PREFERRED APARTMENT COMMUNITIES, INC.
Common Stock
($0.01 par value per share)

Capital on Demand™ Sales Agreement
May 4, 2016
Canaccord Genuity Inc
99 High Street, 12th Floor
Boston, Massachusetts 02110

Gentlemen:
Preferred Apartment Communities, Inc., a Maryland corporation (the “Company”)
confirms its agreement (this “Agreement”) with Canaccord Genuity Inc (the
“Agent”), as follows:
1.Issuance and Sale of Shares. Subject to the next paragraph, the Company agrees
that, from time to time during the term of this Agreement, on the terms and
subject to the conditions set forth herein, it may issue and sell through the
Agent, acting as agent and/or principal, shares (the “Placement Shares”) of the
Company’s common stock, $0.01 par value per share (the “Common Stock”), having
an aggregate offering price of up to $150,000,000 (the “Maximum Amount”);
provided, however, that in no event shall the Company issue or sell through the
Agent such number of Placement Shares that (a) exceeds the number of shares of
Common Stock registered on the effective Registration Statement (as defined
below) pursuant to which the offering is being made, or (b) exceeds the number
of authorized but unissued shares of the Company’s Common Stock. Notwithstanding
anything to the contrary contained herein, the parties hereto agree that
compliance with the limitation set forth in this Section 1 on the aggregate
offering price of the Placement Shares issued and sold under this Agreement
shall be the sole responsibility of the Company, and that the Agent shall have
no obligation in connection with such compliance, provided that the Agent
strictly follows the trading instructions provided pursuant to any Placement
Notice (as defined below), including, without limitation, not selling in excess
of the number of Placement Shares specified in any Placement Notice. The
issuance and sale of Placement Shares through the Agent shall be effected
pursuant to the Registration Statement (as defined below) filed by the Company
and declared effective by the Securities and Exchange Commission (the
“Commission”), although nothing in this Agreement shall be construed as
requiring the Company to use the Registration Statement (as defined below) to
issue Common Stock.
The Company has also entered into a separate Sales Agreement of even date
herewith (the “Alternative Sales Agreement”), pursuant to which it may, from
time to time during the term of such Alternative Sales Agreement, issue and sell
through or to JonesTrading Institutional Services LLC or FBR Capital Markets &
Co. (the “Alternative Agent”), as sales agent and/or principal. The aggregate
offering price of shares of Common Stock that may be sold pursuant to this
Agreement and the Alternative Sales Agreement shall not exceed the Maximum
Amount.

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The Company has filed or will file in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the “Securities Act”), with the Commission a
registration statement on Form S-3, including a base prospectus, relating to
certain securities (including the Placement Shares) to be issued from time to
time by the Company, and which incorporates by reference documents that the
Company has filed or will file in accordance with the provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (collectively, the “Exchange Act”). The Company has also
prepared a prospectus included as part of the registration statement, which
prospectus specifically relates to the Placement Shares to be issued from time
to time by the Company (the “ATM Prospectus”). The Company will furnish to the
Agent, for use by the Agent, copies of the ATM Prospectus relating to the
Placement Shares. Except where the context otherwise requires, such registration
statement, as amended when it became effective, including all documents filed as
part thereof or incorporated by reference therein, and including any information
contained in a Prospectus (as defined below) subsequently filed with the
Commission pursuant to Rule 424(b) under the Securities Act or deemed to be a
part of such registration statement pursuant to Rule 430B, 430C or 462(b) of the
Securities Act, as well as any comparable successor registration statement filed
by the Company for the sale of shares of its Common Stock, including the
Placement Shares, collectively are herein called the “Registration Statement.”
The ATM Prospectus, including all documents incorporated or deemed to be
incorporated by reference therein, included in the Registration Statement, in
the form in which the ATM Prospectus has most recently been filed by the Company
with the Commission pursuant to Rule 424(b) under the Securities Act, together
with the then issued Issuer Free Writing Prospectus(es) (as defined below), is
herein called the “Prospectus.” Any reference herein to the Registration
Statement, the Prospectus or any amendment or supplement thereto shall be deemed
to refer to and include the documents incorporated, or deemed incorporated, by
reference therein, and any reference herein to the terms “amend,” “amendment” or
“supplement” with respect to the Registration Statement or the Prospectus shall
be deemed to refer to and include the filing after the execution hereof of any
document with the Commission deemed to be incorporated by reference therein (the
“Incorporated Documents”). For purposes of this Agreement, all references to the
Registration Statement, the Prospectus or to any amendment or supplement thereto
shall be deemed to include any copy filed with the Commission pursuant to its
Electronic Data Gathering Analysis and Retrieval System or, if applicable, the
Interactive Data Electronic Applications system (collectively, “EDGAR”).
2.    Placements.
Each time the Company wishes to issue and sell the Placement Shares hereunder
(each, a “Placement”), it will notify the Agent by email notice (or other
methods mutually agreed to in writing by the parties) (a “Placement Notice”)
containing the parameters in accordance with which it desires the Placement
Shares to be sold, which shall at a minimum include the number of Placement
Shares to be issued, the time period during which sales are requested to be
made, any limitation on the number of Placement Shares that may be sold in any
one Trading Day (as defined in Section 3), and any minimum price below which
sales may not be made. A form of Placement Notice, which contains such minimum
required sales parameters, is attached hereto as

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Schedule 1. A Placement Notice must originate from any two of the three
individuals from the Company set forth on Schedule 2 (with a copy to each of the
other individuals from the Company listed on such schedule), and shall be
addressed to each of the individuals the Agent set forth on Schedule 2, as
amended from time to time. The Placement Notice shall be effective upon receipt
by the Agent unless and until (a) in accordance with the notice requirements set
forth in Section 4, the Agent declines to accept the terms contained therein for
any reason, in its sole discretion, (b) the entire amount of the Placement
Shares has been sold, (c) in accordance with the notice requirements set forth
in Section 4, the Company suspends or terminates the Placement Notice, (d) the
Company issues a subsequent Placement Notice with parameters superseding those
on the earlier dated Placement Notice, (e) the Agent declines or continues to
make sales under an existing Placement Notice for any reason, in its sole
discretion, or (f) the Agreement has been terminated under the provisions of
Section 12. The amount of any discount, commission or other compensation to be
paid by the Company to the Agent in connection with the sale of the Placement
Shares shall be calculated in accordance with the terms set forth on Schedule 3.
It is expressly acknowledged and agreed that neither the Company nor the Agent
will have any obligation whatsoever with respect to a Placement Notice or any
Placement Shares unless and until the Company delivers a Placement Notice to the
Agent and the Agent does not decline such Placement Notice pursuant to the terms
set forth above, and then only upon the terms specified therein and herein.
3.    Sale of Placement Shares by the Agent. Subject to the terms and conditions
set forth herein, upon the Company’s issuance of a Placement Notice, and unless
the sale of the Placement Shares described therein has been declined, suspended,
or otherwise terminated in accordance with the terms of this Agreement, the
Agent, for the period specified in the Placement Notice, will use its
commercially reasonable efforts consistent with its customary trading and sales
practices to sell such Placement Shares up to the amount specified, and
otherwise in accordance with the terms of such Placement Notice. The Agent,
acting under a Placement Notice, will provide written confirmation to the
Company (including by email correspondence to all the individuals from the
Company set forth on Schedule 2), no later than the opening of the Trading Day
(as defined below) immediately following the Trading Day on which sales of
Placement Shares have been made hereunder setting forth the number of Placement
Shares sold on such day, the compensation payable by the Company to the Agent
pursuant to Section 2 with respect to such sales, and the Net Proceeds (as
defined below) payable to the Company. The Agent may sell Placement Shares by
any method permitted by law deemed to be an “at the market offering” as defined
in Rule 415 of the Securities Act, including without limitation, sales made
directly on the New York Stock Exchange (the “NYSE”), on any other existing
trading market for the Common Stock or to or through a market maker. With the
prior consent of the Company, the Agent may also sell Placement Shares in
privately negotiated transactions. During the term of this Agreement and
notwithstanding anything to the contrary herein, the Agent agrees that in no
event will it or any Agent Affiliate (as defined in Section 10(a), below) engage
in any market making, bidding, stabilization or other trading activity with
regard to the Common Stock if such activity would be prohibited under Regulation
M or other anti-manipulation rules under the Securities Act. For the purposes
hereof, “Trading Day” means any day on which shares of the Common Stock are
purchased and sold on the principal market on which the Common Stock is listed
or quoted. The Company agrees that any offer to sell, any solicitation of an
offer to buy,

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or any sales of Placement Shares shall only be effected by or through the Agent
or the Alternative Agent on any single given day, but in no event by more than
one of them, and the Company shall in no event request that the Agent and the
Alternative Agent sell Placement Shares on the same day.
4.    Suspension of Sales. The Company or the Agent may, upon notice to the
other party in writing (including by email correspondence to each of the
individuals of the other party set forth on Schedule 2, if receipt of such
correspondence is actually acknowledged by any of the individuals to whom the
notice is sent, other than via auto-reply) or by telephone (confirmed
immediately by verifiable facsimile transmission or email correspondence to each
of the individuals of the other party set forth on Schedule 2), suspend any sale
of Placement Shares; provided, however, that such suspension shall not affect or
impair the other party’s obligations with respect to any Placement Shares sold
hereunder prior to the receipt of such notice. Each of the parties agrees that
no such notice under this Section 4 shall be effective against the other unless
it is made to one of the individuals named on Schedule 2 hereto, as such
schedule may be amended from time to time.
5.    Representations and Warranties of the Company. The Company represents and
warrants to the Agent that as of each Applicable Time (as defined below):
(a)    Registration Statement and Prospectus. The Company and, assuming no act
or omission on the part of the Agent that would make such statements untrue, the
transactions contemplated by this Agreement meet the requirements for and comply
with the applicable conditions set forth in Form S-3 (including General
Instruction I.A and I.B) under the Securities Act. The Registration Statement
has been or will be filed with the Commission and will be declared effective by
the Commission under the Securities Act prior to the issuance of any Placement
Notices by the Company and the Placement Shares will remain eligible for
registration by the Company on the Registration Statement. The ATM Prospectus
will name the Agent as the agent in the section entitled “Plan of Distribution.”
The Company has not received, and has no written notice of, any order of the
Commission preventing or suspending the use of the Registration Statement, or,
threatening or instituting proceedings for that purpose. The Registration
Statement and the offer and sale of Placement Shares as contemplated hereby meet
the requirements of Rule 415 under the Securities Act and comply in all material
respects with said Rule. Any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement have been so
described in all material respects or filed. The Company has not distributed
and, prior to the later to occur of each Settlement Date and completion of the
distribution of the Placement Shares, will not distribute any offering material
in connection with the offering or sale of the Placement Shares other than the
Registration Statement and the Prospectus and any Issuer Free Writing Prospectus
(as defined below) to which the Agent has consented.
(b)    No Misstatement or Omission. The Registration Statement, when it becomes
effective, and the Prospectus, and any amendment or supplement thereto, on the

