the “Initial Holder”), or its registered assigns the aggregate principal amount of Twelve Million Dollars ($12,000,000), together with any accrued interest added to the principal pursuant to Section 4, to be paid in such amounts and on each payment date as set forth herein, in each case together with all accrued and unpaid interest thereon as provided herein. The indebtedness evidenced by this Note (as defined below) shall constitute senior unsecured indebtedness of the Issuer.
Definitions. Capitalized terms used herein shall have the meanings set forth in this Section 1.
“Applicable Rate” means 12% per annum.
“Bankruptcy Code” means the provisions of Title 11 of the United States Code, 11 U.S.C. § 101 et seq., as now or hereafter in effect or any successor thereto.
“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by Law to close.
“Credit Agreements” means (i) the First Lien Credit Agreement, dated as of April 29, 2014 (as amended by Amendment No.1 dated as of June 30, 2015 and Amendment No. 2 dated as of November 8, 2015), among the Issuer, RCAP Holdings, LLC, RCS Capital Management, LLC, the guarantors, the lenders and other parties thereto from time to time and Barclays Bank PLC, as Administrative Agent and Collateral Agent and (ii) the Second Lien Credit Agreement, dated as of April 29, 2014 (as amended by Amendment No.1 dated as of June 30, 2015 and Amendment No. 2 dated as of November 8, 2015), among the Issuer, RCAP Holdings, LLC, RCS Capital Management, LLC, the guarantors, the lenders and other parties thereto from time to time and Bank of America, N.A., as Administrative Agent and Collateral Agent.
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“Credit Facilities” means one or more debt facilities or agreements (including, without limitation, the Credit Agreements and the indenture governing the Convertible Senior Notes) or commercial paper facilities or indentures, in each case with banks or other institutional lenders providing for, or acting as initial purchasers of, revolving credit loans, term loans, notes, debentures, securities, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced (whether after or upon termination or otherwise), restructured, restated or refinanced (including any agreement to extend the maturity thereof and adding additional borrowers or guarantors and including by means of sales of debt securities to institutional investors) in whole or in part from time to time and including increasing the amount of available borrowings thereunder.
“Default” means any of the events specified in Section 6 which constitutes an Event of Default or which, upon the giving of notice, the lapse of time, or both pursuant to Section 6, would, unless cured or waived, become an Event of Default.
“Default Rate” means, at any time, the Applicable Rate plus 1.0%.
“Encumbrances” means any liens, claims, proxies, voting trusts or agreements, options, rights, understandings or arrangements or any other encumbrances or restrictions whatsoever on title, transfer or exercise of any rights of holder in respect of the New Securities, except pursuant to any applicable restrictions on transfer under the Securities Act.
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended and the rules and regulations thereunder.
“Event of Default” has the meaning set forth in Section 6.
“Exchange Transaction” has the meaning set forth in Section 3.1.
“Governmental Authority” means the government of any nation or any political subdivision thereof, whether at the national, state, territorial, provincial, municipal or any other level, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of, or pertaining to, government (including any supranational bodies such as the European Union or the European Central Bank).
“Holder” means the Initial Holder and each subsequent holder of the Note registered in the Note Register.
“Initial Holder” has the meaning set forth in the introductory paragraph.
“Interest Payment Date” means February 1, May 1, August 1 and November 1 of each year beginning on February 1, 2016; provided that if any such day is not a Business Day, then the applicable Interest Payment Date shall be the immediately preceding Business Day.
“Issuer” has the meaning set forth in the introductory paragraph.
“Law” as to any Person, means any law (including common law), statute, ordinance, treaty, rule, regulation, policy or requirement of any Governmental Authority and authoritative interpretation thereon, whether now or hereafter in effect, in each case, applicable to or binding on such Person or any of its properties or to which such Person or any of its properties is subject.
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“Maturity Date” means the earlier of (a) November 1, 2021 and (b) the date on which all amounts under this Note shall become due and payable pursuant to Section 7.
“New Financing” has the meaning set forth in Section 3.1.
“New Securities” has the meaning set forth in Section 3.1.
“Note” means this senior unsecured promissory note issued by the Issuer in an aggregate principal amount of Twelve Million Dollars ($12,000,000).
“Note Register” has the meaning set forth in Section 5.1(a).
“Note Value” has the meaning set forth in Section 3.1.
“Notice of New Financing” has the meaning set forth in Section 3.1.
“Person” means any individual, corporation, limited liability company, trust, joint venture, association, company, limited or general partnership, unincorporated organization, Governmental Authority or other entity.
“PIK Note” has the meaning set forth in Section 4.7.
“Record Date” means, with respect to any Interest Payment Date, the date that is fifteen days earlier (whether or not such day is a Business Day) of the applicable Interest Payment Date.
“Securities Act” has the meaning set forth in the legend.
“Senior Lender Approvals” has the meaning set forth in Section 3.1.
“Specified Subsidiary” shall mean any Subsidiary that guarantees loans under the Credit Agreements or any subsequent refinancing thereof.
“Stock” shall mean all shares, options, warrants, general or limited partnership interests or other equivalents (regardless of how designated) of or in a corporation, partnership or equivalent entity whether voting or nonvoting, including common stock, preferred stock or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Exchange Act).
“Stockholder Approval” has the meaning set forth in Section 3.1.
“Subordinated Debt and Preferred Equity Approvals” has the meaning set forth in Section 3.1.
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“Subsidiary” shall mean, with respect to any Person, (a) any corporation of which an aggregate of more than fifty percent (50%) of the outstanding Stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person and/or one or more Subsidiaries of such Person, or with respect to which any such Person has the right to vote or designate the vote of fifty percent (50%) or more of such Stock whether by proxy, agreement, operation of law or otherwise, and (b) any partnership or limited liability company in which such Person and/or one or more Subsidiaries of such Person shall have an interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%) or of which any such Person is a general partner or may exercise the powers of a general partner.
“Taxes” has the meaning set forth in Section 9(a).
Issuance; Payment Date; Ranking.
Issuance of this Note. This Note is a general obligation of the Issuer.
Payment Date. On the Maturity Date, the Issuer shall pay to the Holder the principal amount of this Note, together with all accrued and unpaid interest thereon and all other amounts payable under this Note, to the extent not paid prior thereto.
Ranking. This Note is a senior unsecured indebtedness of the Issuer. The payment obligations with respect to this Note shall rank pari passu in priority of payment to the Issuer’s payment obligations under the 5.00% Convertible Senior Notes due 2021 (the “Convertible Senior Notes”).
Prepayment. The unpaid principal amount of, and any accrued interest on, this Note may be prepaid in whole or in part at any time or times on or prior to July 31, 2016 without premium or penalty.
New Securities.
Right to Exchange this Note. In the event, on or prior to the Maturity Date, the Issuer raises capital through an issuance of any securities junior to the Credit Agreements (in a single transaction or a series of related transactions) from a third party resulting in net proceeds to the Issuer or its Subsidiaries of at least $175,000,000 (the “New Financing”), the Issuer shall promptly inform the Holder of the New Financing by written notice (the “Notice of New Financing”), which shall include a copy of the definitive documents or a summary of the principal economic terms thereof. The Issuer may elect to provide the Notice of New Financing after an agreement in principle has been reached regarding the provision of the New Financing. The Holder shall have the right, exercisable by irrevocable written notice to the Issuer within a period of five (5) Business Days after receipt of the Notice of New Financing to exchange (an “Exchange Transaction”) this Note, in whole, but not in part, valued at the outstanding principal amount of this Note, together with all accrued and unpaid interest thereon, as of the date of the consummation of the Exchange Transaction (the “Note Value”), for one or more securities (the “New Securities”) having, in the aggregate, terms (including economic terms) which are substantially equivalent to the terms contained in the securities issued in the New Financing. The consummation of an Exchange Transaction shall be subject to (i) any required approvals of the senior lenders under the Credit Agreements (“Senior Lender Approvals”); (ii) any required approvals of the subordinated debt and preferred equity holders of the Issuer (“Subordinated Debt and Preferred Equity Approvals”); (iii) any required approvals of the common stockholders of the Issuer in accordance with the rules of the New York Stock Exchange (the “Stockholder Approval”); and (iv) any required regulatory approvals. The Issuer shall use commercially reasonable efforts to obtain any Senior Lender Approvals, Subordinated Debt and Preferred Equity Approvals and regulatory approvals that are required to consummate the Exchange Transaction. If the Stockholders Approval is required, the Issuer shall include, in the next proxy statement for a meeting of the Issuer’s stockholders otherwise filed by the Issuer with the Securities and Exchange Commission after the Holder’s election for an Exchange Transaction, an item on the ballot for approval of the stockholders of a proposal to approve the Exchange Transaction. The Exchange Transaction may be consummated, at the Issuer’s election, either concurrently with or as soon as practicable after the New Financing or by definitive agreement subject to the consummation of the New Financing and to the receipt of any such required approvals. Upon the consummation of the Exchange Transaction, this Note shall be deemed satisfied and discharged in full.
