0001144204-13-034543.txt : 20130612 0001144204-13-034543.hdr.sgml : 20130612 20130612171118 ACCESSION NUMBER: 0001144204-13-034543 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20130606 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Material Modifications to Rights of Security Holders ITEM INFORMATION: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20130612 DATE AS OF CHANGE: 20130612 FILER: COMPANY DATA: COMPANY CONFORMED NAME: American Realty Capital Properties, Inc. CENTRAL INDEX KEY: 0001507385 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-35263 FILM NUMBER: 13909456 BUSINESS ADDRESS: STREET 1: 405 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 212-415-6500 MAIL ADDRESS: STREET 1: 405 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 8-K 1 v347580_8k.htm FORM 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): June 12, 2013 (June 6, 2013)

AMERICAN REALTY CAPITAL PROPERTIES, INC.

(Exact Name of Registrant as Specified in its Charter)



Maryland	001-35263	45-2482685
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

405 Park Avenue, 15^th Floor, New York, New York 10022

(Address, including zip code, of Principal Executive Offices)

(212) 415-6500

Registrant's telephone number, including area code:

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

EXPLANATORY NOTE

On June 7, 2013, American Realty Capital Properties, Inc. (the “Company”) closed on a previously announced private placement transaction for the sale and issuance of approximately 29.4 million shares (the “Common Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”), at a purchase price of $15.47 per share, for an aggregate purchase price of $455 million (the “Common Stock Transaction”). Concurrently with the closing of the Common Stock Transaction, the Company closed on a previously announced private placement transaction for the sale of approximately 28.4 million shares (the “Preferred Shares”) of a new series of the Company’s 5.81% convertible preferred stock designated as Series C Convertible Preferred Stock, at a purchase price of $15.67 per share, for an aggregate purchase price of $445 million (the “Preferred Stock Transaction”). After deducting for fees and expenses, the aggregate net proceeds from (i) the Common Stock Transaction were approximately $453 million and (ii) the Preferred Stock Transaction were approximately $443 million, for aggregate net proceeds from both transactions of approximately $896 million.

The Company filed a Current Report on Form 8-K on June 5, 2013 reporting, among other things, that it entered into definitive purchase agreements with respect to the Common Stock Transaction and the Preferred Stock Transaction (the “Initial Report”). The Initial Report had the following two typographical errors with respect to the Preferred Shares and the Preferred Stock Transaction: (i) the Initial Report disclosed that the net proceeds from the sale of the Preferred Shares was expected to be approximately $453 million and (ii) the Initial Report disclosed, in the Convertible Preferred Stock Purchase Agreement (as defined in Item 1.01 of this Current Report on Form 8-K) for the Preferred Stock Transaction attached as Exhibit 10.2 thereto, that the purchase price per Preferred Share was $15.76. As described above, the purchase price per Preferred Share was $15.67 (not $15.76) and the aggregate net proceeds from the Preferred Stock Transaction were approximately $443 million (not $453 million). Such information updates and replaces the errors contained in the Initial Report as described above.

Item 1.01. Entry into a Material Definitive Agreement.

Contingent Value Rights Agreements

On June 7, 2013, pursuant to the Securities Purchase Agreement by and among the Company and the investors party thereto (the “Investors”) related to the Common Stock Transaction (the “Securities Purchase Agreement”), upon the closing of the Common Stock Transaction, the Company entered into contingent value rights agreements (the “Common Stock CVR Agreements”) with each of the Investors. Pursuant to each Common Stock CVR Agreement, the Company issued to each Investor an amount of contingent value rights (the “Common Stock CVR’s”) equal to the number of Common Shares purchased by each such Investor. On the 61st trading day (the “Common CVR Test Date”) following the closing of the Common Stock Transaction, the Company will calculate the volume-weighted average trading price (“VWAP”) for the Common Stock for the 30th – 60th trading days following the closing of the transactions contemplated by the Securities Purchase Agreement (the “Common CVR Period VWAP”). Within five business days after the Common CVR Test Date, the Company will pay to each holder of Common Stock CVR’s, in immediately available funds, an amount, equal to (a) the number of Common Stock CVR’s held by the holder on the Common CVR Test Date multiplied by (b) the amount, not to exceed $1.50, equal to the difference between $15.47 (the per Common Share purchase price), as may be adjusted from time to time, and the Common CVR Period VWAP.

Additionally, on June 7, 2013, pursuant to the Convertible Preferred Stock Purchase Agreement by and among the Company and the Investors related to the Preferred Stock Transaction (the “Convertible Preferred Stock Purchase Agreement”), the Company entered into contingent value rights agreements (the “Convertible Preferred Stock CVR Agreements”) with each of the Investors. Pursuant to each such Convertible Preferred Stock CVR Agreement, the Company issued to the Investors an amount of contingent value rights (the “Convertible Preferred Stock CVR’s”) equal to the number of Preferred Shares purchased by each such Investor. In the event that the Company converts (regardless of whether such shares are actually converted) Preferred Shares into shares of Common Stock in accordance with the terms of the Articles Supplementary (as defined in Item 3.03 of this Current Report on Form 8-K), on the 121st trading day following such conversion election date (the "Preferred CVR Test Date"), the Company will calculate the VWAP for the Common Stock for the 90th – 120th trading days following the conversion election date (the “Preferred CVR Period VWAP”). Within five business days after the Preferred CVR Test Date, the Company will pay to each holder of Convertible Preferred Stock CVR’s, in immediately available funds, the amount, if any, with respect to each share of Common Stock into which shares of Preferred Stock were converted (regardless of whether any such shares are actually converted) held by such holder (and/or its assignees) on the Preferred CVR Test Date equal to: (i) the number of such shares of Common Stock at the close of business on the Preferred CVR Test Date multiplied by (ii) the amount, not to exceed $2.00, equal to the difference between (A) the lowest of (i) a 2% discount to the VWAP of the Common Stock for the 10 trading days prior to the conversion election date, (ii) a 2% discount to the closing price of the Common Stock on the date of the conversion election date and (iii) $15.67 (the per Preferred Share purchase price), as may be adjusted from time to time, and (B) the Preferred CVR Period VWAP.

The foregoing summary descriptions of the material terms of the Common Stock CVR Agreements and Convertible Preferred Stock CVR Agreements are not complete and are qualified in their entirety by reference to the form of each such agreement, which are incorporated herein by reference and attached as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K, respectively.

Item 3.02. Unregistered Sale of Equity Securities.

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02 in its entirety.

On June 7, 2013, in connection with the closing of Common Stock Transaction, the Company issued to the Investors approximately 29.4 million shares of Common Stock. Additionally, on June 7, 2013, in connection with the closing of the Preferred Stock Transaction, the Company issued to the Investors approximately 28.4 million shares of the Company’s Series C Convertible Preferred Stock. Additionally, on June 7, 2013, the Company entered into the Common Stock CVR Agreements and the Convertible Preferred Stock CVR Agreements with each of the Investors.

The Common Shares, Preferred Shares, Common Stock CVR’s and Convertible Preferred Stock CVR’s were offered and sold pursuant to an exemption from the registration requirements under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D promulgated thereunder. The shares of Common Stock to be issued upon conversion of the Preferred Shares have not been registered under the Securities Act and may not be offered or sold in the United States in the absence of an effective registration statement or exemption from the registration requirements.

As previously disclosed, pursuant to the terms of the Securities Purchase Agreements and the Convertible Preferred Stock Purchase Agreements, the Company has agreed to file a prospectus supplement under its existing “WKSI” shelf registration statement on Form S-3ASR within 15 days following the closing of the Common Stock Transaction and the Preferred Stock Transaction (subject to an extension of up to 10 days) for the purpose of registering the resale of the Common Shares and, if necessary, another prospectus supplement for the purpose of registering the resale of the underlying shares of Common Stock into which the Preferred Shares are convertible within 15 days following the conversion to common stock (subject to an extension of up to 10 days).

Item 3.03. Material Modification to Rights of Securities Holders.