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date of such Prospectus or amendment or supplement, will conform in all material
respects with the requirements of the Securities Act. At each Settlement Date,
the Registration Statement and the Prospectus, as of such date, will conform in
all material respects with the requirements of the Securities Act. The
Registration Statement, when it becomes effective, will not, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading. The
Prospectus and any amendment and supplement thereto, on the date thereof and at
each Applicable Time, did not or will not include an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The documents incorporated by reference in the Prospectus or the ATM
Prospectus did not, and any further documents filed and incorporated by
reference therein will not, when filed with the Commission, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated in such document or necessary to make the statements in such document, in
light of the circumstances under which they were made, not misleading. The
foregoing shall not apply to statements in, or omissions from, any such document
made in reliance upon, and in conformity with, information furnished to the
Company by the Agent specifically for use in the preparation thereof.
(c)    Ineligible Issuer Status. (A) At the time of filing of the Registration
Statement and any post-effective amendment thereto, (B) at the earliest time
thereafter that the Company or another offering participant made a bona fide
offer (within the meaning of Rule 164(h)(2) of the Securities Act) of the
Placement Shares and (C) at the date of this Agreement, the Company was not and
is not an “ineligible issuer,” as defined in Rule 405 of the Securities Act,
without taking account of any determination by the Commission pursuant to Rule
405 of the Securities Act that it is not necessary that the Company be
considered an ineligible issuer.
(d)    Incorporated Documents. The documents incorporated or deemed to be
incorporated by reference into the Registration Statement and the Prospectus,
when such incorporated or deemed to be incorporated documents became effective
or were filed with the Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act and the Exchange Act, as
applicable, and none of such documents contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and any further
documents so filed and incorporated or deemed to be incorporated by reference
into the Registration Statement and the Prospectus, when such incorporated
documents become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the Securities Act
and the Exchange Act, as applicable, and will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The foregoing shall
not apply to statements in, or omissions from, any such document made in

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reliance upon, and in conformity with, information furnished to the Company by
the Agent specifically for use in the preparation thereof.
(e)    Issuer Free Writing Prospectuses. Each Issuer Free Writing Prospectus, as
of its issue date and at all subsequent times through the completion of the
public offer and sale of the Placement Shares or until any earlier date that the
Company notified or notifies the Agent as described in the next sentence, did
not, does not and will not include any information that conflicted, conflicts or
will conflict with the information then contained in the Registration Statement.
If at any time following the issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development as a result of which such Issuer Free
Writing Prospectus conflicted or would conflict with the information then
contained in the Registration Statement or as a result of which such Issuer Free
Writing Prospectus, if republished immediately following such event or
development, would include an untrue statement of a material fact or omitted or
would omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, (i) the Company has promptly notified or will promptly notify the
Agent and (ii) the Company has promptly amended or will promptly amend or
supplement such Issuer Free Writing Prospectus to eliminate or correct such
conflict, untrue statement or omission. This section does not apply to
statements in or omissions from any Issuer Free Writing Prospectus in reliance
upon and in conformity with written information furnished to the Company by the
Agent specifically for use therein, it being understood and agreed that such
information furnished by the Agent consists of only the information described as
such in Section 10(b) hereof. “Applicable Time” means the date of this
Agreement, each Representation Date (as defined in Section 7(l) hereof), the
date on which a Placement Notice is given and any date on which Placement Shares
are sold hereunder. The Company has not, directly or indirectly, distributed and
will not distribute any prospectus or other offering material in connection with
the offering and sale of the Placement Shares other than the Prospectus and
other materials, if any, permitted under the Securities Act to be distributed.
(f)    Organization; Execution, Delivery and Performance.
(1)    The Company and each of its “significant subsidiaries” as defined by
Rule1-02(w) of Regulation S-X under the Securities Act (each a “Subsidiary” and
collectively, the “Subsidiaries”) is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, with full power and authority (corporate and other)
to own, lease, use and operate its properties and to carry on its business as
and where now owned, leased, used, operated and conducted, except where the
failure to be or to do so would not have a Material Adverse Effect. Each of the
Company and its Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which its ownership or
use of property or the nature of the business conducted by it makes such
qualification necessary except where the failure to be so qualified or in good
standing would not have a

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Material Adverse Effect. For the purposes hereof, “Material Adverse Effect”
shall mean any event, circumstance, occurrence, fact, condition, change or
effect, individually or in the aggregate, that is materially adverse to (i) the
financial condition, business affairs, properties, results of operations or
business prospects of the Company and its Subsidiaries considered as one
enterprise, or (ii) the ability of the Company to perform its obligations under
this Agreement or the validity or enforceability of this Agreement against the
Company. As used in this Agreement, “business prospects” excludes any
development resulting from any event, circumstance, development, change or
effect (A) in general economic or business conditions, (B) in financial or
securities markets generally, or (C) generally affecting the business or
industry in which the Company operates.
(2)    The Company has no Subsidiaries other than those listed on Schedule 5(e)
to this Agreement. Except as set forth in the Registration Statement and the
Prospectus, (i) the Company owns, directly or indirectly, all of the capital
stock or comparable equity interests of each Subsidiary free and clear of any
and all liens, security interests, charges, pledges or similar encumbrances
(“Liens”), and (ii) comparable equity interest of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive rights of first
refusal and other similar rights. The Company has the unrestricted right to
vote, and (subject to limitations imposed by applicable law) to receive
dividends and distributions on, all capital stock or other equity securities of
its Subsidiaries.
(3)    The Company has the requisite corporate power and authority to enter into
and perform this Agreement and to consummate the transactions contemplated
hereby and the Company has the requisite power and authority to issue the
Placement Shares in accordance with the terms hereof.
(4)    The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly authorized by the Company’s Board of Directors and no further consent or
authorization of the Company, its Board of Directors or its stockholders is
required.
(5)    This Agreement has been duly executed and delivered by the Company by its
authorized representatives, and such authorized representatives are true and
official representatives with authority to sign each such document and the other
documents or certificates executed in connection herewith and bind the Company
accordingly.
(6)    The Agreement constitutes, and upon execution and delivery thereof by the
Company will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by general principals of equity, or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and

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other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.
(g)    Conflicts.
(1)    The execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby will
not:
(i)    conflict with or result in a violation of any provision of the charter of
the Company or any of its Subsidiaries or by-laws of the Company or any of its
Subsidiaries as in effect on the date hereof;
(ii)    (violate or conflict with, or result in a breach of any provision of, or
constitute a default and/or an event of default (or an event which with notice
or lapse of time or both could become a default and/or an event of default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture, patent, patent license or instrument
to which the Company or any of its Subsidiaries is a party, except for possible
violations, conflicts, breaches, defaults or events of default as would not,
individually or in the aggregate, have a Material Adverse Effect on the Company;
or
(iii)    result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and
regulations of any self-regulatory organizations to which the Company, any of
its Subsidiaries or the Company's securities are subject) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected, except for such
violations as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
(2)    Neither the Company nor any of its Subsidiaries is in violation of its
charter, by-laws or other organizational documents. Neither the Company nor any
of its Subsidiaries is in default (and no event has occurred which with notice
or lapse of time or both could put the Company or any of its Subsidiaries in
default), under, and neither the Company nor any of its Subsidiaries has taken
any action or failed to take any action that would give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party or by which any property or assets of the Company or of any of its
Subsidiaries is bound or affected, except for possible defaults, events,
terminations, amendments, accelerations or cancellations which would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses
of the Company and of all of its Subsidiaries are not being conducted in
violation of any law, rule ordinance or regulation of any governmental entity,
except for possible violations which would

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not, individually or in the aggregate, have a Material Adverse Effect. Except as
required under the Securities Act, the Exchange Act, or any applicable state
securities laws, neither the Company nor any of its Subsidiaries is required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency, regulatory agency,
self-regulatory organization or stock market or any third party in order for it
to execute, deliver or perform any of its obligations under this Agreement in
accordance with the terms hereof or to issue and sell the Placement Shares in
accordance with the terms hereof. All consents, authorizations, orders, filings
and registrations which the Company or any of its Subsidiaries is required to
obtain prior to each Settlement Date as pursuant to the preceding sentence will
be obtained or effected on or prior to such time.
(h)    Capitalization.
(1)    The Placement Shares and all outstanding shares of capital stock of the
Company have been duly authorized and reserved for issuance and sale pursuant to
this Agreement; the capitalization of the Company is as set forth under the
caption “Description of Capital Stock” in the Prospectus; all outstanding shares
of capital stock of the Company are, and, when the Placement Shares have been
delivered and paid for in accordance with this Agreement on each Settlement
Date, such Placement Shares will have been, validly issued, fully paid and
nonassessable and issued in compliance with federal and state securities laws,
will conform to the information in the Prospectus and to the description of such
Placement Shares contained therein.
(2)    Except as disclosed in the Prospectus:
(i)    there are no outstanding options, warrants, scrip, rights to subscribe
for, puts, calls, rights of first refusal, agreements, understandings, claims or
other commitments or rights of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, any shares of capital
stock of the Company, or arrangements by which the Company is or may become
bound to issue additional shares of capital stock of the Company;
(ii)    there are no agreements or arrangements under which the Company is
obligated to register the sale of any of its securities under the Securities
Act;
(iii)    there are no anti-dilution or price adjustment provisions contained in
any security issued by the Company (or in any agreement providing rights to
security holders) that will be triggered by the issuance of the Placement
Shares; and

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(iv)    no shares of capital stock and/or other securities of the Company are
subject to preemptive rights, rights of first refusal and/or any other similar
rights of the stockholders of the Company and/or any other person or entity (a
“Person”) or any Lien imposed through the actions or failure to act of the
Company.
(3)    The Placement Shares have been registered pursuant to Section 12(b) of
the Exchange Act and the Company has not received any notification that the
Commission is contemplating terminating such registration; and the Company has
not received any notification that the NYSE is contemplating terminating the
listing of the Securities.
(i)    SEC Information. The SEC Documents have been made available to the Agent
via EDGAR. As used herein, “SEC Documents” means all of the Company’s reports,
schedules, financial statements and other documents required to be filed by it
with the Commission pursuant to the reporting requirements of the Exchange Act
since December 31, 2015, including, without limitation, the Company’s annual
report on Form 10-K for the year ended December 31, 2015, and the Company’s
current reports on Form 8-K filed since December 31, 2015, and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein which is “filed” information (but excluding
all information contained therein that is deemed to be “furnished” information).
(j)    Company Financial Statements.
(1)    As of their respective dates, the financial statements included or
incorporated by reference in the Registration Statement and the Prospectus
(“Company Financial Statements”) complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the Commission with respect thereto as in effect at the time of the filing.
The Company Financial Statements have been prepared in accordance with United
States generally accepted accounting principles (“GAAP”), consistently applied,
during the periods involved except:
(i)    as may be otherwise indicated in such financial statements or the notes
thereto; or
(ii)    in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements.
(2)    The Company Financial Statements fairly present in all material respects
the consolidated financial position of the Company and its consolidated
Subsidiaries, if any, as of the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments).