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Right to Purchase New Securities. On or prior to July 31, 2016 and following the issuance of the New Securities to the Holder upon the consummation of the Exchange Transaction, the Issuer shall have the right, at its option, to purchase all (but not less than all) of the New Securities from the Holder (and the Holder shall transfer the New Securities to the Issuer free and clear of any Encumbrances) at a purchase price, payable in cash by or on behalf of the Issuer, equal to the Note Value. The Issuer shall give the Holder written notice of the exercise of its right pursuant to this Section 3.2 at least five (5) Business Days prior to the proposed closing date of the purchase of the New Securities. Such notice shall state the proposed closing date of such purchase, which shall be a Business Day, the purchase price (and include a reasonably detailed calculation thereof) and the manner and place of payment. At the closing of such purchase, the Holder shall deliver to the Issuer original certificate(s) evidencing the New Securities, duly endorsed in blank or accompanied by stock power or other instrument of transfer, as appropriate. Notwithstanding anything to the contrary herein, this Section 3.2 shall survive the satisfaction and discharge of this Note.
Interest.
Interest. Except as otherwise provided herein, this Note shall bear interest at the Applicable Rate from the date hereof until the Maturity Date.
Interest Payment Dates; PIK Interest. Interest shall be payable quarterly in arrears on each Interest Payment Date to the Person who is the registered Holder of this Note at the close of business on the Record Date immediately preceding the applicable Interest Payment Date. Notwithstanding the foregoing, on any Interest Payment Date, at the option of the Issuer, interest may be payable in kind, by increasing the principal amount of this Note by the amount of such Interest.
Default Interest. During the continuance of an Event of Default, the Issuer shall pay to the Holder interest at the Default Rate on the outstanding principal amount of this Note and on any other amount payable by the Issuer hereunder (including accrued but unpaid interest to the extent permitted under applicable Law). Interest payable at the Default Rate shall be payable upon demand and in kind, by increasing the principal amount of this Note by the amount of such Interest.
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Computation of Interest. All computations of interest shall be made on the basis of a year of 365 days (or 366 days in the case of a leap year), and the actual number of days elapsed (including the first day but excluding the last day).
Interest Rate Limitation. If at any time and for any reason whatsoever, the interest rate payable on this Note shall exceed the maximum rate of interest permitted to be charged under applicable Law, such interest rate shall be reduced automatically to the maximum rate of interest permitted to be charged under applicable Law and that portion of each sum paid attributable to that portion of such interest rate that exceeds the maximum rate of interest permitted by applicable Law shall be deemed a voluntary prepayment of principal.
Legal Holidays. In any case where any Interest Payment Date is not a Business Day, then any action to be taken on such date need not be taken on such date, but may be taken on the next succeeding Business Day with the same force and effect as if taken on such date, and no interest shall accrue in respect of the delay.
PIK Note. At the Holder’s request, the Issuer shall deliver one or more additional promissory notes (each, a “PIK Note”) having an aggregate principal amount equal to the accrued but unpaid interest on this Note and shall otherwise be in form and substance substantially identical to this Note, including with respect to the interest rate. Interest on each PIK Note shall accrue from the Interest Payment Date in respect of which such additional PIK Note was issued until repayment of the principal and payment of all accrued interest in full. In the event a PIK Note is not requested by the Holder and/or delivered by the Issuer in accordance herewith, interest shall accrue on this Note such that the aggregate interest due and payable on the Maturity Date and on each Interest Payment Date would be the same as if all PIK Notes not issued had been issued, and the principal payable on the Maturity Date with respect to this Note shall be an amount equal to the sum of the principal outstanding hereunder and the aggregate principal which would be outstanding if the PIK Notes not issued had been issued.
Note Register; Payment Mechanics.
Note Register.
The Issuer shall cause to be kept at its principal office a register for the registration and transfer of this Note (the “Note Register”). The name and address of the Holder of this Note, any transfer of this Note, and the name and address of the transferee of this Note shall be registered in the Note Register.
The Person in whose name this Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes of this Note, and the Issuer shall not be affected by any notice to the contrary, until due presentment of such Note for registration of transfer so provided in this Section 5.1. Payment of or on account of the principal, and interest on this Note shall be made to or upon the written order of such registered holder.
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The Person in whose name this Note is registered on the Note Register at the close of business on any Record Date with respect to any Interest Payment Date shall be entitled to receive the interest payable on such Interest Payment Date. Interest shall be payable at the office or agency of the Issuer maintained by the Issuer for such purposes.
Direct Payment.
On the Maturity Date, the Issuer will pay or cause to be paid all amounts payable with respect to this Note (without any presentment of this Note and without any notation of such payment being made thereon) by crediting (before 1:00 p.m., New York time), by intra-bank or Federal funds bank wire transfer in same day funds in U.S. Dollars to the Holder’s account in any bank in the United States as may be designated and specified in writing by the Holder at least two Business Days prior thereto.
Notwithstanding anything to the contrary contained in this Note, if the Maturity Date is not a Business Day, then the Issuer shall pay such amount on the next succeeding Business Day, and interest shall accrue on such amount until the date on which such amount is paid and payment of such accrued interest shall be made concurrently with the payment of such amount; provided that the Issuer may elect to pay in full (but not in part) any such amount on the last Business Day prior to the date such payment otherwise would be due, and no such additional interest shall accrue on such amount.
Lost, etc. Notes. If a mutilated Note is surrendered to the Issuer or if the Holder of this Note claims and submits an affidavit or other evidence, reasonably satisfactory to the Issuer to the effect that this Note has been lost, destroyed or wrongfully taken, the Issuer shall issue a replacement Note if the customary requirements relating to replacement securities are reasonably satisfied. If required by the Issuer, the Holder must provide an indemnity bond, or other form of indemnity, sufficient in the reasonable judgment of the Issuer to protect the Issuer from any loss which it may suffer if a Note is replaced.
Replacement Notes. All Notes issued by the Issuer shall be in form and substance identical to this Note other than the principal amount and the Holder thereof.
Events of Default. The occurrence and continuance of any of the following shall constitute an “Event of Default” hereunder:
default in any payment of interest on this Note when due and payable, and the default continues for a period of thirty (30) days;
default in the payment of principal of this Note when due and payable on the Maturity Date, upon declaration of acceleration or otherwise;
any representation or warranty made in this Note shall prove to have been untrue in any material respect when so made and which breach materially adversely affects the ability of the Issuer to perform its obligations under this Note;
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failure by the Issuer for 60 days after written notice from the Holder has been received by the Issuer to comply with any of its other covenants or agreements contained in this Note;
default by the Issuer or any Specified Subsidiary (i) under the Credit Facilities or (ii) with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of Twenty Eight Million Seven Hundred and Fifty Thousand Dollars ($28,750,000) (or its foreign currency equivalent) in the aggregate of the Issuer and/or any such Specified Subsidiary, whether such indebtedness now exists or shall hereafter be created, which default, in each case under the foregoing clauses (i) and (ii), (A) results in such indebtedness becoming or being declared due and payable or (B) constitutes a failure to pay the principal or interest of any such debt when due and payable at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise;
a final judgment for payment of Twenty Eight Million Seven Hundred and Fifty Thousand Dollars ($28,750,000) (or its foreign currency equivalent) or more (excluding any amounts covered by insurance) rendered against the Issuer or any Specified Subsidiary, which judgment is not discharged or stayed within 60 days after (i) the date on which the right to appeal thereof has expired if no such appeal has commenced or (ii) the date on which all rights to appeal have extinguished;
the Issuer or any Specified Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other similar relief with respect to the Issuer or any such Specified Subsidiary or its debts under any bankruptcy, insolvency or other similar Law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Issuer or any such Specified Subsidiary or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due; or
an involuntary case or other proceeding shall be commenced against the Issuer or any Specified Subsidiary seeking liquidation, reorganization or other relief with respect to the Issuer or such Specified Subsidiary or its debts under any bankruptcy, insolvency or other similar Law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Issuer or such Specified Subsidiary or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 90 consecutive days.
Remedies.
Acceleration of Note. If an Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6) occurs and is continuing, the Holder, by notice to the Issuer, may declare the unpaid principal of and any accrued interest on this Note to be due and payable, and immediately upon such declaration, the principal and interest shall be due and payable. If an Event of Default specified in clause (g) or (h) of Section 6 occurs, such an amount shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Holder.
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Other Remedies.
If an Event of Default occurs and is continuing, the Holder may pursue any rights and remedies available under this Note and applicable law to collect the payment of principal or interest on this Note or to enforce the performance of any provision of this Note.
A delay or omission by the Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.
Taxes. The Issuer shall make all payments, whether on account of principal, interest or otherwise, free of and without deduction or withholding for any present or future taxes, duties or other charges (“Taxes”), unless otherwise required by Law.
Miscellaneous.
Notices.
All notices, requests or other communications required or permitted to be delivered hereunder shall be delivered in writing:
If to the Issuer:
RCS Capital Corporation
405 Park Ave, 14th floor
New York, NY 10022
Attention: General Counsel
Facsimile: 646-861-7743
E-mail: JTanaka@rcscapital.com
With copy (which shall not constitute notice) to:
Dechert LLP
1095 Avenue of the Americas
New York, NY 10036
Attention: Martin Nussbaum
Telephone: 212-698-3596
Facsimile: 212-698-0496
E-mail: Martin.Nussbaum@dechert.com
If to the Holder which acquired this Note from the Issuer on the date hereof at the address or facsimile number set forth on Exhibit A hereto or, in the case of another Holder, at the address or facsimile number provided by such Holder to the Issuer.
