THIRD AMENDED AND RESTATED MANAGEMENT AGREEMENT

among

Preferred Apartment Communities, Inc.,

Preferred Apartment Communities Operating Partnership, L.P.

and

Preferred Apartment Advisors, LLC

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

Dated as of May 13, 2011
 

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

 
 

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

 

TABLE OF CONTENTS
 

   
Page
     
Section 1.
Definitions
1
     
Section 2.
Appointment and Duties of the Manager
6
     
Section 3.
Conduct Policies
12
     
Section 4.
Additional Activities of the Manager; Non-Solicitation; Restrictions
12
     
Section 5.
Bank Accounts
13
     
Section 6.
Records; Confidentiality
14
     
Section 7.
Compensation
15
     
Section 8.
Expenses of the Company
17
     
Section 9.
Limits of the Manager’s Responsibility; Indemnification
19
     
Section 10.
No Joint Venture
21
     
Section 11.
Term; Renewal; Termination Without Cause
21
     
Section 12.
Assignments
22
     
Section 13.
Termination for Cause
23
     
Section 14.
Action Upon Termination
24
     
Section 15.
Release of Money or Other Property Upon Written Request
24
     
Section 16.
Miscellaneous
25

 
 

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

 

THIRD AMENDED AND RESTATED MANAGEMENT AGREEMENT dated as of May 13, 2011, among
Preferred Apartment Communities, Inc., a Maryland corporation (“PAC”), Preferred
Apartment Communities Operating Partnership, L.P., a Delaware limited
partnership (the “Operating Partnership”), and Preferred Apartment Advisors,
LLC, a Delaware limited liability company (the “Manager”).
 
WITNESSETH:
 
WHEREAS, the parties entered into the Management Agreement on November 19, 2010
(the “Original Agreement”) and amended and restated the Original Agreement on
January 25, 2011 (the “Amended and Restated Agreement”) and amended and restated
the Amended and Restated Agreement on February 28, 2011 (the “Second Amended and
Restated Agreement”); and
 
WHEREAS, the parties have agreed to make certain amendments and desire to amend
and restate the Second Amended and Restated Agreement in its entirety;
 
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the parties hereto, intending to be legally
bound, hereby agree that the Second Amended and Restated Agreement hereby is
amended and restated in its entirety to read as follows:
 
 
Section 1.
Definitions.

 
(a)           The following terms shall have the respective meanings set forth
below in this Section 1(a):
 
“Above-Market Rates” has the meaning set forth in Section 11(b).
 
“Acquisition Expenses” means any and all expenses, exclusive of Acquisition
Fees, incurred by the Company, the Manager or any of their respective Affiliates
in connection with the selection, evaluation, acquisition, origination, making
or development of any Investment, whether or not acquired, including legal fees
and expenses, travel and communications expenses, property inspection expenses,
third party brokerage or finder’s fees, costs of appraisals, nonrefundable
option payments on property not acquired, accounting fees and expenses, title
insurance premiums and expenses, survey expenses, closing costs and the costs of
performing due diligence.
 
“Acquisition Fee” means the fee payable to the Manager or its assignees pursuant
to Section 7(a).
 
“Affiliate” means, with respect to a specified Person, (i) any Person directly
or indirectly controlling, controlled by, or under common control with such
specified Person, (ii) any general partner of such specified Person, and (iii)
any Person for which such specified Person acts as a general partner.  For
purposes of this definition, the terms “controlled”, “controlled by”, or “under
common control with” shall mean the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of an entity,
whether through the ownership of voting securities, by contract or credit
arrangement, as trustee or executor, or otherwise.

 
 

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

 

“Agreement” means this Third Amended and Restated Management Agreement, as
amended or supplemented from time to time.
 
“AMEX” means NYSE Amex.
 
“Asset Management Fee” means the fee payable to the Manager pursuant to
Section 7(b).
 
“Automatic Renewal Term” has the meaning set forth in Section 11(a).
 
“Bankruptcy Event” means, with respect to any Person, (i) the filing by such
Person of a voluntary petition seeking liquidation, reorganization, arrangement
or readjustment, in any form, of its debts under Title 11 of the United States
Code or any other U.S. federal or state or foreign insolvency law, or such
Person’s filing an answer consenting to or acquiescing in any such petition,
(ii) the making by such Person of any assignment for the benefit of its
creditors, (iii) the expiration of 60 days after the filing of an involuntary
petition under Title 11 of the Unites States Code, an application for the
appointment of a receiver for a material portion of the assets of such Person,
or an involuntary petition seeking liquidation, reorganization, arrangement or
readjustment of its debts under any other U.S. federal or state or foreign
insolvency law, provided that the same shall not have been vacated, set aside or
stayed within such 60-day period, or (iv) the entry against such Person of a
final and non-appealable order for relief under any bankruptcy, insolvency or
similar law now or hereinafter in effect.
 
“Board” means the board of directors of PAC.  In every instance herein requiring
approval of the Board or referring to policies or directions of the Board, for
purposes of this Agreement, the Board shall be deemed to include any duly
appointed and constituted committee of the Board with respect to each and every
act that under the Governing Instruments or applicable law may be taken with the
approval of a duly appointed and constituted committee of the Board, and
references herein to the Board shall be deemed to include references to each
such committee.
 
“Business Day” means any day except a Saturday, a Sunday or a day on which
banking institutions in New York, New York or in Atlanta, Georgia are not
required to be open.
 
“Cause Termination Notice” has the meaning set forth in Section 13(a).
 
“Change of Control” of an entity means a change in the direct or indirect (i)
beneficial ownership of more than 50% of the combined voting power of such
entity’s then outstanding equity interests, or (ii) power to direct or cause the
direction of the management and policies of such entity, whether through the
ownership of voting securities, by contract or credit arrangement, as trustee or
otherwise.
 
“Claim” has the meaning set forth in Section 9(c).
 
“Class A Common Stock” means the Class A Common Stock, par value $0.01 per
share, of PAC.

 
2

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

 

“Closing Date” means the date of closing of the Initial Public Offering.
 
“Code” means the Internal Revenue Code of 1986, as amended from time to time, or
any successor statute thereto.  Reference to any provision of the Code shall
mean such provision as in effect from time to time, as the same may be amended,
and any successor provision thereto, as interpreted by any applicable
regulations as in effect from time to time.
 
“Company” means, collectively, PAC and the Operating Partnership.
 
“Company Entities” means, collectively, PAC, the Operating Partnership and each
of their respective subsidiaries.
 
“Company Indemnified Party” has meaning set forth in Section 9(b).
 
“Competitive Real Estate Commission” means a real estate or brokerage commission
for the purchase or sale of an asset which is reasonable, customary and
competitive in light of the size, type and location of the asset.
 
“Conduct Policies” has the meaning set forth in Section 3.
 
“Confidential Information” has the meaning set forth in Section 6.
 
“Construction Fee, Development Fee and Landscaping Fee” means the fee payable to
the Manager or its assignees pursuant to Section 7(e).
 
“Contract Sales Price” means the total consideration received by any of the
Company Entities for the sale of an Investment, which total consideration shall
include the amount of cash received, the fair market value of any property
received and the amount of debt assumed by the purchaser to which a Company
Entity is relieved of responsibility upon such disposition.
 
“Director” means a member of the Board.
 
“Disposition Fee on Sale of Assets” means the fee payable to the Manager or its
assignees pursuant to Section 7(d).
 
“Effective Termination Date” has the meaning set forth in Section 11(b).
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“Fees Accrued Upon Termination” means the amounts payable to the Manager or its
assignees equal to the aggregate of any earned but unpaid compensation and
expense reimbursements accrued as of the date of termination if this Agreement
is terminated (i) pursuant to a Change of Control of PAC, (ii) pursuant to a
Termination Without Cause, (iii) by the Manager pursuant to Section 13(b), or
(iv) based on a liquidation by the Company of all its assets.
 
“Financing Transaction” means any transaction with respect to any Investment
involving any of the Company Entities incurring any mortgage or other
indebtedness, including the entering into any line of credit, transaction
involving the creation of any commercial mortgage-backed security and mezzanine
financing.

 
3

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

 

“GAAP” means United States generally accepted accounting principles,
consistently applied.
 
“General and Administrative Expenses Fee” means the fee payable to the Manager
or its assignees pursuant to Section 8(b)(ii) in connection with the
administration of the day-to-day operations and the performance and supervision
of the performance of such other administrative functions necessary to the
management of the Company.
 
“Governing Instruments” means, with regard to any entity, the articles of
incorporation or certificate of incorporation and by-laws in the case of a
corporation, the partnership agreement in the case of a general or limited
partnership, the certificate of formation and operating or limited liability
company agreement in the case of a limited liability company, the declaration of
trust or other comparable trust instrument in the case of a trust, or similar
governing documents in the case of another type of entity, in each case, as the
same may be amended from time to time.
 
“Indemnified Party” has the meaning set forth in Section 9(b).
 