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(3)    Except as expressly set forth in the Company Financial Statements or in
the Registration Statement and the Prospectus, the Company has no material
liabilities, contingent or otherwise, other than:
(i)    liabilities incurred in the ordinary course of business subsequent to
December 31, 2015; and
(ii)    obligations under contracts and commitments incurred in the ordinary
course of business and not required under GAAP to be reflected in such financial
statements.
(4)    All information relating to or concerning the Company and its officers,
directors, employees, customers or clients (including, without limitation, all
information regarding the Company’s internal financial accounting controls and
procedures) set forth in the Registration Statement and the Prospectus, when
taken together as a whole, does not contain an untrue statement of material fact
or omit to state any material fact necessary in order to make the statements
made herein or therein, in light of the circumstances under which they were
made, not misleading.
(5)    Other than the Company Financial Statements, are required by the
Securities Act to be set forth or to be incorporated by reference in the
Registration Statement or the Prospectus under the Securities Act.
(k)    Internal Controls and Compliance with the Sarbanes-Oxley Act. The Company
is in compliance with, and there has been no failure on the part of the Company
or, to the Company’s knowledge, any of the Company’s directors or officers, in
their capacities as such, to comply, in all material respects, with the
Sarbanes-Oxley Act of 2002 (“SOX”). The Company maintains a system of internal
controls, including, but not limited to, disclosure controls and procedures,
internal controls over accounting matters and financial reporting, an internal
audit function and legal and regulatory compliance controls (collectively,
“Internal Controls”) that comply with the applicable Securities Laws (as defined
below) and are sufficient to provide reasonable assurances that (A) transactions
are executed in accordance with management’s general or specific authorization;
(B) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(C) receipts and expenditures are being made only in accordance with
management’s general or specific authorization; (D) access to assets is
permitted only in accordance with management’s general or specific
authorization; and (E) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Internal Controls are overseen by the Audit
Committee (the “Audit Committee”) of the Board in accordance with the rules of
NYSE. The Company has not publicly disclosed or reported to the Audit Committee
or the Board a significant deficiency, material weakness, change in Internal
Controls or fraud involving management or other employees who have a significant
role in Internal Controls, any violation of, or failure to comply with, the
applicable Securities Laws (as

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defined below), or any matter which, if determined adversely, would have a
Material Adverse Effect. Except as disclosed in the Registration Statement or
the Prospectus, since the date of the most recent evaluation of such system of
internal accounting controls, there has been no material change in internal
control over financial reporting, including any corrective actions with regard
to significant deficiencies or material weaknesses. For the purposes hereof,
“Securities Laws” means, collectively, SOX, the Securities Act, the Exchange
Act, the auditing principles, rules, standards and practices applicable to
auditors of “issuers” (as defined in SOX) promulgated or approved by the Public
Company Accounting Oversight Board and, as applicable, the rules of NYSE.
(l)    Disclosure Controls. The Company and its Subsidiaries maintain an
effective system of “disclosure controls and procedures” (as defined in Rule
13a-15(e) of the Exchange Act) that complies with the requirements of the
Exchange Act and that has been designed to provide reasonable assurances that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the Commission’s rules and forms, including
controls and procedures designed to ensure that such information is accumulated
and communicated to the Company’s management as appropriate to allow timely
decisions regarding required disclosure.
(m)    Intellectual Property. Except as set forth in the Registration Statement
and the Prospectus, the Company and its Subsidiaries own or possess, or can
acquire on reasonable terms, adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other intellectual
property (collectively, “Intellectual Property Rights”) reasonably necessary to
conduct the business now operated by them. None of the Company nor any of its
Subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property Right or of any facts or circumstances that would render any
Intellectual Property Right invalid or inadequate to protect the interest of the
Company or any of its Subsidiaries therein, and which infringement or conflict
(if the subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would reasonably be expected to result
in a Material Adverse Effect.
(n)    Permits; Compliance. Each of the Company and its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the “Company Permits”), except as
described in the Registration Statement and the Prospectus or where such failure
to possess would not have a Material Adverse Effect, and there is no action
pending or, to the knowledge of the Company, threatened regarding suspension or
cancellation of any of the Company Permits. Neither the Company nor any of its
Subsidiaries is in conflict with, or in default or violation of, any of the
Company Permits, except for any such conflicts, defaults or violations which,

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individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect or except as described in the Registration Statement and
the Prospectus. The Company has received no notification with respect to
possible conflicts, defaults or violations of applicable laws, except for
notices relating to possible conflicts, defaults or violations, which conflicts,
defaults or violations would not have a Material Adverse Effect or except as
described in the Registration Statement and the Prospectus.
(o)    Absence of Litigation. Except as set forth in the Registration Statement
and the Prospectus, there is no action, suit, claim, proceeding, inquiry or
investigation before or by any court, public board, government agency, self-
regulatory organization or body pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries, or the
Company's or any of its Subsidiaries' businesses, properties or assets or the
Company's or any of its Subsidiaries' officers or directors in their capacity as
such, that would reasonably be expected to result in a Material Adverse Effect.
(p)    No Material Changes. Except as set forth in the Registration Statement
and the Prospectus, since December 31, 2015, there has not been: (i) any
material adverse change in the financial condition, operations or business of
the Company from that shown on the Company Financial Statements, or any material
transaction or commitment effected or entered into by the Company outside of the
ordinary course of business; (ii) to the Company’s knowledge, any effect, change
or circumstance which has had, or could reasonably be expected to have, a
Material Adverse Effect; or (iii) any incurrence of any material liability
outside of the ordinary course of business.
(q)    Labor Matters.
(1)    Neither the Company nor any of its Subsidiaries is a party to or bound by
any collective bargaining agreements. Neither the Company nor any of its
Subsidiaries has violated in any material respect any laws, regulations, orders
or contract terms affecting the collective bargaining rights of employees, labor
organizations or any laws, regulations or orders affecting employment
discrimination, equal opportunity employment, or employees’ health, safety,
welfare, wages and hours.
(2)    Each of the Company and its Subsidiaries is, and during the three years
prior to the date hereof, has been, in compliance in all material respects with
all applicable laws respecting employment (including laws relating to
classification of employees and independent contractors) and employment
practices, terms and conditions of employment, wages and hours, and immigration
and naturalization.
(r)    Hazardous Materials. Except as described in the Registration Statement,
and the Prospectus, there has not been any (i) unlawful presence of any
hazardous substances, hazardous materials, toxic substances or waste materials
(collectively, “Hazardous Materials”) on any of the properties owned by it or
its Subsidiaries or

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subject to mortgage loans owned by the Company or any of its Subsidiaries, or
(ii) any unlawful spills, releases, discharges or disposal of Hazardous
Materials that have occurred or are presently occurring off such properties as a
result of any construction on or operation and use of such properties, which
presence or occurrence in the case of clauses (i) and (ii) would reasonably be
expected to result in, individually or in the aggregate, a Material Adverse
Effect. In connection with the properties owned by the Company and its
Subsidiaries or subject to mortgage loans owned by the Company or any of its
Subsidiaries, except as described in the Registration Statement and the
Prospectus, there has been no material failure to comply with all applicable
local, state and federal environmental laws, regulations, ordinances and
administrative and judicial orders relating to the generation, recycling, reuse,
sale, storage, handling, transport and disposal of any Hazardous Materials,
except as would not, individually or in the aggregate, reasonably result in a
Material Adverse Effect.
(s)    Environmental Laws. Except as would not, individually or in the
aggregate, result in a Material Adverse Effect, (i) neither the Company nor any
of its Subsidiaries is in violation of any federal, state, local or foreign law
or regulation relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including without
limitation, laws and regulations relating to Hazardous Materials or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
“Environmental Laws”), which violation includes, without limitation,
noncompliance with any material permits or other material governmental
authorizations required for the operation of the business of the Company under
applicable Environmental Laws, or noncompliance with any material terms and
conditions thereof, nor has the Company or any of its Subsidiaries received any
written communication, whether from a governmental authority, citizens group,
employee or otherwise, that alleges that the Company or any of its Subsidiaries
is in violation of any Environmental Law that remains outstanding or unresolved;
(ii) there is no pending claim, action or cause of action filed with a court or
governmental authority, no pending investigation with respect to which the
Company or any of its Subsidiaries has received written notice, and no written
notice by any person or entity alleging potential liability for investigatory
costs, cleanup costs, governmental responses costs, natural resources damages,
property damages, personal injuries, attorneys’ fees or penalties arising out
of, based on or resulting from the presence, or release into the environment, of
any Hazardous Materials at any location owned, leased or operated by the Company
or any of its Subsidiaries, now or in the past (collectively, “Environmental
Claims”), pending or, to the knowledge of the Company, threatened against the
Company, any of its Subsidiaries; and (iii) to the knowledge of the Company,
there are no past or present actions, activities, circumstances, conditions,
events or incidents, including, without limitation, the release, emission,
discharge, presence or disposal of any Hazardous Materials, that reasonably
would result in a violation of any Environmental Law.

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(t)    Tax Returns. Each of the Company and its Subsidiaries has filed all
federal, state and foreign income tax returns required to be filed by or on
behalf of the Company or any of its Subsidiaries on or before the due dates
therefor (taking into account all extensions of time to file) and has paid or
provided for the payment of all such taxes indicated by such tax returns and all
assessments received by the Company any of its Subsidiaries to the extent that
such taxes or assessments have become due. There are no taxes that have been
assessed on the Company or any Subsidiary or are due by the Company or any
Subsidiary that have not been paid, except for the nonpayment of which would
not, individually or in the aggregate, have a Material Adverse Effect. Neither
the Company nor any of its Subsidiaries have executed a waiver with respect to
the statute of limitations relating to the assessment or collection of any
foreign, federal, state or local tax. The Company has no knowledge of any
material tax deficiency which has been threatened or asserted in writing against
the Company or its Subsidiaries.
(u)    Certain Transactions. Except as set forth in the Registration Statement
and the Prospectus, there are no loans, leases, royalty agreements or other
transactions between (i) the Company or any of its Subsidiaries, on the one
hand, and (ii) any officer or director of the Company, any person owning five
(5%) percent or more of the capital stock of the Company, any member of the
immediate family of such officer, director or 5% or more stockholder, or any
corporation or other entity controlled by such officer, director or 5% or more
stockholder.
(v)    Property Ownership. Except as set forth in the Registration Statement and
the Prospectus or in the SEC Documents and except as would not reasonably be
expected to result in, individually or in the aggregate, a Material Adverse
Effect, (i) each of the Company and its Subsidiaries owns its property and
assets free and clear of all Liens, except such Liens which arise in the
ordinary course of business and do not impair its ownership or use of such
property or assets, and (ii) with respect to the property and assets it leases,
if any, each of the Company and its Subsidiaries is in compliance with such
leases and, to its knowledge, holds a valid leasehold interest free of any Liens
except as set forth under the terms of the lease.
(w)    Insurance. Each of the Company and its Subsidiaries is insured by
recognized, financially sound and reputable institutions with policies in such
amounts and with such deductibles and covering such risks as are customary in
the business in which it is engaged, including directors’ and officers’
liability insurance. Neither the Company nor any Subsidiary has any reason to
believe that it will not be able: (i) to renew its existing insurance coverage
as and when such policies expire; or (ii) to obtain comparable coverage from
similar institutions as may be necessary or appropriate to conduct its business
as now conducted.
(x)    Illegal Payments. Neither the Company, nor, to the Company’s knowledge,
any director, officer, agent, employee or other Person acting on behalf of the
Company has, in the course of its actions for, or on behalf of, the Company: (i)
used any corporate funds for any unlawful contribution, gift, entertainment or
other unlawful

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expenses relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended (“FCPA”); or (iv) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.
(y)    PATRIOT Act. To the best knowledge of the Company, neither the sale of
the Placement Shares by the Company nor its use of the proceeds thereof will
violate the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto. Without limiting the foregoing, the Company is not (A) a
person whose property or interests in property are blocked pursuant to Section 1
of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)) or (B) a person who engages in any dealings or
transactions, or be otherwise associated, with any such person. To the best
knowledge of the Company, each of the Company and its Subsidiaries is in
compliance, in all material respects with the USA PATRIOT Act of 2001 (signed
into law October 26, 2001).
(z)    No Finders. Except for the compensation set forth in this Agreement and
the Alternative Sales Agreement and as disclosed in the Registration Statement
and the Prospectus, the Company is not obligated to pay, and has not obligated
the Agent to pay, a finder’s, consulting or origination fee in connection with
the sale of the Placement Shares, and hereby agrees to indemnify the Agent from
any such claim made by any other person as more fully set forth in Section 10
hereof. The Company has not offered for sale or solicited offers to purchase the
Placement Shares except as set forth in the Registration Statement and the
Prospectus and for negotiations with the Agent. Except as set forth in the
Prospectus, no other person has any right to participate in any offer, sale or
distribution of the Placement Shares, to which the Agent's rights, described
herein, shall apply.
(aa)    REIT Qualifications. The Company made a timely election to be subject to
tax as a real estate investment trust (a “REIT”) pursuant to Sections 856
through 860 of the Internal Revenue Code of 1986, as amended (the “Code”),
beginning with its taxable year ended December 31, 2011. The Company has been
organized and operated in conformity with the requirements for qualification and
taxation as a REIT. The Company’s current and proposed method of operation as
described in the Registration Statement and the Prospectus will enable it to
continue to meet the requirements for qualification and taxation as a REIT under
the Code.
(bb)    Manager; Management Agreement.
(1)    The Company currently is managed by Preferred Apartment Advisors, LLC, a
Delaware limited liability company (the “Manager”), pursuant