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With copies (which shall not constitute notice) to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
Attention: Lee Meyerson
Elizabeth Cooper
Facsimile: 212-455-2502
Email: lmeyerson@stblaw.com
ecooper@stblaw.com
Notices if (i) mailed by certified or registered mail or sent by hand or overnight courier service shall be deemed to have been given when received, (ii) sent by facsimile during the recipient’s normal business hours shall be deemed to have been given when sent (and if sent after normal business hours shall be deemed to have been given at the opening of the recipient’s business on the next Business Day) and (iii) sent by e-mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment).
Successors and Assigns. This Note shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties. The Holder may assign this Note in whole (but not in part); provided, that the Holder shall provide the Issuer prior notice at least three Business Days before assigning this Note.
GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUCTED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND RULE 327(B) OF THE NEW YORK CIVIL PRACTICE LAWS AND RULES. THE ISSUER AND THE HOLDER HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE, AND IRREVOCABLY ACCEPT FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE ISSUER AND THE HOLDER IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY SUCH CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE ISSUER IN ANY OTHER JURISDICTION.
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Waiver of Jury Trial. EACH OF THE ISSUER AND THE HOLDER WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE.
Independence of Covenants. All covenants hereunder shall be given in any jurisdiction independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.
Note Solely A Corporate Obligation. No recourse for the payment of the principal of or accrued and unpaid interest on this Note, nor for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Issuer under this Note shall be had against any stockholder, employee, agent, officer, member of the Board of Directors or subsidiary, as such, past, present or future, of the Issuer or of any successor corporation, either directly or through the Issuer or any successor corporation whether by virtue of any constitution, statue or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the issue of this Note.
Revival and Reinstatement of Obligations. If the Holder repays, refunds, restores, or returns in whole or in part, any payment or property previously paid or transferred to the Holder in full or partial satisfaction of any obligation evidenced by this Note, because the payment, transfer, or the incurrence of the obligation so satisfied is asserted or declared to be void, voidable, or otherwise recoverable under any Law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent transfers, preferences, or other voidable or recoverable obligations or transfers (each, a “Voidable Transfer”), or because the Holder elects to do so on the reasonable advice of its counsel in connection with a claim that the payment, transfer, or incurrence is or may be a Voidable Transfer, then, as to any such Voidable Transfer, or the amount thereof that the Holder elects to repay, restore, or return (including pursuant to a settlement of any claim in respect thereof), and as to all reasonable costs, expenses, and attorneys’ fees of the Holder related thereto, the liability of the Issuer with respect to the amount or property paid, refunded, restored, or returned will automatically and immediately be revived, reinstated, and restored and will exist.
Waiver of Notice. The Issuer hereby waives demand for payment, presentment for payment, protest, notice of payment, notice of dishonor, notice of nonpayment, notice of acceleration of maturity and diligence in taking any action to collect sums owing hereunder.
Amendments and Waivers.
Written Agreement. Neither this Note nor any provision hereof, may be amended, waived or modified (including pursuant to any side letter or other arrangement or agreement that changes, expands or otherwise modifies the rights or obligations of the Issuer and/or Holder) except pursuant to an agreement in writing entered into between the Issuer and the Holder and with the prior written consent of Luxor Capital Partners, LP.
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Notation on or Exchange of Notes. If an amendment or waiver changes the terms of this Note, the Issuer may require the Holder to deliver this Note to the Issuer so that it may place an appropriate notation on this Note about the changed terms and return it to the Holder.
Headings. The headings of the various Sections and subsections herein are for reference only and shall not define, modify, expand or limit any of the terms or provisions hereof.
No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising on the part of the Holder, of any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Law.
Electronic Execution. The words “execution”, “signed”, “signature”, and words of similar import in this Note shall be deemed to include electronic or digital signatures or the keeping of records in electronic form, each of which shall be of the same effect, validity and enforceability as manually executed signatures or a paper-based recordkeeping system, as the case may be, to the extent and as provided for under applicable Law, including the Electronic Signatures in Global and National Commerce Act of 2000 (15 USC § 7001 et seq.), the Electronic Signatures and Records Act of 1999 (N.Y. State Tech. Law §§ 301-309), or any other similar state Laws based on the Uniform Electronic Transactions Act.
Severability. If any term or provision of this Note is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Note or invalidate or render unenforceable such term or provision in any other jurisdiction.
Expenses. The Issuer agrees to pay all reasonable out-of-pocket expenses incurred by the Holder in connection with the administration of this Note or in connection with any amendments, modifications or waivers of the provisions hereof or thereof or incurred by the Holder in connection with the enforcement or protection of its rights under this Note, including in connection with the New Financing, the Exchange Transaction or any other refinancing or restructuring of the credit arrangements provided under this Note in the nature of a “work-out” or pursuant to any insolvency or bankruptcy proceedings, including the reasonable fees, charges and disbursements of one New York counsel (and counsel in each other relevant local jurisdiction) for the Holder. The agreements in this Section 9.14 shall survive repayment of all of the indebtedness evidenced by this Note. All amounts due under this Section 9.14 shall be paid promptly following receipt by the Issuer of an invoice relating thereto setting forth such expenses in reasonable detail.
Effectiveness of Note. This Note shall become effective at and as of the date hereof.
No Set-off, etc. The Issuer hereby waives, for the benefit of the Holder, any rights to set-offs, recoupments and counterclaims.
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Representations and Warranties. The Issuer hereby represents and warrants as of the date hereof as follows:
Organization and Qualification. The Issuer is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization;
Power and Authority. The Issuer is duly authorized to execute, deliver and perform its obligations under this Note. The execution, delivery and performance of this Note have been duly authorized by all necessary action, and do not (i) require any consent or approval of any equity holders of the Issuer or any Governmental Authority, other than those already obtained; (ii) contravene the organizational documents of the Issuer; or (iii) violate or cause a default under any material applicable Law or material contract to which the Company is a party or by which the Company or any of its properties is bound; and
Enforceability. This Note is a legal, valid and binding obligation of the Issuer, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally,
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed.
RCS CAPITAL CORPORATION | ||
By: | ||
Name: | ||
Title: |
[Signature Page to Senior Unsecured Promissory Note (RCAP)]
EXHIBIT A
Address and Facsimile Number for Notice:
RCAP Holdings, LLC
405 Park Avenue, 14th Floor
New York, NY 10022
Attention: Jesse C. Galloway
Facsimile: 646-861-7804
Email: jgalloway@arlcap.com
EXHIBIT B
FORM OF IRREVOCABLE PROXY
RCAP Holdings, LLC, a Delaware limited liability company (“RCAP”), for consideration received, hereby irrevocably grants to, and appoints, the Special Committee of the Board of Directors (the “Board”) of RCS Capital Corporation (the “Company”) comprised of Mark Auerbach, Doug Wood and C. Thomas McMillen (the “Committee”) (and if any member of such Committee no longer serves on such Committee for any reason, then the remaining member or members of such Committee, in each case acting by a majority and if none of the three individuals named above serve on the Committee, the Board may then appoint such other independent director(s) to the Committee that are reasonably acceptable to RCAP and Luxor Capital Partners, LP), RCAP’s proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of RCAP, to vote or cause to be voted the Class B common share, $0.001 par value, of the Company (the “Class B Share”) (in person or by proxy), as RCAP would be required to vote the Class B Share on any two Class B Specified Matters and to exercise all powers that RCAP would be entitled to exercise on any such matters if personally present, at any annual, special or other meeting of the stockholders of the Company and at any adjournment or adjournments thereof, and to execute any written consent of stockholders on behalf of RCAP in lieu of such meeting or otherwise; provided, however, that the Committee may not use this proxy to approve any Class B Specified Matter, except (i) with respect to any Class B Specified Matter, in connection with a transaction in which the Senior Unsecured Promissory Note in the aggregate principal amount of $12,000,000, held by RCAP (the “RCAP Note”) is repaid (including all accrued and outstanding interest thereunder) upon consummation of such transaction, with the effectiveness of any such transaction to be subject to such repayment of the RCAP Note, or (ii) with respect to one other Class B Specified Matter, in connection with a transaction that results in net proceeds to the Company or its subsidiaries of up to $80,000,000 (which, for the avoidance of doubt, shall not require repayment of the RCAP Note); provided, further, that to the extent the first or the second Class B Specified Matter requires one or more votes of the Company stockholders in order to effectuate an agreed, specific transaction (or any related transaction or a series of related transactions, including (x) any amendments to the certificate of incorporation or bylaws of the Company necessitated by such transactions and (y) any required approvals of the stockholders of the Company in accordance with the rules of the New York Stock Exchange), then such additional stockholder votes shall all be deemed to relate to one Class B Specified Matter and the Committee may use this proxy in connection with any such additional stockholder votes.