On June 6, 2013, the Company filed articles supplementary to the Company’s charter to create the Series C Convertible Preferred Stock (the “Articles Supplementary”) with the Secretary of State of the State of Maryland, which create and specify the rights of the Series C Convertible Preferred Stock, including the terms and conditions on which the Series C Convertible Preferred Stock would convert into shares of Common Stock.

Each holder of the shares of Series C Convertible Preferred Stock is entitled to receive dividends when, as and if authorized and declared by the Company’s board of directors out of funds legally available for that purpose, at the rate per annum equal to 5.81% of the $15.67 face amount (as may be adjusted from time to time). In addition, within three business days following the earliest to occur of (i) the closing of the Company’s merger with CapLease, Inc. (“CapLease”), (ii) the first trading day following (a) an announcement that CapLease has accepted a competing offer or (b) the Company’s merger agreement with CapLease is otherwise terminated, and (iii) December 31, 2013 (the third business day following such date, the “Election Date”), the Company will have the option to: (A) convert all the shares of Series C Convertible Preferred Stock into such number of shares of Common Stock equal to the liquidation preference of the shares of Series C Convertible Preferred Stock divided by the lowest of (i) a 2% discount to the VWAP of the Common Stock for the 10 trading days prior to the Election Date, (ii) a 2% discount to the closing price on the Election Date and (iii) $15.67 (as such amount may be adjusted upon the occurrence of certain events) or (B) redeem all shares of the Company’s Series C Convertible Preferred Stock in cash at 120% the liquidation preference.

The shares of Series C Convertible Preferred Stock have no voting rights, except with respect to matters that materially and adversely affect the voting powers, rights or preferences of the shares of Series C Convertible Preferred Stock.

With respect to payment of dividends and distribution of assets upon liquidation, dissolution or winding up, the holders of shares of Series C Convertible Preferred Stock rank senior to holders of Common Stock and on parity with holders of both the Company’s Series A Preferred Stock and the Company’s Series B Preferred Stock.

The foregoing summary description of the material terms of the Articles Supplementary is not complete and is qualified in its entirety by reference to the full text of the Articles Supplementary, which is incorporated herein by reference and filed as Exhibit 3.5 to this Current Report on Form 8-K.

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

The information set forth in Item 3.03 of this Current Report on Form 8-K is incorporated by reference into this Item 5.03 in its entirety.

Item 8.01. Other Events.

The information set forth in the Explanatory Note to this Current Report on Form 8-K is incorporated by reference into this Item 8.01 in its entirety.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits


Exhibit No.		Description
3.5		Articles Supplementary for the Series C Convertible Preferred Stock of the Company, dated June 6, 2013.
10.1		Form of Common Stock CVR Agreement.
10.2		Form of Convertible Preferred Stock CVR Agreement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.



	AMERICAN REALTY CAPITAL PROPERTIES, INC.

June 12, 2013	By:	/s/ Nicholas S. Schorsch
	Name:	Nicholas S. Schorsch
	Title:	Chief Executive Officer and
		Chairman of the Board of Directors

EX-3.5 2 v347580_ex3-5.htm EXHIBIT 3.5

Exhibit 3.5

AMERICAN REALTY CAPITAL PROPERTIES, INC.

Articles Supplementary Classifying and Designating a
Series of Preferred Stock as
Series C Convertible Preferred Stock
and Fixing Distribution and
Other Preferences and Rights of Such Series

American Realty Capital Properties, Inc., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation (the “SDAT”) of Maryland that:

FIRST: Pursuant to authority expressly vested in the Board of Directors by Section 4.03 of the charter of the Corporation (the “Charter”), the Board of Directors adopted resolutions classifying and designating Twenty-Eight Million Three Hundred Ninety-Eight Thousand Two Hundred Thirteen (28,398,213) shares of authorized but unissued shares of preferred stock, par value $0.01 per share, of the Corporation (the “Preferred Stock”), as Series C Convertible Preferred Stock with a liquidation preference of Fifteen Dollars and Sixty-Seven Cents ($15.67) per share, possessing the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption, as described below, which, upon any restatement of the Charter, shall become part of Article IV of the Charter, with any necessary or appropriate renumbering or relettering of the sections or subsections hereof:

SECTION 1. NUMBER OF SHARES AND DESIGNATION. This series of Preferred Stock shall be designated as Series C Convertible Preferred Stock (the “Series C Preferred Shares”), and the number of Series C Preferred Shares shall be 28,398,213.

SECTION 2. DEFINITIONS. The following terms shall have the meanings indicated:

“Act” shall mean the Securities Act of 1933, as amended.

“Additional Shares” shall have the meaning set forth in Section 7(d)(iv).

“Adjustment Price” shall have the meaning set forth in Section 7(d)(iv).

“Annual Dividend Rate” shall have the meaning set forth in Section 3(a).

“Board of Directors” or “Board” shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Series C Preferred Shares.

“Business Day” shall mean any day other than Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open.

“CapLease Acquisition” means the Corporation’s pending acquisition of CapLease, Inc. pursuant to that certain Agreement and Plan of Merger, dated as of March 28, 2013, between the Corporation, CapLease, Inc. and certain of their subsidiaries.

“Change in Control” shall mean any merger or consolidation of the Corporation in which one or more entities that are not affiliates of the Corporation acquire more than 50% of the Corporation’s outstanding voting equity securities or as a result of which stockholders of the Corporation immediately before such merger or consolidation hold, immediately after such merger or consolidation, less than 50% of the surviving entity’s outstanding common stock.

“Closing Price” means, for any date, the closing price per Common Share for such date (or, if not a Trading Day, the nearest preceding date that is a Trading Day) on the primary Eligible Market or exchange or quotation system on which the Common Shares are then listed or quoted.

“Common Shares” shall mean the shares of common stock, par value $0.01 per share, of the Corporation.

“Common Share Events” shall have the meaning set forth in Section 7(d).

“Constituent Person” shall have the meaning set forth in Section 7(e).

“Contingent Value Rights Agreement” means that certain Contingent Value Rights Agreement, dated as of June 4, 2013, between the Corporation and certain Investors (as defined therein).

“Conversion Notice” shall have the meaning set forth in Section 5(a).

“Continuation Right” shall have the meaning set forth in Section 4.

“Conversion Price” shall mean the conversion price per Common Share for which each Series C Preferred Share is convertible. The initial conversion price shall be lowest of (i) a 2% discount to the VWAP of the common stock for the 10 Trading Days prior to the Election Date, (ii) a 2% discount to the closing price on the Election Date and (iii) $15.67 (as such amount may be adjusted pursuant to Section 7 hereof, the “Fixed Conversion Price”).

“Convertible Preferred Stock Purchase Agreement” means that certain Convertible Preferred Stock Purchase Agreement, dated as of June 4, 2013, between the Corporation and certain Investors (as defined therein).

“Current Market Price” shall mean, with respect to the Common Shares, on any date specified herein, the average of the Market Price during the period of the most recent ten consecutive trading days ending on such date.

“Dividend Payment Date” shall mean, with respect to each Dividend Period, the fifteenth (15^th) day of each month, commencing on June 15, 2013; provided, however, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment due on such Dividend Payment Date shall be paid on the first Business Day immediately following such Dividend Payment Date.

“Dividend Payment Record Date” shall have the meaning set forth in Section 3(a).

“Dividend Periods” shall mean monthly dividend periods commencing on the first day of each month and ending on and including the day preceding the first day of the next succeeding Dividend Period (other than the initial Dividend Period, which shall commence on the Issue Date and end on and include June 15, 2013).

“Election Date” shall have the meaning set forth in Section 5(a).

“Eligible Market” means any of the New York Stock Exchange, the NYSE MKT, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board

“Exchange Cap” shall have the meaning set forth in Section 13(c).

“Exchange Cap Shares” shall have the meaning set forth in Section 13(d).

“Face Amount” means $15.67 (as may be adjusted from time to time).

“Issue Date” shall mean the first date on which any Series C Preferred Shares are issued and sold.

“Junior Shares” shall have the meaning set forth in Section 9(c).

“Liquidation” shall mean (A) a dissolution or winding up of the Corporation, whether voluntary or involuntary, (B) a consolidation or merger of the Corporation with and into one or more entities which are not affiliates of the Corporation which results in a Change in Control, or (C) a sale or transfer of all or substantially all of the Corporation’s assets other than to an affiliate of the Corporation.