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to the Fifth Amended and Restated Management Agreement dated as of January 1,
2015 (as the same may be subsequently amended or supplemented, the “Management
Agreement”), among the Company, Preferred Apartment Communities Operating
Partnership, L.P. and the Manager.
(2)    The Manager is a limited liability company duly formed and validly
existing under the laws of the State of Delaware.
(3)    The Management Agreement has been duly and validly authorized, executed
and delivered by or on behalf of the Manager and the Company and constitutes a
valid and binding agreement of the Manager and the Company enforceable in
accordance with its terms (except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws of the
United States, any state or any political subdivision thereof which affect
creditors’ rights generally or by equitable principles relating to the
availability of remedies or except to the extent that the enforceability of the
indemnity and contribution provisions contained in this Agreement may be limited
under applicable securities laws).
(4)    The execution and delivery of the Management Agreement did not, and the
performance thereunder by the Manager do not and will not conflict with, or
result in a breach of any of the terms and provisions of, or constitute a
default under: (i) the Manager’s or any of its subsidiaries’ charter or by-laws,
or other organizational documents, as applicable; (ii) any indenture, mortgage,
stockholders agreement, note, lease or other material agreement or instrument to
which the Manager or any of its subsidiaries is a party or by which the Manager
or any of its subsidiaries or any of their properties is bound except, for
purposes of this clause (ii) only, for such conflicts, breaches or defaults that
could not reasonably be expected to have or result in, individually or in the
aggregate, (A) a material adverse effect on the financial condition, business
affairs, properties, results of operations or business prospects of the Manager,
or (B) a Material Adverse Effect; or (iii) any statute, rule or regulation or
order of any court or other governmental agency or body having jurisdiction over
the Manager or any of its subsidiaries or any of their respective properties. No
consent, approval, authorization or order of any court or other governmental
agency or body has been obtained nor is required for the performance of the
Management Agreement by the Manager. The Manager is not in violation of its
limited liability company agreement or other organizational documents, as
applicable.
(5)    There is no action, suit, proceeding, inquiry or investigation before or
brought by any court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Company, threatened against or affecting
the Manager.
(6)    The Manager possesses such certificates, authorities or permits issued by
the appropriate state, federal or foreign regulatory agencies or bodies

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necessary to conduct the business now operated by it, other than those which the
failure to possess or own would not reasonably be expected to have or result in,
individually or in the aggregate, (A) a material adverse effect on the financial
condition, business affairs, properties, results of operations or business
prospects of the Manager, (B) a Material Adverse Effect, or (C) a material
adverse effect on the performance of the services under the Management Agreement
by the Manager, and to the knowledge of the Company, the Manager has not
received any notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit.
(cc)    Not an Investment Company. The Company is not, and after receipt of
payment for the Placement Shares will not be, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.
(dd)    Approval for Listing. To the extent required by the continued listing
rules of the Exchange, the Placement Shares shall have been approved for listing
on the Exchange, subject only to notice of issuance, or the Company shall have
filed an application for listing of the Placement Shares on the Exchange at, or
prior to, the issuance of any Placement Notice.
(ee)    Accurate Disclosure. The statements in the Prospectus under the heading
“Description of Capital Stock” are true and correct in all material respects and
the statements in the Company’s Annual Report on Form 10-K (incorporating by
reference the Company’s 2016 proxy statement) incorporated by reference into the
Registration Statement and the Prospectus under the caption “Certain
Relationships and Related Transactions and Director Independence” as updated by
the information contained in the Registration Statement and the Prospectus,
insofar as such statements summarize legal matters, agreements, documents or
proceedings discussed therein, are, in all material respects, accurate and fair
summaries of such legal matters, agreements, documents or proceedings and
present the information required to be shown. All of the Placement Shares
conform in all material respects to the description thereof contained in the
Prospectus. Neither the Company nor any of the Subsidiaries has sent or received
any notice indicating the termination of or intention to terminate any of the
material contracts or agreements referred to or described in the Registration
Statement or the Prospectus, or filed as an exhibit to the Registration
Statement, and no such termination has been threatened by the Company, any
Subsidiary or any other party to any such contract or agreement.
(ff)    Forward-Looking Statements. The information contained in the
Registration Statement and the Prospectus regarding the Company’s expectations,
plans and intentions, and any other information that constitutes
“forward-looking” information within the meaning of the Securities Act and the
Exchange Act were made by the Company on a reasonable basis and reflect the
Company’s good faith belief and/or estimate of the matters described therein.

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(gg)    Absence of Manipulation. Neither the Company, nor to the Company’s
knowledge, any of its affiliates, has taken or may take, directly or indirectly,
any action designed to cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation of
the price of the shares of any securities of the Company to facilitate the sale
or resale of the Placement Shares. The Company acknowledges that the Agent may
engage in passive market making transactions in the Placement Shares on the NYSE
in accordance with Regulation M under the Exchange Act.
(hh)    Statistical and Market-Related Data. Any third-party statistical and
market-related data included in the Registration Statement and the Prospectus
are based on or derived from sources that the Company believes to be reliable
and accurate.
(ii)    No Restriction on Subsidiaries. Except as disclosed in the Registration
Statement and the Prospectus, no Subsidiary of the Company is currently
prohibited, directly or indirectly, under any agreement or other instrument to
which it is a party or is subject, from paying any dividends to the Company,
from making any other distribution on such Subsidiary’s capital stock, from
repaying to the Company any loans or advances to such Subsidiary from the
Company or from transferring any of such Subsidiary’s properties or assets to
the Company or any other Subsidiary of the Company.
(jj)    Compliance with OFAC. None of the Company or any of its Subsidiaries or
any trustee, officer, agent, employee or affiliate of the Company or any of its
Subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Department of the Treasury
(“OFAC”); and the Company will not, directly or indirectly, use the proceeds of
the offering of the Placement Shares, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or other person
or entity, for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
(kk)    Prior Sales of Securities. Except as disclosed in the Registration
Statement and the Prospectus, the Company has not sold, issued or distributed
any securities during the six-month period preceding the date hereof other than
pursuant to employee benefit, incentive and other compensation plans.
(ll)    Independent Accountants. PricewaterhouseCoopers LLP (“PwC”), who have
certified the financial statements and supporting schedules included in the
Registration Statement and the Prospectus are independent public accountants as
required by the Securities Act, the rules and regulations promulgated by the
Commission and the Public Company Accounting Oversight Board.
(mm)    ERISA Matters. Each of the Company and its Subsidiaries is in compliance
in all material respects with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations thereunder (“ERISA”); to the Company’s knowledge, no “reportable
event” (as defined in Section 4043(c) of ERISA) for which the 30-day notice
requirement

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has not been waived has occurred with respect to any “pension plan” (as defined
in Section 3(2) of ERISA) for which the Company and each Subsidiary would have
any liability; each of the Company and its Subsidiaries and has not incurred and
do not reasonably expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any “pension plan” or (ii)
Sections 412 or 4971 of the Code; and each “pension plan” for which the Company
or any Subsidiary or “ERISA Affiliate” (as defined below) would have any
liability that is intended to be qualified under Section 401(a) of the Code has
received a determination or opinion letter from the Internal Revenue Service
regarding its qualified status and, to the Company’s knowledge, nothing has
occurred, whether by action or by failure to act, which would reasonably be
expected to cause the loss of such qualification. “ERISA Affiliates ” means,
with respect to the Company, any member of any group of organizations described
in Sections 414(b),(c),(m) or (o) of the Code of which the Company is a member.
(nn)    Investment Strategy. The Company’s investment strategy described in the
Registration Statement and the Prospectus accurately reflect in all material
respects the current intentions of the Company with respect to the operation of
the Company’s business, and no material deviation from such investment strategy
is currently contemplated.
(oo)    No Consents Required. No consent, approval, authorization, or order of,
or filing with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement in connection
with the issuance and sale of the Securities by the Company, except such as have
been obtained and made under the Securities Act and such as may be required by
NYSE, the Financial Industry Regulatory Authority (“FINRA”) or under state
securities laws or the laws of any foreign jurisdiction.
(pp)    Non-GAAP Information. All “non-GAAP financial measures” (as defined in
the Securities Act) included in the Registration Statement or the Prospectus
comply with the requirements of Regulation G and Item 10 of Regulation S-K under
the Securities Act.
(qq)    No Non-Compete Obligations. To the Company’s knowledge, no director or
officer is subject to any non-competition agreement or non-solicitation
agreement with any employer or prior employer which could materially affect each
director’s or officer’s ability to be and act in the capacity of a director or
officer of the Company.
(rr)    No FINRA Member Payments. Except as described in the Registration
Statement or the Prospectus, the Company has not made any direct or indirect
payments (in cash, securities or otherwise) to: (i) any person, as a finder’s
fee, consulting fee or otherwise, in consideration of such person raising
capital for the Company or introducing to the Company persons who raised or
provided capital to the Company; (ii) to any FINRA member; or (iii) to any
person or entity that has any direct or indirect affiliation or association with
any FINRA member, within the past 12 months, other than payments to the Agent in
connection with the offering of Placement Shares and other payments in

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connection with the sale of up to a maximum of 900,000 shares of Series A
Redeemable Preferred Stock and warrants to purchase a up to a maximum of
18,000,000 shares of Common Stock.
(ss)    No Loans to FINRA members. To the Company’s knowledge, apart from the
subordinated loan made by the Company to International Assets Advisory, LLC on
November 15, 2012, no affiliate of the Company has made a subordinated loan to
any member of FINRA.
(tt)    No Proceeds to FINRA members. No proceeds from the sale of the Placement
Shares (excluding the Agent’s compensation prescribed herein) will be paid by
the Company to any FINRA member, or any persons associated or affiliated with a
member of FINRA, except as specifically authorized herein.
(uu)    No Conflict of Interest. To the Company’s knowledge, no FINRA member
intending to participate in the purchase of Placement Shares hereby has a
conflict of interest with the Company. For this purpose, a “conflict of
interest” exists when a member of FINRA and/or its associated persons, parent or
affiliates in the aggregate beneficially own 10% or more of the Company’s
outstanding subordinated debt or common equity, or 10% or more of the Company’s
preferred equity. “Members participating” include managing agents, syndicate
group members and all dealers which are members of FINRA.
(vv)    No Agreements with Agents. Except as described in the Registration
Statement or the Prospectus, the Company has not entered into any agreement or
arrangement (including, without limitation, any consulting agreement or any
other type of agreement) during the 180-day period prior to the initial filing
date of the Registration Statement, which arrangement or agreement provides for
the receipt of any item of value and/or the transfer or issuance of any
warrants, options or other securities from the Company to a FINRA member, any
person associated with a member (as defined by FINRA rules), any potential
agents in the offering of Placement Shares and/or any related persons.
The Company acknowledges that the Agent and, for purposes of the opinions to be
delivered pursuant to this Agreement, counsel to the Company and counsel to the
Agent, will rely upon the accuracy and truthfulness of the foregoing
representations and hereby consents to such reliance.
6.    Sale and Delivery; Settlement.
(a)    Sale of Placement Shares. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, upon the Agent’s acceptance of the terms of a Placement Notice, and
unless the sale of the Placement Shares described therein has been declined,
suspended or otherwise terminated in accordance with the terms of this
Agreement, the Agent, for the period specified in the Placement Notice, will use
its commercially reasonable efforts consistent with its normal