“Class B Specified Matters” means (i) any disposal of all or substantially all the Company’s assets, or any consolidation, merger or entry into a business combination by the Company with a third person, (ii) any authorization of a new class or series of capital stock or additional shares of capital stock, or reclassification or alteration of the terms of any class or series of capital stock, or any issuance of capital stock or other equity securities (including the right to acquire capital stock or other equity securities) by the Company, and (iii) any amendment or modification to the certificate of incorporation or bylaws of the Company in connection with any matters set forth in clauses (i) and (ii) above; provided, however, that the Board may not use this proxy to approve any Class B Specified Matter that adversely affects the voting rights of the Class B Share, except in connection with a transaction in which the RCAP Note is repaid (including all accrued and outstanding interest thereunder) upon consummation of such transaction, with the effectiveness of any such transaction to be subject to such repayment of the RCAP Note; provided, further, that with respect to any Class B Specified Matter (and any related transactions or series of transactions relating to any Class B Specified Matter or otherwise) each share of Class A common stock, par value $0.001 per share, of the Company held by RCAP or officers, employees, equityholders or affiliate of RCAP shall be treated in the same manner as each other share of Class A common stock.
This proxy shall be irrevocable, shall be deemed to be coupled with an interest sufficient in law to support an irrevocable proxy and shall revoke any and all prior proxies granted by RCAP with respect to the Class B Share. This proxy shall (i) be subject to the rights and remedies of the Collateral Agent (the “First Lien Collateral Agent”) under the Security Documents (each undefined term as defined in the First Lien Credit Agreement, dated as of April 29, 2014, as amended, among the Company and other parties thereto) and the Collateral Agent (the “Second Lien Collateral Agent”) under the Security Documents (each undefined term as defined in the First Lien Credit Agreement, dated as of April 29, 2014, as amended, among the Company and other parties thereto). This proxy shall be valid from the date hereof and until 11:59 P.M. New York time on January 31, 2016 (the “End Date”); provided that (i) if the Company enters into a definitive agreement with respect to a Class B Specified Matter prior to 11:59 P.M. New York time on January 31, 2016, the End Date shall be automatically extended until 11:59 P.M. New York time on June 30, 2016 and (ii) notwithstanding the foregoing, this proxy shall terminate automatically upon the occurrence and during the continuance of an Event of Default and the provision by the First Lien Collateral Agent or the Second Lien Collateral Agent, as applicable, of notice to the Borrower of the exercise of remedies by the First Lien Collateral Agent or the Second Lien Collateral Agent, as applicable, under the security documents described above, provided that such notice shall be deemed to have been given immediately upon the occurrence of an Event of Default under Section 7.01(g) or (h) under either of such credit agreements. The First Lien Collateral Agent and Second Lien Collateral Agreement, and the Secured Parties under each of the credit agreements referred to above, are intended to be third party beneficiaries of this paragraph and have relied on this paragraph.
This proxy is given pursuant to that certain Note Purchase and Class B Share Agreement, dated as of November 8, 2015, between the Company and RCAP.
Dated: November 8, 2015
RCAP HOLDINGS, LLC | ||
By: | ||
Name: | ||
Title: |
Exhibit 18
Execution Version
SERIES D-1 SHARES AGREEMENT
This SERIES D-1 SHARES AGREEMENT (this “Agreement”), dated as of November 8, 2015, is by and between AR Capital, LLC, a Delaware limited liability company (“ARC”), and RCS Capital Corporation, a Delaware corporation (the “Company”).
WHEREAS, ARC is a party to that certain Transaction Agreement, dated as of August 6, 2015, among ARC, AMH Holdings (Cayman), L.P., and AR Global, LLC (the “Transaction Agreement”), pursuant to which ARC may acquire 1,000,000 shares of 11% Series D-1 Convertible Preferred Stock, par value $0.001 per share, of the Company currently held by Apollo Principal Holdings I, LP or any of its affiliates (“Apollo”) (such shares, including to the extent acquired by ARC or any of its affiliates in whole or in part as the context requires, being referred to as the “Series D-1 Shares”); and
WHEREAS, the parties hereto desire to enter into this Agreement in respect of certain matters related to the Series D-1 Shares as provided herein.
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:
ARTICLE I
VOTING AGREEMENT AND GRANT OF IRREVOCABLE PROXY
1.1. Proxy.
(a) On the day ARC or any of its affiliates acquires the Series D-1 Shares (the “Purchase Date”), ARC shall, or shall cause its affiliates to, irrevocably grant to, and appoint, the Special Committee of the Board of Directors of the Company (the “Board”) comprised of Mark Auerbach, Doug Wood and C. Thomas McMillen (the “Committee”) (and if any member of such Committee no longer serves on such Committee for any reason, then the remaining member or members of such Committee, in each case acting by a majority, and if none of the three individuals named above serve on the Committee, the Board may then appoint such other independent director(s) to the Committee that are reasonably acceptable to ARC and Luxor Capital Partners, LP), ARC’s proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of ARC, to vote or cause to be voted the Series D-1 Shares (in person or by proxy), as ARC would be required to vote the Series D-1 Shares in connection with any two Series D-1 Specified Matters to the extent Series D-1 Shares are entitled to a vote on such matters pursuant to the certificate of designation authorizing the Series D-1 Shares, and to exercise all powers that ARC would be entitled to exercise on any such matters if personally present, at any annual, special or other meeting of the stockholders of the Company and at any adjournment or adjournments thereof, and to execute any written consent of stockholders on behalf of ARC in lieu of such meeting or otherwise; provided, further, that to the extent the first or the second Series D-1 Specified Matter requires one or more votes of the Company stockholders in order to effectuate an agreed, specific transaction (or any related transaction or a series of related transactions, including any amendments to the certificate of incorporation or any certificate of designation of the Company necessitated by such transactions), then such additional stockholder votes shall all be deemed to relate to one Series D-1 Specified Matter and the Committee may use the Proxy in connection with any such additional stockholder votes. The proxy set forth in this Section 1.1(a) is hereinafter referred to as the “Proxy”.
(b) “Series D-1 Specified Matters” means (i) any consolidation, merger or entry into a business combination by the Company with a third person, (ii) any authorization of a new class or series of capital stock or additional shares of capital stock, or reclassification or alteration of the terms of any class or series of capital stock, or any issuance of capital stock or other equity securities (including the right to acquire capital stock or other equity securities) by the Company, and (iii) any amendment or modification to, or waiver of, the certificate of incorporation or any certificate of designation of the Company in connection with any matters set forth in clauses (i) and (ii) above; provided, that with respect to any Series D-1 Specified Matter (and any related transactions or series of transactions relating to any Series D-1 Specified Matter or otherwise) each Series D-1 Share shall be treated in the same manner as each other preferred stock of the Company ranking on a parity with Series D-1 Shares.
(c) The Proxy shall be irrevocable, shall be deemed to be coupled with an interest sufficient in law to support an irrevocable proxy and shall revoke any and all prior proxies granted by ARC with respect to the Series D-1 Shares. The Proxy shall be valid from the Purchase Date and until 11:59 P.M. New York time on January 31, 2016 (the “End Date”); provided that if the Company enters into a definitive agreement with respect to a Series D-1 Specified Matter prior to 11:59 P.M. New York time on January 31, 2016, the End Date shall be automatically extended until 11:59 P.M. New York time on June 30, 2016 (and, in the case of Section 5.1, on July 31, 2016), in which case such extended date shall be the “End Date” for all purposes of this Agreement. The Company hereby agrees to recognize the Proxy. ARC shall, or shall cause its affiliate to, take such further action or execute such other instrument as may be reasonably requested by the Company to effectuate the intent of the Proxy.
(d) On the Purchase Date, ARC shall, or shall cause its affiliate to, (i) execute and deliver to the Company an irrevocable proxy in the form attached hereto as Exhibit A with respect to the Series D-1 Shares and (ii) deliver to the Company the original stock certificate or certificates representing the Series D-1 Shares to enable a legend referring to this Agreement to be added to such stock certificate or certificates.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ARC
ARC represents and warrants to the Company as follows:
4.1. Organization; Authorization; Binding Agreement. ARC is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is formed and the consummation of the transactions contemplated hereby are within ARC’s organizational powers and have been duly authorized by all necessary organizational actions on the part of ARC. ARC has full power and authority to execute, deliver and perform this Agreement. This Agreement has been duly and validly executed and delivered by ARC, and constitutes a legal, valid and binding obligation of ARC enforceable against ARC in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally and general equitable principles (whether considered in an action in equity or at law).
4.2. Non-Contravention. The execution and delivery of this Agreement by ARC does not, and the performance by ARC of ARC’s obligations hereunder and the consummation by ARC of the transactions contemplated hereby will not (i) violate any law applicable to ARC, (ii) require any consent, approval, order, authorization or other action by, or filing with or notice to, any person (including any governmental entity) under, constitute a default (with or without the giving of notice or the lapse of time or both) under, or give rise to any right of termination, cancellation or acceleration under, or pursuant to, any contract, agreement, trust, commitment, order, judgment, writ, stipulation, settlement, award, decree or other instrument binding on ARC or any applicable law, or (iii) violate any provision of ARC’s organizational documents, in each case, except as would not reasonably be expected to adversely affect the ability of ARC to perform its obligations under this Agreement in any material respect.