“Independent Director” means a member of the Board who is “independent” in
accordance with PAC’s Governing Instruments and the rules of the AMEX or such
other securities exchange on which the shares of Class A Common Stock are
listed.
 
“Initial Public Offering” means PAC’s sale of Class A Common Stock to the public
through one or more underwriters pursuant to the Registration Statement.
 
“Initial Term” has the meaning set forth in Section 11(a).
 
“Investment” means any investment by any Company Entity, directly or indirectly,
in Real Estate Assets, Real Estate Related Loans or any other asset.
 
“Investment Committee” means the investment committee formed by the Board.
 
“Investment Company Act” means the Investment Company Act of 1940, as amended.
 
“Investment Guidelines” means the investment guidelines approved by the Board, a
copy of which is attached hereto as Exhibit A, as the same may amended,
restated, supplemented or waived pursuant to the approval of a majority of the
entire Board (which must include a majority of the Independent Directors).
 
“Investment Transaction” means any purchase, acquisition, exchange, sale or
disposition, merger or interest exchange that results in the acquisition or
disposition of, or other transaction involving, an Investment.
 
“Joint Ventures” means the joint venture or partnership or other similar
arrangements (other than between or among any Company Entity) in which a Company
Entity is a co-venturer, member, partner or other equity holder, which are
established to own Investments.

 
4

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

 

“Losses” has the meaning set forth in Section 9(a).
 
“Manager” has the meaning set forth at the head of this Agreement and shall
include any successor in interest thereto.
 
“Manager Change of Control” means a Change of Control of the Manager; provided,
however, that no Manager Change of Control shall result from (i) any public
offering of equity interests of the Manager, or (ii) any assignment of this
Agreement by the Manager as permitted hereby and in accordance with the terms
hereof.
 
“Manager Indemnified Party” has the meaning set forth in Section 9(a).
 
“Manager Permitted Disclosure Parties” has the meaning set forth in
Section 6(a).
 
“Notice of Proposal to Negotiate” has the meaning set forth in Section 11(c).
 
“Operating Partnership” has the meaning at the head of this Agreement.
 
“PAC” has the meaning at the head of this Agreement.
 
“Person” or “person” means any natural person, corporation, partnership,
association, limited liability company, estate, trust or joint venture, any
federal, state, county or municipal government or any bureau, department or
agency thereof, or any other legal entity.
 
“Property Management and Leasing Fee” means the fee payable to the Manager or
its assignees pursuant to Section 7(c).
 
“Real Estate Assets” means any investments by any Company Entity in unimproved
or improved Real Property (including fee or leasehold interests, options and
leases), directly, through one or more subsidiaries or through a Joint Venture.
 
“Real Estate Related Loans” means any investments in mortgage loans and other
types of real estate related debt obligations, including mezzanine loans, bridge
loans, convertible mortgages, wraparound mortgage loans, construction mortgage
loans, loans on leasehold interests and participations in such loans, by any
Company Entity, directly, through one or more subsidiaries or through a Joint
Venture.
 
“Real Property” means real property owned from time to time by any Company
Entity, directly, through one or more subsidiaries or through a Joint Venture,
which consists of (i) land only, (ii) land, including the buildings located
thereon, (iii) buildings only, or (iv) such Investments the Board or the Manager
designates as Real Property to the extent such Investments could be classified
as Real Property.
 
“Registration Statement” means PAC’s Registration Statement on Form S-11
(Registration No. 333-168407), as amended from time to time, pursuant to which
it is conducting or has conducted the Initial Public Offering.
 
“Regulation FD” means Regulation FD as promulgated by the SEC.

 
5

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

 

“REIT” means a “real estate investment trust” as defined under the Code.
 
“SEC” means the United States Securities and Exchange Commission.
 
“Securities Act” means the Securities Act of 1933, as amended.
 
“Target Assets” means the types of assets described under “Business— Our Target
Assets” in PAC’s prospectus included in the Registration Statement, subject to,
and including any changes in, the Investment Guidelines.
 
“Termination Notice” has the meaning set forth in Section 11(b).
 
“Termination Without Cause” has the meaning set forth in Section 11(b).
 
(b)          As used herein, accounting terms relating to any Company Entity not
defined in Section 1(a), and accounting terms partly defined in Section 1(a), to
the extent not defined, shall have the respective meanings given to them under
GAAP.
 
(c)          As used herein, “calendar quarters” shall mean the periods from
January 1 to March 31, April 1 to June 30, July 1 to September 30 and October 1
to December 31 of the applicable year.
 
(d)          The words “hereof”, “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section references are to
this Agreement unless otherwise specified.
 
(e)           The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
 
(f)           The words “include”, “includes” and “including” shall be deemed to
be followed by the phrase “without limitation.”
 
(g)          A reference to any gender shall be deemed to be a reference to all
genders.
 
 
Section 2.
Appointment and Duties of the Manager.

 
(a)           PAC and the Operating Partnership hereby appoint the Manager to
manage and administer the Investments and day-to-day operations of the Company
Entities, subject at all times to the further terms and conditions set forth in
this Agreement and to the oversight of, and such further limitations or
parameters consistent with this Agreement as may be imposed from time to time
by, the Board.  The Manager will use commercially reasonable efforts to perform
each of its duties set forth herein, provided that funds are made available by
the Company for such purposes as set forth in Section 8.  The Company shall not
appoint any other Person except the Manager to perform the duties and carry out
the responsibilities of the Manager described herein, except as may otherwise be
permitted by this Agreement and except to the extent that the Manager elects, in
its sole and absolute discretion, subject to the terms of this Agreement, to
cause the duties of the Manager as set forth herein to be provided by third
parties.

 
6

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

 

(b)           The Manager, in its capacity as manager of the Investments and the
day-to-day operations of the Company Entities, at all times will be subject to
the oversight and direction of the Board, will act in a manner that is compliant
with the provisions of the Governing Instruments of each Company Entity, will
use commercially reasonable efforts to present to the Company potential
investment opportunities and will perform its duties hereunder, including
managing the Company’s business affairs in conformity with the Investment
Guidelines and other policies that are determined and adopted by the
Board.  PAC, the Operating Partnership and the Manager hereby acknowledge the
adoption by the Board of the Investment Guidelines, including the Company’s
investment strategy with respect to Target Assets.  PAC, the Operating
Partnership and the Manager hereby acknowledge and agree that, during the term
of this Agreement, any proposed changes to the Company’s investment strategy
that would modify or expand the Target Assets shall require a change in, or
supplement to, the Investment Guidelines.  The Company shall notify the Manager
promptly of any amended, restated, supplemented or waived Investment Guidelines,
including any modification or revocation of the Manager’s authority set forth in
the Investment Guidelines; provided, however, that such modification or
revocation shall not be applicable to investment transactions to which the
Manager has committed any Company Entity prior to the date of receipt by the
Manager of such notification.
 
(c)           The Manager will be responsible for the day-to-day operations of
the Company Entities (which, for purposes of the Manager’s responsibilities in
this Agreement, includes their respective subsidiaries) and will perform (or
cause to be performed), subject to the Board’s oversight, such services and
activities relating to the Investments and the day-to-day operations of the
Company Entities as may be appropriate, which may include:
 
(i)    (A) proposing modifications to the Investment Guidelines to the Board,
(B) periodically reviewing the Company’s Investment portfolio for compliance
with the Investment Guidelines and reporting its findings to the Board, (C)
periodically reviewing and reporting to the Board regarding the diversification
of the Company’s Investment portfolio and the financing strategies, and (D)
conducting or overseeing the provision of the services and activities set forth
in this Section 2;
 
(ii)  investigating, analyzing, selecting, conducting due diligence with respect
to, negotiating the terms and conditions of (including negotiating the forms of
definitive agreements), arranging financing for and recommending to the Board in
accordance with procedures adopted by the Board possible Investment Transactions
consistent with the Investment Guidelines;
 
(iii)  with respect to prospective Investment Transactions and Financing
Transactions, conducting negotiations (including negotiation of definitive
agreements) with sellers, purchasers, prospective merger partners, lenders and
other financing sources and brokers and, if applicable, their respective agents
and representatives and closing Investment Transactions and Financing
Transactions on behalf of the Company;
 
(iv)  effecting any private placement of interests in the Operating Partnership,
tenancy-in-common or other interests in Investments as may be approved by the
Board;

 
7

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

 

(v)  delivering to, or maintaining on behalf of, the Company copies of all
appraisals obtained in connection with the Investments in any Real Estate Assets
as may be required to be obtained by the Board;
 
(vi)  negotiating and causing the Company to enter into, within the
discretionary limits and authority granted by the Board, repurchase agreements,
interest rate swap agreements, agreements relating to borrowings under programs
established by the U.S. Government and other agreements and instruments required
to conduct the business of the Company;
 
(vii)  engaging and supervising, at the expense of the Company, independent
contractors that provide investment banking, securities brokerage, mortgage
brokerage, real estate brokerage services, other financial services, due
diligence services, underwriting review services, legal and accounting services,
and all other services (including transfer agent and registrar services) as may
be required relating to the Company’s operations, Investments, Investment
Transactions or Financing Transactions;
 