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trading and sales practices to sell such Placement Shares up to the amount
specified, and otherwise in accordance with the terms of such Placement Notice.
The Company acknowledges and agrees that (i) there can be no assurance that the
Agent will be successful in selling Placement Shares, (ii) the Agent will not
incur any liability or obligation to the Company or any other person or entity
if it does not sell Placement Shares for any reason, other than a failure by the
Agent to use its commercially reasonable efforts consistent with its normal
trading and sales practices to sell such Placement Shares as required under this
Agreement, and (iii) the Agent shall not be under any obligation to purchase
Placement Shares on a principal basis pursuant to this Agreement, unless such
purchase by the Agent on a principal basis is permitted under applicable laws,
rules and regulations (and the Agent represents to the Company to such effect in
a Placement Notice) and is agreed to by the Agent in a Placement Notice.
(b)    Settlement of Placement Shares. Unless otherwise specified in the
applicable Placement Notice, settlement for sales of Placement Shares will occur
on the third (3rd) Trading Day (or such earlier day as is industry practice for
regular-way trading) (each, a “Settlement Date” and the first such settlement
date, the “First Delivery Date”) following the date on which such sales are
made. The amount of proceeds to be delivered to the Company on a Settlement Date
against receipt of the Placement Shares sold (the “Net Proceeds”) will be equal
to the aggregate sales price received by the Agent at which such Placement
Shares were sold, after deduction for (i) the Agent’s commission, discount or
other compensation for such sales payable by the Company pursuant to Section 2
hereof, (ii) any other amounts due and payable by the Company to the Agent
hereunder pursuant to Section 9 (Payment of Expenses) hereof and (iii) any
transaction fees imposed by any governmental or self-regulatory organization in
respect of such sales.
(c)    Delivery of Placement Shares. On or before each Settlement Date, the
Company will, or will cause its transfer agent to, electronically transfer the
Placement Shares being sold by crediting the Agent’s or its designee’s (provided
that the Agent shall have given the Company written notice of such designee
prior to the Settlement Date) account at The Depository Trust Company (the
“DTC”) through its Deposit and Withdrawal at Custodian System or by such other
means of delivery as may be mutually agreed upon by the parties hereto which in
all cases shall be freely tradable, transferable, registered shares in good
deliverable form. On each Settlement Date, the Agent acting under the applicable
Placement Notice will deliver the related Net Proceeds in same-day funds to an
account designated by the Company on, or prior to, the Settlement Date. The
Company agrees that if the Company, or its transfer agent (if applicable),
defaults in its obligation to deliver Placement Shares on a Settlement Date, the
Company will, in addition to and in no way limiting the rights and obligations
set forth in Section 10(a) (Indemnification and Contribution), (i) hold the
Agent harmless against any loss, claim, damage, or expense (including reasonable
legal fees and expenses), as incurred, arising out of or in connection with such
default by the Company, and (ii) pay to the Agent any commission, discount, or
other compensation to which it would otherwise have been entitled absent such
default. Notwithstanding the foregoing, the Company will not be

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required to furnish any document (other than the Prospectus) to the Agent to the
extent such document is available on EDGAR.
(d)    Denominations; Registration. Certificates for the Placement Shares, if
any, shall be in such denominations and registered in such names as the Agent
may request in writing at least one full Business Day before each Settlement
Date. The certificates for the Placement Shares, if any, will be made available
for examination and packaging by the Agent in the City of New York not later
than noon (New York time) on the Business Day prior to the Settlement Date. The
Company shall deliver the Placement Shares through the facilities of the DTC
unless the Agent shall otherwise instruct in writing. For purposes of this
Agreement, “Business Day” shall mean any day, other than a Saturday or Sunday,
that is not a day on which banking institutions in The City of New York are
authorized or required by law, regulation or executive order to close.
(e)    Limitations on Offering Size. Under no circumstances shall the Company
cause or request the offer or sale of any Placement Shares if, after giving
effect to the sale of such Placement Shares, the aggregate gross sales proceeds
sold pursuant to this Agreement would exceed the least of (i) together with all
sales of Placement Shares under this Agreement, the Maximum Amount, (ii) the
amount available for offer and sale under the currently effective Registration
Statement, and (iii) the amount authorized from time to time to be issued and
sold under this Agreement by the Company’s board of directors, a duly authorized
committee thereof or a duly authorized executive officer, and notified to the
Agent in writing. Under no circumstances shall the Company cause or request the
offer or sale of any Placement Shares at a price lower than the minimum price
authorized from time to time by the Company’s board of directors, duly
authorized committee thereof or a duly authorized executive officer, and
notified to the Agent in writing.
7.    Covenants of the Company. The Company covenants and agrees with the Agent
that:
(a)    Registration Statement Amendments. After the date of this Agreement and
during any period in which a Prospectus relating to any Placement Shares is
required to be delivered by the Agent under the Securities Act with respect to a
pending sale of the Placement Shares (including in circumstances where such
requirement may be satisfied pursuant to Rule 172 under the Securities Act), the
Company will notify the Agent promptly of the time when any subsequent amendment
to the Registration Statement, other than documents incorporated by reference,
has been filed with the Commission and/or has become effective or any subsequent
supplement to the Prospectus has been filed and any request by the Commission
for any amendment or supplement to the Registration Statement or Prospectus or
for additional information related to the Registration Statement, the Prospectus
or any Issuer Free Writing Prospectus.
(b)    Notice of Commission Stop Orders. The Company will notify the Agent,
promptly after it receives notice or obtains knowledge thereof, of the issuance
or threatened issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any other order preventing or
suspending the use of the

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Prospectus, of the suspension of the qualification of the Placement Shares for
offering or sale in any jurisdiction, or of the initiation or threatening of any
proceeding for any such purpose or any examination pursuant to Section 8(e) of
the Securities Act concerning the Registration Statement, or if the Company
becomes the subject of a proceeding under Section 8A of the Securities Act in
connection with the offering of the Placement Shares; and the Company will
promptly use its commercially reasonable efforts to prevent the issuance of any
stop or other order or to obtain its withdrawal if such a stop or other order
should be issued.
(c)    Delivery of Prospectus; Subsequent Changes. During any period in which a
Prospectus relating to the Placement Shares is required to be delivered by the
Agent under the Securities Act with respect to a pending sale of the Placement
Shares (including in circumstances where such requirement may be satisfied
pursuant to Rule 172 under the Securities Act), the Company will comply with all
requirements imposed upon it by the Securities Act, as from time to time in
force, and to file on or before their respective due dates all reports and any
definitive proxy or information statements required to be filed by the Company
with the Commission pursuant to Sections 13(a), 13(c), 14, 15(d) or any other
provision of or under the Exchange Act. If during such period any event occurs
as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances then
existing, not misleading, or if during such period it is necessary to amend or
supplement the Registration Statement or Prospectus to comply with the
Securities Act, the Company will promptly notify the Agent to suspend the
offering of Placement Shares during such period and the Company will promptly
amend or supplement the Registration Statement or Prospectus (at the expense of
the Company) so as to correct such statement or omission or effect such
compliance.
(d)    Listing of Placement Shares. During any period in which the Prospectus
relating to the Placement Shares is required to be delivered by the Agent under
the Securities Act with respect to a pending sale of the Placement Shares
(including in circumstances where such requirement may be satisfied pursuant to
Rule 172 under the Securities Act), the Company will use its commercially
reasonable efforts to cause the Placement Shares to be listed on the NYSE (or
the Company’s then principal trading market for its Common Stock).
(e)    Delivery of Registration Statement and Prospectus. The Company will
furnish to the Agent and its counsel (at the expense of the Company) copies of
the Registration Statement and the Prospectus (including all documents
incorporated by reference therein) and all amendments and supplements to the
Registration Statement or Prospectus that are filed with the Commission during
any period in which a Prospectus relating to the Placement Shares is required to
be delivered under the Securities Act. The copies of the Registration Statement
and the Prospectus and any supplements or amendments thereto furnished to the
Agent will be identical to the electronically

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transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
(f)    Earnings Statement. The Company will make generally available to its
security holders as soon as reasonably practicable, but in any event not later
than 15 months after the end of the Company’s current fiscal quarter, an
earnings statement covering a 12-month period that satisfies the provisions of
Section 11(a) and Rule 158 of the Securities Act. “Earnings statement” and “make
generally available” will have the meanings contained in Rule 158 under the
Securities Act.
(g)    Use of Proceeds. The Company will use the Net Proceeds as described in
the Prospectus in the section entitled “Use of Proceeds.”
(h)    Notice of Other Sales. During either the pendency of any Placement Notice
given hereunder or any period in which the Prospectus relating to the Placement
Shares is required to be delivered by the Agent, the Company shall provide the
Agent with notice as promptly as reasonably possible before it offers to sell,
contracts to sell, sells, grants any option to sell or otherwise disposes of any
shares of Common Stock (other than Placement Shares offered pursuant to the
provisions of this Agreement or the Alternative Sales Agreement) or securities
convertible into or exchangeable for Common Stock, warrants or any rights to
purchase or acquire Common Stock; provided, however, that such notice shall not
be required in connection with the (i) issuance, grant or sale of Common Stock,
options to purchase shares of Common Stock or Common Stock issuable upon the
exercise of options or other equity awards pursuant to any employee or director
stock option or benefits plan or stock ownership plan or issuances permitted by
FINRA, (ii) the issuance or sale of Common Stock pursuant to any dividend
reinvestment plan that the Company may adopt from time to time, (iii) the
issuance of Common Stock upon the exercise of any currently outstanding
warrants, options or other rights in effect or outstanding and disclosed in
filings by the Company available on EDGAR, or (iv) the issuance or sale of
Common Stock in connection with the Company’s Series A Redeemable Preferred
Stock, par value $0.01 per share (the “Series A Redeemable Preferred Stock”) or
any warrants issued in connection with the issuance or sale of the Series A
Redeemable Preferred Stock).
(i)    Change of Circumstances. The Company will, at any time during the
pendency of a Placement Notice, advise the Agent reasonably promptly after it
shall have received notice or obtained knowledge thereof, of any information or
fact that would alter or affect in any material respect any opinion,
certificate, letter or other document required to be provided to the Agent
pursuant to this Agreement.
(j)    Due Diligence Cooperation. The Company will cooperate with any reasonable
due diligence review conducted by the Agent or their counsel, representatives or
agents in connection with the transactions contemplated hereby, including,
without limitation, providing information and making available documents and
senior corporate officers, during regular business hours and at the Company’s
principal offices, as the Agent may reasonably request.

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(k)    Required Filings Relating to Placement of Placement Shares. The Company
agrees that on such dates as the Securities Act shall require, the Company will
(i) file a prospectus supplement with the Commission under the applicable
paragraph of Rule 424(b) under the Securities Act, which prospectus supplement
will set forth, within the relevant period, the amount of Placement Shares sold
through the Agent, the Net Proceeds to the Company and the compensation payable
by the Company to the Agent with respect to such Placement Shares, and (ii)
deliver such number of copies of each such prospectus supplement to each
exchange or market on which such sales were affected as may be required by the
rules or regulations of such exchange or market.
(l)    Representation Dates; Certificate. Each time the Company: (i) (A) files
the Prospectus relating to the Placement Shares, or (B) amends or supplements
(other than a prospectus supplement relating solely to an offering of securities
other than the Placement Shares) the Registration Statement or the Prospectus
relating to the Placement Shares by means of a post-effective amendment, sticker
or supplement, but not by means of incorporation of documents by reference into
the Registration Statement or the Prospectus relating to the Placement Shares;
(ii) files an annual report on Form 10-K under the Exchange Act (including any
Form 10-K/A containing amended financial information or a material amendment to
the previously filed Form 10-K); (iii) files its quarterly reports on Form 10-Q
under the Exchange Act; or (iv) files a current report on Form 8-K containing
amended financial information (other than information “furnished” pursuant to
Items 2.02 or 7.01 of Form 8-K) under the Exchange Act (each date of filing of
one or more of the documents referred to in clauses (i) through (iv) shall be a
“Representation Date”); the Company shall furnish the Agent with a certificate,
in the form attached hereto as Schedule 7(l) within five (5) Trading Days of any
Representation Date. The requirement to provide a certificate under this Section
7(l) shall be waived for any Representation Date occurring at a time at which no
Placement Notice is pending, which waiver shall continue until the earlier to
occur of the date the Company delivers a Placement Notice hereunder (which for
such calendar quarter shall be considered a Representation Date) and the next
occurring Representation Date; provided, however, that such waiver shall not
apply for any Representation Date on which the Company files its annual report
on Form 10-K. Notwithstanding the foregoing, if the Company subsequently decides
to sell Placement Shares following a Representation Date when the Company relied
on such waiver and did not provide the Agent with a certificate under this
Section 7(l), then before the Company delivers the Placement Notice or the Agent
sells any Placement Shares, the Company shall provide the Agent with a
certificate, in the form attached hereto as Section 7(l), dated the date of the
Placement Notice.
(m)    Legal Opinion. On or prior to the date the first Placement Notice is
given hereunder, the Company shall cause to be furnished to the Agent (i) a
written opinion of Proskauer LLP (“Proskauer”) as to corporate and securities
matters dated as of the date of such Placement Notice in substantially the form
set forth in Schedule 7(m)(1), (ii) a written opinion of Proskauer as to tax
matters dated as of the date of such Placement Notice in substantially the form
set forth in Schedule 7(m)(2), (iii) a negative assurance letter from Proskauer
dated as of the date of such Placement Notice, in substantially the