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ARTICLE V
COVENANTS
5.1. Restrictions. During the period commencing on the Purchase Date and ending on the End Date, ARC shall not, and shall causes its affiliates not to, directly or indirectly, (i) create or permit to exist any liens, claims, proxies, voting trusts or agreements, options, rights, understandings or arrangements or any other encumbrances or restrictions whatsoever on title, transfer or exercise of any rights of a stockholder in respect of the Series D-1 Shares (collectively, “Encumbrances”), except as provided hereunder or pursuant to any applicable restrictions on transfer under the Securities Act of 1933, as amended (collectively, “Permitted Encumbrances”), (ii) except in accordance with Section 5.2, transfer, sell, assign, gift, hedge, pledge or otherwise dispose (whether by sale, liquidation, dissolution, dividend or distribution) of, or enter into any derivative arrangement with respect to (collectively, “Transfer”), the Series D-1 Shares or any right or interest therein (or consent to any of the foregoing), (iii) except in accordance with Section 5.2, enter into any contract, option or other agreement, arrangement or understanding with respect to any Transfer of the Series D-1 Shares or any right or interest therein, (iv) grant or permit the grant of any proxy, power-of-attorney or other authorization or consent in or with respect to the Series D-1 Shares, (v) deposit or permit the deposit of the Series D-1 Shares into a voting trust or enter into a voting agreement or arrangement with respect to the Series D-1 Shares, (vi) knowingly take any other action that would reasonably be expected to restrict, limit or interfere with the performance of ARC’s obligations hereunder or the transactions contemplated hereby or (vii) without the prior written consent of the Committee, vote or cause to be voted the Series D-1 Shares (in person or by proxy), on any stockholder matter at any annual, special or other meeting of the stockholders of the Company and at any adjournment or adjournments thereof, or execute any written consent of stockholders in lieu of such meeting or otherwise. Any attempted Transfer of the Series D-1 Shares or any interest therein or any attempted exercise of the voting power with respect to the Series D-1 Shares in violation of this Section 5.1 or Section 5.2 shall be null and void. If any involuntary Transfer of the Series D-1 Shares shall occur (including, if applicable, a sale by ARC’s trustee in any bankruptcy, or a sale to a purchaser at any creditor’s or court sale), the transferee (which term, as used herein, shall include any and all transferees and subsequent transferees of the initial transferee) shall take and hold the Series D-1 Shares subject to all of the obligations, restrictions, liabilities and rights under this Agreement.
5.2. Permitted Transfer. As a condition to any Transfer of any Series D-1 Shares to a transferee (including any affiliate of ARC), or the transfer or assignment to any transferee (including any affiliate of ARC) of ARC’s rights to acquire any Series D-1 Shares, such transferee (and any subsequent transferee thereof) shall (i) assume in writing, in a form reasonably acceptable to the Company, all of the obligations, restrictions and liabilities of ARC under this Agreement and (ii) upon acquisition of such Series D-1 Shares, execute and deliver to the Company a proxy in the form attached hereto as Exhibit A with respect to the Series D-1 Shares Transferred to such transferee.
5.3 Adjustments. During the period commencing on the Purchase Date and ending on the End Date, in the event (a) of any stock split, stock dividend, merger, amalgamation, reorganization, recapitalization, reclassification, combination, exchange of shares or the like of the capital stock of the Company on, of or affecting the Series D-1 Shares or (b) that ARC shall become the beneficial owner of any additional shares of the Series D-1 Convertible Preferred Stock of the Company, then the terms of this Agreement and the Proxy shall apply to the shares of the Series D-1 Convertible Preferred Stock or similar shares of the Company held by ARC immediately following the effectiveness of the events described in clause (a) or ARC becoming the beneficial owner thereof as described in clause (b), as though, in either case, they were Series D-1 Shares hereunder.
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ARTICLE VI
MISCELLANEOUS
6.1. Notices. All notices, requests or other communications required or permitted to be delivered hereunder shall be delivered in writing:
If to the Company:
RCS Capital Corporation
405 Park Ave, 14th floor
New York, NY 10022
Attention: General Counsel
Facsimile: 646-861-7743
E-mail: JTanaka@rcscapital.com
With copy (which shall not constitute notice) to:
Dechert LLP
1095 Avenue of the Americas
New York, NY 10036
Attention: Martin Nussbaum
Telephone: 212-698-3596
Facsimile: 212-698-0496
E-mail: Martin.Nussbaum@dechert.com
If to ARC:
405 Park Avenue, 14th Floor
New York, NY 10022
Attention: Jesse C. Galloway
Facsimile: 646-861-7804
Email: jgalloway@arlcap.com
With copies (which shall not constitute notice) to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
Attention: Lee Meyerson
Elizabeth Cooper
Facsimile: 212-455-2502
Email: lmeyerson@stblaw.com
ecooper@stblaw.com
Notices if (i) mailed by certified or registered mail or sent by hand or overnight courier service shall be deemed to have been given when received, (ii) sent by facsimile during the recipient’s normal business hours shall be deemed to have been given when sent (and if sent after normal business hours shall be deemed to have been given at the opening of the recipient’s business on the next business say) and (iii) sent by e-mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment).
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6.2. Amendments and Waivers. Any provision of this Agreement may be amended or waived if such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
6.3. Binding Effect; Benefit; Assignment. The parties hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit of the other parties, in accordance with and subject to the terms of this Agreement, and this Agreement is not intended to, and does not, confer upon any person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein, except that the Committee is the intended third party beneficiary of Sections 1.1 and 5.1(vii). Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties (whether by operation of law or otherwise) without the prior written consent of the other party, except to the extent that such rights, interests or obligations are assigned pursuant to an involuntary Transfer as provided in Section 5.1. No assignment by any party shall relieve such party of any of its obligations hereunder. Subject to the foregoing, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.
6.4. Governing law; Waiver of Jury Trial.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS.
(b) EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.
6.5. Counterparts; Delivery by Facsimile or Email. This Agreement may be executed by facsimile and in one or more counterparts, and by the different parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. This Agreement, and any amendments hereto, waivers hereof or consents or notifications hereunder, to the extent signed and delivered by means of a facsimile machine or by email with facsimile, scan PDF or equivalent attachment, shall be treated in all manner and respects as an original contract and shall be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person.
6.6. Entire Agreement. This Agreement, and the documents and agreements referred to herein, constitutes the entire agreement of the parties and supersedes all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof and thereof.
6.7. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the end that transactions contemplated hereby are fulfilled to the greatest extent possible.
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6.8. Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof, and, accordingly, that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity. In any proceeding for specific performance, the parties will waive the defense of adequacy of a remedy at law, and the parties waive any requirement for the securing or posting of any bond in connection with the remedies referred to in this Section 6.8.
6.9 Headings. The Section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
6.10. Mutual Drafting. Each party has participated in the drafting of this Agreement, which each party acknowledges is the result of extensive negotiations between the parties; accordingly, 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 provisions of this Agreement.
6.11. Further Assurances. The parties will execute and deliver, or cause to be executed and delivered, all further documents and instruments and use their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations, to perform their respective obligations under this Agreement.
6.12. No Ownership Interest. Except as otherwise provided herein, nothing contained in this Agreement shall be deemed to vest in the Committee or the Company any direct or indirect ownership or incidence of ownership of or with respect to the Series D-1 Shares, and all rights, ownership and economic benefits of and relating to the Series D-1 Shares shall remain vested in and belong to ARC or its affiliate.
6.13. Public Announcements. The parties hereto shall consult with each other (and obtain the other party’s consent) before any party (or its affiliates) issues any press release or otherwise makes any public statements with respect to the transactions contemplated by this Agreement, except (a) as may be required by any applicable law, regulation or rule of any governmental authority, stock exchange or self-regulatory organization to which a party is subject if the party issuing such press release or other public statement has, to the extent practicable, provided the other parties with a reasonable opportunity to review and comment or (b) any press release or other public statement that is consistent in all material respects with previous press releases, public disclosures or public statements made by a party in accordance with this Agreement, in each case under this clause (b) to the extent such disclosure is still accurate.
[Signature Page Follows]
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The parties are executing this Agreement on the date set forth in the introductory clause.
