American Realty Capital Properties

If the Common Shares are not listed on a national securities exchange within ten years after the Termination of the Initial Public Offering, the Board must either pursue an amendment to extend or eliminate the deadline (subject to stockholder vote) or adopt a Plan of Liquidation. Shares are not listed and have no guaranteed liquidity event, exposing investors to a 10+ year potential illiquidity period.

“In the event that Listing does not occur on or before the tenth anniversary of the Termination of the Initial Public Offering, then the Board must either (a) adopt a resolution that sets forth a proposed amendment to the Charter extending or eliminating this deadline (the 'Extension Amendment'), declaring that the Extension Amendment is advisable and directing that the proposed Extension Amendment be submitted for consideration at either an annual or special meeting of the Stockholders, or (b) adopt a resolution that declares that a proposed liquidation of the Company is advisable”

The Company may purchase or lease assets from, and enter into joint ventures with, the Sponsor, Advisor, Directors and their Affiliates, subject to majority independent director approval. These transactions present ongoing related-party conflict risk given the advisory structure.

“The Company may purchase or lease an Asset or Assets from the Sponsor, the Advisor, a Director, an officer or any Affiliate thereof or certain of our Stockholders upon a finding by a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction (i) that such transaction is fair and reasonable to the Company and (ii) that such transaction is at a price to the Company no greater than the cost of the Asset to such Sponsor, Advisor, Director, officer, Stockholder or Affiliate”

The charter mandates that all transactions between the Company and the Sponsor, Advisor, Directors, officers or their Affiliates (including purchases/sales/leases of assets, joint ventures, and loans) require approval by a majority of Directors including a majority of Independent Directors not otherwise interested in the transaction, and must be on terms not less favorable than those available from unaffiliated third parties.

“The Company shall not engage in any other transaction with the Sponsor, a Director, the Advisor or any Affiliates thereof unless a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in such transaction approve such transaction as fair and reasonable to the Company and on terms and conditions not less favorable to the Company than those available from unaffiliated third parties.”

The Dealer Manager (Realty Capital Securities, LLC) is an Affiliate of the Company, creating a structural conflict of interest in which the entity distributing shares to investors is controlled by the same sponsor group that manages and advises the Company.

“'DEALER MANAGER' means Realty Capital Securities, LLC, an Affiliate of the Company, or such other Person selected by the Board to act as the dealer manager for an Offering.”

The Advisor manages multiple affiliated investment programs simultaneously and must allocate investment opportunities among them. The charter acknowledges that where an opportunity is suitable for both the Company and another affiliated program, the entity that has gone longest without an investment opportunity gets first priority — a conflict resolution procedure that may disadvantage the Company.

“In the event that an investment opportunity becomes available that is suitable for both the Company and a public or private entity with which the Advisor or its Affiliates are affiliated for which both entities have sufficient uninvested funds, and the requirements of Section 10.4(i) above have been satisfied, then the entity that has had the longest period of time elapse since it was offered an investment opportunity will first be offered the investment opportunity.”

The charter permits the Advisor or its Affiliates to receive an interest in gain from the sale of assets of up to 15% of net proceeds after investors receive 100% of Invested Capital plus 6% per annum cumulative. This promote is paid to an affiliated party and is subject only to a presumptive-reasonableness standard rather than an arm's-length negotiation.

“Such an interest in gain from the Sale of Assets shall be considered presumptively reasonable if it does not exceed fifteen percent (15%) of the balance of such net proceeds remaining after payment to Stockholders, in the aggregate, of an amount equal to one hundred percent (100%) of the Invested Capital, plus an amount equal to six percent (6%) of the Invested Capital per annum cumulative.”

The Dealer Manager, Realty Capital Securities, LLC, is expressly an Affiliate of the Company. It receives both Selling Commissions of up to 7% on Retail Shares and an ongoing Platform Fee of 0.70% per annum of NAV on Institutional Shares, creating a structural conflict of interest between maximizing distribution compensation and investor returns.

“'DEALER MANAGER' means Realty Capital Securities, LLC, an Affiliate of the Company, or such other Person selected by the Board to act as the dealer manager for an Offering.”

The charter expressly permits the Company to purchase or lease assets from, and sell or lease assets to, the Sponsor, Advisor, Directors, officers or their Affiliates, subject only to majority Independent Director approval and fair-value findings. Similarly, joint ventures with affiliated parties are permitted.

“The Company may purchase or lease an Asset or Assets from the Sponsor, the Advisor, a Director, an officer or any Affiliate thereof upon a finding by a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction (i) that such transaction is fair and reasonable to the Company and (ii) that such transaction is at a price to the Company no greater than the cost of the Asset to such Sponsor, Advisor, Director, officer, Affiliate”

The charter expressly permits the Company to purchase or lease assets from, and sell assets to, the Sponsor, Advisor, Directors, officers, and their Affiliates, subject only to a majority of disinterested Independent Director approval. The Company may also enter joint ventures with these affiliated parties on substantially the same terms as other joint venturers.

“The Company may purchase or lease an Asset or Assets from the Sponsor, the Advisor, a Director, an officer or any Affiliate thereof upon a finding by a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction (i) that such transaction is fair and reasonable to the Company and (ii) that such transaction is at a price to the Company no greater than the cost of the Asset to such Sponsor, Advisor, Director, officer, Affiliate”

The Dealer Manager, Realty Capital Securities, LLC, is explicitly identified as an Affiliate of the Company, creating a related-party conflict in the distribution of Shares and receipt of Selling Commissions and Platform Fees.

“'DEALER MANAGER' means Realty Capital Securities, LLC, an Affiliate of the Company, or such other Person selected by the Board to act as the dealer manager for an Offering.”

The Dealer Manager, Realty Capital Securities, LLC, is expressly identified as an Affiliate of the Company, creating a conflict of interest in the distribution and sale of shares, as the Company pays Selling Commissions and Platform Fees to an entity affiliated with the Sponsor.

“'DEALER MANAGER' means Realty Capital Securities, LLC, an Affiliate of the Company, or such other Person selected by the Board to act as the dealer manager for an Offering.”

The Dealer Manager, Realty Capital Securities, LLC, is an Affiliate of the Company, creating a related-party conflict in the distribution and sale of shares where the affiliated dealer manager earns selling commissions.

“'DEALER MANAGER' means Realty Capital Securities, LLC, an Affiliate of the Company, or such other Person selected by the Board to act as the dealer manager for an Offering.”

The Company is explicitly permitted to invest in joint ventures with the Sponsor, Advisor, Directors and their Affiliates, conditioned only on majority independent director approval. This creates a recurring related-party conflict opportunity in deal sourcing and co-investment.

“The Company may invest in Joint Ventures with the Sponsor, the Advisor, one (1) or more Directors or any of their Affiliates only if a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction, approve such investment as being fair and reasonable to the Company and on substantially the same terms and conditions as those received by the other joint venturers.”

The charter expressly permits the Company to invest in joint ventures with the Sponsor, Advisor, Directors or their Affiliates, and to purchase/lease assets from or sell/lease assets to those parties, subject only to majority Independent Director approval. These provisions create ongoing related-party conflict risks.

“The Company may invest in Joint Ventures with the Sponsor, the Advisor, one (1) or more Directors or any of their Affiliates only if a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction, approve such investment as being fair and reasonable to the Company and on substantially the same terms and conditions as those received by the other joint venturers.”

The charter explicitly permits joint venture investments with the Sponsor, Advisor, Directors and their Affiliates, subject to majority Independent Director approval. This creates ongoing related-party conflict risk in joint venture formation and governance.

“The Company may invest in Joint Ventures with the Sponsor, the Advisor, one (1) or more Directors or any of their Affiliates only if a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction, approve such investment as being fair and reasonable to the Company and on substantially the same terms and conditions as those received by the other joint venturers.”

The charter expressly permits the Company to invest in joint ventures with the Sponsor, the Advisor, one or more Directors, or any of their Affiliates. Although majority Independent Director approval is required, the structure creates a standing related-party conflict because affiliated parties may co-invest alongside the Company on terms that may not be equivalent to arm's-length transactions.

“The Company may invest in Joint Ventures with the Sponsor, the Advisor, one (1) or more Directors or any of their Affiliates only if a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction, approve such investment as being fair and reasonable to the Company and on substantially the same terms and conditions as those received by the other joint venturers.”

The Dealer Manager for the Company's Offerings is Realty Capital Securities, LLC, which is defined as an Affiliate of the Company. This creates a related-party conflict in that selling commissions and dealer-manager fees flow to an entity affiliated with the Sponsor/Advisor.

“'DEALER MANAGER' means Realty Capital Securities, LLC, an Affiliate of the Company, or such other Person selected by the Board to act as the dealer manager for an Offering.”

The Dealer Manager for the Company's Offerings is Realty Capital Securities, LLC, which is expressly identified as an Affiliate of the Company. Selling Commissions and dealer-manager fees flow to an affiliated entity rather than an independent third party.

“'DEALER MANAGER' means Realty Capital Securities, LLC, an Affiliate of the Company, or such other Person selected by the Board to act as the dealer manager for an Offering.”

The Dealer Manager for the Company's public offerings is Realty Capital Securities, LLC, which is explicitly identified as an Affiliate of the Company. This creates a structural conflict as the entity responsible for distributing shares and collecting selling commissions is related to the sponsor/advisor complex.

“'DEALER MANAGER' means Realty Capital Securities, LLC, an Affiliate of the Company, or such other Person selected by the Board to act as the dealer manager for an Offering.”

The Dealer Manager for the Company's Offerings is Realty Capital Securities, LLC, which is explicitly defined as an Affiliate of the Company, creating a structural conflict of interest in the distribution of shares.

“'DEALER MANAGER' means Realty Capital Securities, LLC, an Affiliate of the Company, or such other Person selected by the Board to act as the dealer manager for an Offering.”

The charter contemplates potential Roll-Up Transactions (acquisition, merger, conversion or consolidation of the Company into a new entity with issuance of new securities to stockholders). Stockholders who vote against a Roll-Up must be offered either cash at appraised value or the right to remain as stockholders on existing terms — but this right only applies to those who vote against; those who vote for may receive securities in a new Roll-Up Entity whose terms could differ materially.

“In connection with any proposed Roll-Up Transaction, an appraisal of all of the Company's assets shall be obtained from a competent Independent Appraiser ... the person sponsoring the Roll-Up Transaction shall offer to Stockholders who vote against the proposed Roll-Up Transaction the choice of: (a) accepting the securities of a Roll-Up Entity offered in the proposed Roll-Up Transaction; or (b) one of the following: (I) remaining as Stockholders of the Company and preserving their interests therein on the same terms and conditions as existed previously; or (II) receiving cash in an amount equal to the Stockholder's pro rata share of the appraised value of the net assets of the Company.”

The charter expressly permits the Company to purchase or lease assets from the Sponsor, Advisor, Directors, officers or their Affiliates, and permits those parties to purchase or lease assets from the Company, subject only to majority Independent Director approval and fair-value findings. This creates ongoing related-party conflict risk in asset transactions.

“The Company may purchase or lease an Asset or Assets from the Sponsor, the Advisor, a Director, an officer or any Affiliate thereof upon a finding by a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction (i) that such transaction is fair and reasonable to the Company and (ii) that such transaction is at a price to the Company no greater than the cost of the Asset to such Sponsor, Advisor, Director, officer, Affiliate or, if the price to the Company is in excess of such cost, substantial justification exists for the excess and the excess is reasonable.”

Article X explicitly contemplates that the Company may purchase or lease assets from, and sell or lease assets to, the Sponsor, the Advisor, Directors, officers, or their Affiliates. Purchase prices must not exceed appraised value, and transactions require majority Independent Director approval, but the bidirectional affiliated-transaction authority creates ongoing conflict-of-interest risk.

“The Company may purchase or lease an Asset or Assets from the Sponsor, the Advisor, a Director, an officer or any Affiliate thereof upon a finding by a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction (i) that such transaction is fair and reasonable to the Company and (ii) that such transaction is at a price to the Company no greater than the cost of the Asset to such Sponsor, Advisor, Director, officer, Affiliate or, if the price to the Company is in excess of such cost, substantial justification exists for the excess and the excess is reasonable. In no event shall the purchase price paid by the Company for any such Asset exceed the Asset's current appraised value.”