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form set forth in Schedule 7(m)(3), and (iv) a written opinion of Venable LLP
(“Venable”) as to Maryland corporate matters dated as of the date of such
Placement Notice in substantially the form set forth in Schedule 7(m)(4). Within
three Trading Days of each subsequent Representation Date with respect to which
the Company is obligated to deliver a certificate in the form attached hereto as
Schedule 7(l) for which no waiver is applicable, for which no waiver is
applicable, and not more than once per calendar quarter, the Company shall cause
to be furnished to the Agent the written opinions and negative assurance letter
of Proskauer referred to in clause (i) and clause (iii) of Sections 7(m) in
substantially the foregoing forms; provided, however, that in lieu of such
opinion or negative assurance letter, counsel last furnishing such applicable
opinion or negative assurance letter to the Agent may furnish to the Agent a
letter substantially to the effect that the Agent may rely on such prior opinion
or negative assurance letter to the same extent as though dated the date of such
letter authorizing reliance.
(n)    Comfort Letter. On or prior to the date of the first Placement Notice is
given hereunder, the Company shall cause PwC (and/or any other independent
accountants whose report is included in the Registration Statement or the
Prospectus), to furnish the Agent with a letter (the “Initial Comfort Letter”)
in form and substance satisfactory to the Agent (i) confirming that they are an
independent registered public accounting firm within the meaning of the
Securities Act, the Exchange Act, and the PCAOB, and (ii) stating, as of such
date, the conclusions and findings of such firm with respect to the financial
information and other matters ordinarily covered by accountants’ “comfort
letters” to underwriters in connection with registered public offerings. Within
three Trading Days of each subsequent Representation Date, other than pursuant
to Sections 7(l)(iii) and (iv), with respect to which the Company is obligated
to deliver a certificate in the form attached hereto as Schedule 7(l) for which
no waiver is applicable, the Company shall cause such auditors to provide a
supplemental comfort letter to the Agent which shall state that such auditors
have followed such procedures as they deem necessary to determine that no
changes or modifications to the Initial Comfort Letter are necessary except as
set forth in such supplemental letter, together with a customary “circle up” of
the relevant sections of the 10-K or other documents filed by the Company with
the Commission that contain updated or changed information of the type for which
the auditors customarily give comfort.
(o)    Filings with the NYSE. The Company will timely file with the NYSE (and/or
the Company’s then principal trading market for its Common Stock) all material
documents and notices required by the NYSE (or such other principal trading
market) of companies that have or will issue securities that are traded on the
NYSE (or such other principal trading market)
(p)    Securities Act and Exchange Act. The Company will use its commercially
reasonable efforts to comply with all requirements imposed upon it by the
Securities Act and the Exchange Act as from time to time in force, so far as
necessary to permit the continuance of sales of, or dealings in, the Placement
Shares as contemplated by the provisions hereof and the Prospectus.

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(q)    No Offer to Sell. Other than a free writing prospectus (as defined in
Rule 405 under the Securities Act) approved in advance in writing by the Company
and the Agent in its capacity as principal or agent hereunder, neither the Agent
nor the Company (including its agents and representatives, other than the Agent
in their capacity as such) will, directly or indirectly, make, use, prepare,
authorize, approve or refer to any free writing prospectus relating to the
Placement Shares to be sold by the Agent as principal or agent hereunder. The
Company will treat the Agent-approved Issuer Free Writing Prospectus as an
“issuer free writing prospectus,” as defined in Rule 433 of the Securities Act,
and will comply with the requirements of Rule 433 of the Securities Act
applicable to any Issuer Free Writing Prospectus, including timely filing with
the Commission where required, legending and record keeping.
(r)    Sarbanes-Oxley Act. The Company will maintain and keep accurate books and
records reflecting its assets and maintain internal accounting controls in a
manner designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and
including those policies and procedures that (i) pertain to the maintenance of
records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the Company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit the preparation of the
Company’s consolidated financial statements in accordance with generally
accepted accounting principles; (iii) provide reasonable assurance that receipts
and expenditures of the Company are being made only in accordance with
management’s and the Company’s directors’ authorization; and (iv) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company’s assets that could have a
material effect on its financial statements. The Company will maintain such
controls and other procedures, including, without limitation, those required by
Sections 302 and 906 of SOX, and the applicable regulations thereunder that are
designed to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Commission’s rules and forms, including, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the Company’s management, including its
principal executive officer and principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding
required disclosure and to ensure that material information relating to the
Company is made known to them, particularly during the period in which such
periodic reports are being prepared.
(s)    Transfer Agent. The Company shall maintain, at its expense, a registrar
and transfer agent for the Common Stock.

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(t)    Disclosure of Sales. The Company will disclose in its quarterly reports
on Form 10-Q and in its annual report on Form 10-K the number of Placement
Shares sold through the Agent during the relevant period, if any.
(u)    Market Stabilization. The Company will not, and will use its commercially
reasonable efforts to cause its officers, directors and affiliates not to, (i)
take, directly or indirectly, any action designed to stabilize or manipulate the
price of any security of the Company, or which may cause or result in, or which
might in the future reasonably be expected to cause or result in, the
stabilization or manipulation of the price of any security of the Company, to
facilitate the sale or resale of any of the Placement Shares, (ii) sell, bid
for, purchase or pay anyone any compensation for soliciting purchases of the
Placement Shares during the pendency of any Placement Notice or (iii) pay or
agree to pay to any person any compensation for soliciting any order to purchase
any other securities of the Company during the pendency of any Placement Notice;
provided, however, that upon consent of the Agent (which consent shall not be
unreasonably withheld, conditioned or delayed), the Company may bid for and
purchase Common Stock in accordance with Rule 10b-18 under the Exchange Act.
(v)    Listing. During any period in which the Prospectus relating to the
Placement Shares is required to be delivered by the Agent under the Securities
Act with respect to a pending sale of the Placement Shares (including in
circumstances where such requirement may be satisfied pursuant to Rule 172 under
the Securities Act), the Company will use its commercially reasonable efforts to
cause the Placement Shares to be listed on the NYSE (or such other principal
trading market for the Company’s Common Stock)
(w)    Available Shares. The Company will ensure that there are at all times
sufficient shares of Common Stock to provide for the issuance, free of any
preemptive rights, out of its authorized but unissued shares of Common Stock, of
the Maximum Amount.
8.    Conditions to the Agent’s Obligations. The obligations of the Agent
hereunder with respect to a Placement Notice will be subject to the continuing
accuracy and completeness of the representations and warranties made by the
Company herein, to the due performance by the Company of its obligations
hereunder, to the completion by the Agent prior to the delivery of the first
Placement Notice by the Company of a due diligence review satisfactory to them
in their reasonable judgment, and to the continuing satisfaction (or waiver by
the Agent in its sole discretion) of the following additional conditions:
(a)    Registration Statement Effective. The Registration Statement shall have
become effective and shall be available for the sale of all Placement Shares
contemplated to be issued by any Placement Notice.
(b)    No Material Notices. None of the following events shall have occurred and
be continuing: (i) receipt by the Company of any request for additional
information from the Commission or any other federal or state governmental
authority during the

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period of effectiveness of the Registration Statement, the response to which
would require any post-effective amendments or supplements to the Registration
Statement or the Prospectus; (ii) the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose; (iii) receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Placement Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose or (iv) the occurrence of any
event that makes any material statement made in the Registration Statement or
the Prospectus or any material document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in the Registration Statement, related
Prospectus or documents so that, in the case of the Registration Statement, it
will not contain any materially untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and, that in the case of the Prospectus, it
will not contain any materially untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(c)    Material Changes. Except as contemplated in the Prospectus, or disclosed
in the Company’s reports filed with the Commission, there shall not have been,
on a consolidated basis, any Material Adverse Effect.
(d)    Legal Opinion. The Agent shall have received the opinions and negative
assurance letter of Proskauer and opinions of Venable required to be delivered
pursuant to Section 7(m) on or before the date on which such delivery of such
opinion is required pursuant to Section 7(m).
(e)    Comfort Letter. The Agent shall have received the Initial Comfort Letter
and any update letters required to be delivered pursuant to Section 7(n) on or
before the date on which such delivery of such opinion is required pursuant to
Section 7(n).
(f)    Representation Certificate. The Agent shall have received the certificate
required to be delivered pursuant to Section 7(l) on or before the date on which
delivery of such certificate is required pursuant to Section 7(l).
(g)    No NYSE Suspension or FINRA Objection. Trading in the Common Stock shall
not have been suspended on the NYSE. FINRA shall not have objected to the
fairness or reasonableness of the terms or arrangements under this Agreement.
(h)    Other Materials. On each date on which the Company is required to deliver
a certificate pursuant to Section 7(l), the Company shall have furnished to the
Agent such appropriate further information, certificates and documents as the
Agent may reasonably request. All such opinions, certificates, letters and other
documents will be in compliance with the provisions hereof. The Company will
furnish the Agent with such

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conformed copies of such opinions, certificates, letters and other documents as
the Agent shall reasonably request.
(i)    Securities Act Filings Made. All filings with the Commission required by
Rule 424, 430A, 430B or 430C under the Securities Act to have been filed prior
to the issuance of any Placement Notice hereunder shall have been made within
the applicable time period prescribed for such filing by Rule 424.
(j)    Approval for Listing. The Placement Shares shall either have been
(i) approved for listing on the NYSE, subject only to notice of issuance, or
(ii) the Company shall have filed an application for listing of the Placement
Shares on the NYSE at, or prior to, the issuance of any Placement Notice.
(k)    Termination of Agreement. If any condition specified in this Section 8
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Agent by notice to the Company, and such
termination shall be without liability of any party to any other party. Notice
of such cancellation shall be given in writing and addressed to each of the
individuals of the Company set forth on Schedule 2.
(l)    No Termination Event. There shall not have occurred any event or
condition that would permit the Agent to terminate this Agreement pursuant to
Section 12.
9.    Payment of Expenses. The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is terminated, in
accordance with the provisions of Section 12 hereunder, will pay all expenses
incident to the performance of the Company’s obligations hereunder, which the
parties acknowledge include expenses relating to: (i) the preparation, printing
and filing of the Registration Statement and each amendment and supplement
thereto, of each Prospectus and of each amendment and supplement thereto, and of
this Agreement; (ii) the preparation, issuance and delivery of the Placement
Shares; (iii) the printing and delivery by the Agent of copies of the Prospectus
and any amendments and supplements thereto; (iv) the fees and expenses incurred
in connection with the listing or qualification of the Placement Shares for
trading on the NYSE; (v) the filing fees and expenses (including counsel fees),
if any, related to the filing and clearance of the transactions and related
documentation with the Commission and FINRA; and (vi) the reasonable
out-of-pocket expenses of Agent, including fees and disbursements of counsel to
the Agent. Notwithstanding the foregoing, in no event shall the amount of
expenses reimbursed to Agent hereunder exceed $35,000.
10.    Indemnification and Contribution.
(a)    Indemnification of the Agent by the Company. The Company will indemnify
and hold harmless the Agent and its affiliates, officers, directors and
employees and each person, if any, who controls the Agent within the meaning of
the Securities Act (each an “Agent Indemnitee”) against, and pay or reimburse
each Agent Indemnitee for, any and all losses, claims, damages, liabilities or
expenses whatsoever (or