AR CAPITAL, LLC | |||
By: | /s/ William M. Kahane | ||
Name: | William M. Kahane | ||
Title: | Managing Member |
RCS Capital Corporation | |||
By: | /s/ Brian D. Jones | ||
Name: | Brian D. Jones | ||
Title: | Chief Financial Officer |
[Signature Page to the Series D-1 Shares Agreement]
EXHIBIT A
FORM OF IRREVOCABLE PROXY
[___________] (“Series D-1 Shareholder”), for consideration received, hereby irrevocably grants to, and appoints, the Special Committee of the Board of Directors (the “Board”) of RCS Capital Corporation (the “Company”) comprised of Mark Auerbach, Doug Wood and C. Thomas McMillen (the “Committee”) (and if any member of such Committee no longer serves on such Committee for any reason, then the remaining member or members of such Committee, in each case acting by a majority, and if none of the three individuals named above serve on the Committee, the Board may then appoint such other independent director(s) to the Committee that are reasonably acceptable to ARC Capital LLC, a Delaware limited liability company (“ARC”), and Luxor Capital Partners, LP, a Delaware limited partnership), Series D-1 Shareholder’s proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of Series D-1 Shareholder, to vote or cause to be voted the shares of 11% Series D-1 Convertible Preferred Stock, par value $0.001 per share, of the Company (the “Series D-1 Shares”) (in person or by proxy), as Series D-1 Shareholder would be required to vote the Series D-1 Shares in connection with any two Series D-1 Specified Matters to the extent Series D-1 Shares are entitled to a vote on such matters pursuant to the certificate of designation authorizing the Series D-1 Shares, and to exercise all powers that Series D-1 Shareholder would be entitled to exercise on any such matters if personally present, at any annual, special or other meeting of the stockholders of the Company and at any adjournment or adjournments thereof, and to execute any written consent of stockholders on behalf of Series D-1 Shareholder in lieu of such meeting or otherwise; provided, further, that to the extent the first or the second Series D-1 Specified Matter requires one or more votes of the Company stockholders in order to effectuate an agreed, specific transaction (or any related transaction or a series of related transactions, including any amendments to the certificate of incorporation or any certificate of designation of the Company necessitated by such transactions), then such additional stockholder votes shall all be deemed to relate to one Series D-1 Specified Matter and the Committee may use this proxy in connection with any such additional stockholder votes.
“Series D-1 Specified Matters” means (i) any consolidation, merger or entry into a business combination by the Company with a third person, (ii) any authorization of a new class or series of capital stock or additional shares of capital stock, or reclassification or alteration of the terms of any class or series of capital stock, or any issuance of capital stock or other equity securities (including the right to acquire capital stock or other equity securities) by the Company, and (iii) any amendment or modification to the certificate of incorporation or any certificate of designation of the Company in connection with any matters set forth in clauses (i) and (ii) above; provided, that with respect to any Series D-1 Specified Matter (and any related transactions or series of transactions relating to any Series D-1 Specified Matter or otherwise) each Series D-1 Share shall be treated in the same manner as each other preferred stock of the Company ranking on a parity with Series D-1 Shares.
This proxy shall be irrevocable, shall be deemed to be coupled with an interest sufficient in law to support an irrevocable proxy and shall revoke any and all prior proxies granted by Series D-1 Shareholder with respect to the Series D-1 Shares. This proxy shall be valid from the date hereof and until 11:59 P.M. New York time on January 31, 2016 (the “End Date”); provided that if the Company enters into a definitive agreement with respect to a Series D-1 Specified Matter prior to 11:59 P.M. New York time on January 31, 2016, the End Date shall be automatically extended until 11:59 P.M. New York time on June 30, 2016.
This proxy is given pursuant to that certain Series D-1 Shares Agreement, dated as of November 8, 2015, between ARC and the Company.
Dated: [___]
[_____] | ||
By: | ||
Name: | ||
Title: |
Exhibit 19
Execution Version
RELEASE
This RELEASE, dated as of November 8, 2015 (this “Agreement”), is entered into by and among (i) AR Capital, LLC (“AR Capital”), (ii) Nicholas S. Schorsch, Peter M. Budko, William M. Kahane, Edward M. Weil, Jr. and Brian S. Block (each, an “ARC Principal” and collectively, the “ARC Principals”), (iii) RCS Capital Corporation (“RCAP”) and RCS Capital Holdings, LLC (“RCS Holdings”) and (iv) Luxor Capital Partners LP (“Luxor”). Each of the foregoing are collectively referred to herein as the “Parties” and each individually as a “Party.”
RECITALS
A. WHEREAS, on August 6, 2015 (i) AMH Holdings (Cayman), L.P. (“AMH”), AR Capital and AR Global, LLC entered into a Transaction Agreement (the “Transaction Agreement”) and (ii) AMH and each of Nicholas S. Schorsch, Peter M. Budko, William M. Kahane, Edward M. Weil, Jr. and Brian S. Block entered into a Guaranty and Support Agreement (the “Guaranty Agreement”), and the parties to the Transaction Agreement and Guaranty Agreement are terminating such agreements pursuant to a termination and release agreement entered into concurrently with this Agreement.
B. WHEREAS, on August 6, 2015 Apollo Management Holdings, L.P., RCAP and RCS Holdings entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”), and the parties to the Purchase Agreement are amending the Purchase Agreement as of the date hereof (the “Amended Purchase Agreement”).
NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, the Parties hereto hereby agree as follows:
AGREEMENT
1. Mutual Releases; Covenants Not to Sue.
(a) AR Capital and the ARC Principals, for and on behalf of themselves and the ARC Related Parties (as defined below), do hereby unequivocally release and discharge (1) RCAP and RCS Holdings and any of their former and current subsidiaries, equity holders, directors, officers, employees, agents, affiliates, members, managers, successors or assignees or any former or current subsidiary, equity holder, director, officer, employee, agent, affiliate, member, manager, general or limited partner, successor or assignee of any of the foregoing (other than the ARC Related Parties) (collectively, the “RCAP Related Parties”) and (2) Luxor and any of its former and current subsidiaries, equity holders, directors, officers, employees, agents, affiliates, members, managers, successors or assignees or any former or current subsidiary, equity holder, director, officer, employee, agent, affiliate, member, manager, general or limited partner, successor or assignee of any of the foregoing (collectively, the “Luxor Related Parties”), from any and all past, present or future liabilities, actions, claims or damages of any kind or nature, in law, equity or otherwise, asserted or that could have been asserted, under any Applicable Law to which a Party is subject or otherwise, whether known or unknown, suspected or unsuspected, foreseen or unforeseen, anticipated or unanticipated, disclosed or undisclosed, accrued or unaccrued, apparent or not apparent, foreseen or unforeseen, matured or not matured, liquidated or not liquidated, fixed or contingent, whether or not concealed or hidden, from the beginning of time until the date of execution of this Agreement, that in any way, and to the extent, arises from or out of, are based upon, or are in connection with or relate in any way to or involve, directly or indirectly, any of the actions, transactions, occurrences, statements, representations, misrepresentations, omissions, allegations, facts, practices, events, claims or any other matters, things or causes whatsoever, or any series thereof, that were, could have been, or in the future can or might be alleged, asserted, set forth or claimed, directly or indirectly, based on: (i) the Transaction Agreement, the Guaranty Agreement and the Purchase Agreement (collectively, the “Transaction Documents”), (ii) any breach, non-performance, action or failure to act under any of the Transaction Documents, (iii) the Amended Purchase Agreement and the transactions contemplated thereby, (iv) the events leading to the termination of the Transaction Agreement and the Guaranty Agreement and the execution of the Amended Purchase Agreement, (v) any deliberations or negotiations in connection with the Transaction Documents, and (vi) any SEC filings, public filings, periodic reports, press releases, proxy statements or other statements issued, made available or filed relating, directly or indirectly, to the transactions contemplated by the Transaction Documents (collectively, the “ARC Released Claims”); provided, however, that no Party shall be released from any breach, non-performance, action or failure to act under this Agreement occurring on or after the date hereof.
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(b) Each of RCAP and RCS Holdings, for and on behalf of itself and the RCAP Related Parties, does hereby unequivocally release and discharge (1) AR Capital, the ARC Principals and any of their former and current subsidiaries, equity holders, controlling persons, directors, officers, employees, agents, affiliates, members, managers, general or limited partners, spouses, heirs, trusts, trustees, successors, assignees, or any former or current subsidiary, equity holder, controlling person, director, officer, employee, agent, affiliate, member, manager, general or limited partner, successor or assignee of any of the foregoing (collectively, the “ARC Related Parties” and, together with the Luxor Related Parties and the RCAP Related Parties, the “Related Parties”), and (2) the Luxor Related Parties, from any and all past, present or future liabilities, actions, claims or damages of any kind or nature, in law, equity or otherwise, asserted or that could have been asserted, under any Applicable Law to which a Party is subject or otherwise, whether known or unknown, suspected or unsuspected, foreseen or unforeseen, anticipated or unanticipated, disclosed or undisclosed, accrued or unaccrued, apparent or not apparent, foreseen or unforeseen, matured or not matured, liquidated or not liquidated, fixed or contingent, whether or not concealed or hidden, from the beginning of time until the date of execution of this Agreement, that in any way, and to the extent, arises from or out of, are based upon, or are in connection with or relate in any way to or involve, directly or indirectly, any of the actions, transactions, occurrences, statements, representations, misrepresentations, omissions, allegations, facts, practices, events, claims or any other matters, things or causes whatsoever, or any series thereof, that were, could have been, or in the future can or might be alleged, asserted, set forth or claimed, directly or indirectly, based on: (i) the Transaction Documents and the transactions contemplated by the Transaction Documents, (ii) any breach, non-performance, action or failure to act under any of the Transaction Documents, (iii) the Amended Purchase Agreement and the transactions contemplated thereby, (iv) the events leading to the termination of the Transaction Agreement and the Guaranty Agreement and the execution of the Amended Purchase Agreement, (v) any deliberations or negotiations in connection with the Transaction Documents, and (vi) any SEC filings, public filings, periodic reports, press releases, proxy statements or other statements issued, made available or filed relating, directly or indirectly, to the transactions contemplated by the Transaction Documents (collectively, the “RCAP Released Claims”); provided, however, that no Party shall be released from any breach, non-performance, action or failure to act under this Agreement occurring on or after the date hereof.