(viii)  advising the Company on, preparing, negotiating and entering into, on
behalf of the Company, applications and agreements relating to programs
established by the U.S. Government;
 
(ix)  coordinating and managing operations of any joint venture or co-investment
interests held by the Company and conducting all matters with the joint venture
or co-investment partners;
 
(x)  providing executive and administrative personnel, office space and office
services required in rendering services to the Company;
 
(xi)  entering into on behalf of the Company leases and service contracts in
connection with the Investments and administering the day-to-day operations and
performing and supervising the performance of such other administrative
functions necessary to the Company’s management under oversight by the Board,
including the collection of revenues and the payment of the Company’s debts and
obligations and maintenance of appropriate computer services to perform such
administrative functions;
 
(xii)  communicating on the Company’s behalf with the holders of any equity or
debt securities of PAC or the Operating Partnership as required to satisfy the
reporting and other requirements of any governmental body or agency or trading
market and to maintain effective relations with such holders;
 
(xiii)  evaluating and recommending to the Board hedging strategies and engaging
on the Company’s behalf in hedging activities within the discretionary limits
and authority as granted by the Board, consistent with the Company’s
qualification as a REIT and with the Investment Guidelines;
 
(xiv)  counseling the Board and the Company regarding the maintenance of PAC’s
qualification as a REIT and monitoring compliance with the various REIT
qualification tests and other rules set out in the Code and Treasury Regulations
thereunder and using commercially reasonable efforts to cause PAC to qualify for
taxation as a REIT;

 
8

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

 

(xv)  counseling the Board and the Company regarding the maintenance of PAC’s
exemption from the status of an investment company required to register under
the Investment Company Act, monitoring compliance with the requirements for
maintaining such exemption and using commercially reasonable efforts to cause
PAC to maintain such exemption from such status;
 
(xvi)  furnishing reports and statistical and economic research to the Board
regarding the activities and services performed for the Company by the Manager,
including reports with respect to potential conflicts of interest involving the
Manager or any of its Affiliates;
 
(xvii)  monitoring the performance of the Investments and providing periodic
reports with respect thereto to the Board, including comparative information
with respect to such operating performance and budgeted or projected operating
results;
 
(xviii)  investing and reinvesting any moneys and securities of the Company
within the discretionary limits and authority as granted by the Board (including
investing in short-term investments pending investment in other Investments,
payment of fees, costs and expenses) and advising the Company with respect to
its equity and debt capitalization and its financing strategies, and the
payments of dividends or distributions to PAC’s stockholders and the Operating
Partnership’s partners;
 
(xix)  causing the Company to retain qualified accountants and legal counsel, as
applicable, to assist in developing appropriate accounting procedures and
systems, internal controls and other compliance procedures and testing systems
with respect to financial reporting obligations and compliance with the
provisions of the Code applicable to REITs and, if applicable, taxable REIT
subsidiaries, and to conduct quarterly compliance reviews with respect thereto;
 
(xx)  assisting the Company in qualifying to do business in all applicable
jurisdictions and to obtain and maintain all appropriate licenses;
 
(xxi)  assisting the Company in complying with all laws and regulatory
requirements applicable to the Company’s business activities, including
preparing or causing to be prepared all financial statements required under
applicable regulations and contractual undertakings and all reports and
documents, if any, required under the Exchange Act, the Securities Act, state or
foreign securities laws or by the AMEX;
 
(xxii)  assisting the Company in taking all necessary action to enable the
Company to make required tax filings and reports, including soliciting
information from stockholders to the extent required by the provisions of the
Code applicable to REITs;

 
9

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

 

(xxiii)  handling and resolving all claims, disputes or controversies (including
all litigation, arbitration, settlement or other proceedings or negotiations) in
which the Company may be involved or to which the Company or the Company’s
properties or assets may be subject arising out of the Company’s day-to-day
operations (other than with the Manager or its Affiliates), subject to such
limitations or parameters as may be imposed from time to time by the Board;
 
(xxiv)  using commercially reasonable efforts to cause expenses incurred on
behalf of the Company to be commercially reasonable or commercially customary
and within any budgeted parameters or expense guidelines proposed by the Manager
and approved by the Board from time to time;
 
(xxv)  advising the Board regarding the Company’s equity and debt financings,
hedging activities and joint venture arrangements including (A) advising the
Board on the appropriateness of the Company’s leverage ratio, levels of
preferred and common equity financing, pricing of equity offerings, derivative
positions and strategies and off-balance sheet arrangements, and (B) seeking to
execute on the Company’s behalf Financing Transactions, equity offerings,
hedging transactions and joint ventures and off-balance sheet transactions
consistent with the Board’s directions and the Company’s financing policies as
approved by the Board;
 
(xxvi)  providing portfolio management services to the Company;
 
(xxvii)  arranging marketing materials, advertising, industry group activities
(such as conference participations and industry organization memberships) and
other promotional efforts designed to promote the Company’s business; and
 
(xxviii)  performing such other services as may be required from time to time
for management and other activities relating to the Company’s assets and
business as the Board shall reasonably request or the Manager shall deem
appropriate under the particular circumstances.
 
(d)           The Manager may retain, for and on behalf, and at the sole cost
and expense, of the Company, such services of the Persons referred to in
Section 8 as the Manager deems necessary or advisable in connection with the
management and operations of the Company.  In performing its duties under this
Section 2, the Manager shall be entitled to rely reasonably on qualified experts
and professionals (including accountants, legal counsel and other professional
service providers) hired by the Manager at the Company’s sole cost and expense.
 
(e)           The Manager shall refrain from any action that, in its sole
judgment made in good faith, (i) is not in compliance with the Investment
Guidelines, (ii) would adversely and materially affect the qualification of PAC
as a REIT or the Operating Partnership as a partnership under the Code or the
Company’s status as an entity excluded from investment company status under the
Investment Company Act, or (iii) would conflict with or violate (A) any law,
rule or regulation of any governmental body or agency having jurisdiction over
any Company Entity, (B) any rule of any exchange on which the securities of the
Company may be listed, or (C) any applicable Governing Instruments.  The Manager
may proceed with taking an action described above if further instructed to do so
by the Board.  If the Manager is ordered to take any action by the Board, the
Manager promptly shall notify the Board if it is the Manager’s judgment that
such action would adversely and materially affect such qualification or status
or conflict with or violate any such law, rule or regulation or Governing
Instruments.  Notwithstanding the foregoing, neither the Manager nor any of its
Affiliates shall be liable to any Company Entity, the Board, any of the
stockholders, partners, members or other holders of equity interests of any
Company Entity for any act or omission by the Manager or any of its Affiliates,
except as provided in Section 9.

 
10

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

 

(f)           The Manager shall notify the Board of all proposed Investment
Transactions before they are completed and within 30 days following completion
of the transaction.  The Manager shall seek and obtain Board approval of any
Investment Transaction that does not meet the Investment Guidelines.  Subject to
this Section 2(f), the Manager may execute without Board approval (but, in all
cases, with advance notice to the Board) any Investment Transaction that fits
within the Investment Guidelines.  If any transaction requires approval by the
Independent Directors, the Manager will deliver to the Independent Directors all
documents and other information reasonably required by them to evaluate properly
the proposed transaction.  With respect to Investment Transactions for which
Board approval is not required but advance notice is required, the Manager shall
provide to the Board a summary of its investment analysis with respect to the
proposed Investment Transaction.  The Board may, at any time upon the giving of
notice to the Manager, modify or revoke the authority set forth in this
Section 2(f); provided, however, that such modification or revocation shall be
effective upon receipt by the Manager and shall not be applicable to Investment
Transactions to which the Manager has committed the Company prior to the date of
receipt by the Manager of such notification.
 
(g)           The Company will take all actions reasonably required to permit
and enable the Manager to carry out its duties and obligations under this
Agreement, including all steps reasonably necessary to allow the Manager to file
any registration statement or other filing required to be made under the
Securities Act, Exchange Act, the AMEX’s Company Guide, the Code or other
applicable law, rule or regulation on behalf of the Company in a timely
manner.  The Company will use commercially reasonable efforts to make available
to the Manager all resources, information and materials reasonably requested by
the Manager to enable the Manager to satisfy its obligations hereunder,
including its obligations to deliver financial statements and any other
information or reports with respect to the Company.
 
(h)           As frequently as the Manager may deem necessary or advisable, or
at the direction of the Board, the Manager shall prepare (or, at the sole cost
and expense of the Company, cause to be prepared) reports and other information
relating to any proposed or consummated Investment.
 
(i)           The Manager shall prepare (or, at the sole cost and expense of the
Company, cause to be prepared) all reports, financial or otherwise, reasonably
required by the Board in order for the Company Entities to comply with their
respective Governing Instruments or as otherwise reasonably requested by the
Board, including an annual audit of PAC’s consolidated financial statements by a
nationally recognized independent accounting firm.
 
(j)           The Manager shall prepare (or, at the sole cost and expense to the
Company, cause to be prepared) regular reports for the Board to enable the Board
to review the Company’s acquisitions, Investment portfolio composition and
characteristics, credit quality, performance and compliance with the Investment
Guidelines and policies approved by the Board.

 
11

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

 

(k)           Officers, employees and agents of the Manager and its Affiliates
may serve as directors, officers, agents, nominees or signatories for any
Company Entity, to the extent permitted by their respective Governing
Instruments, by any resolutions duly adopted by the Board, the Operating
Partnership or such subsidiary.  When executing documents or otherwise acting in
such capacities for any Company Entity, such Persons shall indicate in what
capacity they are executing on behalf of such Company Entity.  Without limiting
the foregoing, while this Agreement is in effect, the Manager will establish a
management team, including a chief executive officer and president or similar
positions, along with appropriate support personnel, to provide the management
services to be provided by the Manager to the Company Entities hereunder, who
shall devote such of their time to the management of the Investments and
consideration of the Investment Guidelines and policies as necessary and
appropriate, commensurate with the level of activity of the Company from time to
time.
 
(l)           The Manager, at its sole cost and expense, shall maintain
reasonable and customary “errors and omissions” insurance coverage and other
customary insurance coverage in respect to its obligations and activities under,
or pursuant to, this Agreement, naming PAC and the Operating Partnership as
additional insureds.
 
(m)           The Manager, at its sole cost and expense, shall provide such
internal audit, compliance and control services as may be required for the
Company to comply with applicable law (including the Securities Act and Exchange
Act), regulation (including SEC regulations) and the rules and requirements of
the AMEX and as otherwise reasonably requested by the Company or the Board from
time to time.
 
(n)           The Manager, at its sole cost and expense, shall maintain any
required registration of the Manager or any Affiliate with the Securities and
Exchange Commission under the Investment Advisers Act of 1940, as amended, or
with any state securities authority in any state in which the Manager or its
Affiliate is required to be registered as an investment advisor under applicable
state securities laws.
 
 
Section 3.
Conduct Policies.

 
The Manager acknowledges receipt of the Company’s Code of Business Conduct and
Ethics and the Company’s Policy on Insider Trading (collectively, the “Conduct
Policies”) and will use commercially reasonable efforts to require the Persons
who provide services to the Company to comply with the Conduct Policies in the
performance of such services hereunder or such comparable policies as shall in
substance hold such Persons to at least the standards of conduct set forth in
the Conduct Policies.
 
 
Section 4.
Additional Activities of the Manager; Non-Solicitation; Restrictions.

 
(a)           Subject to Section 4(c) and except as may be provided in the
Investment Guidelines, nothing in this Agreement shall:  (i) prevent the
Manager, any of its Affiliates or any of their respective officers, directors or
employees, from engaging in other businesses or from rendering services of any
kind to any other Person, whether or not the investment objectives or policies
of any such other Person are similar to those of the Company; provided, however,
that the Manager devotes sufficient resources to the Company’s business to
discharge its obligations to the Company under this Agreement; or (ii) in any
way bind or restrict the Manager, any of its Affiliates or any of their
respective officers, directors or employees from buying, selling or trading any
securities or commodities for their own accounts or for the account of others
for whom the Manager, any of its Affiliates or any of their respective officers,
directors or employees may be acting.

 
12

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

 

(b)           While information and recommendations supplied to the Company
shall, in the Manager’s good faith judgment, be appropriate under the
circumstances and in light of the investment objectives and policies of the
Company, they may be different from the information and recommendations supplied
by the Manager or any Affiliate of the Manager to others.  The Company shall be
entitled to equitable treatment under the circumstances in receiving
information, recommendations and any other services, but the Company recognizes
that the Company is not entitled to receive preferential treatment as compared
with the treatment given by the Manager or any Affiliate of the Manager to
others.
 
(c)           The Manager shall report to the Board any condition or
circumstance, existing or anticipated, of which it has knowledge, which creates
or could create a conflict of interest between the Manager’s obligations to the
Company and its obligations to or its interest in any other Person.  If the
Manager or any of its Affiliates sponsored any other investment program with
similar investment objectives to the Company that has investment funds available
at the same time as the Company, the Manager shall inform the Board of the
method to be applied by the Manager in allocating investment opportunities among
the Company and competing investment entities and shall provide regular updates
to the Board of the investment opportunities provided by the Manager to
competing programs in order for the Board (including the Independent Directors)
to evaluate that the Manager is allocating such opportunities in accordance with
such method.
 
(d)           In the event of a Termination Without Cause of this Agreement by
the Company pursuant to Section 11(b), for a period of two years from and after
the date of such termination of this Agreement, the Company shall not (and shall
cause each of the Company Entities to not), without the consent of the Manager,
employ or otherwise retain (directly or indirectly any Company Entity) any
Person who was employed as an executive by the Manager or any of its Affiliates
on the date of such termination or any Person who shall have been employed as an
executive by the Manager or any of its Affiliates at any time within the
two-year period immediately preceding the date on which such Person is scheduled
to commence employment with or otherwise be retained by the Company or any other
Company Entity.  The Company acknowledges and agrees that, in addition to any
damages, the Manager shall be entitled to equitable relief for any violation of
this Section 4(d) by PAC or the Operating Partnership (directly or indirectly
through any of their respective subsidiaries), including injunctive relief.
 
 
Section 5.
Bank Accounts.

 
At the direction of the Board, the Manager may establish and maintain one or
more bank accounts in the name of any Company Entity, and may collect and
deposit into any such account or accounts, and disburse funds from any such
account or accounts, under such policies, terms and conditions as the Company
may establish and the Board may approve, provided that no funds shall be
commingled with the funds of the Manager or its Affiliates.  The Manager shall
from time to time render appropriate accountings of such collections and
payments to the Board and, upon request, shall provide information regarding
such account to the Company’s auditors.

 
13

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

 

 
Section 6.
Records; Confidentiality.

 
(a)           The Manager shall maintain appropriate books of accounts and
records relating to services performed hereunder, and such books of account and
records shall be accessible for inspection by representatives of the Company
Entities at any time during normal business hours.  The Manager shall keep
confidential any and all non-public information, written or oral, obtained by it
in connection with the services rendered hereunder (“Confidential
Information”) and shall not use Confidential Information except in furtherance
of its duties under this Agreement or disclose Confidential Information, in
whole or in part, to any Person other than (i) to its Affiliates and the
officers, directors, employees, agents, representatives or advisors of the
Manager or any of its Affiliates who need to know such Confidential Information
for the purpose of rendering services hereunder, (ii) to appraisers, financing
sources and others in the ordinary course of the Company’s business ((i) and
(ii) collectively, “Manager Permitted Disclosure Parties”), (iii) in connection
with any governmental or regulatory filings of the Company, or filings with the
AMEX or other applicable securities exchange or market, (iv) in presentations or
other disclosures to the Company’s investors (subject to compliance with
Regulation FD), (iv) to governmental officials having jurisdiction over the
Company, (v) as required by law or legal process to which the Manager or any
Person to whom disclosure is permitted hereunder is a party, or (vi) with the
consent of the Company.  The Manager will inform each of its Manager Permitted
Disclosure Parties of the non-public nature of the Confidential Information and
to obtain agreement from such Persons to treat such Confidential Information in
accordance with the terms hereof.
 
(b)           Nothing herein shall prevent any Manager Permitted Disclosure
Party from disclosing Confidential Information (i) upon the order of any court
or administrative agency, (ii) upon the request or demand of, or pursuant to any
law or regulation to, any regulatory agency or authority, (iii) to the extent
reasonably required in connection with the exercise of any remedy hereunder, or
(iv) to its legal counsel or independent auditors; provided, however, that with
respect to clauses (i) and (ii), it is agreed that, so long as not legally
prohibited, the Manager will provide PAC with prompt written notice of such
order, request or demand so that PAC may seek, at its sole expense, an
appropriate protective order and/or waive any Manager Permitted Disclosure
Party’s compliance with the provisions of this Agreement.  If, failing the entry
of a protective order or the receipt of a waiver hereunder, the Manager is
required to disclose Confidential Information, the Manager Permitted Disclosure
Party may disclose only that portion of such information that is legally
required without liability hereunder; provided, however, that the Manager
Permitted Disclosure Party agrees to exercise commercially reasonable efforts to
obtain reliable assurance that confidential treatment will be accorded such
information.
 
(c)           Notwithstanding anything herein to the contrary, the following
types of Confidential Information shall be deemed to be excluded from provisions
hereof:  (i) any Confidential Information that is available to the public from a
source other than the Manager or its Affiliates, (ii) any Confidential
Information that is released in writing by any of the Company Entities to the
public (except to the extent exempt under, and in compliance with, Regulation
FD) or to persons who are not under similar obligation of confidentiality to any
of the Company Entities; and (iii) any Confidential Information that is obtained
by the Manager from a third party which, to the Manager’s knowledge, does not
constitute a breach by such third party of an obligation of confidence with
respect to the Confidential Information disclosed.

 
14

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

 

(d)           The provisions of this Section 6 shall survive the expiration or
earlier termination of this Agreement for a period of two years thereafter,
provided that the parties will maintain trade secrets of the other party
identified in writing as trade secrets, and which in fact constitute trade
secrets, for a period of no longer than five years thereafter.
 
 
Section 7.
Compensation.

 
(a)           Acquisition Fee.  The Company shall pay an Acquisition Fee to the
Manager or its assignees as compensation for services rendered in connection
with the investigation, selection and acquisition (by purchase, investment or
exchange) of Investments.  The total Acquisition Fee payable to the Manager or
its assignees shall equal 1.0% of the purchase price of Real Estate Assets and
1.0% of the amount advanced for Real Estate Related Loans or other Investments
(other than Real Estate Assets), along with reimbursement of Acquisition
Expenses actually incurred by the Manager or any of its Affiliates; provided,
however, that no Acquisition Fee will be payable until the Closing Date,
although it may accrue before the Closing Date.  The purchase price of Real
Estate Assets shall equal the amount paid or allocated to the acquisition (by
purchase, investment or exchange) of the Real Estate Assets inclusive of
expenses related thereto and the amount of debt assumed in connection with such
Investment or to which such Investment may be subject following such
acquisition, but exclusive of Acquisition Fees.  The purchase price allocable
for an Investment held through a Joint Venture shall equal the product of (i)
the purchase price of, or the amount advanced for, the Investment, as
applicable, determined as stated above, and (ii) the direct or indirect
ownership percentage in the Joint Venture held directly or indirectly by any
Company Entity.  For purposes of this paragraph, “ownership percentage” shall be
the percentage of capital stock, membership interests, partnership interests or
other equity interests held by any Company Entity, without regard to
classification of such equity interests.  The Company shall pay to the Manager
or its assignees the Acquisition Fee promptly upon the closing of the
Investment, subject to the proviso set forth above.
 
(b)           Asset Management Fee.  The Company shall pay a monthly Asset
Management Fee to the Manager or its assignees as compensation for services
rendered in connection with the management of the Investments.  The Asset
Management Fee shall be payable monthly in cash or shares of PAC’s Class A
Common Stock, at the option of the Manager, and shall be equal to one-twelfth of
0.50% of the total value of the Company’s assets (including cash or cash
equivalents) held as of the last day of the immediately preceding month, based
on the adjusted cost of the Company’s assets before reduction for depreciation,
amortization, impairment charges and cumulative acquisition costs charged to
expense in accordance with GAAP (adjusted cost of Real Estate Assets and Real
Estate Related Loans will include the purchase price, Acquisition Expenses,
capital expenditures and other customarily capitalized costs) and as adjusted
for appropriate closing dates for individual asset acquisitions.  The Asset
Management Fee will be appropriately pro rated for any partial month.

 
15

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

 

(c)           Property Management and Leasing Fee.  The Company shall pay a
Property Management and Leasing Fee to the Manager or its assignees as
compensation for services rendered in connection with the rental, leasing,
operation and management of the Company’s Real Estate Assets and the supervision
of any non-Affiliates that are engaged by the Manager to provide such services
in an amount equal to 4.0% of the gross revenues of properties managed per
month.  The Manager may subcontract the performance of its property management
and leasing services duties to third parties (including its Affiliates) and pay
all or a portion of the Property Management and Leasing Fee to such persons with
whom it contracts for these services. The Manager will be responsible for all
fees payable to third parties (including its Affiliates) in connection with
subcontracted property management and leasing duties. The Property Management
and Leasing Fee will be payable monthly in arrears, based on the actual gross
revenues for the prior month.
 
(d)           Disposition Fee on Sale of Assets.  In connection with a sale or
other disposition (other than a roll-over of an existing Investment into another
Investment related to substantially the same underlying asset) of an Investment
(except for such Investments that are traded on a national securities exchange
and short-term investments pending investment in other Investments) in which the
Manager or any Affiliate of the Manager provides a substantial amount of
services, as determined by a majority of the Independent Directors, the Company
shall pay to the Manager or its assignees a Disposition Fee on Sale of Assets up
to the lesser of (i) one-half of a Competitive Real Estate Commission and (ii)
1.0% of the Contract Sales Price of such Investment; provided, however, that in
no event may the Disposition Fee on Sale of Assets paid to the Manager, its
Affiliates and non-Affiliates exceed the lesser of 6.0% of the Contract Sales
Price and a Competitive Real Estate Commission.  If the sale or disposition
involves the receipt of publicly traded securities or operating partnership
units that may be redeemed for or converted into publicly traded securities,
then the Disposition Fee on Sale of Assets shall be receivable upon the receipt
of such consideration, notwithstanding the fact that such consideration may at
that time be publicly traded or valued by reference to a publicly traded
security.
 
(e)           Construction Fee, Development Fee and Landscaping Fee.  The
Company shall pay a Construction Fee, Development Fee and/or Landscaping Fee to
the Manager or its assignees as compensation for services rendered in connection
with the construction, development or landscaping of the Real Estate Assets and
the supervision of any non-Affiliates that are engaged by then Manager to
provide such services in an amount equal to the customary and competitive market
rates in light of the size, type and location of the Real Estate Assets.
 
(f)           Exclusion of Certain Transactions.  If any Company Entity shall
propose to enter into any transaction in which the Manager, any Affiliate of the
Manager or any of the Manager’s directors or officers has a direct or indirect
interest, then such transaction shall be approved by a majority of the Board not
otherwise interested in such transaction, including a majority of the
Independent Directors.

 
16

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

 

(g)           Limitation on Total Asset Management Fees, Property Management and
Leasing Fees and General and Administrative Expenses Fee.  The total amount of
the Asset Management Fees, Property Management and Leasing Fees and General and
Administrative Expenses Fee payable in connection with the Company’s investments
paid or reimbursed to the Manager shall not exceed 1.50% per annum of the total
value of the Company’s assets (including cash and cash equivalents) based on the
adjusted cost of the Company’s assets before reduction for depreciation,
amortization, impairment charges and cumulative acquisition costs charged to
expense in accordance with GAAP (adjusted cost will include the gross contract
purchase price, Acquisition Expenses, capital expenditures and other customarily
capitalized costs).
 
(h)           General and Administrative Expenses Fee.  The Company shall pay a
General and Administrative Expenses Fee in an amount equal to 2.0% of the gross
revenues of the Company per month.
 
 
Section 8.
Expenses of the Company.

 
(a)           The Manager shall be responsible for the expenses related to any
and all personnel of the Manager and its Affiliates who provide services to the
Company pursuant to this Agreement (including each of the officers and directors
of the Company who are also directors, officers, employees or agents of the
Manager or any of its Affiliates), including salaries, bonus and other wages,
payroll taxes, the cost of employee benefit plans of such personnel, and costs
of insurance with respect to such personnel.  For the avoidance of doubt, any
equity incentive plan of PAC or the Operating Partnership in which any person
referred to above participates shall be excluded from the operation of this
Section 8(a).
 
(b)           The Company shall pay (or cause to be paid) all the costs and
expenses of each Company Entity and shall reimburse the Manager or its
Affiliates for expenses of the Manager and its Affiliates incurred on behalf of
any Company Entity, excepting only those expenses that are specifically the
responsibility of the Manager pursuant to Section 8(a) and subject to
Section 7(g).  Without limiting the generality of the foregoing, it is
specifically agreed that the following costs and expenses of the Company
Entities shall be paid (or caused to be paid) by the Company and shall not be
paid by the Manager or Affiliates of the Manager:
 
(i)  Acquisition Expenses incurred in connection with the selection and
acquisition of Investments;
 
(ii)  General and Administrative Expenses Fee;
 
(iii)  expenses in connection with the issuance of securities of the Company,
any Financing Transaction and other costs incident to the acquisition,
disposition and financing of the Investments;
 
(iv)  costs of legal, tax, accounting, consulting, auditing and other similar
services rendered to the Company by providers retained by the Manager, or, if
provided by the Manager’s personnel, in amounts which are no greater than those
which would be payable to outside professionals or consultants engaged to
perform such services pursuant to agreements negotiated on an arm’s-length
basis;
 
(v)  the compensation and expenses of the Directors and the cost of liability
insurance to indemnify the Company and its officers and the Directors;

 
17

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

 

(vi)  expenses connected with communications to holders of the securities of any
Company Entity and other bookkeeping and clerical work necessary in maintaining
relations with holders of such securities and in complying with the continuous
reporting and other requirements of governmental bodies or agencies, including
all costs of preparing and filing required reports with the SEC, the costs
payable by the Company to any transfer agent and registrar in connection with
the listing and/or trading of the Company’s securities on any exchange, the fees
payable by the Company to any such exchange in connection with its listing,
costs of preparing, printing and mailing PAC’s annual report to its stockholders
or the Operating Partnership’s partners, as applicable, and proxy materials with
respect to any meeting of PAC’s stockholders or the Operating Partnership’s
partners, as applicable;
 
(vii)  costs associated with any computer software or hardware, electronic
equipment or purchased information technology services from third-party vendors
that is used for the Company Entities;
 
(viii)  expenses incurred by managers, officers, personnel and agents of the
Manager for travel on the Company’s behalf and other out-of-pocket expenses
incurred by managers, officers, personnel and agents of the Manager in
connection with the purchase, financing, refinancing, sale or other disposition
of an Investment or in connection with any Financing Transaction;
 
(ix)  costs and expenses incurred with respect to market information systems and
publications, research publications and materials, and settlement, clearing and
custodial fees and expenses;
 
(x)  the costs of maintaining compliance with all federal, state and local rules
and regulations or any other regulatory agency;
 
(xi)  all taxes and license fees;
 
(xii)  all insurance costs incurred in connection with the operation of the
Company’s business except for the costs attributable to the insurance that the
Manager elects to carry for itself and its personnel;
 
(xiii)  costs and expenses incurred in contracting with third parties;
 
(xiv)  all other costs and expenses relating to the Company’s business and
investment operations, including the costs and expenses of owning, protecting,
maintaining, developing and disposing of Investments, including appraisal,
reporting, audit and legal fees;
 
(xv)  expenses relating to any office(s) or office facilities, including
disaster backup recovery sites and facilities, maintained for the Company
Entities or the Investments of the Company separate from the office or offices
of the Manager;
 
(xvi)  expenses connected with the payments of interest, dividends or
distributions in cash or any other form authorized or caused to be made by the
Board, the Operating Partnership or other governing body to or on account of
holders of the securities of any Company Entity, including in connection with
any dividend reinvestment plan;

 
18

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

 

(xvii)  any judgment or settlement of pending or threatened proceedings (whether
civil, criminal or otherwise) against any Company Entity, or against any
trustee, director, partner, member or officer of such Company Entity in his
capacity as such for which such Company Entity is required to indemnify such
trustee, director, partner, member or officer pursuant to the applicable
Governing Instruments or any agreement or other instrument or by any court or
governmental agency; and
 
(xviii)  all other expenses actually incurred by the Manager (except as
otherwise specified herein) which are reasonably necessary or advisable for the
performance by the Manager of its duties and functions under this Agreement.
 
(c)           Costs and expenses incurred by the Manager on behalf of the
Company shall be reimbursed monthly to the Manager.  The Manager shall prepare a
written statement in reasonable detail documenting the costs and expenses of the
Company and those incurred by the Manager on behalf of the Company during each
month, and shall deliver such written statement to the Company within 30 days
after the end of each month.  The Company shall pay all amounts payable to the
Manager pursuant to this Section 8(c) within five Business Days after the
receipt of the written statement without demand, deduction, offset or
delay.  Cost and expense reimbursement to the Manager shall be subject to
adjustment at the end of each calendar year in connection with the annual audit
of the Company.  The provisions of this Section 8 shall survive the expiration
or earlier termination of this Agreement to the extent such expenses have
previously been incurred or are incurred in connection with such expiration or
termination.
 
 
Section 9.
Limits of the Manager’s Responsibility; Indemnification.

 
(a)           The Manager, its Affiliates and their respective directors,
officers, employees, partners, members, stockholders, other equity holders
agents and representatives (each, a “Manager Indemnified Party”), will not be
liable to any Company Entity or any of the stockholders, partners, members or
other holders equity interests of any Company Entity for any acts or omissions
by any Manager Indemnified Party performed in accordance with and pursuant to
this Agreement, except by reason of any act or omission constituting bad faith,
willful misconduct or gross negligence on the part of such Manager Indemnified
Party.  The Company shall, to the fullest lawful extent, reimburse, indemnify
and hold harmless each Manager Indemnified Party, of and from any and all
expenses, losses, damages, liabilities, demands, charges and claims of any
nature whatsoever (including reasonable attorneys’ fees and costs of
investigation) (collectively “Losses”) in respect of or arising from any acts or
omissions of such Manager Indemnified Party performed in good faith under this
Agreement and not constituting bad faith, willful misconduct or gross negligence
on the part of such Manager Indemnified Party.  In addition, the Company shall
advance funds to a Manager Indemnified Party for legal fees and other costs and
expenses incurred as a result of any claim, suit, action or proceeding for which
indemnification is being sought, provided that such Manager Indemnified Party
undertakes to repay the advanced funds to the Company, together with the
applicable legal rate of interest thereon, in cases in which such Manager
Indemnified Party is found pursuant to a final and non-appealable order or
judgment to not be entitled to indemnification.

 
19

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

 

(b)           The Manager shall, to the fullest lawful extent, reimburse,
indemnify and hold harmless the Company (each, a “Company Indemnified Party”) of
and from any and all Losses in respect of or arising from (i) any acts or
omissions of the Manager constituting bad faith, willful misconduct or gross
negligence on the part of the Manager, or (ii) any claims by the Manager’s
employees relating to the terms and conditions of their employment by the
Manager.  The Manager assumes no responsibility under this Agreement other than
to render in good faith the services specifically designated as to be provided
by the Manager hereunder and shall not be responsible for any action of the
Board in following or declining to follow any advice or recommendations of the
Manager, including as set forth in the Investment Guidelines.  A Manager
Indemnified Party and a Company Indemnified Party are each sometimes hereinafter
referred to as an “Indemnified Party.”
 
(c)           In case any such claim, suit, action or proceeding (a “Claim”) is
brought against any Indemnified Party in respect of which indemnification may be
sought by such Indemnified Party pursuant hereto, the Indemnified Party shall
give prompt written notice thereof to the indemnifying party, which notice shall
include all documents and information in the possession of or under the control
of such Indemnified Party reasonably necessary for the evaluation and/or defense
of such Claim and shall specifically state that indemnification for such Claim
is being sought under this Section 9; provided, however, that the failure of the
Indemnified Party to so notify the indemnifying party shall not limit or affect
such Indemnified Party’s rights except to the extent that the indemnifying party
is actually prejudiced thereby.  Upon receipt of such notice of Claim (together
with such documents and information from such Indemnified Party), the
indemnifying party shall, at its sole cost and expense, in good faith defend any
such Claim with counsel reasonably satisfactory to such Indemnified Party, which
counsel may, without limiting the rights of such Indemnified Party pursuant to
the next succeeding sentence of this Section, also represent the indemnifying
party in such investigation, action or proceeding.  In the alternative, such
Indemnified Party may elect to conduct the defense of the Claim, if (i) such
Indemnified Party reasonably determines that the conduct of its defense by the
indemnifying party could be materially prejudicial to its interests, (ii) the
indemnifying party refuses to assume such defense (or fails to give written
notice to the Indemnified Party within ten days of receipt of a notice of Claim
that the indemnifying party assumes such defense), or (iii) the indemnifying
party shall have failed, in such Indemnified Party’s reasonable judgment, to
defend the Claim in good faith.  The indemnifying party may settle any Claim
against such Indemnified Party without such Indemnified Party’s consent,
provided (A) such settlement is without any Losses whatsoever to such
Indemnified Party, (B) the settlement does not include or require any admission
of liability or culpability by such Indemnified Party, (C) the indemnifying
party obtains an effective written release of liability for such Indemnified
Party from the party to the Claim with whom such settlement is being made, which
release must be reasonably acceptable to such Indemnified Party, and a dismissal
with prejudice with respect to all claims made by the party against such
Indemnified Party in connection with such Claim, and (D) such settlement does
not provide for any equitable relief.  The applicable Indemnified Party shall
reasonably cooperate with the indemnifying party, at the indemnifying party’s
sole cost and expense, in connection with the defense or settlement of any Claim
in accordance with the terms hereof.  If such Indemnified Party is entitled
pursuant to this Section 9 to elect to defend such Claim by counsel of its own
choosing and so elects, then the indemnifying party shall be responsible for any
good faith settlement of such Claim entered into by such Indemnified
Party.  Except as provided in the immediately preceding sentence, no Indemnified
Party may pay or settle any Claim and seek reimbursement therefor under this
Section 9.

 
20

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

 

(d)           The provisions of this Section 9 shall survive the expiration or
earlier termination of this Agreement.
 
 
Section 10.
No Joint Venture.

 
The parties to this Agreement are not partners or joint venturers with each
other and nothing herein shall be construed to make them partners or joint
venturers or impose any liability as such on either of them.
 
 
Section 11.
Term; Renewal; Termination Without Cause.

 
(a)           This Agreement shall become effective on the Closing Date and
shall continue in operation, unless terminated in accordance with the terms
hereof, until the fifth anniversary of the Closing Date (the “Initial
Term”).  After the Initial Term, this Agreement shall be deemed renewed
automatically each year for an additional one-year period (an “Automatic Renewal
Term”), unless the Company or the Manager elects not to renew this Agreement in
accordance with Section 11(b) or Section 11(d), respectively.
 