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actions or proceedings or investigations in respect thereof), joint or several
(which will, for all purposes of this Agreement, include, but not be limited to,
all reasonable costs of defense and investigation and all reasonable attorneys’
fees and disbursements, including appeals) (collectively, “Losses”), without
duplication, to which any Agent Indemnitee may become subject under the
Securities Act or otherwise, in connection with the offer and sale of the
Placement Shares, regardless whether such Losses shall result from any claim of
any Agent Indemnitee or any third party; provided, however, that the Company
will not be liable in any such case to the extent that any such Loss arises out
of, is based upon, or results from an untrue statement or alleged untrue
statement of a material fact made in the Registration Statement or the
Prospectus, or an omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, made solely in reliance upon and in conformity with written
information furnished to the Company by the Agent specifically for use in the
preparation thereof, it being understood and agreed that such information
furnished by the Agent consists only of the information described as such in
Section 10(b) below. Notwithstanding the foregoing, in no event shall the
Company’s indemnification obligation under this Section 10(a) in respect of an
untrue statement or alleged untrue statement of a material fact made in the
Registration Statement or the Prospectus, or an omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, exceed the net proceeds received by the
Company hereunder.
(b)    Indemnification of Company, Directors and Officers. The Agent will
severally indemnify and hold harmless the Company and its affiliates, officers,
directors and employees and each person, if any, who controls the Company within
the meaning of the Securities Act (a “Company Indemnitee”) against, and pay or
reimburse each Company Indemnitee for, any and all Losses, without duplication,
to which any Company Indemnitee may become subject, under the Securities Act or
otherwise, in connection with the offer and sale of the Placement Shares, but
only insofar as such Losses are based upon an untrue statement or alleged untrue
statement of a material fact made in the Registration Statement or the
Prospectus, or an omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, made or omitted solely in reliance upon and in conformity with
written information furnished to the Company by the Agent specifically for use
in the preparation thereof, it being understood and agreed that the only
information furnished by the Agent consists of the information set forth on
Schedule 10(b), regardless whether such Losses shall result from any claim of
any Company Indemnitee or any third party; provided, however, that the Agent
will not be liable in any such case to the extent that any such Loss of the
Company results from the fraud, willful misconduct or gross negligence of the
Company. Notwithstanding the foregoing, in no event shall the Agent's
indemnification obligation under this Section 10(b) in respect of an untrue
statement or

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alleged untrue statement of a material fact made in the Registration Statement
or the Prospectus or an omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, exceed the fees paid to it hereunder.
(c)    Actions against Parties; Notification. Promptly after receipt by an
indemnified party under this Section 10 of notice of the commencement of any
action, claim, proceeding or investigation (the “Action”), such indemnified
party, if a claim in respect thereof is to be made against the indemnifying
party under this Section 10, will notify the indemnifying party of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
under this Section 10 unless the indemnifying party has been substantially
prejudiced by such omission. The indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party, to assume the defense thereof subject to the provisions
herein stated, with counsel reasonably satisfactory to such indemnified party.
The indemnified party will have the right to employ separate counsel in any such
Action and to participate in the defense thereof, but the fees and expenses of
such counsel will not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the Action with counsel reasonably
satisfactory to the indemnified party, provided, however, that if the
indemnified party shall be requested by the indemnifying party to participate in
the defense thereof or shall have concluded in good faith and specifically
notified the indemnifying party either that there may be specific defenses
available to it which are different from or additional to those available to the
indemnifying party or that such Action involves or could have a material adverse
effect upon it with respect to matters beyond the scope of the indemnity
agreements contained in this Agreement, then the counsel representing it, to the
extent made necessary by such defenses, shall have the right to direct such
defenses of such Action on its behalf and in such case the reasonable fees and
expenses of such counsel in connection with any such participation or defenses
shall be paid by the indemnifying party. The indemnifying party shall not
consent to the terms of any compromise or settlement of any claim or Action
defended by it in accordance with the foregoing without the prior written
consent of the indemnified party unless such compromise or settlement (i)
includes an unconditional release of the indemnified party from all liability
arising out of such claim or Action, and (ii) does not include a statement as to
or an admission of fault or culpability by or on behalf of such indemnified
party. The indemnifying party shall not be required to indemnify any indemnified
party for any amount paid or payable by it in the settlement of any claim or
Action without the prior written consent of the indemnifying party.
(d)    Contribution. To provide for just and equitable contribution, if an
indemnified party makes a claim for indemnification pursuant to Section 10
hereof and it is finally determined, by a judgment, order or decree not subject
to further appeal that such claims for indemnification may not be enforced, even
though this Agreement expressly provides for indemnification in such case, then
each indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion

33

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as is appropriate to reflect not only such relative benefits but also the
relative fault of the Company on the one hand and the Agent on the other in
connection with the statements or omissions which resulted in the relevant
Losses, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Agent on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering and sale of the Placement Shares (before deducting expenses) received
by the Company bear to the total commissions and fees actually received by the
Agent. The relative fault, in the case of an untrue statement, alleged untrue
statement, omission or alleged omission will be determined by, among other
things, whether such statement, alleged statement, omission or alleged omission
relates to information supplied by the Company or the Agent, and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement, alleged statement, omission or alleged omission. The
Company and the Agent agree that it would be unjust and inequitable if the
respective obligations of the Company and the Agent for contribution were
determined by pro rata allocation of the aggregate Losses or by any other method
or allocation that does not reflect the equitable considerations referred to in
this Section 10(d). No person guilty of a fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 10(d), each person, if any, who
controls the Agent within the meaning of the Securities Act will have the same
rights to contribution as the Agent, and each person, if any, who controls the
Company within the meaning of the Securities Act will have the same rights to
contribution as the Company, subject in each case to the provisions of this
Section 10(d). Anything in this Section 10(d) to the contrary notwithstanding,
no party will be liable for contribution with respect to the settlement of any
claim or Action effected without its written consent. This Section 10(d) is
intended to supersede, to the extent permitted by law, any right to contribution
under the Securities Act, the Exchange Act or otherwise available to the Company
or the Agent.
11.    Representations and Agreements to Survive Delivery. All representations
and warranties of the Company herein or in certificates delivered pursuant
hereto shall survive, as of their respective dates, regardless of (a) any
investigation made by or on behalf of the Agent, any controlling persons, or the
Company (or any of their respective officers, directors or controlling persons),
(b) delivery and acceptance of the Placement Shares and payment therefore, or
(c) any termination of this Agreement.
12.    Termination.
(a)    Termination; General. The Agent may terminate this Agreement, by notice
to the Company, as hereinafter specified at any time (1) if there has been,
since the time of execution of this Agreement or since the date as of which
information is given in the Prospectus, any change which, individually or in the
aggregate, has or would reasonably be expected to have a Material Adverse Effect
that makes it impractical or inadvisable to market the Placement Shares or to
enforce contracts for the sale of the Placement Shares, (2) if there has
occurred any material adverse change in the financial

34

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markets in the United States or the international financial markets, any
outbreak of hostilities or escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Agent,
impracticable or inadvisable to market the Placement Shares or to enforce
contracts for the sale of the Placement Shares, (3) if trading in the Placement
Shares has been suspended or limited by the Commission or the NYSE, or if
trading generally on the NYSE has been suspended or limited, (4) if any
suspension of trading of any securities of the Company on any exchange or in the
over-the-counter market shall have occurred and be continuing, (5) if a major
disruption of securities settlements or clearance services in the United States
shall have occurred and be continuing, or (6) if a banking moratorium has been
declared by either U.S. Federal or New York authorities.
(b)    Termination by the Company. The Company shall have the right to terminate
this Agreement by giving ten days’ prior notice as specified herein to the
Agent.
(c)    Termination by the Agent. In addition to the rights set forth in
Section 12(a), the Agent shall have the right to terminate this Agreement by
giving ten days’ prior notice to the Company.
(d)    Automatic Termination. Unless earlier terminated pursuant to this
Section 12, this Agreement shall automatically terminate upon the issuance and
sale of the Maximum Amount of Placement Shares through the Agent pursuant to
this Agreement.
(e)    Effectiveness of Termination. Any termination of this Agreement shall be
effective on the date specified in such notice of termination; provided,
however, that such termination shall not be effective until the close of
business on the date specified in such notice by the Agent or the Company, as
the case may be. If such termination shall occur prior to the Settlement Date
for any sale of Placement Shares, such Placement Shares shall settle in
accordance with the provisions of this Agreement.
(f)    Survival. The provisions of Sections 7(g), 10, 17 and 18 hereof and the
obligation herein to pay any discount, commission or other compensation accrued,
but unpaid, shall survive any expiration or termination of this Agreement.
13.    Notices. All notices or other communications (each a “Notice”) required
or permitted to be given by any party to any other party pursuant to the terms
of this Agreement shall be in writing, unless e-mail notice is otherwise
expressly specified in this Agreement, and if sent to the Agent,

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Canaccord Genuity Inc
            99 High Street, 12th Floor

            Boston, Massachusetts 02110
   
   Fax No.: (617) 788-1553
   Attention: U.S. ECM / General Counsel
 
 
with a copy to (which shall not constitute notice):
 
Duane Morris LLP
One Riverfront Plaza
1037 Raymond Boulevard, Suite 1800,
Newark, NJ 07102-5429
Attention: Dean Colucci
Telephone: (973) 424-2020
Email: dmcolucci@duanemorris.com
 
and if sent to the Company,
 
Preferred Apartment Communities, Inc.
3284 Northside Parkway NW, Suite 150
Atlanta, GA 30339
Fax No.: (770) 818-4105
Attention: Jeffrey R. Sprain
E-mail: jsprain@pacapts.com
 
with copies to (which shall not constitute notice):
 
Proskauer Rose LLP
Eleven Times Square
New York, NY 10036
Fax No.: (212) 969-2900
Attention: James P. Gerkis
E-mail: JGerkis@proskauer.com

All Notices shall be: (a) delivered personally or by commercial messenger; (b)
sent via a recognized overnight courier service; or (c) sent by facsimile
transmission, provided confirmation of receipt is received by sender and such
Notice is sent or delivered contemporaneously by an additional method provided
in this Section 13. Any party may change its address specified above by giving
each party Notice of such change in accordance with this Section 13. Any Notice
shall be deemed given upon actual receipt (or refusal of receipt).

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14.    Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon the Company and the Agent and their respective successors,
permitted assigns and the persons referred to in Section 10 hereof. References
to any of the parties contained in this Agreement shall be deemed to include the
successors and permitted assigns of such party. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and permitted assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. No party may assign its rights
or obligations under this Agreement without the prior written consent of the
other party.
15.    Adjustments for Stock Splits. The parties acknowledge and agree that all
share-related numbers contained in this Agreement shall be adjusted to take into
account any stock split, stock dividend or similar event effected with respect
to the Placement Shares.
16.    Entire Agreement; Amendment; Severability. This Agreement (including all
schedules and exhibits attached hereto and Placement Notices issued pursuant
hereto) constitutes the entire agreement and supersedes all other prior and
contemporaneous agreements and undertakings, both written and oral, between the
parties hereto with regard to the subject matter hereof; provided, that nothing
herein shall be deemed to terminate or modify any ongoing or existing
obligations arising under the underwriting agreements entered into by the
Company and the Agent prior to the date hereof. Neither this Agreement nor any
term hereof may be amended except pursuant to a written instrument executed by
the Company and the Agent. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable as written by a court of competent
jurisdiction, then such provision shall be given full force and effect to the
fullest possible extent that it is valid, legal and enforceable, and the
remainder of the terms and provisions herein shall be construed as if such
invalid, illegal or unenforceable term or provision was not contained herein,
but only to the extent that giving effect to such provision and the remainder of
the terms and provisions hereof shall be in accordance with the intent of the
parties as reflected in this Agreement.
17.    Applicable Law; Consent to Jurisdiction. This Agreement shall be governed
by, and construed in accordance with, the internal laws of the State of New York
without regard to the principles of conflicts of laws. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection with any transaction
contemplated hereby, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof (certified or registered mail, return
receipt requested) to such party at the address in effect for notices to it
under this agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.