“Liquidation Preference” shall have the meaning set forth in Section 4(a).

“Market Price” shall mean, with respect to the Common Shares on any date, the last reported sales price, regular way on such day, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way on such day, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on The NASDAQ Capital Market (“NASDAQ”) or, if the Common Shares are not listed or admitted for trading on NASDAQ, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Shares are listed or admitted for trading or, if the Common Shares are not listed or admitted for trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the principal automated quotation system that may then be in use or, if the Common Shares are not quoted by any such system, the average of the closing bid and asked prices as furnished by a professional market maker regularly making a market in the Common Shares selected for such purpose by the Board of Directors or, if there is no such professional market maker, such amount as an independent investment banking firm selected by the Board of Directors determines to be the value of a Common Share.

“Merger Liquidation” shall have the meaning set forth in Section 4(a).

“NASDAQ” shall have the meaning set forth in the definition of Market Price.

“Non-Electing Share” shall have the meaning set forth in Section 7(e).

“Parity Shares” shall have the meaning set forth in Section 9(b).

“Person” shall mean any individual, firm, partnership, corporation, limited liability company or other entity, and shall include any successor (by merger or otherwise) of such entity.

“Preferred Stock” shall have the meaning set forth in the Charter.

“Redemption Date” shall have the meaning set forth in Section 5(a).

“Redemption Notice” shall have the meaning set forth in Section 5(a).

“Redemption Premium” shall have the meaning set forth in Section 5(a).

“Redemption Trigger Date” shall mean the earliest of: (i) the closing of the CapLease Acquisition; (ii) the Trading Day after (a) the date of an announcement that CapLease, Inc. has accepted a competing offer or (b) the CapLease Acquisition is otherwise terminated; and (iii) December 31, 2013.

“SDAT” shall mean the State Department of Assessments and Taxation of Maryland.

“Securities” shall have the meaning set forth in Section 7(d)(iii).

“Securities Purchase Agreement” means that certain Securities Purchase Agreement, dated as of June 4, 2013, between the Corporation and certain Investors (as defined therein).

“Senior Shares” shall have the meaning set forth in Section 9(a).

“Series A Preferred Shares” shall mean the Series A Convertible Preferred Stock of the Corporation, par value $0.01 per share.

“Series B Preferred Shares” shall mean the Series B Convertible Preferred Stock of the Corporation, par value $0.01 per share.

“Series C Preferred Shares” shall have the meaning set forth in Section 1.

“Set apart for payment” shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of a dividend or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of shares of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Shares or any class or series of Parity Shares are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then “set apart for payment” with respect to the Series C Preferred Shares shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent.

“Shares” shall have the meaning set forth in the Charter.

“Trading Day” shall mean any day on which the securities in question are traded on the NASDAQ or, if such securities are not listed or admitted for trading on the NASDAQ, on the principal national securities exchange on which such securities are listed or admitted for trading.

“Trading Market” means whichever of the New York Stock Exchange, the NYSE MKT, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Common Shares is listed or quoted for trading on the date in question.

“Transaction” shall have the meaning set forth in Section 7(e).

“VWAP” means the dollar volume-weighted average price for the Common Shares on its Trading Market during the period beginning at 9:30:01 a.m., New York City time (or such other time as the Trading Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York City time (or such other time as the Trading Market publicly announces is the official close of trading), as reported by Bloomberg, L.P. through its “Volume at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York City time (or such other time as the Trading Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York City Time (or such other time as the Trading Market publicly announces is the official close of trading), as reported by Bloomberg, L.P., or, if no dollar volume-weighted average price is reported for such security by Bloomberg, L.P. for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the VWAP cannot be calculated for the Common Shares on a particular date on any of the foregoing bases, the VWAP of the Common Shares shall be the fair market value of the Common Shares on such date as determined by the Board of Directors in good faith.

SECTION 3. DIVIDENDS.

(a) The holders of Series C Preferred Shares shall be entitled to receive, when, as and if authorized by the Board of Directors and declared by the Corporation out of funds legally available for that purpose, dividends payable in cash at a per share rate per annum equal to 5.81% of the Face Amount (the “Annual Dividend Rate”). Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable monthly, when, as and if authorized and declared, in arrears on Dividend Payment

Dates, commencing on the first Dividend Payment Date after the Issue Date. Each such dividend shall be payable in arrears to the holders of record of the Series C Preferred Shares, as they appear on the stock records of the Corporation at the close of business on each record date, which shall not be more than 30 days preceding the applicable Dividend Payment Date (the “Dividend Payment Record Date”), as shall be fixed by the Board of Directors. Accrued and unpaid dividends for any past Dividend Periods may be authorized and declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which shall not be more than 45 days preceding the payment date thereof, as may be fixed by the Board of Directors. The amount of accrued and unpaid dividends on any Series C Preferred Share at any date shall be the amount of any dividends thereon calculated at the applicable rate to and including such date, whether or not earned or declared, which have not been paid in cash.

(b) The amount of dividends payable for each full Dividend Period for the Series C Preferred Shares shall be computed by dividing the Annual Dividend Rate by twelve. The amount of dividends payable for the initial Dividend Period, or any other period shorter or longer than a full Dividend Period, on the Series C Preferred Shares shall be computed on the basis of twelve 30-day months and a 360-day year. Holders of Series C Preferred Shares shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided, on the Series C Preferred Shares, except for any other amounts provided herein.

(c) So long as any Series C Preferred Shares are outstanding, no dividends, except as described in the immediately following sentence, shall be authorized and declared and paid or set apart for payment on any series or class or classes of Parity Shares for any period unless full cumulative dividends have been or contemporaneously are authorized and declared and paid or authorized and declared and a sum sufficient for the payment thereof set apart for such payment on the Series C Preferred Shares for all Dividend Periods prior to the dividend payment date for such class or classes or series of Parity Shares. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends authorized and declared upon Series C Preferred Shares and all dividends authorized and declared upon any other series or class or classes of Parity Shares shall be authorized and declared ratably in proportion to the respective amounts of dividends accumulated and unpaid on the Series C Preferred Shares and such class or classes or series of Parity Shares.

(d) So long as any Series C Preferred Shares are outstanding, no dividends shall be authorized and declared and paid or set apart for payment or other distribution authorized and declared and made upon Junior Shares (other than dividends or other distributions (i) paid in respect of the Common Shares issued pursuant to the Securities Purchase Agreement or stock issued pursuant to the Contingent Value Rights Agreement or (ii) paid solely in Junior Shares, or options, warrants or rights to subscribe for or purchase Junior Shares), nor shall any Junior Shares be redeemed, purchased or otherwise acquired (other than (i) a redemption, purchase or other acquisition of Common Shares made for purposes of and in compliance with requirements of an employee incentive or benefit plan of the Corporation or any subsidiary or (ii) a purchase or other acquisition of Common Shares made in connection with the restrictions on ownership and transfer set forth in Section 4.07 of the Charter), for any consideration (or any moneys to be paid to or made available for a sinking fund for the redemption of any shares of such stock) by the Corporation, directly or indirectly (except by conversion into or exchange for Junior Shares), unless in each case the full cumulative dividends on all outstanding Series C Preferred Shares and any other Parity Shares shall have been paid or set apart for payment for all past Dividend Periods with respect to the Series C Preferred Shares and all past dividend periods with respect to such Parity Shares.

SECTION 4. LIQUIDATION PREFERENCE.

(a) In the event of any Liquidation, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of Junior Shares, the holders of Series C Preferred Shares shall be entitled (subject to the Continuation Right of such holders described below) to receive an amount equal to the greater of (i) (A) Fifteen Dollars and Sixty-Seven Cents ($15.67) per Series C Preferred Share plus dividends (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holder (the “Liquidation Preference”) plus (B) the Redemption Premium or (ii) an amount per Series C Preferred Share equal to the amount that would have been payable had each Series C Preferred Share been converted into Common Shares immediately prior to such Liquidation. The foregoing amounts shall be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination, reorganization, recapitalization, reclassification or other similar event involving a change in the capital structure of the Series C Preferred Shares. Until the holders of the Series C Preferred Shares have been paid the Liquidation Preference in full, no payment will be made to any holder of Junior Shares upon Liquidation. If, upon any such Liquidation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Series C Preferred Shares shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Shares, then such assets, or the proceeds thereof, shall be distributed among the holders of such Series C Preferred Shares and such other Parity Shares ratably in accordance with the amounts that would be payable on such Series C Preferred Shares and such other Parity Shares if all amounts payable thereon were paid in full.