(b)           Notwithstanding any other provision of this Agreement to the
contrary, upon written notice provided to the Manager no later than 180 days
prior to the expiration of the Initial Term or any Automatic Renewal Term (the
“Termination Notice”), the Company may, without cause, in connection with the
expiration of the Initial Term or the then current Automatic Renewal Term,
decline to renew this Agreement (any such nonrenewal, a “Termination Without
Cause”) upon the affirmative vote of at least 75% of the Independent Directors
that includes a finding by such 75% majority either that (i) there has been
unsatisfactory performance by the Manager that is materially detrimental to the
Company Entities, taken as a whole, or (ii) the fees payable to the Manager
under Section 7 are not, taken as a whole, in accordance with then-current
market rates charged by asset management companies rendering services similar to
those rendered by the Manager (“Above-Market Rates”), subject to Section 11(c),
and only after reasonable investigation by the Independent Directors as to the
market rates charged by similarly situated managers.  In the event of a
Termination Without Cause, the Company shall pay the Manager the Fees Accrued
Upon Termination before or on the last day of the Initial Term or such Automatic
Renewal Term, as the case may be (the “Effective Termination Date”).  The
Company may terminate this Agreement for cause pursuant to Section 13 even after
a Termination Notice and, in such case, no Fees Accrued Upon Termination shall
be payable.

 
21

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

 

(c)           Notwithstanding the provisions of Section 11(b), if the reason for
nonrenewal specified in the Company’s Termination Notice is that 75% of the
Independent Directors have determined that the fees payable to the Manager under
Section 7 are, taken as a whole, at Above-Market Rates, then the Company shall
not have the foregoing nonrenewal right if the Manager agrees that it will
continue to perform its duties hereunder during the Automatic Renewal Term that
would commence upon the expiration of the Initial Term or then current Automatic
Renewal Term at rates that at least 75% of the Independent Directors determine
to be at or below market rates, taken as a whole; provided, however, that if the
Independent Directors have made such a determination, the Manager shall have the
right to renegotiate the rate of fees payable to the Manager under Section 7 as
so determined by the Independent Directors, by delivering to the Company, not
less than 120 days prior to the pending Effective Termination Date, written
notice (a “Notice of Proposal to Negotiate”) of its intention to renegotiate the
fees payable to the Manager under Section 7.  Thereupon, the Company and the
Manager shall endeavor to negotiate the fees payable to the Manager under
Section 7 in good faith.  Provided that the Company and the Manager agree to a
revised fee structure under Section 7 within 60 days following the Company’s
receipt of the Notice of Proposal to Negotiate, the Termination Notice from the
Company shall be deemed of no force and effect, and this Agreement shall
continue in full force and effect on the terms stated herein, except that the
compensation structure shall be the revised compensation structure as then
agreed upon by the Company and the Manager.  The Company and the Manager agree
to execute and deliver an amendment of this Agreement setting forth such revised
fee structure promptly upon reaching an agreement regarding same.  If the
Company and the Manager are unable to agree to a revised compensation structure
during such 60-day period, this Agreement shall terminate on the Effective
Termination Date and the Company shall be obligated to pay the Manager the Fees
Accrued Upon Termination upon the Effective Termination Date.
 
(d)           No later than 180 days prior to the expiration of the Initial Term
or the then current Automatic Renewal Term, the Manager may deliver written
notice to the Company informing the Company of the Manager’s intention to
discontinue performance of services pursuant to this Agreement as of the
upcoming expiration date, whereupon this Agreement shall not be renewed and
extended and this Agreement shall terminate effective on the anniversary date of
this Agreement next following the delivery of such notice.  The Company shall
not be required to pay to the Manager the Fees Accrued Upon Termination if the
Manager terminates this Agreement pursuant to this Section 11(d).
 
(e)           Except as set forth in this Section 11, a non-renewal of this
Agreement pursuant to this Section 11 shall be without any further liability or
obligation of any party to the others, except as provided in Sections 6, 8, 9
and 15.
 
(f)           The Manager shall cooperate with the Company in executing an
orderly transition of the management of PAC’s consolidated assets to a new
manager.
 
 
Section 12.
Assignments.

 
(a)           Assignments by the Manager.  This Agreement shall terminate
automatically without payment of the Fees Accrued Upon Termination in the event
of its assignment, in whole or in part, by the Manager, unless such assignment
has been consented to in writing by (i) the Company with the consent of a
majority of the Independent Directors, and (ii) the Operating Partnership.  Any
such permitted assignment shall bind the assignee under this Agreement in the
same manner as the Manager is bound, and the Manager shall be liable to the
Company for all acts or omissions of the assignee under any such assignment to
the same extent had such delegation not occurred.  In addition, the assignee
shall execute and deliver to the Company a counterpart of this Agreement naming
such assignee as the Manager.  Notwithstanding the foregoing, the Manager may,
without the approval of the Company’s Independent Directors, (A) assign this
Agreement to an Affiliate of the Manager, and (B) delegate to one or more of its
Affiliates the performance of any of its responsibilities hereunder so long as
it remains liable for any such Affiliate’s performance to the same extent had
such delegation not occurred, in each case so long as assignment or delegation
does not require the Company’s approval under the Investment Company Act (but if
such approval is required, the Company shall not unreasonably withhold,
condition or delay its consent).  Nothing contained in this Agreement shall
preclude any pledge, hypothecation, assignment or other transfer of any amounts
payable to the Manager under this Agreement.

 
22

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

 

(b)           Assignments by the Company.  This Agreement shall not be assigned
by the Company without the prior written consent of the Manager, except in the
case of assignment by the Company to another REIT or other organization which is
a successor (by merger, consolidation, purchase of assets, or other transaction)
to the Company, in which case such successor organization shall be bound under
this Agreement and by the terms of such assignment in the same manner as the
Company is bound under this Agreement.
 
 
Section 13.
Termination for Cause.

 
(a)           The Company may terminate this Agreement for cause effective upon
30 days’ prior written notice of termination from the Company to the Manager (a
“Cause Termination Notice”), without payment of any Fees Accrued Upon
Termination, upon the occurrence of:
 
(i)  a breach by the Manager, its agents or its assignees of any material
provision of this Agreement and such breach shall continue for a period of 60
days after written notice thereof specifying such breach and requesting that the
same be remedied in such 60-day period (or 90 days after written notice of such
breach if the Manager takes steps to cure such breach within 60 days of the
written notice);
 
(ii)  a Bankruptcy Event with respect to the Manager,
 
(iii)  a Manager Change of Control which a majority of the Independent Directors
has determined to be materially detrimental to the Company Entities, taken as a
whole;
 
(iv)  the dissolution of the Manager; or
 
(v)  (A) a final determination by a court that the Manager has committed fraud
against the Company, the Manager has embezzled funds of the Company or the
Manager has otherwise acted, or failed to act, in a manner constituting bad
faith, willful misconduct, gross negligence or reckless disregard in the
performance of its duties under this Agreement, (B) which act of fraud,
embezzlement or other act or failure to act described in clause (v)(A) above has
had a material adverse effect on the consolidated business, operations and
financial condition of the Company, and (C) where a majority of the Independent
Directors of PAC has voted affirmatively to terminate this Agreement for cause
as a result of such fraud, embezzlement or other act or failure to act, which
vote shall have occurred within 30 days following the final determination
referred to in clause (v)(A) above; provided, however, if such fraud,
embezzlement or other act or failure to act was committed by a person other than
an executive officer of the Manager, then the Manager can cure the same by
terminating the employment of such person on or prior to the 30th day following
such final determination, in which event the Company shall cease to have the
right to terminate this Agreement for cause pursuant to this Section 13(a) and
any Cause Termination Notice previously given in reliance on this clause (v)
automatically shall be deemed to have been rescinded and nugatory.

 
23

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

 

(b)           The Manager may terminate this Agreement effective upon 60 days’
prior written notice of termination to the Company if the Company shall default
in the performance or observance of any material term, condition or covenant
contained in this Agreement and such default shall continue for a period of 60
days after written notice thereof specifying such default and requesting that
the same be remedied in such 60-day period.  The Company shall be required to
pay to the Manager the Fees Accrued Upon Termination if the termination of this
Agreement is made pursuant to this Section 13(b).
 
(c)           The Manager may terminate this Agreement if the Company becomes
required to register as an investment company under the Investment Company Act,
with such termination deemed to occur immediately before such event, in which
case the Manager shall not be entitled to payment of the Fees Accrued Upon
Termination.
 
 
Section 14.
Action Upon Termination.

 
From and after the effective date of termination of this Agreement pursuant to
Section 11, 12 or 13, the Manager shall not be entitled to compensation for
further services hereunder.  If the Manager is terminated pursuant to
Sections 11(b) or 13(b), it shall be paid all Fees Accrued Upon
Termination.  Upon any such termination, the Manager shall forthwith:
 
(a)           after deducting any accrued compensation and reimbursement for its
expenses to which it is then entitled, pay over to each Company Entity all money
collected and held for the account of such Company Entity pursuant to this
Agreement;
 
(b)           deliver to the Board a full accounting, including a statement
showing all payments collected by it and a statement of all money held by it,
covering the period following the date of the last accounting furnished to the
Board with respect to the Company Entities;
 
(c)           deliver to the Board all property and documents of the Company
Entities then in the custody of the Manager; and
 
(d)           cooperate with the Company Entities to provide an orderly
management transition.
 
 
Section 15.
Release of Money or Other Property Upon Written Request.

 
The Manager agrees that any money or other property of the Company (which, for
the purposes of this Section 15, shall be deemed to include any and all of their
respective subsidiaries, if any) held by the Manager shall be held by the
Manager as custodian for the Company, and the Manager’s records shall be
appropriately and clearly marked to reflect the ownership of such money or other
property by the Company.  Upon the receipt by the Manager of a written request
signed by a duly authorized officer of the Company requesting the Manager to
release to the Company any money or other property then held by the Manager for
the account of the Company under this Agreement, the Manager shall release such
money or other property to the Company or within a reasonable period of time,
but in no event later than 60 days following such request.  Upon delivery of
such money or other property to the Company, the Manager shall not be liable to
the Company, the Board, PAC’s stockholders, the Operating Partnership’s partners
or any of the directors or equity holders of any subsidiary of the Company for
any acts or omissions by the Company in connection with the money or other
property released to the Company in accordance with this Section 15.  The
Company shall indemnify the Manager Indemnified Parties against any and all
Losses which arise in connection with the Manager’s proper release of such money
or other property to the Company in accordance with the terms of this
Section 15.  Indemnification pursuant to this provision shall be in addition to
any right of the Manager Indemnified Parties to indemnification under Section 9.

 
24

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

 

 
Section 16.
Miscellaneous.

 
(a)           Notices.  All notices, requests, communications and demands (each
a “Notice”) to, with or upon any of the respective parties shall be in writing
and sent by (i) personal delivery, (ii) reputable overnight courier,
(iii) facsimile transmission with telephonic confirmation (provided that such
Notice also is sent contemporaneously by another method provided for in this
Section 16(a)), or (iv) registered or certified mail, postage prepaid, return
receipt requested, addressed as set forth below (or to such other address as may
be hereafter notified by the respective parties hereto in accordance with this
Section 16(a)):
 
PAC:
Preferred Apartment Communities, Inc.
3625 Cumberland Boulevard, Suite 400
Atlanta, Georgia 30339
Attention:  Leonard A. Silverstein, Esq.
Attention:  Jeffrey R. Sprain, Esq.
Fax:  (770) 818-4105
   
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention:  Peter M. Fass, Esq.
Attention:  James P. Gerkis, Esq.
Fax:  (212) 969-2900
   
The Operating Partnership:
Preferred Apartment Communities, Inc.
3625 Cumberland Boulevard, Suite 400
Atlanta, Georgia 30339
Attention:  Leonard A. Silverstein, Esq.
Attention:  Jeffrey R. Sprain, Esq.
Fax:  (770) 818-4105
   
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention:  Peter M. Fass, Esq.
Attention:  James P. Gerkis, Esq.
Fax:  (212) 969-2900

 
25

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

 

The Manager:
Preferred Apartment Advisors, LLC
3625 Cumberland Boulevard, Suite 400
Atlanta, Georgia 30339
Attention:  Leonard A. Silverstein, Esq.
Attention:  Jeffrey R. Sprain, Esq.
Fax:  (770) 818-4105
   
with a copy to:
Bass, Berry & Sims PLC
100 Peabody Place, Suite 900
Memphis, Tennessee 38103
Attention:  John A. Good, Esq.
Fax:  (901) 543-5901

 
Any Notice sent as aforesaid shall be deemed given and effective upon actual
receipt (or refusal of receipt).
 
(b)           Binding Nature of Agreement; Successors and Assigns; No Third
Party Beneficiaries.  This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and permitted assigns.  Except as provided in this Agreement with
respect to indemnification of Indemnified Parties hereunder, nothing in this
Agreement shall confer any rights upon any Person other than the parties hereto
and their respective heirs, legal representatives, successors and permitted
assigns.
 
(c)           Integration.  This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements, understandings, inducements and
conditions, express or implied, oral or written, of any nature whatsoever with
respect to the subject matter hereof.  The express terms hereof control and
supersede any course of performance or usage of the trade inconsistent with any
of the terms hereof.
 
(d)           Amendments.  This Agreement, nor any terms hereof, may not be
amended or supplemented except in an instrument in writing executed by the
parties hereto.
 
(e)           GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF DELAWARE, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.  EACH OF THE PARTIES HERETO IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE AND
THE UNITED STATES DISTRICT COURT FOR ANY DISTRICT WITHIN SUCH STATE FOR THE
PURPOSE OF ANY ACTION OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND TO THE LAYING OF VENUE IN
SUCH COURT.

 
26

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

 

(f)           WAIVER OF JURY TRIAL.  EACH PARTY HERETO ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR
RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.
 
(g)           No Waiver; Cumulative Remedies.  No failure to exercise and no
delay in exercising, on the part of a party hereto, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.  The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
 
(h)           Costs and Expenses.  Each party hereto shall bear its own costs
and expenses (including the fees and disbursements of counsel and accountants)
incurred in connection with the negotiations and preparation of this Agreement,
and all matters incident thereto.  If any party hereto initiates any legal
action arising out of or in connection with this Agreement, the prevailing party
shall be entitled to recover from the other party all reasonable attorneys’
fees, expert witness fees and expenses incurred by the prevailing party in
connection therewith.
 
(i)           Section Headings.  The section and subsection headings in this
Agreement are for convenience in reference only and shall not be deemed to alter
or affect the interpretation of any provisions hereof.
 
(j)           Counterparts.  This Agreement may be executed (including by
facsimile transmission) with counterpart signature pages or in any number of
separate counterparts, and all of which taken together shall be deemed to
constitute one and the same instrument.
 
(k)           Severability.  Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 
27

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

 

IN WITNESS WHEREOF, each of the parties hereto has executed this Third Amended
and Restated Management Agreement as of the date first written above.
 
PREFERRED APARTMENT COMMUNITIES, INC.
   
By:
/s/ John A. Williams
 
Name:  John A. Williams
 
Title: President and Chief Executive Officer

 
PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P.
 
By:
Preferred Apartment Communities, Inc.
its General Partner
       
By:
/s/ John A. Williams
   
Name: John A. Williams
   
Title: President and Chief Executive Officer

 
PREFERRED APARTMENT ADVISORS, LLC
 
By:
NELL Partners, Inc.
its Managing Member
       
By:
/s/ John A. Williams
   
Name: John A. Williams
   
Title: President and Chief Executive Officer

 
[Signature Page to Third Amended and Restated Management Agreement]

 
 

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

 

Exhibit A
 
Investment Guidelines
 
1.
No Investment shall be made by the Manager that would cause PAC to fail to
qualify as a REIT under the Code.

 
2.
No Investment shall be made by the Manager that would cause either PAC or the
Operating Partnership to be regulated as an investment company under the
Investment Company Act.

 
3.
The Manager may invest the proceeds of the Initial Public Offering, any future
offerings of PAC’s or the Operating Partnership’s securities for cash, and cash
from operations and capital transactions in interest-bearing, short-term,
investment-grade investments, subject to the requirements for PAC’s
qualification as a REIT under the Code.

 
4.
Investment Deployment Quantitative Limits:

 
 
(a)
Other than for short-term investments made for cash management purposes, the
Manager may not invest (net of any debt placed at closing or assumed with the
transaction) more than 15% of the Company’s total assets (as determined for the
Asset Management Fee) in any one single asset or transaction.  By way of
example, if

 
Total assets before proposed transaction:
  $ 100 million  
Proposed transaction asset value value:
  $ 40 million  
Total assets after proposed transaction:
  $ 140 million  
15% of total assets after proposed transaction:
  $ 21 million  

then the Manager would be allowed to invest up to $21 million in the proposed
transaction.

 
(b)
No more than 25% of the Company’s total assets may be invested by the Manager in
any metropolitan statistical area (“MSA”).

 
 
(c)
The Company’s aggregate borrowings (secured and unsecured) will not exceed 75%
of the cost of its tangible assets at the time of any new borrowing.

 
5.
Investment Deployment Qualitative Guidelines:

 
 
(a)
Multifamily related assets where the associated real property asset is located
in top submarkets of an MSA with an aggregate population in excess of
approximately 1,000,000.

 
 
(b)
Multifamily related assets where the associated real property asset has at least
100 units.

 
 

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

 

 
(c)
Multifamily related assets where the associated real property was built or
substantially renovated after January 1, 1990 and, to the knowledge of the
Manager, does not possess any material design flaws and is not functionally
obsolete.

 
 
(d)
Target five-year portfolio average cash-on-cash returns of approximately 8.5% to
10%, net of fees and expenses.

 
(e)
Seek to acquire assets primarily for income, and secondarily for possible
capital gain.

 
(f)
The Manager may enter into forward purchase contracts and purchase option
agreements for multifamily properties and, in connection therewith, enter into
deposit arrangements, mezzanine loans or other performance assurances, as may be
necessary or appropriate.

 
 
2

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