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18.    WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND THE AGENT HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
CLAIM BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
19.    Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Delivery of an executed Agreement by one
party to the other may be made by facsimile transmission.
20.    Absence of Fiduciary Relationship. The Company acknowledges and agrees
that:
(a)    the Agent is acting solely as agent and/or principal in connection with
the public offering of the Placement Shares and in connection with each
transaction contemplated by this Agreement and the process leading to such
transactions, and no fiduciary or advisory relationship between the Company or
any of its affiliates, stockholders (or other equity holders), creditors or
employees or any other party, on the one hand, and the Agent, on the other hand,
has been or will be created in respect of any of the transactions contemplated
by this Agreement, irrespective of whether the Agent has advised or is advising
the Company on other matters, and the Agent has no obligations to the Company
with respect to the transactions contemplated by this Agreement except the
obligations expressly set forth in this Agreement;
(b)    the Company is capable of evaluating and understanding and understands
and accepts the terms, risks and conditions of the transactions contemplated by
this Agreement;
(c)    the Company has been advised that the Agent and its respective affiliates
are engaged in a broad range of transactions which may involve interests that
differ from those of the Company and that the Agent has no obligation to
disclose such interests and transactions to the Company by virtue of any
fiduciary, advisory or agency relationship;
(d)    the Company disclaims any intention to impose fiduciary obligations on
the Agent by virtue of the engagement contemplated by this Agreement;
(e)    the Agent has not provided any legal, accounting, regulatory or tax
advice with respect to the transactions contemplated by this Agreement and the
Company has consulted its own legal, accounting, regulatory and tax advisors to
the extent it has deemed appropriate;
(f)    the Agent is a full service securities firm and as such from time to
time, subject to applicable securities laws, may effect transaction for its own
account or the account of its customers and hold long or short positions in the
Common Stock; and
(g)    the Company waives, to the fullest extent permitted by law, any claims it
may have against the Agent for breach of fiduciary duty or alleged breach of
fiduciary

38

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duty and agrees that the Agent shall have no liability (whether direct or
indirect) to the Company in respect to such fiduciary claim or to any person
asserting a fiduciary duty claim on behalf of or in right of the Company,
including stockholders, partners, employees or creditors of the Company.
[Remainder of Page Intentionally Blank]

39

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If the foregoing correctly sets forth the understanding between the Company and
the Agent, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the parties.
Very truly yours,
 
PREFERRED APARTMENT COMMUNITIES, INC.
 
 
By:   /s/ John A. Williams
Name: John A. Williams
Title: Chief Executive Officer
 
CANACCORD GENUITY INC
 
 
By: _/s/ Peter Dippolito
Name: Peter Dippolito
Title: Principal, Investment Banking

1

--------------------------------------------------------------------------------

Schedule 1
FORM OF PLACEMENT NOTICE
From:    PREFERRED APARTMENT COMMUNITIES, INC.
Cc:
[ ]
To: CANACCORD GENUITY INC
Subject: Placement Notice
Date:     _______________, 20___
Gentlemen:
Pursuant to the terms and subject to the conditions contained in the Capital on
Demand™ Sales Agreement between Preferred Apartment Communities, Inc. (the
“Company”) and Canaccord Genuity Inc (the “Placement Agent”), dated May ___,
2016 (the “Agreement”), I hereby request on behalf of the Company that the
Placement Agent sell up to [ ] shares of the Company’s Common Stock at a minimum
market price of $[ ] per share.
[ADDITIONAL SALES PARAMETERS MAY BE ADDED, SUCH AS THE MAXIMUM AGGREGATE
OFFERING PRICE, THE TIME PERIOD IN WHICH SALES ARE REQUESTED TO BE MADE,
SPECIFIC DATES THE SHARES MAY NOT BE SOLD ON, THE MANNER IN WHICH SALES ARE TO
BE MADE BY THE AGENT, AND/OR THE CAPACITY IN WHICH THE AGENT MAY ACT IN SELLING
SHARES (AS PRINCIPAL, AGENT, OR BOTH)]

1-1

--------------------------------------------------------------------------------

Schedule 2
Placement Notice Authorized Personnel
Canaccord Genuity Inc
 
 
 
Name
Title
Email Address
Peter Dippolito
Principal, Investment Banking
pdippolito@canaccordgenuity.com
Jennifer Pardi
Sr. Managing Director, Head of U.S. ECM
jpardi@canaccordgenuity.com
With a copy to USecm@canaccordgenuity.com

Preferred Apartment Communities, Inc.
 
 
 
Name
Title
Email Address
John A. Williams
Chief Executive Officer and Chairman of the Board of Directors
jwilliams@pacapts.com
Daniel M. DuPree
Chief Investment Officer and Vice Chairman of the Board of Directors
ddupree@pacapts.com
Leonard A. Silverstein
President and Chief Operating Officer
lsilverstein@pacapts.com
With a copy to Jeff Sprain at jsprain@pacapts.com

Schedule 3
The Agent shall be paid compensation of up to 3.0% of the gross proceeds from
the sale of Placement Shares (subject to reduction in certain circumstances).

    
    

Schedule 5(e)
SUBSIDIARIES
Name
Jurisdiction of Formation
360 Irvine Lending, LLC
Delaware
Ashford Park, LLC
Delaware
Barclay Crossing, LLC
Delaware

City Park Mezzanine Lending, LLC
Delaware
City Park II Capital Lending, LLC
Delaware
City Vista Mezzanine Lending, LLC
Delaware
Crescent Ave Lending, LLC
Delaware
Deltona Landing, LLC
Delaware
Encore Capital Lending, LLC
Delaware
Haven Fayetteville Lending, LLC
Delaware
Haven Northgate Lending, LLC
Delaware
Haven Northgate Capital Lending, LLC
Delaware
Haven Lubbock Lending, LLC
Delaware
Haven Lubbock II Lending, LLC
Delaware

Haven Tampa Lending, LLC
Delaware
Haven Waco Lending, LLC
Delaware
Haven West Mezzanine Lending, LLC
Georgia
Hidden River Capital Lending, LLC
Delaware
Iris Crosstown Mezzanine Lending, LLC
Delaware
Irvine Mezzanine Lending, LLC
Georgia
Kennesaw Mezzanine Lending, LLC
Georgia
Lake Cameron, LLC
Delaware
Madison Wade Green Lending, LLC
Delaware

Main Street Apartment Homes, LLC
Maryland
Main Street Baldwin, LLC
Delaware
Main Street Stone Creek, LLC
Delaware
Manassas Mezzanine Lending, LLC
Georgia
New Market – Overlook, LLC
Delaware
New Market Plano, LLC
Delaware
New Market Properties, LLC
Maryland
New Market-Royal Lakes, LLC
Delaware
New Market- Summit Point, LLC
Delaware
New Market – Victory Village, LLC
Delaware
New Market – Wade Green, LLC
Delaware
New Market-Rosewood, LLC
Delaware
New Market-Anderson, LLC
Delaware
New Market-East Gate, LLC
Delaware
New Market-Southgate, LLC
Delaware
New Market-Fairview,LLC
Delaware
New Market-Furys Ferry, LLC
Delaware

New Town Mezzanine Lending, LLC
Georgia
Newport Bishop Lending, LLC
Delaware
Newport Kennesaw Mezzanine Lending, LLC
Delaware
Newport Overton Mezzanine Lending, LLC
Georgia
NMP Kingwood Glen, LLC
Delaware
Oxford Encore Lending, LLC
Georgia
Oxford Hidden River Lending, LLC
Delaware

Oxford Overture Lending, LLC
Delaware
PAC Carveout, LLC
Delaware
PAC Citilakes, LLC
Delaware
PAC Citypark View, LLC
Delaware
PAC Creekside, LLC
Delaware
PAC Crosstown Walk, LLC
Delaware
PAC Cypress, LLC
Delaware
PAC Enclave at Vista Ridge, LLC
Delaware
PAC Dawson Lending, LLC
Delaware
PAC Lending, LLC
Delaware
PAC Lenox, LLC
Delaware
PAC Lenox Regent, LLC
Delaware
PAC Lenox Retreat, LLC
Delaware
PAC Lenox Village, LLC
Delaware
PAC Naples, LLC
Delaware
PAC Overton Rise, LLC
Delaware

PAC Northpointe, LLC
Delaware
PAC Sarasota, LLC
Delaware
PAC Summit Crossing, LLC
Georgia
PAC Summit Crossing II, LLC
Delaware
PAC Vineyards, LLC
Delaware
PACOP Special Member, Inc.
Delaware
Parkway Centre, LLC
Delaware
Parkway Town Centre, LLC
Delaware
PCC Tallahassee, LLC
Delaware
Powder Springs-Macland Retail, LLC
Delaware
Preferred Apartment Communities Operating Partnership, L.P.
Delaware
Preferred Campus Communities, LLC
Maryland
Salem Cove, LLC
Delaware
Sandstone Creek, LLC
Delaware
SE Grocery, LLC
Delaware
Spring Hill Plaza, LLC
Delaware
Starkville Mezzanine Lending, LLC
Georgia
Stoneridge Farms Hunt Club, LLC
Delaware
Stone Rise Apartments, LLC
Delaware
Summit Crossing III Mezzanine Lending, LLC
Delaware
Sunbelt Retail, LLC
Delaware
Sweetgrass Corner, LLC
Delaware
Trail Creek Apartments, LLC
Delaware
WAM McNeil Ranch, LLC
Delaware
Weems Mezzanine Lending, LLC
Delaware
Woodstock Crossing Center, LLC
Georgia

Schedule 7(l)

Officers’ Certificate

Pursuant to Section 7(l) of the Capital on Demand™ Sales Agreement, dated as of
May [  ], 2016 (the “Agreement”), between Preferred Apartment Communities, Inc.
(the “Company”) and Canaccord Genuity Inc (the “Agent”), the undersigned Chief
Executive Officer and Chief Financial Officer of the Company, hereby certify to
the Agent on behalf of the Company that, to the knowledge of the undersigned, as
of the date indicated below:
1. The representations and warranties of the Company in Section 5 of the
Agreement, (A) to the extent such representations and warranties are subject to
qualifications and exceptions contained therein relating to materiality,
material adverse change or Material Adverse Effect, are true and correct on and
as of the date hereof with the same force and effect as if expressly made on and
as of the date hereof, except for those representations and warranties that
speak solely as of a specific date and which were true and correct as of such
specific date; and (B) to the extent such representations and warranties are not
subject to any qualifications or exceptions, are true and correct in all
material respects as of the date hereof as if made on and as of the date hereof
with the same force and effect as if expressly made on and as of the date
hereof, except for those representations and warranties that speak solely as of
a specific date and which were true and correct as of such specific date.
2. The Company has complied in all material respects with all agreements and
satisfied all conditions on its part to be performed or satisfied pursuant to
the Agreement at or prior to the date hereof (other than those conditions that
are waived by the Agent).
The undersigned have executed this Officers’Certificate on behalf of the Company
as of the date first written above.
PREFERRED APARTMENT COMMUNITIES, INC.
 
By: __________________________
Name:
Title:

Schedule 7(m)(1)

[On file with Company]

Schedule 7(m)(2)
[On file with Company]

Schedule 7(m)(3)
[On file with Company]

Schedule 7(m)(4)
[On file with Company]

Schedule 10(b)
INFORMATION FROM THE AGENT TO THE COMPANY
[To Be Completed]

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