In connection with a Merger Liquidation (as defined below), each holder of Series C Preferred Shares shall have the right (a “Continuation Right”) to elect, by delivering written notice to the Corporation not less than five Business Days prior to the Merger Liquidation, to require the Corporation to make provision for the Series C Preferred Shares to be assumed by the surviving entity as described in Section 7(e); provided, however, notwithstanding the election by any of the holders of the Series C Preferred Shares of the Continuation Right, the Corporation shall have the right, in connection with any Merger Liquidation, to elect, by delivering written notice to the holders of Series C Preferred Shares at any time prior to the Merger Liquidation, to redeem any or all of the outstanding Series C Preferred Shares for an amount per Series C Preferred Share equal to the Liquidation Preference plus the Redemption Premium. A “Merger Liquidation” shall be a Liquidation which constitutes a consolidation or merger of the Corporation with one or more entities that are not affiliates of the Corporation and as a result of which the Corporation is not the Surviving Entity. Upon a merger or consolidation of the Corporation with one or more entities that are affiliates of the Corporation, the Corporation shall make provision for the Series C Preferred Shares to be assumed by the surviving entity as described in Section 7(e).

(b) Subject to the rights of the holders of any Parity Shares, upon any Liquidation of the Corporation, after payment shall have been made in full to the holders of Series C Preferred Shares and any Parity Shares, as provided in this Section 4, any other series or class or classes of Junior Shares shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series C Preferred Shares and any Parity Shares shall not be entitled to share therein.

SECTION 5. REDEMPTION

The Series C Preferred Shares shall be redeemable by the Corporation subject to the provisions of this Section 5.

(a) Within three Business Days following the Redemption Trigger Date, the Corporation shall notify each holder of Series C Preferred Shares in writing of its intent to redeem the Series C Preferred Shares (the “Redemption Notice”) or its intent to convert the Series C Preferred Shares (the “Conversion Notice”) into Common Shares (the third Business Day following the Redemption Trigger Date, the “Election Date”).

The Corporation shall redeem for cash on the date specified in the Redemption Notice (which date shall be not more than ten (10) days after the date of the Redemption Notice) (the “Redemption Date”), out of funds legally available therefor, all, but not less than all, of the outstanding Series C Preferred Shares at a price per Series C Preferred Share equal to the Liquidation Preference plus a premium (the “Redemption Premium”) equal to twenty percent (20%) of the Liquidation Preference.

(b) From and after the Redemption Date, (i) except as otherwise provided herein, dividends on the Series C Preferred Shares so called for redemption shall cease to accrue, (ii) said shares shall no longer be deemed to be outstanding and (iii) all rights of the holders thereof as holders of Series C Preferred Shares shall cease (except the rights to receive the cash payable upon such redemption, without interest thereon, and to receive any dividends payable thereon). The Corporation’s obligation to provide cash in accordance with the preceding sentence shall be deemed fulfilled if, on or before the Redemption Date, the Corporation shall deposit with a bank or trust company (which may be an affiliate of the Corporation) that has an office in the Borough of Manhattan, City of New York and that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, any cash necessary for such redemption, in trust, with irrevocable instructions that such cash be applied to the redemption of the Series C Preferred Shares so called for redemption. No interest shall accrue for the benefit of the holder of Series C Preferred Shares to be redeemed on any cash so set apart by the Corporation.

SECTION 6. REACQUIRED SHARES TO BE RETIRED. All Series C Preferred Shares that have been issued and reacquired in any manner by the Corporation shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to class or series.

SECTION 7. CONVERSION. Series C Preferred Shares shall automatically convert into Common Shares, as follows:

(a) If the Corporation fails to send to the holders of Series C Preferred Shares a Redemption Notice or sends a Conversion Notice as provided in Section 5(a), each Series C Preferred Share will automatically be converted into the number of fully paid and non-assessable Common Shares obtained by dividing the aggregate Liquidation Preference of such Series C Preferred Shares by the Conversion Price.

(i) Holders of Series C Preferred Shares at the close of business on any Dividend Payment Record Date shall be entitled to receive the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion thereof (and of any accrued and unpaid dividends to the date of conversion) following such Dividend Payment Record Date and prior to such Dividend Payment Date. A holder of Series C Preferred Shares on a Dividend Payment Record Date whose Series C Preferred Shares are converted into Common Shares on such Dividend Payment Date will receive the dividend payable by the Corporation on such Series C Preferred Shares on such date, and the converting holder need not pay to the Corporation the amount of such dividend upon conversion.

(b) Each conversion shall be deemed to have been effected immediately prior to the close of business on the Election Date, and the person or persons in whose name or names any Common Shares shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the Common Shares represented thereby at such time on such date, and such conversion shall be at the Conversion Price in effect at such time and on such date unless the stock transfer books of the Corporation shall be closed on that date, in which event such person or persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such notice of conversion shall have been received by the Corporation.

(c) No fractional shares or scrip representing fractions of Common Shares shall be issued upon conversion of the Series C Preferred Shares. Instead of any fractional interest in a Common Share that would otherwise be deliverable upon the conversion of a Series C Preferred Share, the Corporation shall pay to the holder of such Series C Preferred Share an amount in cash based upon the Current Market Price of Common Shares on the Trading Day immediately preceding the date of conversion. If more than one Series C Preferred Share shall be converted at one time by the same holder, the number of full Common Shares issuable upon conversion thereof shall be computed on the basis of the aggregate number of Series C Preferred Shares so surrendered.

(d) The Fixed Conversion Price shall be adjusted from time to time as follows:

(i) If, after the Issue Date, the Corporation (A) pays a dividend or make a distribution on its shares of capital stock in Common Shares, (B) subdivides its outstanding Common Shares into a greater number of shares, (C) combines its outstanding Common Shares into a smaller number of shares or (D) issues any shares of capital stock by reclassification of its Common Shares (the events set forth in clauses (A), (B), (C) and (D) above being hereinafter referred to as the “Common Share Events”), the Fixed Conversion Price shall be adjusted so that the holder of any Series C Preferred Share thereafter surrendered for

conversion shall be entitled to receive the number of Common Shares that such holder would have owned or have been entitled to receive after the happening of any of any Common Share Event, had such Series C Preferred Share been converted immediately prior to the record date in the case of a dividend or distribution or the effective date in the case of a subdivision, combination or reclassification. An adjustment made pursuant to this subparagraph (i) shall become effective immediately upon the opening of business on the day next following the record date (subject to paragraph (h) below) in the case of a dividend or distribution and shall become effective immediately upon the opening of business on the day next following the effective date in the case of a subdivision, combination or reclassification.

(ii) If, after the Issue Date, the Corporation issues rights, options or warrants to all holders of Common Shares entitling them (for a period expiring within 45 days after the record date mentioned below in this subparagraph (ii)) to subscribe for or purchase Common Shares at a price per share less than the Current Market Price per Common Share on the record date for the determination of stockholders entitled to receive such rights, options or warrants, then the Fixed Conversion Price shall be adjusted to equal the price determined by multiplying (A) the Fixed Conversion Price by (B) a fraction, the numerator of which shall be the sum of (I) the number of Common Shares outstanding on the close of business on the date fixed for such determination and (II) the number of Common Shares that the aggregate proceeds to the Corporation from the exercise of such rights, options or warrants for Common Shares would purchase at such Current Market Price, and the denominator of which shall be the sum of (I) the number of Common Shares outstanding on the close of business on the date fixed for such determination and (II) the number of additional Common Shares offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall become effective immediately upon the opening of business on the day next following such record date (subject to paragraph (h) below). In determining whether any rights, options or warrants entitle the holders of Common Shares to subscribe for or purchase Common Shares at less than such Current Market Price, there shall be taken into account any consideration received by the Corporation upon issuance and upon exercise of such rights, options or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors, whose determination shall be conclusive, absent manifest error.