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(c) Luxor, for and on behalf of itself and the Luxor Related Parties, does hereby unequivocally release and discharge (1) the ARC Related Parties and (2) the RCAP Related Parties, from any and all past, present or future liabilities, actions, claims or damages of any kind or nature, in law, equity or otherwise, asserted or that could have been asserted, under any Applicable Law to which a Party is subject or otherwise, whether known or unknown, suspected or unsuspected, foreseen or unforeseen, anticipated or unanticipated, disclosed or undisclosed, accrued or unaccrued, apparent or not apparent, foreseen or unforeseen, matured or not matured, liquidated or not liquidated, fixed or contingent, whether or not concealed or hidden, from the beginning of time until the date of execution of this Agreement, that in any way, and to the extent, arises from or out of, are based upon, or are in connection with or relate in any way to or involve, directly or indirectly, any of the actions, transactions, occurrences, statements, representations, misrepresentations, omissions, allegations, facts, practices, events, claims or any other matters, things or causes whatsoever, or any series thereof, that were, could have been, or in the future can or might be alleged, asserted, set forth or claimed, directly or indirectly, based on: (i) the Transaction Documents and the transactions contemplated by the Transaction Documents, (ii) any breach, non-performance, action or failure to act under any of the Transaction Documents, (iii) the Amended Purchase Agreement and the transactions contemplated thereby, (iv) the events leading to the termination of the Transaction Agreement and the Guaranty Agreement and the execution of the Amended Purchase Agreement, (v) any deliberations or negotiations in connection with the Transaction Documents, and (vi) any SEC filings, public filings, periodic reports, press releases, proxy statements or other statements issued, made available or filed relating, directly or indirectly, to the transactions contemplated by the Transaction Documents (collectively, the “Luxor Released Claims” and, together with the ARC Released Claims and the RCAP Released Claims, the “Released Claims”); provided, however, that no Party shall be released from any breach, non-performance, action or failure to act under this Agreement occurring on or after the date hereof.
(d) It is understood and agreed that, except as provided in the provisos to Section 1(a), Section 1(b) and Section 1(c), the preceding paragraphs are a full and final release covering all known as well as unknown or unanticipated debts, claims or damages of each of the Parties and their respective Related Parties relating to or arising out of the Transaction Documents. Therefore, each of the Parties expressly waives any rights it may have under any statute or common law principle under which a general release does not extend to claims which such Party does not know or suspect to exist in its favor at the time of executing the release, which if known by such Party must have affected such Party’s settlement with the other, including, without limitation, Section 1542 of the California Civil Code, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
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In connection with such waiver and relinquishment, the Parties acknowledge that they or their attorneys or agents may hereafter discover claims or facts in addition to or different from those which they now know or believe to exist with respect to the Released Claims, but that it is their intention hereby fully, finally and forever to settle and release all of the Released Claims. In furtherance of this intention, the releases herein given shall be and remain in effect as full and complete mutual releases with regard to the Released Claims notwithstanding the discovery or existence of any such additional or different claim or fact.
(e) Each Party, on behalf of itself and its respective Related Parties, hereby covenants to each other Party and their respective Related Parties not to, with respect to any Released Claim, directly or indirectly encourage or solicit or voluntarily assist or participate in any way in the investigation, filing, reporting or prosecution by such Party or its Related Parties or any third party of a suit, arbitration, mediation, or claim against any other Party and/or its Related Parties relating to any Released Claim. The covenants contained in this Section 2 shall survive this Agreement indefinitely regardless of any statute of limitations.
(f) From and following date hereof, each of RCAP and RCS Holdings agrees to defend, indemnify and hold harmless the ARC Related Parties (the “Indemnified Parties”) from and against any and all damages, losses, liabilities, claims, demands, suits, judgments, costs and expenses (including reasonable legal fees and expenses) incurred or suffered by the Indemnified Parties as a result of any claim made by any third party to the extent such claim relates primarily to or arises from changes to the Purchase Agreement reflected in the Amended Purchase Agreement (the “Indemnifiable Claims”) and upon request of AR Capital, RCAP shall advance reasonable expenses in connection with any defense of any Indemnifiable Claim or any action or proceeding arising therefrom. The right of the Indemnified Parties to any indemnification or advancement of expenses shall be subordinated as to payment to (and only to) both (i) the First Lien Credit Agreement (as in effect from time to time, the “First Lien Credit Agreement”) and (ii) the Second Lien Credit Agreement (as in effect from time to time, the “Second Lien Credit Agreement”), each dated as of April 29, 2014, as amended (together, the “Credit Agreements”) and notwithstanding anything to the contrary in this Agreement, RCAP shall not, and shall not permit any of its subsidiaries to, make, and none of the Indemnified Parties shall, directly or indirectly, receive, any payment with respect to such indemnification or advancement of expenses until 91 days after (A) indefeasibly paying all outstanding Term Loans and Revolving Loans and all other Obligations in full in cash and permanently reducing all Commitments (including, without limitation, the Revolving Credit Commitments) to zero (as such terms in this clause (A) are defined in the First Lien Credit Agreement) (the “Discharge of First Lien Obligations”) and (B) indefeasibly paying all outstanding Term Loans and all other Obligations in full in cash (as such terms in this clause (B) are defined in the Second Lien Credit Agreement) (the “Discharge of Second Lien Obligations”). In the event any Indemnified Party receives a payment in contravention of the preceding sentence, such Indemnified Party shall promptly pay over and deliver such payment to the Collateral Agent (as defined in the First Lien Credit Agreement) (the “First Lien Collateral Agent”), so long as the Discharge of First Lien Obligations has not occurred, and then to the Collateral Agent (as defined in the Second Lien Credit Agreement) (the “Second Lien Collateral Agent” and, together with the First Lien Collateral Agent, the “Collateral Agents”), and pending such payment over shall hold such payment in trust for the benefit of the Collateral Agents (or, after the Discharge of First Lien Obligations, the Second Lien Collateral Agent). No amendment to the provisions of this paragraph shall be effective without the consent of the Collateral Agents. The Collateral Agents and Secured Parties (as defined in the Credit Agreement) are intended third party beneficiaries of this paragraph and have relied on this paragraph.
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2. Non-Disparagement. Each Party agrees to not, directly or indirectly, make or ratify any statement, public or private, oral or written (including concerning the Transaction Documents, the participation or involvement of the Parties in the transactions contemplated by the Transaction Documents or the Amended Purchase Agreement or the reasons for or any of the events or circumstances surrounding the termination of the transactions contemplated by the the termination of the Transaction Agreement and the Guaranty Agreement and the execution of the Amended Purchase Agreement that disparages the business reputation of the other Parties or their respective Related Parties; provided that nothing herein will (i) prevent Luxor from making (a) any public statements that Luxor has a reasonable basis for believing are true or (b) any private statements, (ii) prevent any Party from making truthful statements as may be required by Applicable Law to which a Party is subject or (iii) expand the scope of the releases contained in this Agreement.
3. Public Announcements. The initial press release concerning this Agreement shall be a press release in the form agreed by the Parties (other than Luxor) as set forth on Annex A and thereafter the Parties shall consult with each other (and obtain the other party’s consent) before any Party (or its Affiliates) issues any press release or otherwise makes any public statements with respect to the transactions contemplated by this Agreement, except (a) as may be required by any Applicable Law to which a Party is subject if the Party issuing such press release or other public statement has, to the extent practicable, provided the other Parties (other than Luxor) with an opportunity to review and comment or (b) any press release or other public statement that is consistent in all material respects with previous press releases, public disclosures or public statements made by a Party in accordance with this Agreement, in each case under this clause (b) to the extent such disclosure is still accurate; provided that no such press release shall make any reference to Luxor or any Luxor Related Parties without the Luxor’s prior written consent.
4. Representations of the Parties.
(a) Each Party represents and warrants to the other Parties as follows:
(i) Such Party has the requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by such Party of this Agreement, the performance of its obligations hereunder and its consummation of the transactions contemplated hereby have been duly and validly authorized and approved by all necessary action of such Party, as applicable, and no other action on the part of such Party, is necessary to authorize the execution and delivery by such Party of this Agreement, the performance by it of its obligations hereunder and its consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by such Party, and, assuming the due authorization, execution and delivery by the other Parties, constitute legal and binding obligations of such Party, enforceable against such Party in accordance with its terms, except as (a) the enforceability hereof may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (b) the availability of equitable remedies may be limited by equitable principles of general applicability.