(iii) If the Corporation distributes to all holders of its Common Shares any shares of capital stock of the Corporation (other than Common Shares), evidence of its indebtedness or assets or cash dividends in excess of $0.11 in any month or rights or warrants to subscribe for or purchase any of its securities (excluding those rights and warrants referred to in and treated under subparagraph (ii) above) (any of the foregoing being hereinafter in this subparagraph (iii) called the “Securities”), then in each case the Fixed Conversion Price shall be adjusted so that it shall equal the price determined by multiplying (A) the Fixed Conversion Price by (B) a fraction, the numerator of which shall be the Current Market Price per Common Share on the record date mentioned below less the then fair market value (as determined by the Board of Directors, whose determination shall be conclusive, absent manifest error) of the portion of the shares of capital stock or assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one Common Share, and the denominator of which shall be the Current Market Price per Common Share on the record date mentioned below. Such adjustment shall become effective immediately upon the opening of business on the day next following (subject to paragraph (h) below) the record date for the determination of stockholders

entitled to receive such distribution. For the purposes of this subparagraph (iii), the distribution of a Security, which is distributed not only to the holders of the Common Shares on the date fixed for the determination of stockholders entitled to such distribution of such Security, but also is required to be distributed with each Common Share delivered to a Person converting a Series C Preferred Share after such determination date, shall not require an adjustment of the Fixed Conversion Price pursuant to this subparagraph (iii); provided that on the date, if any, on which a person converting a Series C Preferred Share would no longer be entitled to receive such Security with a Common Share (other than as a result of the termination of all such Securities), a distribution of such Securities shall be deemed to have occurred, and the Fixed Conversion Price shall be adjusted as provided in this subparagraph (iii) (and such day shall be deemed to be “the date fixed for the determination of the stockholders entitled to receive such distribution” and “the record date” within the meaning of the two preceding sentences).

The occurrence of a distribution or the occurrence of any other event as a result of which holders of Series C Preferred Shares shall not be entitled to receive rights, including exchange rights (the “Rights”), pursuant to any stockholders protective rights agreement (the “Agreement”) that may be adopted by the Corporation as if such holders had converted such shares into Common Shares immediately prior to the occurrence of such distribution or event shall not be deemed a distribution of Securities for the purposes of any Fixed Conversion Price adjustment pursuant to this subparagraph (iii) or otherwise give rise to any Fixed Conversion Price adjustment pursuant to this Section 7; provided, however, that in lieu of any adjustment to the Fixed Conversion Price as a result of any such a distribution or occurrence, the Corporation shall make provision so that Rights, to the extent issuable at the time of conversion of any Series C Preferred Shares into Common Shares, shall issue and attach to such Common Shares then issued upon conversion in the amount and manner and to the extent and as provided in the Agreement in respect of issuances at the time of Common Shares other than upon conversion.

(iv) If, at any time or from time to time after the Issue Date, the Corporation issues or sells any Common Shares (other than in connection with any underwritten public offering and issuances to unaffiliated third parties for an acquisition on an arm’s-length basis) (“Additional Shares”) for a consideration per share that is less than the Current Market Price on the Business Day immediately preceding the earlier of the issuance or sale, or public announcement of the issuance or sale, of such Additional Shares, then the Fixed Conversion Price shall be reduced to an amount determined by multiplying the Fixed Conversion Price by a fraction of which (x) the numerator is the sum of (i) the product of (A) the number of Common Shares outstanding immediately prior to such issuance or sale multiplied by (B) the greater of (1) the Fixed Conversion Price and (2) the Closing Price on the date preceding the earlier of the issuance or sale or public announcement of the issuance or sale of such Additional Shares (the greater of (1) and (2) above hereinafter referred to as the “Adjustment Price”) and (ii) the aggregate consideration receivable by the Corporation for the total number of Common Shares so issued or sold, and (y) the denominator equals the product of (i) the sum of (A) the total number of Common Shares outstanding immediately prior to such issuance or sale and (B) the number of additional Common Shares issued or sold, multiplied by (ii) the Adjustment Price. An adjustment made pursuant to this subparagraph (iv) shall be made on the next Business Day following the date on which any such issuance or sale is made and shall be effective retroactively to the close of business on the date of such issuance or sale.

(v) No adjustment in the Fixed Conversion Price shall be required unless such adjustment would require a cumulative increase or decrease of at least 1 % in such price; provided, however, that any adjustments that by reason of this subparagraph (v) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and provided, further, that any adjustment shall be required and made in accordance with the provisions of this Section 7 (other than this subparagraph (v)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of Common Shares. Notwithstanding any other provisions of this Section 7, the Corporation shall not be required to make any adjustment of the Fixed Conversion Price for the issuance of any Common Shares pursuant to any plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and the investment of additional optional amounts in Common Shares under such plan. All calculations under this Section 7 shall be made to the nearest cent (with $.005 being rounded upward) or to the nearest one-tenth of a share (with .05 of a share being rounded upward), as the case may be. Anything in this paragraph (d) to the contrary notwithstanding, the Corporation shall be entitled, to the extent permitted by law, to make such reductions in the Fixed Conversion Price, in addition to those required by this paragraph (d), as it in its discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, reclassification or combination of shares, distribution of rights, options or warrants to purchase stock or securities, or a distribution of other assets (other than cash dividends) hereafter made by the Corporation to its stockholders shall not be taxable.

(e) If the Corporation becomes party to any transaction (including without limitation a merger, consolidation, statutory share exchange, self tender offer for all or substantially all Common Shares outstanding, sale of all or substantially all of the Corporation’s assets or recapitalization of the Common Shares but excluding any Common Share Events (each of the foregoing being referred to herein as a “Transaction”), in each case as a result of which Common Shares shall be converted into the right to receive stock, securities or other property (including cash or any combination thereof), each Series C Preferred Share that is not redeemed or converted into the right to receive stock, securities or other property in connection with such Transaction shall thereafter be convertible into the kind and amount of shares of stock, securities and other property (including cash or any combination thereof) receivable upon the consummation of such Transaction by a holder of that number of Common Shares into which one Series C Preferred Share was convertible immediately prior to such Transaction, assuming such holder of Common Shares (i) is not a Person with which the Corporation consolidated or into which the Corporation merged or which merged into the Corporation or to which such sale or transfer was made, as the case may be (a “Constituent Person”), or an affiliate of a Constituent Person and (ii) failed to exercise his or her rights of the election, if any, as to the kind or amount of stock, securities and other property (including cash) receivable upon such Transaction (provided that if the kind or amount of stock, securities and other property (including cash) receivable upon such Transaction is not the same for each Common Share held immediately prior to such Transaction by other than a Constituent Person or an affiliate thereof and in respect of which such rights of election shall not have been exercised (“Non-Electing Share”), then for the purpose of this paragraph (e) the kind and amount of stock, securities and other property (including cash) receivable upon such Transaction by each Non-Electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of the Non-Electing Shares). The Corporation shall not be a party to any Transaction unless the terms of such Transaction are consistent with the provisions of this paragraph (e), and it shall not consent or agree to the occurrence of any Transaction until the Corporation has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Series C Preferred Shares that will contain provisions enabling the holders of the Series C Preferred Shares that remain outstanding after such Transaction to convert their Series C Preferred Shares into the consideration received by holders of Common Shares at the Conversion Price in effect immediately prior to such Transaction. The provisions of this paragraph (e) shall similarly apply to successive Transactions.

(f) If:

(i) the Corporation declares a dividend (or any other distribution) on the Common Shares (other than in cash out of assets, based on a fair valuation of assets, in excess of the sum of the liabilities of the Corporation and the amount of stated capital attributable to Common Shares, determined on the basis of the most recent annual consolidated cost basis and current value basis and quarterly consolidated balance sheets of the Corporation and its consolidated subsidiaries available at the time of the declaration of the dividend or distribution); or

(ii) the Corporation grants to the holders of the Common Shares of rights or warrants to subscribe for or purchase any shares of any class or any other rights or warrants (other than Rights to which the second paragraph of subparagraph (d)(iii) of this Section 7 applies); or

(iii) there shall occur any reclassification of the Common Shares (other than an event to which subparagraph (d) (i) of this Section 7 applies) or any consolidation or merger to which the Corporation is a party and for which approval of any stockholders of the Corporation is required, or a statutory share exchange involving the conversion or exchange of Common Shares into securities or other property, or a self tender offer by the Corporation for all or substantially all of its outstanding Common Shares, or the sale or transfer of all or substantially all of the assets of the Corporation as an entirety and for which approval of any stockholders of the Corporation is required; or

(iv) there shall occur the voluntary or involuntary liquidation, dissolution or winding up of the Corporation,

then the Corporation shall cause to be prepared and delivered to the holders of the Series C Preferred Shares at their addresses as shown on the stock records of the Corporation, as promptly as possible, but at least 15 days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution or rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Shares of record to be entitled to such dividend, distribution or rights or warrants are to be determined or (B) the date on which such reclassification, consolidation, merger, statutory share exchange, self tender offer, sale, transfer, liquidation, dissolution or winding up is expected to become effective, and the date as of which it is expected that holders of Common Shares of record shall be entitled to exchange their Common Shares for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, statutory share exchange, self tender offer, sale, transfer, liquidation, dissolution or winding up. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7.

(g) Whenever the Fixed Conversion Price is adjusted as herein provided, the Corporation shall promptly prepare and deliver to the holders of the Series C Preferred Shares a notice of such adjustment of the Fixed Conversion Price setting forth the adjusted Fixed Conversion Price and the effective date of such adjustment and an officer’s certificate setting forth the Fixed Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. The Corporation shall mail such notice and such certificate to the holders of each Series C Preferred Share at such holder’s last address as shown on the stock records of the Corporation.

(h) In any case in which paragraph (d) of this Section 7 provides that an adjustment shall become effective on the day next following the record date for an event, the Corporation may defer until the occurrence of such event (A) issuing to the holder of any Series C Preferred Share converted after such record date and before the occurrence of such event the additional Common Shares issuable upon such conversion by reason of the adjustment required by such event over and above the Common Shares issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount of cash in lieu of any fraction pursuant to paragraph (c) of this Section 7.

(i) There shall be no adjustment of the Fixed Conversion Price in case of the issuance of any shares of capital stock of the Corporation in a reorganization, acquisition or other similar transaction except as specifically set forth in this Section 7. If any action or transaction would require adjustment of the Fixed Conversion Price pursuant to more than one paragraph of this Section 7, only one adjustment shall be made, and such adjustment shall be the amount of adjustment that has the highest absolute value.

(j) If the Corporation takes any action affecting the Common Shares, other than action described in this Section 7, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of the Series C Preferred Shares, the Fixed Conversion Price for the Series C Preferred Shares may be adjusted, to the extent permitted by law, in such manner, if any, and at such time, as the Board of Directors, in its sole discretion, may determine to be equitable in the circumstances.

(k) The Corporation will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Common Shares, for the purpose of effecting conversion of the Series C Preferred Shares, the full number of Common Shares deliverable upon the conversion of all outstanding Series C Preferred Shares not theretofore converted. For purposes of this paragraph (k), the number of Common Shares that shall be deliverable upon the conversion of all outstanding shares of Series C Preferred Shares shall be computed as if at the time of computation all such outstanding shares were held by a single holder.

Any Common Shares issued upon conversion of the Series C Preferred Shares shall be validly issued, fully paid and non-assessable. Before taking any action that would cause an adjustment reducing the Conversion Price below the then-par value of the Common Shares deliverable upon conversion of the Series C Preferred Shares, the Corporation shall take any corporate action that, in the opinion of its counsel, may be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable Common Shares at such adjusted Conversion Price.

The Corporation shall endeavor to list the Common Shares required to be delivered upon conversion of the Series C Preferred Shares, prior to such delivery, upon each national securities exchange, if any, upon which the outstanding Common Shares are listed at the time of such delivery.

(l) The Corporation shall pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of Common Shares or other securities or property on conversion of the Series C Preferred Shares pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of any Common Shares or other securities or property in a name other than that of the holder of the Series C Preferred Shares to be converted, and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Corporation the amount of any such tax or established, to the reasonable satisfaction of the Corporation, that such tax has been paid.

(m) If the Fixed Conversion Price is adjusted from time to time in accordance with this Section 7 as the result of an event that alters the number of outstanding Common Shares (or an event in connection with which the Company issues any rights, options or warrants or other securities that, upon exercise or conversion (or otherwise), and such issuance would then alter the number of outstanding Common Shares), then the number of Common Shares issuable hereunder shall be adjusted by multiplying (A) the Common Shares issuable hereunder at such time by (B) a fraction, the numerator of which shall be the Fixed Conversion Price (prior to such adjustment) and the denominator of which shall be the Fixed Conversion Price (following such adjustment).

SECTION 8. PERMISSIBLE DISTRIBUTIONS. In determining whether a distribution (other than upon liquidation, dissolution or winding up), whether by dividend, or upon redemption or other acquisition of shares or otherwise, is permitted under Maryland law, amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of holders of shares of any class or series of capital stock whose preferential rights upon dissolution are superior or prior to those receiving the distribution shall not be added to the Corporation’s total liabilities.

SECTION 9. RANKING. Any class or series of shares of capital stock of the Corporation shall be deemed to rank:

(a) prior or senior to the Series C Preferred Shares, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Series C Preferred Shares (“Senior Shares”);

(b) on a parity with the Series A Preferred Shares, the Series B Preferred Shares and the Series C Preferred Shares, as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Series A Preferred Shares, the Series B Preferred Shares or the Series C Preferred Shares, if the holders of such class or series and the Series A Preferred Shares, the Series B Preferred Shares and the Series C Preferred Shares shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other (“Parity Shares”); and

(c) junior to the Series C Preferred Shares, as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if such stock or series shall be Common Shares or otherwise expressly designated as ranking junior to the Series C Preferred Shares (“Junior Shares”).

SECTION 10. VOTING.

(a) Except as otherwise set forth herein, the Series C Preferred Shares shall not have any relative, participating, optional or other special voting rights and powers, and the consent of the holders thereof shall not be required for the taking of any corporate action.

(b) So long as any Series C Preferred Shares are outstanding, in addition to any other vote or consent of stockholders required by the Charter, the affirmative vote of at least a majority of the votes entitled to be cast by the holders of Series C Preferred Shares; and at the time outstanding, voting as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating any amendment, alteration or repeal of any of the provisions of the Charter, including the terms of the Series C Preferred Shares, that materially and adversely affects the voting powers, rights or preferences of the Series C Preferred Shares; provided, however, that if there are more than two unaffiliated holders of Series C Preferred Shares, such majority shall consist of votes from at least two unaffiliated holders provided further, however, that (A) the amendment of the provisions of the Charter so as to authorize or create or to increase the number of the authorized shares of, any Senior Shares, Parity Shares or Junior Shares shall not be deemed to materially and adversely affect the voting powers, rights or preferences of the Series C Preferred Shares and (B) any filing with the SDAT by the Corporation in connection with a merger, consolidation or sale of all or substantially all of the assets of the Corporation shall not be deemed to be an amendment, alteration or repeal of any of the provisions of the Charter, including the terms of the Series C Preferred Shares.

For purposes of the foregoing provisions of this Section 10, each Series C Preferred Share shall have one (1) vote per share.

SECTION 11. RECORD HOLDERS. The Corporation may deem and treat the record holder of any Series C Preferred Shares as the true and lawful owner thereof for all purposes, and the Corporation shall not be affected by any notice to the contrary.

SECTION 12. NO PREEMPTIVE RIGHTS. No holder of Series C Preferred Shares shall be entitled to any preemptive rights to subscribe for or acquire any unissued Shares (whether now or hereafter authorized) or securities of the Corporation convertible into, or carrying a right to subscribe to or acquire, Shares.