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(ii) The execution and delivery by such Party of this Agreement does not, and the consummation of the transactions contemplated hereby and the performance of its obligations hereunder will not (with or without the giving of notice, the termination of any grace period or both): (a) violate, conflict with, or result in a breach or default under any provision of the organizational documents of such Party, as applicable or (b) (x) violate any Applicable Law to which a Party is subject, (y) violate, result in a violation or breach by such Party of, or cause the termination, acceleration or cancellation or the loss, impairment or alteration of any right or benefit under, or conflict with or constitute a default (or give rise to a right of termination, acceleration, cancellation or the loss, impairment or alteration of any right or benefit under, any contract to which such Party is a party or by which any of its respective properties is bound, whether with the passage of time, giving of notice, or both or (z) result in the creation of any lien on the assets or properties of such Party, except, in the cases of clauses (x), (y) and (z), for any such violation, breach, termination, acceleration, conflict, default or lien as would not, individually or in the aggregate, prohibit or materially impair the ability of such Party to consummate the transactions contemplated by this Agreement or perform its obligations hereunder on a timely basis.
(b) AR Capital represents and warrants to Luxor that, there are no agreements, side letters or arrangements (written or oral) among AR Capital, on the one hand, and RCAP and/or AMH and/or any of their respective affiliates, on the other hand, with respect to, or in any way relating to, the termination of the Transaction Agreement and the Guaranty Agreement and the execution of the Amended Purchase Agreement that have not been disclosed (and provided in the case of written materials, if any) to Luxor.
(c) RCAP represents and warrants to Luxor that, there are no agreements, side letters or arrangements (written or oral) among RCAP, on the one hand, and [AMH] and/or AR Capital and/or any of their respective affiliates, on the other hand, with respect to, or in any way relating to, the termination of the Transaction Agreement and the Guaranty Agreement and the execution of the Amended Purchase Agreement (and provided in the case of written materials, if any) to Luxor.
5. Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed given if delivered personally, mailed by registered or certified mail with postage prepaid and return receipt requested or sent by commercial overnight courier, courier fees prepaid (if available; otherwise, by the next best class of service available), to the parties at the following addresses:
If to AR Capital or any of the ARC Principals, addressed as follows:
405 Park Avenue, 14th Floor
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New York, NY 10022
Attn: Jesse C. Galloway
Email: jgalloway@arlcap.com
with copies (which shall not constitute notice) to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
Attention: Lee Meyerson
Elizabeth Cooper
Email: lmeyerson@stblaw.com
ecooper@stblaw.com
If to RCAP or RCS Holdings, to it at:
RCS Capital Corporation
405 Park Ave
New York, NY 10022
Attention: General Counsel
Email: JTanaka@rcscapital.com
Fax: 646-861-7743
with a copy (which shall not constitute notice) to:
Dechert LLP
1095 Avenue of the Americas
New York, NY 10036
Attn: Martin Nussbaum
Email: Martin.Nussbaum@dechert.com
Fax: (212) 698-0496
If to Luxor, to it at:
Luxor Capital Partners, LP
1114 Avenue of the Americas, 29th Floor
New York, NY 10036
Attention: Norris Nissim
Email: legal@luxorcap.com
Facsimile: (212) 763-8001
with a copy to:
with a copy (which shall not constitute notice) to:
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
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New York, NY 10036
Attention: Gregory Horowitz
Facsimile: (212) 715-8000
Email: ghorowitz@kramerlevin.com
or to such other Person or address as any party shall specify by notice in writing to the other parties in accordance with this Section 5. All such notices or other communications shall be deemed to have been received on the date of the personal delivery, on the third Business Day after the mailing or dispatch thereof, or in the case of electronic mail or facsimile transmission, on the date received, subject to confirmation of receipt; provided that notice of change of address shall be effective only upon receipt.
6. Entire Agreement. This Agreement constitute the entire agreement and supersede all other prior agreements and understandings, both written and oral, of the parties with respect to the subject matter hereof.
7. Amendments and Waiver. This Agreement may not be amended except by an instrument or instruments in writing signed and delivered on behalf of each of the Parties. Any Party that is entitled to the benefits hereof may waive compliance with any of the agreements of any other Party contained herein. Any agreement on the part of a Party to any such waiver shall be valid if set forth in an instrument in writing signed and delivered on behalf of such Party. Waivers shall operate to waive only the specific matter described in the writing and shall not impair the rights of the party granting the waiver in other respects or at other times. A Party’s waiver of a breach of a provision of this Agreement, or failure (on one or more occasions) to enforce a provision of, or to exercise a right under, this Agreement, shall not constitute a waiver of a similar breach, or of such provision or right other than as explicitly waived.
8. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other governmental authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
9. Governing Law. This Agreement shall be governed in all respects (including as to validity, interpretation and effect) by the internal laws of the State of New York, without giving effect to any conflict of laws rules or principles that would require or permit the application of another jurisdiction’s laws.
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10. Jurisdiction of Disputes. Each party hereby irrevocably agrees that any action or proceeding arising out of any dispute in connection with this Agreement, any rights or obligations hereunder or the performance of such rights or obligations shall be brought exclusively in the courts of the State of New York located in the Borough of Manhattan or the federal courts of the United States of America located in the Southern District of New York (and appellate courts thereof) and hereby expressly submits to the personal jurisdiction and venue of such courts for the purposes thereof and expressly waives any claim of improper venue and any claim that such courts are an inconvenient forum. Each party hereby irrevocably consents to the service of process of any of the aforementioned courts in any such suit, action or proceeding by the mailing of copies thereof by registered or certified mail or by overnight courier service, postage prepaid, to its address set forth in Section 5.
11. Waiver of Jury Trail. Each Party hereby waives all rights to a jury trial with respect to any action or claim arising out of any dispute in connection with this Agreement, any rights or obligations hereunder or the performance of such rights and obligations. Each Party (i) certifies that no representative, agent or attorney of any Party has represented, expressly or otherwise, that such Party would not, in the event of litigation, seek to enforce the foregoing waivers and (ii) acknowledges that the other Parties have been induced to enter into this Agreement and the transactions contemplated hereby by, among other things, the waivers and certifications contained herein.
12. No Assignment; Binding Effect. Neither this Agreement nor any right, interest or obligation hereunder may be assigned by any Party hereto without the prior written consent of the other Parties hereto and any attempt to do so shall be void, except for assignments and transfers by operation of any laws. Subject to the preceding sentence, this Agreement is binding upon, inures to the benefit of and is enforceable by the Parties and their respective successors and assigns.
13. Third-Party Beneficiaries. Each Party acknowledges and agrees that the ARC Related Parties, the Luxor Related Parties and the RCAP Related Parties are express third-party beneficiaries of the releases of such Related Parties and covenants not to sue such Related Parties contained in Section 3 of this Agreement and are entitled to enforce rights under such section to the same extent that such Related Parties could enforce such rights if they were a party to this Agreement. Except as provided in the preceding sentence, there are no third-party beneficiaries to this Agreement.
14. Headings. The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.
15. Specific Performance. The Parties agree that if any of the provisions of this Agreement were not performed by the Parties in accordance with their specific terms or were otherwise breached thereby, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and that each Party will be entitled to specific performance to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which it may be entitled at law or in equity.
16. Counterparts; Effectiveness. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.
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17. AmEx Guarantee. Nicholas S. Schorsch has terminated use by the Company, its subsidiaries and their respective officers, directors and employees under the AmEx Contract and the Company shall indemnify and hold Nicholas S. Schorsch harmless from and against any such obligations arising out of any such use.
18. Certain Defined Terms. For the purposes of this Agreement:
(a) “AmEx Contract means the agreement and guaranty, dated November 25, 2013, by and between Nicholas Schorsch and American Express.
(b) “Applicable Law” means any domestic or foreign federal, state or local statute, law (whether statutory or common law), ordinance, rule, administrative interpretation, regulation, order, writ, injunction, directive, judgment, decree, policy, guidelines or other requirement of any Governmental Authority.
(c) “Governmental Authority” means any United States or foreign government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including the Securities and Exchange Commission, Commodity Futures Trading Commission or any other authority, agency, department, board, commission or instrumentality of the United States, any State of the United States or any political subdivision thereof or any foreign jurisdiction, and any court, tribunal or arbitrator(s) of competent jurisdiction, and any United States or foreign governmental or non-governmental self-regulatory organization, agency or authority, including Financial Industry Regulatory Authority and the New York Stock Exchange.
[signature page follows]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.
RCS Capital Corporation | ||
By: | /s/ Brian D. Jones | |
Name: Brian D. Jones | ||
Title: Chief Financial Officer | ||
RCS Capital Holdings, LLC | ||
By: | /s/ Brian D. Jones | |
Name: Brian D. Jones | ||
Title: Chief Financial Officer | ||
Luxor Capital Partners LP | ||
By: | /s/ Norris Nissim | |
Name: Norris Nissim | ||
Title: General Counsel | ||
Luxor Capital Group, LP, Investment Manager | ||
AR Capital, LLC | ||
By: | /s/ William M. Kahane | |
Name: William M. Kahane | ||
Title: Managing Member | ||
By: | /s/ Nicholas S. Schorsch | |
Nicholas S. Schorsch | ||
By: | /s/ Peter M. Budko | |
Peter M. Budko | ||
By: | /s/ William M. Kahane | |
William M. Kahane |
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By: | /s/ Edward M. Weil, Jr. | |
Edward M. Weil, Jr. | ||
By: | /s/ Brian S. Block | |
Brian S. Block |
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