SECTION 13. RESTRICTIONS ON OWNERSHIP AND TRANSFER; EXCHANGE CAP.

(a) The Series C Preferred Shares are subject to all the limitations, terms and conditions of the Charter applicable to Shares generally, including but not limited to the “Aggregate Share Ownership Limit” and the other terms and conditions (including exceptions and exemptions) of Section 4.07 of the Charter.

(b) In no event will the aggregate number Common Shares issued pursuant to the Securities Purchase Agreement and upon conversion of the Series C Convertible Preferred Stock issued pursuant to the Convertible Preferred Stock Purchase Agreement exceed 19.9% of the number Common Shares outstanding on the Trading Day immediately preceding the date of the Preferred Stock Purchase Agreement (as appropriately adjusted for share splits, share dividends, combinations, recapitalizations and the like).

(c) Notwithstanding any other provision contained herein or in the Charter, the Corporation shall not be entitled to issue any Common Shares upon conversion of the Series C Preferred Shares, and no holder of Series C Preferred Shares shall have the right to receive upon conversion of the Series C Preferred Shares any Common Shares, if the issuance of such Common Shares would exceed the limit in Section 13(a) or (b) above (the “Exchange Cap”), and no holder shall be issued in the aggregate, pursuant to the Securities Purchase Agreement or upon conversion of the Series C Preferred Shares, Common Shares in an amount greater than the product of the Exchange Cap multiplied by the quotient of (1) (i) the Common Shares issued to such holder pursuant to the Securities Purchase Agreement plus (ii) the Common Shares underlying the Series C Preferred Shares issued to such holder pursuant to the Convertible Stock Purchase Agreement on the Issue Date divided by (2) (i) the aggregate number of Common Shares issued to pursuant to the Securities Purchase Agreement plus (ii) the aggregate number of Common Shares underlying the Series C Preferred Shares issued pursuant to the Convertible Stock Purchase Agreement on the Issue Date.

(d) In the event that the Corporation is prohibited from issuing Common Shares pursuant to Section 13(c) (the “Exchange Cap Shares”), the Corporation shall pay, out of funds legally available therefor, cash in lieu of such Common Shares in an amount equal to the greater of the product of such number of Exchange Cap Shares and (i) 102% of the Liquidation Preference and (ii) the Conversion Price valued at the one-day VWAP of the Common Shares on the applicable date.

For the avoidance of doubt, in the event a particular holder of Serices C Preferred Shares is subject to the limit in Section 13(a), the shares otherwise issuable to such holder shall be available for issuance to the remaining holders of Series C Preferred Shares on a pro rata basis. The foregoing provisions of this Section 13 shall not be construed to limit the applicability to the Series C Preferred Shares of any other term or provision of the Charter.

SECTION 14. TAX MATTERS

(a) Not less than ten (10) days prior to (i) a redemption of the Series C Preferred Shares pursuant to Section 5(a), (ii) a conversion of the Series C Preferred Shares pursuant to Section 7(a), or (iii) a payment of cash or the issuance of additional shares of stock pursuant to the Contingent Value Rights Agreement, the Company shall give written notice to the holders of Series C Preferred Shares. If (a) any holder of Series C Preferred Shares (or, in the case of a holder which is a partnership or disregarded entity for U.S. federal income tax purposes, any direct or indirect partner, member or owner of such holder) (any such person, a “Tax-Indemnified Person”) is advised by such Tax-Indemnified Person’s tax advisors to pay, or (b) the U.S. taxing authorities seek to impose on any Tax-Indemnified Person, a tax pursuant to Section 897 of the Code in respect of (i) a sale or other disposition (including a redemption or conversion) of such Series C Preferred Shares, or (ii) a payment of cash or the issuance of additional shares pursuant to the Contingent Value Rights Agreement, the Company shall indemnify such Tax-Indemnified Person, on an after-tax basis, for the amount of such tax, including any interest or penalties thereon.

(b) It is the intention of the parties that no payments or transactions with respect to the Series C Preferred Shares, any common stock into which the Series C Preferred Shares have been converted, or any stock which has been issued in respect of the Contingent Value Rights Agreement, other than cash dividends payable pursuant to Section 3(a), shall be treated for U.S. Federal income tax purposes as a dividend. Accordingly

(i) In the event the Company treats (i) a payment in redemption of the Series C Preferred Shares pursuant to Section 5(a), (ii) a conversion of the Series C Preferred Shares pursuant to Section 7(a), (iii) any payment or issuance of additional stock pursuant to the Contingent Value Rights Agreement or (iv) any other payment, issuance of stock, or other transaction with respect to the Series C Preferred Shares, any common stock into which the Series C Preferred Shares has been converted, or any stock which has been issued in respect of the Contingent Value Rights Agreement, other than cash dividends payable pursuant to Section 3(a), as a dividend for U.S. Federal income tax purposes (including, without limitation, as a result of the application of Sections 302 or 305 of the Code), then the Company shall pay to the holders of Series C Preferred Shares an additional amount such that the net amount paid or issued, after any required withholding with respect to such payment or issuance and such additional amount, shall be equal to the amount that would have been received by the direct or indirect holder of the Series C Preferred Stock had withholding not been required.

(ii) In the event that (A) the United States taxing authorities successfully take the position that (i) a payment in redemption of the Series C Preferred Shares pursuant to Section 5(a), (ii) a conversion of the Series C Preferred Shares pursuant to Section 7(a), (iii) any payment or issuance of additional stock pursuant to the Contingent Value Rights Agreement or (iv) any other payment, issuance of stock, or other transaction with respect to the Series C Preferred Shares, any common stock into which the Series C Preferred Shares have been converted, or any stock which has been issued in respect of the Contingent Value Rights Agreement, other than cash dividends payable pursuant to Section 3(a), should be treated for U.S. Federal income tax purposes as a dividend (including, without limitation, as a result of the application of Sections 302 or 305 of the Code), (B) Section 14(c)(i) a does not apply, then the Company shall indemnify the direct or indirect holders of Series C Preferred Shares, on an after-tax basis, for the withholding tax actually imposed on such holders in respect of such dividend.

SECOND: The Series C Preferred Shares have been classified and designated by the Board of Directors under the authority contained in the Charter.

THIRD: These Articles Supplementary have been approved by the Board of Directors in the manner and by the vote required by law.

FOURTH: The undersigned acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties of perjury.

IN WITNESS WHEREOF, American Realty Capital Properties, Inc. has caused these presents to be signed in its name and on its behalf by its Chief Executive Officer and attested to by its Secretary of this 6^th day of June, 2013.

Attest:	AMERICAN REALTY CAPITAL PROPERTIES, INC.
/s/ Edward M. Weil, Jr.
Name: Edward M. Weil, Jr.	By:	/s/ Nicholas S. Schorsch
Title: President, Chief Operating Officer, Secretary and Treasurer		Name: Nicholas S. Schorsch Title: Chief Executive Officer

EX-10.1 3 v347580_ex10-1.htm EXHIBIT 10.1

Exhibit 10.1

FORM OF CONTINGENT VALUE RIGHTS AGREEMENT

This CONTINGENT VALUE RIGHTS AGREEMENT (this “Agreement”), dated as of June [__], 2013, is by and among American Realty Capital Properties, Inc., a Maryland corporation (the “Company”), and the holder set forth on the signature page hereto (together with their successor and their permitted assigns, the “Holder”).

WHEREAS, in connection with the issuance by the Company of 29,411,764 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) on the date hereof pursuant to that certain Stock Purchase Agreement, dated as of June 4, 2013 (the “Stock Purchase Agreement”), by and among the Company and the investors party thereto (the “Investors”), the Company is obligated to issue 29,411,764 contingent value rights subject to the terms and conditions contained herein (each such right, a “Contingent Value Right”), including [______] Contingent Value Rights to the Holder (which initially is an Investor) pursuant to this Agreement. Capitalized terms used but not defined in this Agreement shall have the respective meanings assigned thereto in the Stock Purchase Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated:

“Purchase Price” shall initially equal $15.47; provided that such amount shall be equitably adjusted upon the occurrence of any event that would have resulted in the adjustment of the “Fixed Conversion Price” (as defined in the Articles Supplementary for the Company’s Series C Convertible Preferred Stock (the “Series C Preferred Stock”) and to the same extent of such adjustment (the “Articles Supplementary”).

“Test Date” means the sixty-first (61^st) trading day following the Closing.

“VWAP” means the dollar volume-weighted average price for the Common Stock on its Trading Market during the period beginning at 9:30:01 a.m., New York time (or such other time as the Trading Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as the Trading Market publicly announces is the official close of trading), as reported by Bloomberg, L.P. through its “Volume at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time (or such other time as the Trading Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York City Time (or such other time as the Trading Market publicly announces is the official close of trading), as reported by Bloomberg, L.P., or, if no dollar volume-weighted average price is reported for such security by Bloomberg, L.P. for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the VWAP cannot be calculated for the Common Stock on a particular date on any of the foregoing bases, the VWAP of the Common Stock shall be the fair market value of the Common Stock on such date as determined by the Company’s Board of Directors in good faith.

Contingent Value Rights.

(a) On the Test Date, the Company shall calculate the VWAP per Common Share for the period covering the 30^th through the 60^th trading days after the Closing (the “CVR Period VWAP”).

(b) Within five (5) Business Days following the Test Date, the Company shall pay to the Holder, in immediately available funds to an account designated in writing by such Holder, an amount equal to (a) the number of Contingent Value Rights held by the Holder on the Test Date multiplied by (ii) the amount (the “Settlement Amount”), which shall not be less than zero nor greater than $1.50, equal to the difference between (A) the Purchase Price and (B) the CVR Period VWAP.

(c) If the number of shares of Common Stock is adjusted upon the occurrence of any event that would have resulted in the adjustment of the Fixed Conversion Price (as defined in the Articles Supplementary), the number of Contingent Value Rights shall be adjusted proportionately.

Termination. This Agreement shall terminate and no Holder shall have any rights hereunder (to payment or otherwise) upon the payment by the Company of the Settlement Amount, if any, due to the Holder pursuant to Section 2.

Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Holder. Any Holder may assign all or a portion of its rights under this Agreement to any Person, provided (i) such transferee is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), (ii) such transferor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company after such assignment, (iii) the Company is furnished with written notice of the name and address of such transferee or assignee, (iv) such transferee agrees in writing to be bound by the provisions hereof that apply to the “Holder”, (v) such transfer shall have been made pursuant to the safe harbor for the resale of restricted securities provided by Rule 144A under the Securities Act provided, however, that for purposes of this clause (v): (1) this Agreement or any rights or obligations hereunder shall be deemed not to be the same class of securities as the Common Stock for purposes of Rule 144A(d)(3)(i) and (2) if the Company as the “issue” does not meet the requirements of Rule 144A(d)(4), then the Agreement or any rights or obligations hereunder may be assigned pursuant to any other exemption from registration under the Securities Act and (vi) such transfer shall have been made pursuant to and in accordance with the applicable requirements of this Agreement and with all laws applicable thereto.

No Rights as Shareholders. This Agreement shall not entitle the Holder (or its successors or permitted assigns) to any voting rights or other rights as a stockholder of the Company.

Incorporation of Certain Sections By Reference. The following sections from the Stock Purchase Agreement shall be deemed incorporated by reference into this Agreement, with appropriate changes as the context requires: Sections 7.4, 7.5, 7.6, 7.8, 7.9, 7.11, 7.12, 7.14 and 7.17.

[Signature pages follow.]

IN WITNESS WHEREOF, each party hereto has duly executed this Agreement or has caused this Agreement to be duly executed by an authorized officer as of the day and year first above written.

	AMERICAN REALTY CAPITAL PROPERTIES, INC.

	By:
		Name:
		Title:

	[NAME OF HOLDER]

	By:
		Name:
		Title:

EX-10.2 4 v347580_ex10-2.htm EXHIBIT 10.2

Exhibit 10.2

FORM OF CONTINGENT VALUE RIGHTS AGREEMENT

WHEREAS, in connection with the issuance by the Company of 28,398,213 shares of the Company’s Series C Convertible Preferred Stock (the “Series C Preferred Stock”) on the date hereof pursuant to that certain Convertible Preferred Stock Purchase Agreement, dated as of June 4, 2013 (the “Stock Purchase Agreement”), by and among the Company and the investors party thereto (the “Investors”), the Company is obligated to issue 28,398,213 contingent value rights subject to the terms and conditions contained herein (each such right, a “Contingent Value Right”), including [______] Contingent Value Rights to the Holder (which initially is an Investor) pursuant to this Agreement. Capitalized terms used but not defined in this Agreement shall have the respective meanings assigned thereto in the Stock Purchase Agreement.

Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated:

“Articles” means the Articles Supplementary for the Series C Preferred Stock.

“Test Date” means the 121^st trading day following the Election Date (as defined in the Articles).

Contingent Value Rights. In the event the Company converts (regardless of whether any such shares are actually converted pursuant to Section 13 of the Articles Supplementary) the shares of Series C Preferred Stock into Common Stock pursuant to the terms of the Stock Purchase Agreement and the Articles, then:

(a) On the Test Date, the Company shall calculate the VWAP per Common Share for the period covering the 90^th through the 120^th trading days after the Election Date (as defined in the Articles) (the “CVR Period VWAP”).

(b) Within five (5) Business Days following the Test Date, the Company shall pay to the Holder, in immediately available funds to an account designated in writing by such Holder, the amount, if any, with respect to each share of the Common Stock into which shares of Series C Preferred Stock were converted (regardless of whether any such shares are actually converted pursuant to Section 13 of the Articles Supplementary) (“Common Shares”) held by such Holder (and/or its assignees) on the Test Date equal to: (i) the number of Common Shares held by such Investor at the close of business on the Test Date multiplied by (ii) the amount (the “Settlement Amount”), which shall not be less than zero nor greater than $2.00, equal to the difference between (A) the Conversion Price (as defined in the Articles) (as may be adjusted from time to time pursuant to Section 7 of the Articles) and (B) the CVR Period VWAP.

Termination. This Agreement shall terminate and no Holder shall have any rights hereunder (to payment or otherwise) upon (i) the payment by the Company of the Settlement Amount, if any, due to the Holder pursuant to Section 2 or (2) the redemption of the Series C Preferred Stock in accordance with Section 5 of the Articles Supplementary.

Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Holder. Any Holder may assign all or a portion of its rights under this Agreement to any Person, provided (i) such transferee is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), (ii) such transferor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company after such assignment, (iii) the Company is furnished with written notice of the name and address of such transferee or assignee, (iv) such transferee agrees in writing to be bound by the provisions hereof that apply to the “Holder”, (v) such transfer shall have been made pursuant to the safe harbor for the resale of restricted securities provided by Rule 144A under the Securities Act provided, however, that for purposes of this clause (v): (1) this Agreement or any rights or obligations hereunder shall be deemed not to be the same class of securities as the Common Stock for purposes of Rule 144A(d)(3)(i) and (2) if the Company as the “issue” does not meet the requirements of Rule 144A(d)(4), then this Agreement or any rights or obligations hereunder may be assigned pursuant to any other exemption from registration under the Securities Act and (vi) such transfer shall have been made pursuant to and in accordance with the applicable requirements of this Agreement and with all laws applicable thereto.

No Rights as Shareholders. This Agreement shall not entitle the Holder (or its successors or permitted assigns) to any voting rights or other rights as a stockholder of the Company.

Incorporation of Certain Sections By Reference. The following sections from the Stock Purchase Agreement shall be deemed incorporated by reference into this Agreement, with appropriate changes as the context requires: Sections 9.6, 9.7, 9.8, 9.10, 9.11, 9.13, 9.14, 9.16 and 9.19.

[Signature pages follow.]

IN WITNESS WHEREOF, each party hereto has duly executed this Agreement or has caused this Agreement to be duly executed by an authorized officer as of the day and year first above written.

	AMERICAN REALTY CAPITAL PROPERTIES, INC.

	By:
		Name:
		Title:

	[NAME OF HOLDER]

	By:
		Name:
		Title: