Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

BY AND BETWEEN

LANDMARK APARTMENT TRUST OF AMERICA, INC.

AND

2335887 LIMITED PARTNERSHIP

Dated as of February 27, 2013

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TABLE OF CONTENTS

 

ARTICLE I. Interpretation

     1  

1.1

 

Certain Definitions

     1  

1.2

 

Construction

     8  

ARTICLE II. Purchase and Sale of Securities

     9  

2.1

 

Purchase and Sale of Securities

     9  

2.2

 

Purchase Price

     9  

2.3

 

Closing

     9  

2.4

 

Closing Procedures

     9  

ARTICLE III. Representations and Warranties of the Corporation

     9  

3.1

 

Good Standing of the Corporation and the Operating Partnership

     9  

3.2

 

Good Standing of Subsidiaries

     10  

3.3

 

Authorization of Agreement

     10  

3.4

 

Consents and Approvals

     11  

3.5

 

No Conflicts; No Violations

     11  

3.6

 

Capitalization

     12  

3.7

 

Authorization of Preferred Stock

     12  

3.8

 

Absence of Defaults

     12  

3.9

 

Absence of Proceedings

     13  

3.10

 

Absence of Undisclosed Liabilities

     13  

3.11

 

Indebtedness

     13  

3.12

 

FF&E

     13  

3.13

 

Investment Company

     13  

3.14

 

Compliance

     14  

3.15

 

Insurance

     14  

3.16

 

Solvency

     14  

3.17

 

Private Placement

     14  

3.18

 

Registration Rights

     14  

3.19

 

Waiver of Ownership Limits

     14  

3.20

 

Application of Takeover Protections

     15  

3.21

 

Matters Relating to Uncontributed Portfolio Entities and Uncontributed Portfolio
Properties

     15  

3.22

 

Certain Fees

     17  

3.23

 

SEC Reports; Financial Statements

     17  

3.24

 

No Material Adverse Change in Business

     18  

3.25

 

Accuracy of Descriptions

     18  

3.26

 

Possession of Intellectual Property

     18  

3.27

 

Possession of Licenses and Permits

     19  

3.28

 

Title to Property

     19  

3.29

 

Condition of Properties

     20  

3.30

 

Access and Utilities

     20  

3.31

 

No Condemnation

     20  

 

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3.32

 

Environmental Laws

     20  

3.33

 

Accounting Controls and Disclosure Controls

     21  

3.34

 

Tax Returns and Payment of Taxes

     21  

3.35

 

Insurance

     22  

3.36

 

REIT Qualification

     22  

3.37

 

ERISA

     22  

3.38

 

Absence of Labor Dispute

     22  

3.39

 

Foreign Corrupt Practices Act

     22  

3.40

 

Money Laundering Laws

     23  

3.41

 

OFAC

     23  

3.42

 

August Transaction Agreements

     23  

3.43

 

Acknowledgment Regarding Purchaser’s Purchase of Securities

     23  

3.44

 

Original Issue Date

     24  

ARTICLE IV. Representations and Warranties of the Purchaser

     24  

4.1

 

Organization

     24  

4.2

 

Authorization

     24  

4.3

 

Consents and Approvals

     24  

4.4

 

No Conflicts

     25  

4.5

 

Brokers’ Fees

     25  

4.6

 

Securities Law Matters

     25  

4.7

 

Patriot Act

     25  

4.8

 

Special Representation

     26  

4.9

 

No Other Representations or Warranties

     26  

ARTICLE V. [Intentionally Omitted]

     27  

ARTICLE VI. Conditions Precedent to Closing

     27  

6.1

 

Conditions Precedent to the Corporation’s Obligations

     27  

6.2

 

Conditions Precedent to the Purchaser’s Obligations

     27  

ARTICLE VII. [Intentionally Omitted]

     28  

ARTICLE VIII. Closing Deliveries

     28  

8.1

 

Items to Be Delivered by the Corporation

     28  

8.2

 

Items to Be Delivered by the Purchaser

     30  

ARTICLE IX. Other Agreements of the Parties

     30  

9.1

 

All Reasonable Efforts; Further Assurances

     30  

9.2

 

Notification

     30  

9.3

 

Issuance of Preferred Stock

     31  

9.4

 

Public Announcements

     31  

9.5

 

Confidentiality

     31  

9.6

 

Title to Acquired Properties

     31  

9.7

 

Transfer Taxes

     32  

9.8

 

Transfer Restrictions

     32  

9.9

 

Pre-emptive Rights

     34  

9.10

 

No Impairment

     34  

 

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9.11

 

Director and Officer Insurance

     34  

9.12

 

Access

     35  

9.13

 

Amendments to Transaction Documents

     35  

9.14

 

Integration

     35  

9.15

 

Appraisal

     35  

9.16

 

Use of Proceeds

     36  

9.17

 

Other Reporting Obligations

     36  

9.18

 

Affiliate Transactions

     37  

9.19

 

Investment Company Act

     38  

9.20

 

Amendment to Series A Preferred Articles Supplementary

     38  

ARTICLE X. Survival and Indemnification

     39  

10.1

 

Survival of Representations, Warranties, and Covenants

     39  

10.2

 

Indemnification

     39  

10.3

 

Procedures for Third-Party Claims

     40  

10.4

 

Direct Claims

     41  

10.5

 

Certain Other Matters

     41  

ARTICLE XI. Miscellaneous

     42  

11.1

 

Amendments

     42  

11.2

 

Assignment

     42  

11.3

 

Binding Effect

     42  

11.4

 

Counterparts

     42  

11.5

 

Entire Agreement

     42  

11.6

 

Fees and Expenses

     42  

11.7

 

Governing Law

     43  

11.8

 

Headings

     43  

11.9

 

Jurisdiction

     43  

11.10

 

Notices

     43  

11.11

 

No Recourse

     44  

11.12

 

Severability

     44  

11.13

 

Specific Performance

     45  

11.14

 

Third-Party Beneficiaries

     45  

11.15

 

Waiver

     45  

Index of Schedules

 

Schedule A:   Existing Properties and Existing LATA Indebtedness Schedule B:  
Uncontributed Portfolio Properties

Schedule 1.2(c)(i):   Corporation Knowledge Parties Schedule 1.2(c)(ii):  
Purchaser Knowledge Parties

Schedule 3.4:   Consents and Approvals Schedule 3.5:   No Conflicts; No
Violations Schedule 3.22:   Certain Fees

 

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Index of Exhibits

 

Exhibit A:    Articles Supplementary Exhibit B:    Form of Warrant Exhibit C-1:
   Form of Opinion of Counsel to Corporation Exhibit C-2:    Form of Opinion of
Tax Counsel to Corporation Exhibit D:    Form of Registration Rights Agreement
Exhibit E:    Form of REIT Ownership Limit Waiver

 

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SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is entered into as of
February 27, 2013, by and between LANDMARK APARTMENT TRUST OF AMERICA, INC., a
Maryland corporation (the “Corporation”), and 2335887 LIMITED PARTNERSHIP, an
Ontario limited partnership (the “Purchaser”).

R E C I T A L S

WHEREAS, pursuant to that certain Securities Purchase Agreement, dated as of
August 3, 2012, by and among the Corporation, the Purchaser, DK Landmark, LLC, a
Florida limited liability company (“DeBartolo”), and Elco Landmark Residential
Holdings, LLC, a Delaware limited liability company (“ELRH”) (the “August SPA”),
the Corporation sold (i) four million (4,000,000) shares of the Corporation’s
9.75% Series A Cumulative Non-Convertible Preferred Stock, par value $0.01 per
share (the “Series A Preferred Stock”) together with a warrant to purchase
shares of Common Stock (as defined below) to the Purchaser and (ii) one million
(1,000,000) shares of the Corporation’s 9.75% Series B Cumulative
Non-Convertible Preferred Stock, par value $0.01 per share (the “Series B
Preferred Stock” and, together with the Series A Preferred Stock, the “Preferred
Stock”) together with a warrant to purchase shares of Common Stock to DeBartolo;

WHEREAS, the Corporation has increased the number of authorized shares of the
Series A Preferred Stock from four million (4,000,000) to five million
(5,000,000) by filing with the Department of Assessments and Taxation of the
State of Maryland (the “Department”) the articles supplementary in the form
attached hereto as Exhibit A (the “Articles Supplementary”) in accordance with
the Maryland General Corporation Law (the “MGCL”);

WHEREAS, on the terms and subject to the conditions set forth herein, the
Corporation desires to issue and sell to the Purchaser, and the Purchaser
desires to purchase and acquire from the Corporation, one million
(1,000,000) shares of the Series A Preferred Stock, on the Closing Date (as
defined below) (collectively, the “Series A Preferred Shares”), together with
warrants reflecting 100% warrant coverage to acquire shares of Common Stock in
the form attached hereto as Exhibit B (each a “Series A Warrant”);

NOW, THEREFORE, in consideration of the foregoing recitals and the
representations, warranties, covenants, and agreements herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I.

Interpretation

1.1 Certain Definitions. The following terms shall have the meanings set forth
below:

“Affiliate” means, in respect of any Person, any other Person that is directly
or indirectly controlling, controlled by, or under common control with such
Person, and the term “control” (including the terms “controlled by” and “under
common control with”) means having, directly or indirectly, the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities or by contract or otherwise.

 

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“Annual Report” has the meaning ascribed to it in Section 3.2.

“Articles Supplementary” has the meaning ascribed to it in the recitals to this
Agreement.

“August SPA” has the meaning ascribed to it in the recitals to this Agreement.

“August Transaction Agreements” has the meaning ascribed to “Transaction
Agreements” in the Master Agreement.

“Business Day” means each day, other than a Saturday or a Sunday, that is not a
day on which banking institutions in New York are authorized or required by law,
regulation or executive order to close.

“Capital Stock” means all classes or series of stock of the Corporation,
including, without limitation, Common Equity, Series A Preferred Stock and
Series B Preferred Stock.

“Charter” means the Articles of Amendment and Restatement of the Corporation
dated as of July 18, 2006, as amended by the Articles of Amendment dated as of
December 7, 2007, the Second Articles of Amendment dated as of June 22, 2010,
the Third Articles of Amendment dated as of December 28, 2010, the Fourth
Articles of Amendment dated as of August 6, 2012, and as the same may thereafter
be amended or restated.

“Closing” has the meaning ascribed to it in Section 2.3.

“Closing Date” has the meaning ascribed to it in Section 2.3.

“Code” means the United States Internal Revenue Code of 1986, as amended from
time to time.

“Common Equity” means all shares now or hereafter authorized of any class of
common stock of the Corporation, including the Common Stock, and any other stock
of the Corporation, howsoever designated, authorized after the Closing Date,
which has the right (subject always to prior rights of any class or series of
preferred stock) to participate in the distribution of the assets and earnings
of the Corporation without limit as to per share amount.

“Common Stock” means the common stock, $.01 par value per share, of the
Corporation.

“Contract” has the meaning ascribed thereto in the Master Agreement.

“Corporation” has the meaning ascribed to it in the preamble to this Agreement.

“DeBartolo” has the meaning ascribed to it in the preamble to this Agreement.

“DB Contribution Agreement” means each of the those certain Interest
Contribution Agreements, dated as of August 3, 2012, by and among the
Corporation, the Operating Partnership, one or more of DeBartolo and its
Affiliates and the other parties thereto if any, without giving effect to any
amendment, modification or waiver thereof.

 

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“Department” has the meaning ascribed to it in the recitals to this Agreement.

“Developments and Improvements” has the meaning ascribed to it in Section 3.29.

“Direct Claim” has the meaning ascribed to it in Section 10.4.

“Domestically Controlled REIT” shall mean a REIT that is a “domestically
controlled qualified investment entity” meeting the ownership requirements of
Code section 897(h)(4)(B).

“ELRH” has the meaning ascribed to it in the recitals to this Agreement.

“Environmental Law” and “Environmental Laws” have the meaning ascribed to each
term in Section 3.21(d).

“Equity Interest” means (i) in the case of a corporation, shares of stock,
(ii) in the case of a general or limited partnership, partnership interests,
(iii) in the case of a limited liability company, limited liability company
interests, (iv) in the case of a trust, beneficial interests therein, and (v) in
the case of any other Person that is not an individual, the comparable interests
therein.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Executive Order” has the meaning ascribed to it in Section 4.7(a).

“FCPN” means the Foreign Corrupt Purchases Act of 1977, as amended, and the
rules and regulations thereunder.

“GAAP” means generally accepted accounting principles in the United States.

“Government Approval” means any authorization, consent, approval, waiver,
exception, variance, order, exemption, publication, filing, declaration,
concession, grant, franchise, agreement, permission, permit, or license of, from
or with any Governmental Entity, the giving notice to or registration with any
Governmental Entity or any other action in respect of any Governmental Entity.

“Governmental Entity” means (a) anybody exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including any governmental agency, department, board, commission or other
instrumentality, whether national, territorial, federal, state, provincial,
local, supranational or other authority, (b) any organization of multiple
nations, or (c) any tribunal, court or arbitrator of competent jurisdiction.

“Governmental Licenses” has the meaning ascribed to it in Section 3.25.

“Hazardous Materials” has the meaning ascribed to it in Section 3.21(d).

“IFRS” has the meaning ascribed to it in Section 9.17(b)(ii).

 

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“Indebtedness” has the meaning ascribed thereto in the Series A Preferred
Articles Supplementary.

“Indemnitee” means any Person entitled to indemnification under this Agreement.

“Indemnitor” means any Person required to provide indemnification under this
Agreement.

“Indemnity Payment” means any amount of Losses required to be paid pursuant to
this Agreement.

“Intellectual Property” has the meaning ascribed thereto in Section 3.26.

“Law” means mean (a) any constitution applicable to, and any statute, treaty,
rule, regulation, ordinance, or requirement of any kind of, any Governmental
Entity, (b) principles of common law, and (c) any Order.

“Lender Approval” has the meaning ascribed thereto in the Master Agreement or
the applicable DB Contribution Agreement, as the case may be.

“Lien” means any security interest, lien, pledge, charge, encumbrance, mortgage,
indenture, security agreement or other similar agreement, arrangement, contract,
commitment, or obligation, whether or not relating in any way to credit or the
borrowing of money.

“Liquidation Preference” in respect of Series A Preferred Stock and Series B
Preferred Stock, as applicable, has the meaning ascribed thereto in the Series A
Preferred Articles Supplementary and Series B Preferred Articles Supplementary,
respectively.

“Losses” means any and all direct and reasonable indirect damages (but excluding
any consequential, special or punitive damages, unless such damages are actually
incurred by a party in connection with any Proceedings in respect of such party
is entitled to be indemnified hereunder in which case such damages shall be
included), fines, penalties, deficiencies, liabilities, claims, losses
(including loss of value), judgments, awards, settlements, taxes, actions,
obligations and costs and expenses in connection therewith (including, without
limitation, interest, court costs and fees and expenses of attorneys,
accountants and other experts, or any other expenses of litigation or other
Proceedings or of any default or assessment).

“Master Agreement” means that certain Master Contribution and Recapitalization
Agreement, dated as of August 3, 2012, by and among the Corporation, the
Operating Partnership, a Virginia limited partnership, ELRH and Elco Landmark
Residential Management LLC, without giving effect to any amendment, modification
or waiver thereof.

“Material Adverse Effect” means any result, occurrence, fact, change or event
(whether or not known or foreseeable as of the date of this Agreement) that,
individually, or in the aggregate with any such other results, occurrences,
facts, changes, or events, has a material adverse effect on (i) the earnings,
business affairs, business prospects, management, assets, properties, condition
(financial or otherwise) or results of operations of the Corporation and its
Subsidiaries, taken as a whole, or (ii) the ability of the Corporation and its
Affiliates to perform

 

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in a timely manner their obligations under this Agreement and the other
Transaction Documents and to consummate the transactions contemplated hereby or
thereby; provided that, without limitation to the foregoing, it is understood
and agreed that each of the following shall be deemed a Material Adverse Effect
under this Agreement: (x) a “Portfolio Material Adverse Effect” (as defined in
the Master Agreement on the date hereof without giving effect to any amendment,
modification or waiver thereof), and (y) a material adverse effect on the value
of the Portfolio Properties, taken as a whole.

“MGCL” has the meaning ascribed to it in the recitals to this Agreement.

“Money Laundering Laws” means all applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions, the rules
and regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency.

“OFAC” means the Office of Foreign Assets Control of the U.S. Treasury
Department.

“Operating Partnership” means Landmark Apartment Trust of America Holdings,
L.P., a Virginia limited partnership.

“Order” means any decree, injunction, judgment, order, ruling, writ, assessment
or arbitration award of a Governmental Entity, arbitrator or arbitral body,
commission or self-regulatory organization, whether arising from a Proceeding or
applicable Law.

“Ordinary Course” means, with respect to the Corporation, the ordinary course of
business thereof, as the case may be, consistent with past custom and practice
(including as applicable, with respect to quantity and frequency).

“Organizational Documents” means, with respect to a corporation, limited
liability company, partnership, or other legally authorized incorporated or
unincorporated entity, (i) the articles of incorporation, certificate of
incorporation, articles of organization, articles of association, articles
supplementary, certificate of limited partnership or other applicable
organizational or charter documents relating to the creation or organization of
such entity, together with any amendment or supplement to any of the foregoing
and (ii) the bylaws, operating agreement, partnership agreement, or other
applicable documents relating to the operation, governance or management of such
entity, including any security holders’ agreement, voting agreement, voting
trust agreement, joint venture agreement or registration rights agreement,
together with any amendment or supplement to any of the foregoing.

“Originating Proceedings” has the meaning ascribed to it in Section 10.2(a)(iv).

“Patriot Act” has the meaning ascribed to it in Section 4.7(a).

“Permitted Encumbrances” (i) with respect to any Uncontributed Portfolio
Property, has the meaning ascribed thereto in the Master Agreement or the
applicable DB Contribution Agreement, and (ii) with respect to any other
property, has the meaning ascribed thereto in the Master Agreement.

 

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“Person” means any individual, partnership, limited partnership, corporation,
limited liability company, association, joint stock company, trust, joint
venture, unincorporated organization, or other entity.

“Portfolio Properties” has the meaning ascribed to the term “Contributed
Property” in the August SPA.

“Preferred Equity Securities” means (i) any and all shares of Capital Stock
ranking senior to the Common Equity in respect of the right to receive dividends
or the right to participate in any distribution upon liquidation, dissolution or
winding up of the affairs of the Corporation or the right of redemption thereof,
and (ii) any and all securities of the Corporation convertible into, or
exchangeable or exercisable for, such shares, and options, warrants or other
rights to acquire such shares.

“Preferred Stock” has the meaning ascribed to it in the recitals to this
Agreement.

“Proceeding” means any action, claim, audit or other inquiry, hearing,
investigation, suit or other charge or proceeding (whether civil, criminal,
administrative, investigative, formal or informal) by or before any Governmental
Entity or before an arbitrator or arbitral body or mediator.

“Proceeds Account” has the meaning ascribed to it in Section 9.16.

“Purchaser” has the meaning ascribed to it in the preamble to this Agreement.

“Purchaser Documents” has the meaning ascribed to it in Section 4.2.

“Receiving Party” has the meaning ascribed to it in Section 9.5.

“Registration Rights Agreement” has the meaning ascribed to it in
Section 8.1(j).

“Regulations” means the Treasury Regulations promulgated under the Code as such
regulations may be amended from time to time (including the corresponding
provisions of succeeding regulations).

“Representative” has the meaning ascribed to it in Section 10.2(a)(iv).

“REIT” means any real estate investment trust complying with the requirements of
Sections 856 through 860 of the Code and the Regulations related thereto.

“REIT Ownership Limit Waiver” has the meaning ascribed to it in Section 8.1(k).

“Related Person” means any employee, officer, or director of any of the
Corporation and its Subsidiaries, any member of his or her immediate family, or
any Person controlled by any of the foregoing Persons.

 

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“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act,
as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC having substantially the same effect as such Rule.

“SEC” means the U.S. Securities and Exchange Commission and any governmental
body or agency succeeding to the functions thereof.

“SEC Reports” means, collectively, all reports, schedules, forms, statements and
other documents required by the Securities Act or the Exchange Act or the rules
or regulations promulgated thereunder to be filed or furnished by the
Corporation, including, without limitation, proxy information and solicitation
materials, in each case, in the form and with the substance prescribed by either
such Act or such rules or regulations.

“Securities” means the Series A Preferred Shares and the Series A Warrants
issued as of the Closing Date.

“Securities Act” means the Securities Act of 1933, as amended.

“Series A Preferred Articles Supplementary” means the Articles Supplementary
filed by the Corporation with the Department on August 2, 2012 with respect to
the Series A Preferred Stock.

“Series A Preferred Shares” has the meaning ascribed to it in the recitals to
this Agreement.

“Series A Preferred Stock” has the meaning ascribed to it in the recitals to
this Agreement.

“Series A Warrant” has the meaning ascribed to it in the recitals to this
Agreement.

“Series B Preferred Articles Supplementary” means the Articles Supplementary
filed by the Corporation with the Department on August 2, 2012 with respect to
the Series B Preferred Stock.

“Series B Preferred Stock” has the meaning ascribed to it in the recitals to
this Agreement.

“Specified SEC Reports” means the Corporation’s Annual Report on Form 10-K for
the year ended December 31, 2011, and any and all Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K, in each case, filed after December 31, 2011 and
prior to the Closing Date (excluding disclosures in the “Risk Factors” sections
of any such SEC Reports).

“Subsidiary” means (i) in respect of the Corporation, any “subsidiary” of the
Corporation as such term is defined in Rule 1-02 of Regulation S-X, including,
without limitation, the Operating Partnership, and (ii) in respect of any other
Person, any corporation, partnership, limited liability company, joint venture
or other legal entity of which such Person (either directly or through or
together with another Subsidiary of such Person), (A) owns capital stock or
other Equity Interest having ordinary voting power to elect a majority of the
board of directors (or

 

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equivalent) of such Person, (B) controls the management of which, directly or
indirectly, through one or more intermediaries, (C) directly or indirectly
through Subsidiaries owns more than 50% of the Equity Interests or (D) is a
general partner.

“Third-Party Claim” means any claim, action, suit, or proceeding made or brought
by any Person that is not a party to this Agreement or an Affiliate of a party
to this Agreement.

“Transaction Documents” means, collectively, this Agreement, the stock
certificates representing the Series A Preferred Shares, the Series A Warrants,
the Series A Preferred Articles Supplementary, the Registration Rights
Agreement, the Articles Supplementary and each other document, instrument,
certificate, or agreement to be issued or executed by the parties pursuant to
this Agreement or any other agreement referred to above to effect the
transactions contemplated hereby or thereby.

“Uncontributed Portfolio Entity” means an entity that wholly owns, directly or
indirectly, an Uncontributed Property.

“Uncontributed Portfolio Property” means each property identified on Schedule B
hereto.

1.2 Construction.

(a) All References to “Articles,” “Sections,” “Schedules,” and “Exhibits”
contained in this Agreement are, unless expressly stated otherwise herein,
references to articles, sections, schedules, or exhibits of or to this
Agreement.

(b) In this Agreement, unless the context clearly requires otherwise, (i) words
of any gender include each other gender, (ii) words using the singular or plural
number also include the plural or singular number, respectively, (iii) “day”
means a calendar day; (ii) “U.S.” or “United States” means the United States of
America; (iv) “including” or “include” mean “including without limitation” or
“include without limitation”; (v) “dollar” or “$” means lawful currency of the
United States; and (vi) references to specific Laws (such as the MGCL and the
Code), or to specific sections or provisions of Laws, apply to the respective
U.S. or state Laws that bear the names so specified and to any succeeding Law,
section, or provision corresponding thereto and the rules and regulations
promulgated thereunder.

(c) As used in this Agreement, the term “knowledge” means, with respect to the
Corporation, the actual knowledge of the Persons listed on Schedule 1.2(c)(i)
and with respect to the Purchaser, the actual knowledge of the Persons listed on
Schedule 1.2(c)(ii).

 

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ARTICLE II.

Purchase and Sale of Securities

2.1 Purchase and Sale of Securities. Subject to the terms and conditions set
forth herein, on the Closing Date:

(a) the Corporation shall issue, sell, and deliver to the Purchaser, and the
Purchaser shall purchase and acquire from the Corporation, one million
(1,000,000) shares of Series A Preferred Stock together with a Series A Warrant
having warrant coverage equal to the aggregate purchase price in respect of such
shares of Series A Preferred Stock; and

(b) the Corporation shall pay to the Purchaser a purchase fee equal to the
aggregate sum of one percent (1%) of the Liquidation Preference (as defined in
the Series A Preferred Articles Supplementary) of all shares of Series A
Preferred Stock sold to the Purchaser on the Closing Date.

2.2 Purchase Price. On the terms and subject to the conditions set forth herein,
the consideration to be paid to the Corporation at the Closing by the Purchaser
for the sale and purchase of the Securities as contemplated herein shall be the
aggregate sum of the Liquidation Preference (as defined in the Series A
Preferred Articles Supplementary) for each share of Series A Preferred Stock
sold by the Corporation and purchased by the Purchaser on the Closing Date. Any
purchase price paid to the Corporation as set forth in this Section 2.2 shall be
paid by wire transfer of immediately available funds to the Corporation’s
account designated by the Corporation in writing at least two (2) Business Days
prior to the Closing Date.

2.3 Closing. The closing of the purchase and sale of the Securities as set forth
in Section 2.1 (the “Closing”) shall take place on the date hereof at the
offices of Goulston & Storrs P.C., 885 Third Avenue, 18th Floor, New York, New
York 10022, or such other mutually agreed upon location, provided that all of
the conditions contained in Article VI have been satisfied or waived by such
date (other than those conditions to be satisfied on the Closing Date, as
defined below). The date of the Closing is referred to herein as the “Closing
Date.”

2.4 Closing Procedures. All actions to be taken and all documents to be executed
and delivered by the parties in connection with the consummation of the
transactions contemplated at the Closing shall be reasonably satisfactory in
form and substance to the other parties and their respective counsel. All
actions to be taken and all documents to be executed and delivered by all
parties hereto at the Closing shall be deemed to have been taken and executed
and delivered simultaneously at the Closing, and no action shall be deemed taken
nor any document executed or delivered until all have been taken, executed, and
delivered.

ARTICLE III.

Representations and Warranties of the Corporation

The Corporation hereby makes the following representations and warranties to the
Purchaser:

3.1 Good Standing of the Corporation and the Operating Partnership.

(a) The Corporation has been duly organized and is validly existing as a
corporation in good standing with the Department and has the corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Specified SEC Reports; and the Corporation is duly qualified
as a foreign corporation to transact business and is in good standing in each
other jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except where
the failure so to

 

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qualify or to be in good standing would not result in a Material Adverse Effect.
Complete and correct copies of the Organizational Documents of the Corporation
and all amendments thereto have been made available to the Purchaser.

(b) The Operating Partnership has been duly organized and is validly existing as
a limited partnership in good standing under the laws of the Commonwealth of
Virginia and has the limited partnership power and authority to own, lease and
operate its properties and to conduct its business as described in the Specified
SEC Reports; and the Operating Partnership is duly qualified as a foreign
limited partnership to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect. Complete and correct copies of the Organizational Documents of
the Operating Partnership and all amendments thereto have been made available to
the Purchaser.

3.2 Good Standing of Subsidiaries. The only Subsidiaries of the Corporation are
the entities listed in Exhibit 21.1 to the Corporation’s Annual Report on Form
10-K for the year ended December 31, 2011 (the “Annual Report”) and those owning
Portfolio Properties acquired since the Annual Report. Each Subsidiary of the
Corporation (i) has been duly organized and is validly existing as a partnership
or a limited liability company in good standing under the laws of the
jurisdiction of its organization, (ii) has partnership or limited liability
company power and authority, as applicable, to own, lease and operate its
properties and to conduct its business as described in the Specified SEC Reports
and (iii) is duly qualified as a foreign partnership or limited liability
company, as the case may be, to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except in the
case of this clause (iii) where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; all of the issued and
outstanding equity interests or capital stock, respectively, of each such
Subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Corporation, directly or through a
Subsidiary, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity; none of the outstanding equity interests or shares
of capital stock, respectively, of any Subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such Subsidiary. Except
for the equity interests and shares of capital stock, respectively, in its
Subsidiaries, the Corporation does not own, directly or indirectly, any shares
of stock or any other equity or long term debt securities of any corporation or
have any equity interest in any firm, partnership, joint venture, association or
other entity.

3.3 Authorization of Agreement. The Corporation has the requisite corporate
power to execute and deliver this Agreement and each other Transaction Document
to be executed by it and to perform its obligations hereunder and thereunder.
Each Subsidiary of the Corporation that is party to any Transaction Document has
the requisite limited partnership (or equivalent) power to execute and deliver
each Transaction Document to be executed by it and to perform its obligations
thereunder. The execution and delivery by the Corporation of this Agreement and
each other Transaction Document to be executed by it and the performance by it
of its obligations hereunder and thereunder have been duly authorized by all
necessary corporate action on the part of the Corporation. The execution and
delivery by each Subsidiary of the Corporation that is party to any Transaction
Document of each Transaction Document to be

 

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executed by it and the performance by it of its obligations hereunder and
thereunder have been duly authorized by all necessary limited partnership (or
equivalent) action on the part of the such Subsidiary. This Agreement has been,
and each Transaction Document to be executed by the Corporation or any
Subsidiary of the Corporation will be, duly executed and delivered by a duly
authorized officer of the Corporation (on its own behalf or indirectly on behalf
of such Subsidiary, as the case may be) and constitute valid and binding
obligations of the Corporation or such Subsidiary, as the case may be,
enforceable against the Corporation or such Subsidiary, respectively, in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other similar Laws affecting the
enforcement of creditors’ rights in general and subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
at law or in equity).

3.4 Consents and Approvals. Except as set forth on Schedule 3.4, no consent,
approval, waiver, order, or authorization of, or registration, declaration, or
filing with, or notice to, any Person or Governmental Entity (including any
consent, approval, waiver, or authorization in respect of any contract, license
or permit) is required to be obtained or made by or in respect of the
Corporation or any of its Subsidiaries in connection with the execution and
delivery of this Agreement or any other Transaction Document by the Corporation
or any of its Subsidiaries, the performance by the Corporation or any of its
Subsidiaries of its obligations hereunder and thereunder or the consummation of
the transactions contemplated hereby or thereby, other than (i) if required, the
filing of a Form D with the SEC and filings with any applicable state securities
regulatory authorities and (ii) those made or obtained prior to the Closing. The
Corporation has obtained (i) an irrevocable written consent of DeBartolo to
increase the authorized Series A Preferred Stock to the number of shares set
forth in Section 3.7(a), and (ii) an irrevocable written waiver by DeBartolo of
its pre-emptive rights pursuant to the August SPA to the transactions
contemplated by this Agreement.

3.5 No Conflicts; No Violations. The execution and delivery of this Agreement
does not (and of each other Transaction Document will not), and neither will the
performance by the Corporation or any of its Subsidiaries of their respective
obligations hereunder and thereunder, nor the consummation of the transactions
contemplated hereby and thereby on the terms and conditions set forth herein and
therein (i) conflict with the Organizational Documents of the Corporation or any
of its Subsidiaries, (ii) except as set forth on Schedule 3.5, conflict with,
result in any violation of, constitute a default (with or without notice, the
passage of time or both) under, or give rise to a right of termination,
cancellation, or acceleration of, or any obligation or to loss of a benefit
under, any contract to which the Corporation or any of its Subsidiaries is a
party or by which any of its assets or properties may be bound, (iii) violate,
constitute a default (with or without notice, the passage of time or both)
under, or cause the forfeiture, impairment, non-renewal, revocation, or
suspension of any license or permit necessary for the conduct of the business of
the Corporation or any of its Subsidiaries in compliance with all Laws,
(iv) violate any Order of any Governmental Entity applicable to the Corporation
or any of its Subsidiaries, (v) violate any Law applicable to the Corporation or
any of its Subsidiaries, or (vi) result in the creation of any Lien upon any of
the assets or properties of the Corporation or any of its Subsidiaries, except,
in the case of clauses (ii) through (vi), as could not reasonably be expected to
have a Material Adverse Effect.

 

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3.6 Capitalization. Except as set forth in the Specified SEC Reports or in the
Transaction Documents, there are (i) no authorized or outstanding securities,
rights (preemptive or other), subscriptions, calls, commitments, warrants,
options, or other agreements that give any Person the right to purchase,
subscribe for, or otherwise receive or be issued Capital Stock or any security
convertible into or exchangeable or exercisable for Capital Stock, (ii) no
outstanding debt or equity securities of the Corporation that upon the
conversion, exchange, or exercise thereof would require the issuance, sale, or
transfer by the Corporation of any new or additional Capital Stock (or any other
securities of the Corporation which, whether after notice, lapse of time, or
payment of monies, are or would be convertible into or exchangeable or
exercisable for Capital Stock), (iii) no agreements or commitments obligating
the Corporation to repurchase, redeem, or otherwise acquire Capital Stock or
other securities of any Corporation Entity, and (iv) no outstanding or
authorized stock appreciation rights, phantom stock, stock rights, or other
equity-based interests in respect of the Corporation. The Corporation has not
issued any voting indebtedness.

3.7 Authorization of Preferred Stock.

(a) Five million (5,000,000) shares of Preferred Stock have been designated as
Series A Preferred Stock and one million (1,000,000) shares of Preferred Stock
have been designated as Series B Preferred Stock. No other shares of Preferred
Stock have been designated for issuance by the Board of Directors of the
Corporation. The Corporation has no issued or outstanding Preferred Equity
Securities other than (i) the Series A Preferred Stock issued pursuant to this
Agreement and (ii) the Preferred Stock issued pursuant to the August SPA.

(b) The rights, preferences, privileges and restrictions of the Series A
Preferred Stock are as set forth in the Series A Preferred Articles
Supplementary. The rights, preferences, privileges and restrictions of the
Series B Preferred Stock are as set forth in the Series B Preferred Articles
Supplementary. When issued and delivered in accordance with the terms of this
Agreement and the Series A Preferred Articles Supplementary, the Series A
Preferred Shares will be duly authorized, validly issued, fully paid and
nonassessable, free and clear of all Liens.

(c) The Common Stock issuable upon exercise of the Series A Warrants has been
duly and validly reserved for issuance (based on an exercise price equal to Nine
Dollars ($9.00)). When issued and delivered in accordance with the terms of the
Series A Warrants, such Common Stock will be duly authorized, validly issued,
fully paid and nonassessable, free and clear of all Liens.

3.8 Absence of Defaults.

Neither the Corporation nor any Subsidiary thereof is in violation of its
Organizational Documents (including the provisions governing the Preferred
Stock), or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Corporation or any Subsidiary thereof is a party or by
which it or any of them may be bound, or to which any of the property or assets
of the Corporation or any Subsidiary thereof is subject except for such defaults
that would not result in a Material Adverse Effect.

 

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3.9 Absence of Proceedings.

There is no Proceeding now pending, or, to the knowledge of the Corporation,
threatened, against or affecting the Corporation or any Subsidiary thereof,
which is required to be disclosed in the SEC Reports which has not been so
disclosed, or which might result in a Material Adverse Effect, or which might
materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement and the other
the Transaction Documents or the performance by the Corporation of its
obligations hereunder or thereunder; the aggregate of all pending Proceedings to
which the Corporation or any Subsidiary thereof is a party or of which any of
their respective property or assets is the subject which are not described in
the Specified SEC Reports, including routine litigation incidental to the
business, would not reasonably be expected to result in a Material Adverse
Effect.

3.10 Absence of Undisclosed Liabilities. Neither the Corporation nor any of its
Subsidiaries has any material liabilities, whether currently due, accrued,
absolute, contingent, unliquidated or otherwise, whether or not known, whether
due or to become due and regardless of when asserted, other than the following:
(i) any Indebtedness set forth on Schedule A hereto, (ii) liabilities fully and
adequately reflected or reserved against in the Specified SEC Reports;
(iii) liabilities incurred in the Ordinary Course of business of the Corporation
and its Subsidiaries since the date of the latest audited annual financial
statements included in the Specified SEC Reports, none of which could reasonably
be expected to have a Material Adverse Effect; (iv) liabilities between or among
any two or more of the Corporation and its Subsidiaries; and (v) liabilities of
the type expressly covered by any other representations and warranties of the
Corporation set forth in this Agreement.

3.11 Indebtedness. Schedule A hereto sets forth all Indebtedness of the
Corporation and each of its Subsidiaries (including any Indebtedness secured by
a mortgage on any real property) as of the Closing Date, listing separately
(a) each such Indebtedness that is secured by a mortgage on any specific real
property, (b) each such Indebtedness that is a Permitted Additional Unsecured
Debt (as defined in the Series A Preferred Articles Supplementary) and (c) any
other material Indebtedness. Neither the Corporation nor any of its Subsidiaries
has any Indebtedness or any liabilities in respect thereof, whether currently
due, accrued, absolute, contingent, unliquidated or otherwise, whether or not
known, whether due or to become due and regardless of when asserted, except
Indebtedness listed on Schedule A.

3.12 FF&E. There are no items owned or leased by a third party and used at any
real property owned by the Corporation or its Subsidiaries by or on behalf of
the owner of such real property in connection with the ownership, operation or
maintenance of such real property that would otherwise constitute FF&E (as
defined in the Master Agreement), except as has not had and could not reasonably
be expected to have a Material Adverse Effect.

3.13 Investment Company. The Corporation is not, and after giving effect to the
issuance of the Securities and the application of the proceeds thereof will not
be, an “investment company” within the meaning of Investment Company Act of
1940, as amended.

 

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3.14 Compliance. None of the Corporation or any of its Subsidiaries is in
violation of any Law or of any Order of any Governmental Entity which violation
has had or could reasonably be expected to have a Material Adverse Effect.

3.15 Insurance. The Corporation and its Subsidiaries carry or are entitled to
the benefits of insurance with financially sound and reputable insurers, in such
amounts and covering such risks as are generally maintained by companies of
established reputation engaged in the business of ownership of multifamily
residential properties, and all such insurance is in full force and effect. The
Corporation has no reason to believe that any of the Corporation and its
Subsidiaries will not be able to (a) renew its existing insurance coverage as
and when such policies expire or (b) obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as now
conducted and at a cost that would not reasonably be expected to result in a
Material Adverse Effect. Since January 1, 2011, none of the Corporation and its
Subsidiaries has been denied any material insurance coverage that it has sought
or for which it has applied.

3.16 Solvency. The Corporation and its Subsidiaries are able to pay their
respective debts (including trade debts) as they mature. The fair saleable value
of all the assets and properties (including goodwill minus disposition costs) of
the Corporation and its Subsidiaries, taken as a whole, exceeds the fair value
of their liabilities and 101% of the Liquidation Preference of the outstanding
shares of each series of Preferred Stock, both before and after giving effect to
the consummation of the transactions contemplated by the Transaction Documents.
The Corporation will not be left with unreasonably small capital after
consummation of any transaction contemplated by the Transaction Documents.

3.17 Private Placement. Assuming the accuracy of the representations and
warranties of the Purchaser set forth in Section 4.6, the offer, sale, and
issuance of the Securities as contemplated hereby will be exempt from the
registration requirements of the Securities Act and will have been registered or
qualified (or are exempt from registration and qualification) under the
registration or qualification requirements of all applicable state securities
Laws. Neither the Corporation nor any Person acting on its behalf will take any
action that would cause the loss of any such exemption. Assuming the accuracy of
the representations and warranties of the Purchasers set forth in Section 4.6,
the offer, sale, and issuance of the Securities as contemplated hereby will
comply with all applicable federal and state Laws.

3.18 Registration Rights. Except as set forth in or as permitted by any of the
Transaction Documents, the limited partnership agreement of the Operating
Partnership or the Registration Rights Agreement, dated as of August 3, 2012, by
and among the Corporation, the Purchaser and DeBartolo, as may be amended from
time to time, the Corporation has not granted or agreed to grant to any Person
any rights (including “piggy back” registration rights) to have any securities
of the Corporation or any of its Subsidiaries registered with the SEC or any
other Governmental Entity that have not been satisfied.

3.19 Waiver of Ownership Limits. The Board of Directors of the Corporation has
waived the Aggregate Stock Ownership Limit and the Common Stock Ownership Limit
(each as defined in the Charter), in accordance with the Charter to permit the
Purchaser to acquire and hold ownership positions in the Corporation exceeding
such limit or limits, to the extent provided in the REIT Ownership Limit Waiver
delivered to the Purchaser at the Closing.

 

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3.20 Application of Takeover Protections. The Corporation has taken all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar provision under the Charter (or other
Organizational Documents of the Corporation) or the MGCL that is or could become
applicable to the Purchaser as a result of the Purchaser and the Corporation
fulfilling their obligations or exercising their rights under the Transaction
Documents, including the Corporation’s issuance of the Securities and the
Purchaser’s ownership of the Securities and the Corporation’s issuance of Common
Stock upon exercise of the Series A Warrants and the Purchaser’s ownership of
such Common Stock. To the extent that any acquisition of Capital Stock by the
Purchaser pursuant to this Agreement would constitute an acquisition of control
shares, such acquisition has been exempted from Title 3, Subtitle 7 of the MGCL.

3.21 Matters Relating to Uncontributed Portfolio Entities and Uncontributed
Portfolio Properties.

(a) Incorporation of Representations and Warranties in Article V of Master
Agreement. The Corporation hereby makes to the Purchaser, as of the date hereof,
each of the representations and warranties set forth in Article V of the Master
Agreement, to the extent that they pertain to a Uncontributed Portfolio Entity
or Uncontributed Portfolio Property, all of which are hereby incorporated by
reference (together with (i) any definitions therein necessary to give effect to
such representations and warranties and (ii) any disclosure schedules thereto
modifying or referenced by such representations and warranties), mutatis
mutandis, including to reflect that documents stated therein to have been
furnished or made available to any of the Corporation, ELRH and their respective
Affiliates shall have been furnished or made available to the Purchasers;
provided that any reference to any “Portfolio Material Adverse Effect” in any
such representations and warranties shall be deemed to include also any matter
described in clause (ii) of the definition of “Material Adverse Effect” herein.
For the avoidance of doubt, the Corporation hereby makes to the Purchaser, for
purposes of this Agreement, those same representations and warranties, verbatim,
in place of ELRM.

(b) Insurance. The Contributed Entities and their respective Subsidiaries carry
or are entitled to the benefits of insurance with financially sound and
reputable insurers, in such amounts and covering such risks as are generally
maintained by companies of established reputation engaged in the business of
ownership of multifamily residential properties, and all such insurance is in
full force and effect. The Corporation has no reason to believe that any of the
Contributed Entities and their respective Subsidiaries will not be able to
(a) renew its existing insurance coverage as and when such policies expire or
(b) obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that would
not reasonably be expected to result in a Material Adverse Effect. Since
January 1, 2011, none of the Contributed Entities and their respective
Subsidiaries has been denied any material insurance coverage that it has sought
or for which it has applied.

 

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(c) Other Third Party Approvals and Consents. Except as set forth on Schedule
3.21(c), no consent, approval, waiver or authorization of, or registration,
declaration, or filing with, or notice to, any Person (including any consent,
approval, waiver, or authorization in respect of any contract or permit) is
required to be obtained or made by or in respect of ELRH, Elco Landmark
Residential Management LLC or any Affiliate of either of them in connection with
the execution and delivery of any of the Transaction Documents, the performance
of any of them of their respective obligations thereunder or the consummation of
the transaction contemplated thereby, other than (i) those set forth in the
related disclosure schedules incorporated by reference herein pursuant to
Section 3.21(a), (ii) any Lender Approval or Refinancing and (iii) those made or
obtained prior to the Closing.

(d) Environmental Matters. Except as would not, singly or in the aggregate,
result in a Material Adverse Effect, (A) no owner of any Uncontributed Portfolio
Property is in violation of any federal, state, local or foreign statute, law,
rule, regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products,
asbestos-containing materials or mold (collectively, “Hazardous Materials”) or
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (each, an “Environmental Law” and,
collectively, “Environmental Laws”), (B) each owner of each Uncontributed
Portfolio Property has all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against any Uncontributed Portfolio Entity or any owner of a
Uncontributed Portfolio Property and (D) there are no events or circumstances
that would reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting any Uncontributed Portfolio
Entity or owner or a Uncontributed Portfolio Property relating to Hazardous
Materials or any Environmental Laws.

(e) FF&E. There are no items owned or leased by a third party and used at any
Uncontributed Portfolio Property by or on behalf of the owner of such
Uncontributed Portfolio Property in connection with the ownership, operation or
maintenance of such Uncontributed Portfolio Property that would otherwise
constitute FF&E (as defined in the Master Agreement on the date hereof without
giving effect to any amendment, modification or waiver thereof), other than
(i) any leased or licensed item as set forth in the related disclosure schedules
incorporated by reference herein pursuant to Section 3.21(a), and (ii) any other
item that is not material to the ownership, operation or maintenance of such
Uncontributed Portfolio Property.

 

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(f) Contracts.

(i) No event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a material default by an owner of a Uncontributed
Portfolio Property of, or give rise to any Lien or right of termination,
prepayment or acceleration against any owner of a Uncontributed Portfolio
Property under, any material Contract.

(ii) The material Contracts with respect to each Uncontributed Portfolio
Property to be contributed by ELRH or any Affiliate thereof are in full force
and effect, without material default by ELRH, Elco Landmark Residential
Management LLC or any of their respective Affiliates that is a party thereto
and, to the Corporation’s knowledge, without material default by any other party
thereto.

(iii) The material Contracts with respect to each Uncontributed Portfolio
Property to be contributed by DeBartolo or any Affiliate thereof are in full
force and effect, without material default by DeBartolo or any Affiliate thereof
that is a party thereto and, to the Corporation’s knowledge, without material
default by any other party thereto.

3.22 Certain Fees. Except for any fee payable to the Purchaser pursuant to this
Agreement and except as set forth in Schedule 3.22, no brokerage or finder’s
fees or commissions are or will be payable by the Corporation or any of its
Subsidiaries to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement or any of the Transaction Documents (including,
without limitation, the exercise of the Series A Warrants). The Purchaser shall
have no obligation with respect to any fees or with respect to any claims (other
than such fees or commissions owed by the Purchaser pursuant to agreements made
by the Purchaser which fees or commissions shall be the sole responsibility of
the Purchaser) made by or on behalf of the Corporation or any of its
Subsidiaries for fees of a type contemplated in this Section 3.22 that may be
due in connection with the transactions contemplated by this Agreement or any of
the Transaction Documents (including, without limitation, the exercise of the
Series A Warrants). The Corporation shall indemnify and hold harmless the
Purchaser, its employees, officers, directors, agents, and partners, and its
Affiliates, from and against all claims, losses, damages, costs (including the
costs of preparation and attorney’s fees) and expenses, as such fees and
expenses are incurred, that are suffered in respect of (i) any claimed or
existing fees or commissions of the type contemplated by this Section 3.22 for
which the Corporation or any of its Subsidiaries is responsible, other than
those disclosed above, and (ii) any failure of the Corporation or any of its
Subsidiaries to timely pay those fees and commissions disclosed above.

3.23 SEC Reports; Financial Statements. The Corporation has filed with or
furnished to the SEC all SEC Reports. The Corporation has delivered or made
available to the Purchaser all SEC Reports to the extent the same are not
publicly available through the SEC’s EDGAR website. As of their respective
filing dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act or Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder and other federal, state
and local laws, rules

 

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and regulations applicable to the SEC Reports, and none of the SEC Reports
(including any and all financial statements included therein) as of such dates
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.

The financial statements included in the SEC Reports, together with the related
schedules and notes, including without limitation the audited financial
statements included in the Annual Report, and the unaudited interim financial
statements included in the Corporation’s Quarterly Report on Form 10-Q for the
three month period ended September 30, 2012 (the “Quarterly Report”), are
accurate in all material respects and present fairly the financial position of
ATA and its consolidated Subsidiaries, at the dates indicated; said financial
statements have been prepared in conformity GAAP applied on a consistent basis
throughout the periods involved. The supporting schedules, if any, present
fairly in accordance with GAAP the information required to be stated therein.

3.24 No Material Adverse Change in Business. Since December 31, 2011, (A) there
has been no material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs, business prospects, management, assets or
properties of the Corporation and/or its Subsidiaries considered as one
enterprise, whether or not arising in the Ordinary Course, (B) except for the
transactions contemplated by the Master Agreement, there have been no
transactions entered into by the Corporation or any Subsidiary thereof, other
than those in the Ordinary Course, which are material with respect to the
Corporation and each Subsidiary thereof considered as one enterprise, and
(C) there has been no dividend or distribution of any kind declared, paid or
made by the Corporation on any class of its shares of capital stock, other than
in the Ordinary Course and dividends declared and paid on the Preferred Stock in
accordance with the terms thereof.

3.25 Accuracy of Descriptions.

The descriptions in the SEC Reports of affiliate transactions, contracts
required to be described therein and other legal documents are true and correct
in all material respects, and there are no affiliate transactions, contracts or
other documents of a character required to be described in the SEC Reports or to
be filed as exhibits to the SEC Reports which are not described or filed as
required. All agreements between the Corporation or any Subsidiary thereof, on
the one hand, and any other party expressly referenced in the SEC Reports are
legal, valid and binding obligations of the Corporation or one or more of its
Subsidiaries, enforceable against the Corporation or its Subsidiaries in
accordance with their respective terms, except to the extent that enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors’ rights generally and by general equitable principles.

3.26 Possession of Intellectual Property.

The Corporation and each Subsidiary thereof owns or possesses, or can acquire on
reasonable terms, adequate patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential

 

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information, systems or procedures), trademarks, service marks, trade names or
other intellectual property (collectively, “Intellectual Property”) necessary to
conduct its business as described in the Specified SEC Reports, and neither the
Corporation nor any of its Subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances which
would render any Intellectual Property invalid or inadequate to protect the
interest of the Corporation or any of its Subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate, would result
in a Material Adverse Effect.

3.27 Possession of Licenses and Permits.

The Corporation and its Subsidiaries possess such permits, licenses, approvals,
consents and other authorizations issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct their
business as described in the Specified SEC Reports (collectively, “Governmental
Licenses”), except where the failure so to possess would not, singly or in the
aggregate, result in a Material Adverse Effect; the Corporation and its
Subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not, singly
or in the aggregate, result in a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except where the
invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not, singly or in the aggregate,
result in a Material Adverse Effect; and neither the Corporation nor any of its
Subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in a Material Adverse Effect.

3.28 Title to Property.

The Corporation and its Subsidiaries have good and marketable title in fee
simple to all real property owned by the Corporation and its Subsidiaries and
good title to all other properties owned by them, in each case, free and clear
of all mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except (a) first mortgages on the particular real
properties and (b) such as do not, singly or in the aggregate, materially affect
the value of such property and do not interfere with the use made and proposed
to be made of such property by the Corporation or any of its Subsidiaries; and
all of the leases and subleases material to the business of the Corporation and
its Subsidiaries, considered as one enterprise, and under which the Corporation
or any of its Subsidiaries holds properties described in the SEC Reports, are in
full force and effect, and neither the Corporation nor any Subsidiary thereof
has any notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Corporation or any Subsidiary thereof under
any of the leases or subleases mentioned above, or affecting or questioning the
rights of the Corporation or such Subsidiary to the continued possession of the
leased or subleased premises under any such lease or sublease.

 

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3.29 Condition of Properties.

The Corporation, the Operating Partnership or their Subsidiaries have received
and reviewed property condition reports on all real property owned by the
Corporation, the Operating Partnership and their Subsidiaries. Except as
otherwise set forth in the Specified SEC Reports, to the Corporation’s
knowledge: (i) none of the real property owned by the Corporation, the Operating
Partnership and their Subsidiaries is in violation of any applicable building
code, zoning ordinance or other law or regulation, except where such violation
of any applicable building code, zoning ordinance or other law or regulation
would not, singly or in the aggregate, have a Material Adverse Effect; (ii) none
of the Corporation, the Operating Partnership and their Subsidiaries has
received written notice of any proposed material special assessment or any
proposed change in any property tax, zoning or land use laws or availability of
water affecting any real property owned by the Corporation, the Operating
Partnership and their Subsidiaries that would, singly or in the aggregate, have
a Material Adverse Effect; (iii) there does not exist any violation of any
declaration of covenants, conditions and restrictions with respect to any real
property owned by the Corporation, the Operating Partnership and their
Subsidiaries that would, singly or in the aggregate, have a Material Adverse
Effect, or any state of facts or circumstances or condition or event that could,
with the giving of notice or passage of time, or both, constitute such a
violation; and (iv) the developments or improvements comprising any portion of
real property owned by the Corporation, the Operating Partnership and their
Subsidiaries (the “Developments and Improvements”) are free of any physical,
mechanical, structural, design or construction defects that would, singly or in
the aggregate, have a Material Adverse Effect and the mechanical, electrical and
utility systems servicing the Developments and Improvements (including, without
limitation, all water, electric, sewer, plumbing, heating, ventilation, gas and
air conditioning) are in good condition and proper working order, reasonable
wear and tear and need for routine repair and maintenance excepted, and are free
of defects, except for such failures and defects that would not, singly or in
the aggregate, have a Material Adverse Effect.

3.30 Access and Utilities.

All of the real property owned by the Corporation, the Operating Partnership and
their Subsidiaries has rights of access to public ways and is served by
electric, water, sewer, sanitary sewer and storm drain facilities adequate to
service real property owned by the Corporation, the Operating Partnership and
their Subsidiaries for its use as described in the Specified SEC Reports.

3.31 No Condemnation.

No condemnation or other proceeding has been commenced that has not been
completed, and, to the Corporation’s knowledge, no such proceeding is
threatened, with respect to all or any portion of the real property owned by the
Corporation, the Operating Partnership and their Subsidiaries or for the
relocation away from any such property of any roadway providing access to such
property or any portion thereof.

3.32 Environmental Laws.

Except as would not, singly or in the aggregate, result in a Material Adverse
Effect, (A) neither the Corporation nor any of its Subsidiaries is in violation
of any Environmental Law, (B) the Corporation and its Subsidiaries have all
permits, authorizations and approvals required

 

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under any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Corporation or any of its Subsidiaries and
(D) there are no events or circumstances that would reasonably be expected to
form the basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against or
affecting the Corporation or any of its Subsidiaries relating to Hazardous
Materials or any Environmental Laws.

3.33 Accounting Controls and Disclosure Controls.

The Corporation and each of its Subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurances that
(A) transactions are executed in accordance with management’s general or
specific authorization; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets; (C) access to assets is permitted only in accordance
with management’s general or specific authorization; and (D) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. Since
the date of the Corporation’s formation, there has been (1) no material weakness
in the Corporation’s internal control over financial reporting (whether or not
remediated) and (2) no change in the Corporation’s internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Corporation’s internal control over financial reporting.
The Corporation and each of its Subsidiaries maintain disclosure controls and
procedures that are effective to perform the functions for which they were
established and are designed to ensure that information required to be disclosed
by the Corporation in the reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms, and is accumulated and communicated to
the Corporation’s management, including its principal executive officer or
officers and principal financial officer or officers, as appropriate, to allow
timely decisions regarding disclosure.

3.34 Tax Returns and Payment of Taxes.

All United States federal income tax returns of the Corporation and its
Subsidiaries required by law to be filed have been filed and all taxes shown by
such returns or otherwise assessed, which are due and payable, have been paid,
except assessments against which appeals have been or will be promptly taken in
good faith and as to which adequate reserves have been provided and will be
maintained. The Corporation and its Subsidiaries have filed all other material
tax returns that are required to have been filed by them pursuant to applicable
foreign, state, local or other law and has paid all taxes due pursuant to such
returns or pursuant to any assessment (including all real estate taxes) received
by the Corporation and its Subsidiaries, except for such taxes, if any, as are
being contested in good faith and as to which adequate reserves have been
provided and will be maintained and except for taxes the nonpayment of which
would not result in a Material Adverse Effect. All such returns are true,
correct and complete in all material respects. The charges, accruals and
reserves on the books of the Corporation in respect of any income and tax
liability for any years not finally determined are adequate to meet any
assessments or re-assessments for additional income tax for any years not

 

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finally determined. The Corporation has not engaged in any transaction that
could affect its income Tax liability for any taxable year not closed by the
statute of limitations which is a “listed transaction” within the meaning of
Treasury Regulation section 301.6011-4 (irrespective of the effective date).

3.35 Insurance.

The Corporation and its Subsidiaries carry or are entitled to the benefits of
insurance, with financially sound and reputable insurers, in such amounts and
covering such risks as is generally maintained by companies of established
repute engaged in the same or similar business, and all such insurance is in
full force and effect. The Corporation has no reason to believe that it or any
Subsidiary thereof will not be able (A) to renew its existing insurance coverage
as and when such policies expire or (B) to obtain comparable coverage from
similar institutions as may be necessary or appropriate to conduct its business
as now conducted and at a cost that would not result in a Material Adverse
Effect. Neither the Corporation nor any Subsidiary thereof has been denied any
insurance coverage which it has sought or for which it has applied.

3.36 REIT Qualification.

Commencing with the Corporation’s taxable year ending December 31, 2006, the
Corporation has been organized and has operated, and will continue to be
organized and operated, in a manner so as to qualify as a REIT under Sections
856 through 860 of the Code. The proposed method of operation of the Corporation
as described in the Specified SEC Reports will enable the Corporation to
continue to meet the requirements for qualification and taxation as a REIT under
the Code for its taxable years ending December 31, 2011 and subsequent taxable
years.

3.37 ERISA.

The assets of the Corporation do not constitute “plan assets” under the Employee
Retirement Income Security Act of 1974, as amended.

3.38 Absence of Labor Dispute.

(A) No labor dispute with the employees of the Corporation, the Operating
Partnership or any Subsidiary thereof exists or, to the knowledge of the
Corporation, is imminent, and (B) the Corporation is not aware of any existing
or imminent labor disturbance by the employees of any of its, the Operating
Partnership’s or any of their Subsidiaries’ principal suppliers, manufacturers,
customers or contractors, which, in the case of (A) or (B), would result in a
Material Adverse Effect.

3.39 Foreign Corrupt Practices Act.

Neither the Corporation nor, to the knowledge of the Corporation, any director,
officer, agent, employee, Affiliate or other person acting on behalf of the
Corporation or any of its Subsidiaries is aware of or has taken any action,
directly or indirectly, that would result in a violation by any of such persons
of the FCPA, including, without limitation, making use of the

 

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mails or any means or instrumentality of interstate commerce corruptly in
furtherance of an offer, payment, promise to pay or authorization of the payment
of any money, or other property, gift, promise to give, or authorization of the
giving of anything of value to any “foreign official” (as such term is defined
in the FCPA) or any foreign political party or official thereof or any candidate
for foreign political office, in contravention of the FCPA, and the Corporation
and, to the knowledge of the Corporation, its Affiliates have conducted their
businesses in compliance with the FCPA and have instituted and maintain policies
and procedures designed to ensure, and which are reasonably expected to continue
to ensure, continued compliance therewith.

3.40 Money Laundering Laws.

The operations of the Corporation and its Subsidiaries are and have been
conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Money Laundering Laws, and no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Corporation or any of its Subsidiaries with respect
to the Money Laundering Laws is pending or, to the knowledge of the Corporation,
threatened.

3.41 OFAC.

Neither the Corporation nor, to the knowledge of the Corporation, any trustee,
officer, agent, employee, Affiliate or person acting on behalf of the
Corporation or any of its Subsidiaries is currently subject to any U.S.
sanctions administered by OFAC; and the Corporation will not directly or
indirectly use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any Subsidiary, joint venture partner or other
person or entity, for the purpose of financing the activities of any person
currently subject to any U.S. sanctions administered by OFAC.

3.42 August Transaction Agreements.

Each of the August Transaction Agreements is in full force and effect and has
not been terminated, amended, modified or waived. The Corporation has complied
with and is not in breach of, and to the knowledge of the Corporation each other
party has complied with and is not in breach of, each of the August Transaction
Agreements. Full Contribution (as defined in the Master Agreement), and Adjusted
Full Contribution (as defined in the August SPA) with respect to each of the
Purchaser and DeBartolo, has occurred. The Corporation has complied with, and is
not in breach of, the provisions of the August SPA and the Preferred Stock
(including the restrictions contained in Sections 8(c) of the Series A Preferred
Stock Articles Supplementary and the Series B Preferred Stock Articles
Supplementary.

3.43 Acknowledgment Regarding Purchaser’s Purchase of Securities. The
Corporation acknowledges and agrees that the Purchaser is acting solely in the
capacity of an arm’s length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Corporation further acknowledges that the
Purchaser is not acting as a financial advisor or fiduciary of the Corporation
(or in any similar capacity) with respect to this Agreement and any other
Transaction Documents to which the Purchaser is or will be a party and the
transactions contemplated hereby and thereby and any advice given by the
Purchaser or any of its

 

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representatives or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to the Purchaser’s purchase of the
Securities. The Corporation further represents to the Purchaser that the
Corporation’s decision to enter into this Agreement and each of the other
Transaction Documents to which the Corporation is a party has been based solely
on the independent evaluation of the Corporation and its representatives. The
Corporation further acknowledges that the Purchaser has not made any promises or
commitments other than as set forth in this Agreement, including any promises or
commitments for any additional investment by the Purchaser in the Corporation,
except to the extent that the Purchaser may be party to, and as provided in, any
of the Transaction Documents or any other agreement executed and delivered in
connection therewith.

3.44 Original Issue Date.

The Corporation acknowledges that the Original Issue Date for purposes of the
Series A Preferred Articles Supplementary was August 3, 2012 and the Dividend
Deferral Period provided for under the Series A Preferred Articles Supplementary
ended on November 2, 2012. For the avoidance of doubt, the Corporation further
acknowledges that there shall be no deferral of any dividends payable in respect
of the Series A Preferred Shares issued by the Corporation on Closing pursuant
to this Agreement.

ARTICLE IV.

Representations and Warranties of the Purchaser

The Purchaser hereby makes the following representations and warranties to the
Corporation:

4.1 Organization. The Purchaser is duly formed, validly existing, and in good
standing under the Laws of its jurisdiction of formation.

4.2 Authorization. The Purchaser has the requisite limited partnership power to
execute and deliver this Agreement and each other Transaction Document to be
executed by it in connection with the consummation of the transactions
contemplated hereby (the “Purchaser Documents”) and to perform its obligations
hereunder and thereunder. The execution and delivery by the Purchaser of this
Agreement and each Purchaser Document and the performance by it of its
obligations hereunder and thereunder have been (or at the time of execution will
be) duly authorized by all necessary limited partnership, limited liability
company or equivalent action on the part of the Purchaser. This Agreement has
been (and each Purchaser Document applicable to the Purchaser will be) duly
executed and delivered by the Purchaser and, assuming the due execution and
delivery of this Agreement and each Purchaser Document by the other party or
parties hereto or thereto, constitutes a valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium, or
other similar Laws affecting the enforcement of creditors’ rights in general and
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).

4.3 Consents and Approvals. No consent, approval, waiver, order, or
authorization of, or registration, declaration, or filing with, or notice to,
any Person or Governmental Entity is

 

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required to be obtained or made by or in respect of the Purchaser in connection
with the execution and delivery of this Agreement or any Purchaser Document by
the Purchaser, the performance by the Purchaser of its obligations hereunder and
thereunder, or the consummation of the transactions contemplated hereby or
thereby.

4.4 No Conflicts. The execution and delivery of this Agreement does not (and
each Purchaser Document will not), and neither the performance by the Purchaser
of its obligations hereunder and thereunder, nor the consummation of the
transactions contemplated hereby and thereby, will (i) conflict with the
Purchaser’s Organizational Documents, (ii) conflict with, result in any
violation of, constitute a default under, or give rise to a right of
termination, cancellation, or acceleration of, or any obligation or to loss of a
benefit under, any contract to which the Purchaser is a party or by which any of
its assets or properties may be bound or (iii) violate any Order of any
Governmental Entity or Law applicable to the Purchaser.

4.5 Brokers’ Fees. Neither the Purchaser nor any Person acting on the
Purchaser’s behalf has agreed to pay any commission, finder’s or broker’s fee,
or similar payment in connection with the transactions contemplated by this
Agreement or any matter related hereto to any Person for which any of the
Corporation and its Subsidiaries will be liable.

4.6 Securities Law Matters. The Purchaser is acquiring the Securities for
investment for its own account, and not with a view to, or for sale in
connection with, any distribution thereof. The Purchaser is an “accredited
investor” as defined in Rule 501(a) of Regulation D under the Securities Act and
not a registered broker-dealer under Section 15 of the Exchange Act. The
Purchaser understands and acknowledges that none of the Securities or the Common
Stock underlying the Series A Warrants has been registered under the Securities
Act, or the securities Laws of any state or foreign jurisdiction and, unless so
registered, may not be offered, sold, transferred, or otherwise disposed of
except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and any applicable securities
Laws of any state or foreign jurisdiction. The Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. The Purchaser is able to bear
the economic risk of an investment in the Securities and, at the present time,
is able to afford a complete loss of such investment.

4.7 Patriot Act.

(a) Neither the Purchaser nor, to the Purchaser’s knowledge, any of its
Affiliates, is in violation of Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001 and relating to Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(the “Executive Order”) and/or, to the Purchaser’s knowledge, the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (the “Patriot Act”).

(b) Neither the Purchaser nor, to the Purchaser’s knowledge, any of its
Affiliates, is a “Prohibited Person” which is defined as follows:

(i) a person or entity that is listed in the Annex to, or is otherwise subject
to the provisions of, the Executive Order;

 

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(ii) a person or entity owned or controlled by, or acting for or on behalf of,
any person or entity that is listed in the Annex to, or is otherwise subject to
the provisions of, the Executive Order;

(iii) a person or entity with whom the Corporation or its successor or assignee
is prohibited from dealing or otherwise engaging in any transaction by the
Executive Order or the Patriot Act;

(iv) a person or entity who commits, threatens or conspires to commit or
supports “terrorism” as defined in the Executive Order;

(v) a person or entity that is named as a “specially designated national and
blocked person” on the most current list published by the U.S. Treasury
Department Office of Foreign Assets Control at its official website,
http://www.treas.gov/ofac/tllsdn.pdf, or at any replacement website or other
replacement official publication of such list; and

(vi) a person or entity who is affiliated with a person or entity listed above.

(c) Neither the Purchaser nor, to the Purchaser’s knowledge, any of its
Affiliates, has: (i) conducted any business or engaged in any transaction or
dealing with any Prohibited Person, including the making or receiving any
contribution of funds, goods or services to or for the benefit of any Prohibited
Person, (ii) dealt in or otherwise engaged in any transaction relating to, any
property or interests in property blocked pursuant to the Executive Order; or
(iii) engaged in or conspired to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any
of the prohibitions set forth in the Executive Order or the Patriot Act.

4.8 Special Representation. The Purchaser hereby represents and warrants to the
Corporation that it is treated as a “foreign government” under Treasury
Regulation Section 1.892-2T (and any successor provision thereto), and that it
is not an entity described in section 892(a)(2)(B) of the Code.

4.9 No Other Representations or Warranties. The Corporation acknowledges and
agrees that the Purchaser does not make and has not made any representations or
warranties herein other than those specifically set forth in this Article IV.

 

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ARTICLE V.

[Intentionally Omitted]

ARTICLE VI.

Conditions Precedent to Closing

6.1 Conditions Precedent to the Corporation’s Obligations. Subject to
Section 2.3, the obligation of the Corporation to consummate the sale of
Securities on the Closing Date is subject to the satisfaction or waiver by the
Corporation on the Closing Date of the following conditions:

(a) Accuracy of Representations and Warranties. Each of the representations and
warranties of the Purchaser contained in Article IV shall be true and correct on
and as of the Closing Date with the same force and effect as though the same had
been made on and as of the Closing Date.

(b) Performance of Covenants. The Purchaser shall have performed and complied
with the covenants and provisions of this Agreement required to be performed or
complied with by it on the Closing Date.

(c) Closing Deliveries. The Purchaser shall have delivered to the Corporation
the items set forth in Section 8.2 required to be delivered by the Purchasers on
or before the Closing Date.

(d) Ancillary Agreements. The Registration Rights Agreement shall have been
executed and delivered by the Purchaser.

(e) No Order. No Governmental Entity with jurisdiction over such matters shall
have enacted, issued, promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) which is then in effect and has the effect
of making the transactions contemplated hereby illegal or otherwise restricting,
preventing or prohibiting consummation of the transactions contemplated hereby.

6.2 Conditions Precedent to the Purchaser’s Obligations. The obligation of the
Purchaser to consummate the purchase of Securities on the Closing Date is
subject to the satisfaction on the Closing Date of the following conditions
(except to the extent waived in writing by the Purchaser):

(a) Accuracy of Representations and Warranties. Each of the representations and
warranties of the Corporation contained herein shall be true and correct on and
as of the Closing Date with the same force and effect as though the same had
been made on and as of the Closing Date other than such representations and
warranties that expressly speak as of an earlier date (which need only be true
and correct as of such date).

(b) Performance of Covenants. The Corporation shall have performed and complied
with all of the covenants and provisions of this Agreement required to be
performed or complied with by it on the Closing Date.

 

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(c) Closing Deliveries. The Corporation shall have delivered to each Purchaser
each item set forth in Section 8.1 required to be delivered by the Corporation
on or before the Closing Date.

(d) Organizational Documents. The Articles Supplementary have been duly filed
with, and accepted by, the Department.

(e) Ancillary Agreements. The Registration Rights Agreement shall have been
executed and delivered by the Corporation.

(f) No Order. No Governmental Entity with jurisdiction over such matters shall
have enacted, issued, promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) which is then in effect and has the effect
of making the transactions contemplated hereby illegal or otherwise restricting,
preventing or prohibiting consummation of the transactions contemplated hereby.

(g) No Material Adverse Effect. Since December 31, 2011, there shall not have
occurred any event, circumstance, condition, fact, or other matter that has had
or could reasonably be expected to have a Material Adverse Effect.

(h) Domestically Controlled REIT. The Corporation shall be qualified as a
Domestically Controlled REIT.

(i) Consents and Waivers. All approvals, authorizations, consents, and waivers
of any Person or Governmental Entity that are required in connection with the
execution and delivery of this Agreement or any Transaction Document, the
performance of the Corporation of its obligations hereunder or thereunder, and
the consummation of the transactions contemplated hereby and thereby shall have
been duly obtained and effective.

(j) Absence of Breach. No event shall have occurred that, with the giving of
notice or the passage of time or both, would (i) constitute a default or breach
by any party (other than the Purchaser and its Affiliates) of its covenants and
agreements under the Transaction Documents, or (ii) allow the exercise of the
Optional Redemption Right under (and as defined in) the Series A Preferred
Articles Supplementary or the Series B Preferred Articles Supplementary.

ARTICLE VII.

[Intentionally Omitted]

ARTICLE VIII.

Closing Deliveries

8.1 Items to Be Delivered by the Corporation. At the Closing, the Corporation
shall deliver to the Purchaser the following items, in form and substance
reasonably satisfactory to the Purchaser:

(a) Preferred Stock Certificates. Validly issued stock certificates duly
executed by the appropriate officers of the Corporation and representing the
Series A Preferred Shares being issued to the Purchaser at the Closing.

 

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(b) Series A Warrant. The Series A Warrant being issued to the Purchaser at the
Closing, duly executed by the Corporation.

(c) Purchase Fee. An amount equal to the aggregate sum of one percent (1%) of
the Liquidation Preference (as defined in the Series A Preferred Articles
Supplementary) of all of Series A Preferred Shares being issued to the Purchaser
at the Closing.

(d) Expense Reimbursement. The amount to be reimbursed by the Corporation
pursuant to Section 11.6(a).

(e) Certificate of Good Standing. A file-stamped copy, dated no later than three
(3) Business Days prior to the Closing Date, certified by the Department and
showing the Corporation to be validly existing and in good standing in the State
of Maryland.

(f) Certified Copy of Series A Preferred Articles Supplementary. A file-stamped
copy of the Series A Preferred Articles Supplementary and the Articles
Supplementary, as certified by the Department.

(g) Officers’ Certificate. A certificate, dated as of the Closing Date, duly
executed by the President and the Secretary of the Corporation certifying that
(i) attached to such certificate are true and complete copies of (x) all
Organizational Documents of the Corporation (including without limitation the
Series A Preferred Articles Supplementary and the Articles Supplementary),
together with any and all amendments thereto, and (y) all resolutions adopted by
the Corporation’s Board of Directors authorizing the execution, delivery and
performance by the Corporation of the Transaction Documents to which it is a
party and including, without limitation, such elections and determinations, if
any, as may be necessary to opt out of, or otherwise to render inapplicable, any
applicable control share, business combination or other anti-takeover Laws, and
(ii) that the same are in full force and effect and in accordance with all
applicable Laws.

(h) Closing Certifications of the Corporation. A certificate duly executed by
the President and the Secretary of the Corporation certifying that, as of the
Closing Date, each of the conditions set forth in Sections 6.2(a), 6.2(b),
6.2(i) and 6.2(j) (solely with respect to the Corporation’s obligations
thereunder) has been satisfied (except to the extent waived in writing by the
Purchaser).

(i) Legal Opinions. An opinion of Goulston & Storrs P.C., counsel to the
Corporation, dated the Closing Date, in substantially the form attached hereto
as Exhibit C-1, and an opinion of Morris, Manning and Martin LLP, tax counsel to
the Corporation, dated the Closing Date, in substantially the form attached
hereto as Exhibit C-2.

 

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(j) Registration Rights Agreement. The Registration Rights Agreement, duly
executed by the Corporation, in substantially the form attached hereto as
Exhibit D (the “Registration Rights Agreement”).

(k) Ownership Limit Waiver. A duly executed REIT ownership limit waiver
certificate in substantially the form attached hereto as Exhibit E (a “REIT
Ownership Limit Waiver”).

(l) Other Documents. Such other documents relating to the transactions
contemplated hereby as the Purchaser or its counsel may reasonably request.

8.2 Items to Be Delivered by the Purchaser. At the Closing, the Purchaser shall
deliver to the Corporation the following:

(a) Purchase Price. The purchase price in cash for the Securities being
purchased by the Purchaser at the Closing.

(b) Officer’s Certificates. A certificate, dated as of the Closing Date, duly
executed by authorized officers of the Purchaser certifying that, as of the
Closing Date, each of the conditions set forth in clauses (a) and (b) of
Section 6.1 has been satisfied (except to the extent waived in writing by the
Corporation).

(c) Registration Rights Agreement. The Registration Rights Agreement, duly
executed by the Purchaser.

(d) Other Documents. Such other documents relating to the transactions
contemplated hereby as the Corporation or its counsel may reasonably request.

ARTICLE IX.

Other Agreements of the Parties

9.1 All Reasonable Efforts; Further Assurances. Subject to the terms and
conditions hereof, each of the parties hereto shall use all reasonable efforts
to take, or cause to be taken, all action, and do, or cause to be done, as
promptly as practicable, all things necessary, proper, or advisable under
applicable Law to consummate and make effective as promptly as practicable the
transactions contemplated hereby. At and from time to time after the Closing, at
the request of any party hereto, the other parties shall execute and deliver
such additional certificates, instruments, and other documents and take such
other actions as such party may reasonably request in order to carry out the
purposes of this Agreement.

9.2 Notification. The Corporation shall promptly notify the Purchaser in writing
of any material adverse development causing a breach of any of its
representations, warranties, covenants or agreements contained in this Agreement
or in any of the other Transaction Documents, or that will make it or its
Subsidiaries incapable of or materially less likely to be capable of performing
any of its material obligations under any of the Transaction Documents. The
provisions of this Section 9.2 shall terminate upon the redemption of all Series
A Preferred Stock.

 

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9.3 Issuance of Preferred Stock. No Preferred Stock or any other Preferred
Equity Securities shall be issued by the Corporation except in conformity with
this Agreement. So long as the Purchaser or any of its Affiliates holds any
Series A Preferred Stock, the Series A Preferred Stock shall be issued only to
the Purchaser and/or its Affiliates (as directed by the Purchaser). The
provisions of this Section 9.3 shall terminate upon the redemption of all Series
A Preferred Stock.

9.4 Public Announcements. None of the parties may issue any press release, make
any public filing with any Governmental Entity or make any other public
announcement relating to this Agreement or the transactions contemplated hereby
without the prior written approval of the Corporation and the Purchaser. The
foregoing shall not apply to the extent necessary or advisable in order to
satisfy a party’s or its Affiliate’s disclosure obligations or other obligations
under applicable Law, as determined by such party, in which event such party
shall first consult with and reasonably consider any comments or suggestions of
the other parties with respect thereto.

9.5 Confidentiality. Subject to Section 9.4, each party hereto agrees that such
party will hold, and will use all commercially reasonable efforts to cause its
officers, directors, members, managers, partners, employees, accountants,
counsel, consultants, advisors, financial sources, financial institutions,
representatives and agents to hold, in confidence all confidential information
and documents received from or on behalf of any other party hereto (including,
without, limitation, any material nonpublic information received from or on
behalf of the Corporation), except to the extent such information (i) was
previously known on a non-confidential basis to the party receiving such
information or documents (the “Receiving Party”), (ii) was in the public domain
through no fault of the Receiving Party, (iii) was independently developed by
the Receiving Party, (iv) was later developed by the Receiving Party from
sources other than the disclosing party not known by the Receiving Party to be
bound by any confidentiality obligation, or (v) is required to be disclosed by
Law or by any Governmental Entity.

9.6 Title to Acquired Properties. With respect to (i) each Uncontributed
Portfolio Property, (ii) each additional multi-family residential property, if
any, acquired by the Corporation and its Subsidiaries after the Closing the
acquisition cost of which is funded, in whole or in part, with proceeds from the
issuance and sale of Securities at the Closing, and (iii) the property known as
“Andros Isles Apartments” owned by one or more of DeBartolo and its Affiliates
currently anticipated to be acquired by the Corporation and its Subsidiaries,
the Corporation and its Subsidiaries (including as a Subsidiary, for purposes of
this Section 9.6, any entity that would become a Subsidiary of the Corporation
upon consummation of the contribution of the Uncontributed Portfolio Properties)
shall acquire good and marketable title in fee simple to the real property with
respect thereto, in each case, free and clear of all mortgages, pledges, liens,
security interests, claims, restrictions or encumbrances of any kind except
(a) mortgages on such real property (to the extent permitted under the Series A
Preferred Articles Supplementary), (b) Permitted Encumbrances and (c) such as do
not, individually or in the aggregate, materially affect the value of such real
property and do not interfere with the use made and proposed to be made of such
real property by the Corporation or any of its Subsidiaries. The provisions of
this Section 9.6 shall terminate upon the redemption of all Series A Preferred
Stock.

 

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9.7 Transfer Taxes. The Corporation shall pay all sales, use, transfer, stamp,
conveyance, value added, or other similar taxes, duties, excises, or
governmental charges imposed by any domestic or foreign taxing authority and all
recording and filing fees, notarial fees, and other similar costs in connection
with the issuance, sale or delivery to the Purchaser of the Series A Preferred
Shares or Series A Warrants at the Closing pursuant to Article II, the issuance,
sale or delivery of any shares of Common Stock upon exercise of the Series A
Warrant to the holder thereof, or otherwise on account of this Agreement or the
transactions contemplated hereby or thereby, and shall indemnify and save
harmless the Purchaser without limitation as to time against any and all
liabilities in respect thereof.

9.8 Transfer Restrictions.

(a) The Series A Preferred Shares may only be disposed of in accordance with the
restrictions on transfer, if any, set forth in the Organizational Documents of
the Corporation, subject to such waivers as may be granted from time to time to
a holder thereof, including, without limitation, the waiver granted as of the
Closing as contemplated by Section 8.1(k) and any waiver that may be granted
hereafter pursuant to Section 9.8(e). The Series A Warrants may only be disposed
of in accordance with the restrictions on transfer set forth therein. The Series
A Warrants may not be detached from the Series A Preferred Shares with respect
to which they are issued under this Agreement so long as such Series A Preferred
Shares remain unredeemed and outstanding, as more fully set forth in the Series
A Warrants.

(b) The Securities may only be disposed of pursuant to an effective registration
statement under the Securities Act or pursuant to an available exemption from
the registration requirements of the Securities Act, and in compliance with any
applicable state securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or to the Corporation
or pursuant to the last sentence of Rule 144(b)(l)(i) under the Securities Act,
except as otherwise set forth herein, the Corporation may require the transferor
to provide to the Corporation an opinion of counsel selected by the transferor,
the form and substance of which opinion shall be reasonably satisfactory to the
Corporation, to the effect that such transfer does not require registration
under the Securities Act. Notwithstanding the foregoing, the Corporation hereby
agrees that no such legal opinion shall be required in the case of any transfer
of Securities by the Purchaser to an Affiliate of the Purchaser, provided in
each case that the transferee certifies to the Corporation that it is an
“accredited investor” as defined in Rule 501(a) under the Securities Act. As a
condition of any transfer of any Securities, any such transferee shall agree in
writing to be bound by the terms of this Agreement (and any other applicable
Purchaser Document) and shall have the rights of the Purchaser under this
Agreement (and any other applicable Purchaser Document).

 

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(c) The Purchaser agrees to the imprinting on any certificate evidencing the
Series A Preferred Shares, except as otherwise permitted by Section 9.8(d), of a
restrictive legend in substantially the form as follows, together with any
additional legend required by any applicable state securities laws:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.

(d) Certificates evidencing the Series A Preferred Shares shall not be required
to contain the legend set forth in Section 9.8(c): (i) if a registration
statement under the Securities Act covering the resale of such Series A
Preferred Shares under the Securities Act is effective, (ii) following any sale
of such Series A Preferred Shares in compliance with Rule 144, (iii) if such
Series A Preferred Shares are eligible for sale pursuant to the last sentence of
Rule 144(b)(l)(i) under the Securities Act, or (iv) if such legend is not
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the SEC). The
Corporation shall cause its counsel to issue a legal opinion to the
Corporation’s transfer agent in connection with any transfer occurring after the
effective date of any registration statement referred to in clause (i) above.
Following such effective date or at such earlier time as such legend is no
longer required for certain Series A Preferred Shares, the Corporation will no
later than three (3) Business Days following the delivery by the Purchaser to
the Corporation or the Corporation’s transfer agent of a legended certificate
representing such Series A Preferred Shares, deliver or cause to be delivered to
the Purchaser a certificate representing such Series A Preferred Shares that is
free from such legend. The Corporation may not make any notation on its records
or give instructions to any transfer agent of the Corporation that enlarge the
restrictions on transfer set forth in this Section 9.8.

(e) In the event of a proposed transfer of Series A Preferred Shares that, if
consummated, would result in the intended transferee beneficially owning shares
of capital stock of the Corporation in excess of the ownership limit established
under the Charter for REIT qualification purposes, then, to the extent permitted
by the Charter and subject to the other terms and conditions of this
Section 9.8(e), the Corporation shall deliver a duly executed REIT Ownership
Limit Waiver to such transferee effective upon such transfer. Any such intended
transferee shall provide at least fifteen (15) calendar days written notice to
the Corporation of such proposed transfer and request for a REIT Ownership Limit
Waiver. The grant of any such REIT Ownership Limit Waiver shall be subject to a
determination by the Board of Directors of the Corporation that such waiver
would not adversely affect the Corporation’s ability to qualify as a REIT and
shall also be subject to satisfaction of the conditions set forth in the
immediately following sentences.

 

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As a condition to any such waiver, the proposed transferee shall represent to
the Corporation, and shall furnish such reasonable evidence as the Board of
Directors may request, that no person or entity described in Section 542(a)(2)
of the Code, including the application of the provisions of Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code, owns more than the
maximum ownership limit set forth in the Charter, as such may have been modified
as provided therein. Any such waiver may be subject to automatic revocation in
the event the foregoing representation ceases to be true, as a result of a
direct or indirect transfer of an interest or otherwise. In addition to the
above, as a condition to the granting of any such waiver, the Corporation may
require an opinion of counsel or other evidence reasonably satisfactory to the
Board of Directors of the Corporation in support of the grant of such waiver, in
addition to such other customary conditions as the Board of Directors of the
Corporation may impose.

9.9 Pre-emptive Rights

The Corporation and the Purchaser agree that the Pre-emptive Rights granted to
the Purchaser pursuant to Section 9.9 of the August SPA shall, subject to the
provisions of clause (II) of Section 9.9(f) of the August SPA, continue to be
applicable until the redemption of all outstanding Series A Preferred Stock and
Series B Preferred Stock.

9.10 No Impairment. So long as any Series A Preferred Stock is outstanding, the
Corporation shall:

(a) comply with its obligations under the Series A Preferred Articles
Supplementary and the Series B Preferred Articles Supplementary, and the
Corporation shall not take any action or make any omission that, with notice or
the passage of time or both, would constitute a violation of (i) Section 8(c) of
the Series A Preferred Articles Supplementary or (ii) Section 8(c) of the Series
B Preferred Articles Supplementary; and

(b) not take or permit any action, or cause or permit any of its Subsidiaries
(including as a Subsidiary, for purposes of this Section 9.10(b), any entity
that would become a Subsidiary of the Corporation upon consummation of the
contribution of the Uncontributed Portfolio Properties) to take or permit any
action that would cause the Corporation to be prohibited from making any
payments or distributions required to be made pursuant to the terms of the
Preferred Stock, including, without limitation, any action that would prohibit
the Corporation from making distributions under the MGCL.

9.11 Director and Officer Insurance. So long as the Purchaser has a designee on
the Board of Directors of the Corporation, the Corporation shall maintain
directors’ and officers’ liability insurance providing coverage in such amounts
and on such terms as is customary for a publicly traded company of similar size
to the Corporation. Such insurance shall include coverage for all directors of
the Corporation, including any director designated (individually or jointly) by
the Purchaser. The Purchaser hereby acknowledges and agrees that the
Corporation’s directors’ and officers’ liability insurance policy in effect as
of the Closing Date, a copy of which has been furnished to the Purchaser,
complies with this Section 9.11 as of the date hereof; provided that, upon the
reasonable request of the Purchaser from time to time, to modify or increase the
coverage of the Corporation’s directors’ and officers’ liability insurance
policy that

 

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is then in effect in light of the circumstances existing at such time, then the
Corporation shall make such modifications or increase to such directors’ and
officers’ liability insurance policy (or, if applicable, purchase an additional
directors’ and officers’ liability insurance policy) as may be required, if at
all, to comply with this Section 9.11.

9.12 Access. In addition to any other rights provided by law or set forth
herein, from and after the Closing Date, the Corporation shall, and shall cause
each of its Subsidiaries to, give the Purchaser and its representatives access
during reasonable business hours to (i) all properties, assets, books,
contracts, commitments, reports and records relating to the Corporation and its
Subsidiaries, and (ii) the management, accountants, lenders, customers and
suppliers of the Corporation and its Subsidiaries; provided, however, in each
case, that a party shall not be required to provide such access to any
information or Persons if such party reasonably determines that access to such
information or Persons would violate the attorney-client privilege between such
party or any Affiliate thereof and its counsel that cannot be provided to the
Purchaser in a manner that would avoid the violation of such attorney-client
privilege. The provisions of this Section 9.12 shall terminate upon the
redemption of all the Series Preferred Stock.

9.13 Amendments to Transaction Documents. So long as any share of Series A
Preferred Stock are held by any of the Purchaser and its Affiliates, the
Corporation shall not, and shall not permit any of its Subsidiaries to, enter
into, become or remain subject to any agreement or instrument, except for the
Transaction Documents, that would prohibit or require the consent of any Person
to any amendment, modification or supplement to any of this Agreement, the
Series A Warrant, the Series A Preferred Articles Supplementary, the Series B
Preferred Articles Supplementary or the Registration Rights Agreement. For
avoidance of doubt, any and all approval requirements of (i) shareholders of the
Corporation or partners of the Operating Partnership under their respective
Organizational Documents or under applicable Laws or (ii) lenders to the
Corporation or any of its Subsidiaries or with respect to any of their
respective properties (including for this purpose any Uncontributed Portfolio
Properties) shall be disregarded for purposes of this Section 9.13.

9.14 Integration. The Corporation shall not, and shall use its best efforts to
ensure that no Affiliate of the Corporation shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Series A Preferred Shares and the Series A Warrants
hereunder in a manner that would require the registration under the Securities
Act of the sale of any Series A Preferred Shares or Series A Warrants hereunder
to the Purchaser.

9.15 Appraisal. So long as any shares of Series A Preferred Stock are held by
any of the Purchaser and its Affiliates, the Corporation shall cause an
appraisal of each property owned by the Corporation and its Subsidiaries to be
undertaken on December 1 of each calendar year. All appraisals required under
this Section 9.15 shall be performed by a nationally recognized independent real
property appraisal firm having specialized knowledge and expertise in the
appraisal of multi-family residential properties; provided, however, any
appraiser selected by the Corporation to perform appraisals required under this
Section 9.15 shall be rotated at least once every three years (with the first
such three-year period commencing on the Closing Date). The Corporation shall
cause all such appraisals to be completed and distributed to the Purchaser not

 

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later than the January 20th immediately following the date of such respective
update or appraisal. The cost of any annual appraisal and update obtained
pursuant to this Section 9.15 shall be borne by the Corporation. The provisions
of this Section 9.15 shall terminate upon the redemption of all of the Series A
Preferred Stock.

9.16 Use of Proceeds. The Corporation shall use the proceeds received from the
issuance and sale of the Securities at the Closing primarily for acquisitions of
capital assets and leases, retirement of Indebtedness and payment of costs and
expense relating to the IPO. Provided that the proceeds are used primarily for
the above mentioned purposes, the remaining proceeds may be used for general
corporate purposes. Notwithstanding the foregoing, no portion of the proceeds
received from the issuance and sale of the Securities at the Closing may be used
for the payment of distributions or dividends to the Corporation’s stockholders
or to limited partners of the Operating Partnership. The proceeds received from
the issuance and sale of the Securities at the Closing, shall be deposited on
the Closing Date in one or more segregated bank accounts of the Corporation
(collectively, the “Proceeds Accounts”). No withdrawals shall be permitted from
the Proceeds Accounts without the written consent of OPTrust (so long as any of
OPTrust and its Affiliates hold any Series A Preferred Stock), other than for
use in accordance with this Section 9.16. For so long as the Purchaser or any of
its Affiliates holds any Series A Preferred Stock, with respect to each calendar
month in which any such withdrawals are made, the Corporation shall furnish a
written report the Purchaser within thirty (30) days after the end of such month
specifying in reasonable detail the dates and amounts of such withdrawals and
the purposes therefor.

9.17 Other Reporting Obligations. (a) During any period in which the Corporation
is not subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Corporation shall deliver to the Purchaser by mail and without
cost to the Purchaser the following reports in the form that the Corporation
would have been required to file with the SEC pursuant to Section 13 or
Section 15(d) of the Exchange Act as if the Corporation were subject thereto as
well as the other documents listed herein:

(i) as soon as practicable, but in any event within the time frame prescribed
for the filing of an annual report pursuant to the Exchange Act after the end of
each fiscal year, an annual report on Form 10-K, and to the extent not included
in such Form 10-K, an income statement of the Corporation for such fiscal year,
a balance sheet of the Corporation and statement of stockholders’ equity as of
the end of such fiscal year, and a statement of cash flows for such fiscal year,
such year-end financial reports to be prepared on a consolidated basis, in
reasonable detail, prepared in accordance with GAAP, and audited and certified
by independent public accountants of nationally recognized standing selected by
the Corporation; and

(ii) as soon as practicable, but in any event within the time frame prescribed
for the filing of a quarterly report pursuant to the Exchange Act for each
fiscal quarter of each fiscal year of the Corporation, a quarterly report on
Form 10-K, and to the extent not included in such Form 10-Q, an unaudited income
statement and statement of cash flows for such fiscal quarter and an unaudited
balance sheet and a statement of stockholder’s equity as of the end of such
fiscal quarter prepared on a consolidated basis.

 

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(b) The Corporation at its sole cost and expense shall furnish to the Purchaser
(in each case, for the avoidance of doubt, subject to the provisions of
Section 9.5):

(i) as soon as practicable, but in any event at least 30 days prior to the end
of each fiscal year, a budget for the next fiscal year, prepared on a monthly
basis, including income statements, balance sheets, and statements of cash flows
for such months, and, as soon as prepared, any other budgets or revised budgets
prepared by the Corporation;

(ii) as soon as practicable, but in any event no later than 60 days after the
end of each calendar year, annual fair value statements, with a December 31
year-end, prepared in accordance with International Financial Reporting
Standards (“IFRS”); and

(iii) as soon as practicable, any additional reports as may be reasonably
requested by the Purchaser from time to time for its own internal purposes.

(c) Audits. The Corporation shall be audited annually by a nationally recognized
accounting firm (which firm is initially anticipated to be Ernst & Young).

(d) Termination. The provisions of this Section 9.17 shall terminate upon the
redemption of all the Series A Preferred Stock.

9.18 Affiliate Transactions. So long as any shares of Series A Preferred Stock
are held by any of the Purchaser and its Affiliates, no Related Person shall:
(i) owe any amount to any of the Corporation and its Subsidiaries, nor shall any
of the Corporation and its Subsidiaries owe any amount to, nor shall any of the
Corporation and its Subsidiaries commit to make any loan or extend or guarantee
credit to or for the benefit of, any Related Person; (ii) have any direct or
indirect ownership interest in, or be an officer, director, employee, consultant
or agent of, any Person that has a business relationship with, or enters into
any transaction with, any of the Corporation and its Subsidiaries; or (iii) own,
directly or indirectly, in whole or in part, any real property, leasehold
interests or other property, or any permits, the use of which is necessary for
the conduct of the business of any of the Corporation and its Subsidiaries as
currently conducted and as proposed to be conducted; provided, however, that the
provisions of this Section 9.18 shall not apply to (I) the transactions
contemplated hereby and by the other Transaction Documents, (II) any Qualified
Contribution Transaction (as such term is defined in the Series A Preferred
Articles Supplementary), and (III) any other transaction or arrangement that is
approved in writing by the Purchaser (which approval will not be unreasonably
conditioned, delayed, or withheld, provided that such transaction or arrangement
is made on terms and conditions that are no less favorable to the Corporation
and its Subsidiaries than such terms and conditions as may be attained in a
transaction not involving a Related Person). The provisions of this Section 9.18
are in addition to, and not in lieu of, any other applicable restrictions that
may be set forth in the Organizational Documents of the Corporation (including
the Charter) and elsewhere in the Transaction Documents (including the Series A
Preferred Articles Supplementary) or as may be provided by the MGCL or other
applicable Laws. The provisions of this Section 9.18 shall terminate upon the
redemption of the Series A Preferred Stock.

 

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9.19 Investment Company Act. At any time while any Series A Preferred Stock is
outstanding, the Corporation shall make all reasonable efforts to conduct its
affairs, and to cause its Subsidiaries to conduct their affairs, in such a
manner as to ensure that neither the Corporation nor its Subsidiaries will be or
become an “investment company,” as such term is defined in the Investment
Company Act of 1940, as amended.

9.20 Amendment to Series A Preferred Articles Supplementary.

At the first meeting of the stockholders of the Corporation following the date
of this Agreement, the Corporation shall propose and recommend to the
stockholders of the Corportion that the Series A Preferred Articles
Supplementary and Series B Preferred Articles Supplementary be amended, in form
acceptable to the Purchaser, to:

(i) replace the current definition of “IPO” in each of the Series A Preferred
Articles Supplementary and Series B Preferred Articles Supplementary in its
entierty with the following: ““IPO” shall mean the consummation of the initial
closing (without regard for any closing of any associated “green shoe”) of the
first underwritten public offering of shares of Common Stock registered under
the United States Securities Act of 1933, as amended, and/or applicable
securities legislation in Canada that occurs after the Original Issue Date and,
in conjunction with which, such shares of Common Stock are listed for trading on
the NYSE, the Nasdaq Stock Market and/or the Toronto Stock Exchange.”;

(ii) divest, to the greatest extent permitted by law, the holders of the common
stock of Corporation of any rights to vote in respect of any amendment to the
Series A Preferred Articles Supplementary or Series B Preferred Articles
Supplementary, as applicable, and that (x) only a majority vote of the holders
of all Series A Preferred Stock, voting as a class, is required to amend the
Series A Preferred Articles Supplementary, and (y) only a majority vote of the
holders of all Series B Preferred Stock, voting as a class, is required to amend
the Series B Preferred Articles Supplementary, in each case without derogating
from the rights provided to the holders of the Series A Preferred Stock and the
holders of the Series B Preferred Stock pursuant to section 8(c)(iv) of the
Series A Preferred Articles Supplementary and section 8(c)(iv) of the Series B
Preferred Articles Supplementary, respectively;

(iii) make any additional amendments as may be reasonably required in order to
give effect to the foregoing amendments set forth in this Section 9.20 and the
transactions contemplated by this Agreement.

 

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ARTICLE X.

Survival and Indemnification

10.1 Survival of Representations, Warranties, and Covenants.

(a) The representations and warranties of the parties contained in this
Agreement shall survive until the date upon which all of the shares of the
Series A Preferred Stock have been redeemed and shall be unaffected by any
investigation heretofore or hereafter made by any party in favor of which any
such representation and warranty has been made; except that the representations
and warranties contained in Section 3.7 (Authorization of Preferred Stock),
Section 3.17 (Private Placement), Section 3.19 (Waiver of Ownership Limits),
Section 3.22 (Certain Fees) and Section 3.43 (Acknowledgment Regarding
Purchaser’s Purchase of Securities) shall survive indefinitely. Any claim for
indemnification in respect of any representation or warranty that is not
asserted by notice given as herein provided relating thereto prior to the
expiration of the specified period of survival shall not be pursued and is
hereby irrevocably waived after the expiration of such period of survival. Any
claim for a Loss in respect of such a breach asserted within such period of
survival as herein provided will be timely made for purposes hereof.

(b) Unless a specified period is set forth in this Agreement (in which event
such specified period will control), the covenants in this Agreement will
survive and remain in effect indefinitely.

10.2 Indemnification.

(a) From and after the Closing, the Corporation shall indemnify and hold
harmless the Purchaser from and against any and all Losses incurred, arising out
of or relating to:

(i) any breach by the Corporation of any of the representations, warranties or
covenants made by the Corporation in this Agreement;

(ii) any dividend or other distributions of any nature declared or paid by the
Corporation in respect of the Series A Preferred Stock, including any redemption
or purchase thereof by the Corporation, that is claimed or alleged to have been
made, or actually made, in violation of any applicable Laws;

(iii) any claim or Proceedings against the Corporation or the Purchaser in
relation to this Agreement or any other Transaction Document or any of the
transactions contemplated hereby or thereby commenced by (A) any Governmental
Entity with jurisdiction over the Corporation or any of its Subsidiaries or
(B) any stockholder, director, or officer of the Corporation (other than the
Purchaser and the Purchaser’s respective Affiliates and their respective
representatives), or any representative thereof, including, without limitation,
any allegation or claim that the transactions contemplated hereby or thereby are
invalid or illegal, except to the extent resulting from the bad faith or willful
malfeasance of any of the Purchaser and the Purchaser’s Affiliates; and

(iv) any claim or Proceedings against the Purchaser commenced by any director,
officer, employee or other representative of the Purchaser (a “Representative”)
who, in his or her capacity as a Representative of the

 

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Purchaser, has been appointed as a director of the Corporation, and (A) as a
result of, or in connection with such Representative’s position as a director of
the Corporation, is or becomes subject to any claim or Proceedings (the
“Originating Proceedings”), and (B) such Representative makes a claim or
commences Proceedings against the Purchaser in respect of an indemnity claim or
claim for loss resulting from the Originating Proceedings; provided, however,
that the Corporation shall not be obligated to indemnify the Purchaser under
this clause (iv) to the extent that the Corporation is prohibited under
applicable law from indemnifying such Representative in respect of such
Originating Proceedings.

(b) From and after the Closing, the Purchaser shall indemnify and hold harmless
the Corporation from and against any and all Losses incurred, arising out of or
relating to any breach by the Purchaser of any of the representations,
warranties or covenants made by the Purchaser in this Agreement.

(c) Without limitation to Section 10.2(a), from and after the Closing and for so
long as any Series A Preferred Stock is held by any of the Purchaser and its
Affiliates, the Corporation shall indemnify and hold harmless each of the
Purchaser and its Affiliates from and against any and all U.S. federal, state or
local income or withholding tax incurred or suffered by such Indemnitee as a
holder of Series A Preferred Stock with respect to any gain that is treated as
recognized by such holder from a sale or exchange (or deemed sale or exchange)
by any of the Corporation and its Subsidiaries under Code section 897(h)(1) of a
“United States real property interest” as defined in Code section 897(c)(1) and
that results from any distribution made by the Corporation.

(d) The conduct of any Proceedings for which indemnification is available under
this Section 10.2 shall be governed by Section 10.3. The indemnification
obligations of any Indemnitor under this Section 10.2 shall be the exclusive
remedy of the Purchaser hereunder for breaches of the representations,
warranties and covenants addressed thereby, other than for fraud and equitable
remedies, and shall be binding upon and inure to the benefit of any successors,
permitted assigns, heirs and personal representatives of the Purchaser.

10.3 Procedures for Third-Party Claims.

(a) If any Indemnitee receives notice of assertion or commencement of any
Third-Party Claim against such Indemnitee in respect of which an Indemnitor may
be obligated to provide indemnification under this Agreement, the Indemnitee
shall give such Indemnitor reasonably prompt written notice thereof; provided,
however, that no delay on the part of the Indemnitee in notifying any Indemnitor
shall relieve the Indemnitor from any obligation hereunder unless (and then
solely to the extent) the Indemnitor is actually prejudiced by such delay.

(b) Any Indemnitor will have the right to defend the Indemnitee against the
Third-Party Claim with counsel of its choice reasonably satisfactory to the
Indemnitee so long as (i) the Indemnitor notifies the Indemnitee in writing
within ten (10) days after the Indemnitee has given notice of the Third-Party
Claim that the Indemnitor will indemnify

 

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the Indemnitee from and against any such Losses, (ii) the Indemnitor provides
the Indemnitee with evidence reasonably acceptable to the Indemnitee that the
Indemnitor will have the financial resources to defend against the Third-Party
Claim and fulfill its indemnification obligations hereunder, (iii) the
Third-Party Claim involves only monetary damages and does not seek an injunction
or other equitable relief, (iv) settlement of, or an adverse judgment in respect
of, the Third-Party Claim is not, in the good faith judgment of the Indemnitee,
likely to establish a precedential custom or practice adverse to the continuing
business interests of the Indemnitee, and (v) the Indemnitor conducts the
defense of the Third-Party Claim actively and diligently.

(c) So long as the Indemnitor is conducting the defense of the Third-Party Claim
in accordance with Section 10.3(b), (i) the Indemnitee may retain separate
co-counsel at its sole cost and expense and participate in the defense of the
Third-Party Claim, (ii) the Indemnitee will not consent to the entry of any
judgment or enter into any compromise or settlement in respect of the
Third-Party Claim without the prior written consent of the Indemnitor (which
consent will not be unreasonably conditioned, delayed, or withheld), and
(iii) the Indemnitor will not consent to the entry of any judgment or enter into
any compromise or settlement in respect of the Third-Party Claim without the
prior written consent of the Indemnitee (which consent will not be unreasonably
conditioned, delayed, or withheld); provided, however, that, in respect of
clause (iii) above, the Indemnitee may condition such consent upon the delivery
by the claimant or plaintiff to the Indemnitee of a duly executed unconditional
release of the Indemnitee from all liability in respect of such Third-Party
Claim.

(d) In the event any condition set forth in Section 10.3(b) is or becomes
unsatisfied, however, (i) the Indemnitee may defend against, and consent to the
entry of any judgment or enter into any settlement in respect of, the
Third-Party Claim in any manner it reasonably may deem appropriate, provided
that the Indemnitee will consult with and obtain the consent of the Indemnitor
in connection therewith which shall not be unreasonably conditioned, delayed, or
withheld, (ii) the Indemnitor will reimburse the Indemnitee promptly and
periodically for the costs of defending against the Third-Party Claim (including
reasonable attorneys’ fees and expenses), and (iii) the Indemnitor will remain
responsible for any Losses the Indemnitee may suffer resulting from, arising out
of, relating to, in the nature of, or caused by, the Third-Party Claim to the
fullest extent provided in this Section 10.3.

10.4 Direct Claims. The Indemnitor will have a period of thirty (30) days within
which to respond in writing to any claim by an Indemnitee on account of a Loss
that does not result from a Third-Party Claim (a “Direct Claim”). If the
Indemnitor does not so respond within such 30 day period, the Indemnitor will be
deemed to have rejected such claim, in which event the Indemnitee will be
entitled to pursue such remedies as may be available to the Indemnitee.

10.5 Certain Other Matters. Upon making any Indemnity Payment Indemnitor will,
to the extent of such Indemnity Payment, be subrogated to all rights of
Indemnitee against any third person (other than an insurance company) in respect
of the Loss to which the Indemnity Payment related; provided, however, that
(i) Indemnitor shall then be in compliance with its obligations under this
Agreement in respect of such Loss and (ii) until Indemnitee fully recovers
payment of

 

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its Loss, any and all claims of the Indemnitor against any such third person on
account of such Indemnity Payment will be subrogated and subordinated in right
of payment to Indemnitee’s rights against such third person. Without limiting
the generality or effect of any other provision hereof, each such Indemnitee and
Indemnitor will duly execute upon request all instruments reasonably necessary
to evidence and perfect the above-described subrogation and subordination
rights. Any Indemnity Payment hereunder shall be treated as an adjustment to the
purchase price.

ARTICLE XI.

Miscellaneous

11.1 Amendments. This Agreement may be amended, modified, or supplemented only
pursuant to a written instrument making specific reference to this Agreement and
signed by each of the parties hereto.

11.2 Assignment. Except as expressly provided otherwise in this Agreement, this
Agreement and the rights and obligations hereunder shall not be assigned,
delegated, or otherwise transferred (whether by operation of law, by contract,
or otherwise) without the prior written consent of the other parties hereto;
provided, however, that the Purchaser may, without obtaining the prior written
consent of any other party hereto, assign, delegate, or otherwise transfer its
rights and obligations hereunder to any of its Affiliates in connection with a
transfer of Securities to such Affiliate, provided that any such assignment,
delegation or other transfer shall not relieve the Purchaser from its
obligations hereunder. Each party shall execute such acknowledgements of such
permitted assignments in such forms consistent with the provisions hereof as the
assigning party may from time to time reasonably request. Any attempted
assignment, delegation, or transfer in violation of this Section 11.2 shall be
void and of no force or effect.

11.3 Binding Effect. Except as otherwise expressly provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.

11.4 Counterparts. This Agreement may be executed in multiple counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same instrument.

11.5 Entire Agreement. This Agreement (including the Schedules attached hereto)
and the other Transaction Documents constitute the entire agreement of the
parties hereto in respect of the subject matter hereof and thereof, and
supersede all prior agreements or understandings, among the parties hereto in
respect of the subject matter hereof and thereof.

11.6 Fees and Expenses.

(a) At the Closing, the Corporation shall reimburse the Purchaser for reasonable
out-of-pocket expenses (including fees and disbursements of their counsel and
accountants) incurred by or on behalf of the Purchaser in connection with the
preparation, negotiation, execution, delivery, and performance of this Agreement
and each Transaction Document through and including the Closing Date, including
legal and financial diligence relating thereto.

 

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(b) The Corporation shall bear all of the expenses (including fees and
disbursements of its counsel) incurred by or on behalf of the Corporation in
connection with the preparation, negotiation, execution, delivery, and
performance of this Agreement and each Transaction Document and the consummation
of the transactions contemplated hereby and thereby.

11.7 Governing Law. This Agreement shall be enforced, governed, and construed in
all respects in accordance with the laws of the State of New York applicable to
contracts executed and performable solely in such state (except for matters
governed exclusively by the MGCL).

11.8 Headings. The article and section headings of this Agreement are for
convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof.

11.9 Jurisdiction. Except as otherwise expressly provided in this Agreement, the
parties hereto agree that any action, suit, or proceeding seeking to enforce any
provision of, or based on any matter arising out of or relating to, this
Agreement or the transactions contemplated hereby can only be brought in federal
court sitting in the Eastern District of New York or, if such court does not
have jurisdiction, any district court sitting in the Borough of Manhattan, New
York County, New York, and each of the parties hereto hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such action, suit, or proceeding and irrevocably waives, to the fullest
extent permitted by Law, any objection that it may now or hereafter have to the
laying of the venue of any such action, suit, or proceeding in any such court or
that any such action, suit, or proceeding that is brought in any such court has
been brought in an inconvenient forum.

11.10 Notices. Any notice, demand, request, instruction, correspondence, or
other document required or permitted to be given hereunder by any party to the
other shall be in writing and delivered (i) in person, (ii) by a nationally
recognized overnight courier service requiring acknowledgment of receipt of
delivery, (iii) by certified mail, postage prepaid and return receipt requested,
or (iv) by facsimile, as follows:

If to the Corporation, to:

4901 Dickens Road, Suite 101

Richmond, Virginia 23230

Attention: Stanley J. Olander, Jr.

Facsimile No.: (804) 237-1345

with a copy to (which shall not constitute notice):

Goulston & Storrs P.C.

885 Third Avenue, 18th Floor

New York, New York 10022

Attention: Yaacov M. Gross, Esq.

Facsimile No.: (212) 878-6911

 

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If to the Purchaser, to:

2335887 Ontario Inc.

1 Adelaide Street E.

Suite 1200

Toronto, Ontario M5C 3A7

Canada

Attention: Robert A.S. Douglas

Facsimile No.: (416) 681-2500

with a copy to (which shall not constitute notice):

Davies Ward Phillips & Vineberg LLP

900 Third Avenue, 24th Floor

New York, New York 10022

Attention: Jeffrey Nadler, Esq.

Facsimile No.: (212) 318-0132

Notice shall be deemed given, received, and effective on: (i) if given by
personal delivery or courier service, the date of actual receipt by the
receiving party, or if delivery is refused on the date delivery was first
attempted; (ii) if given by certified mail, the third day after being so mailed
if posted with the United States Postal Service; and (iii) if given by
facsimile, the date on which the facsimile is transmitted if confirmed by
transmission report during the transmitter’s normal business hours, or at the
beginning of the next business day after transmission if confirmed at any time
other than the transmitter’s normal business hours. Any person entitled to
notice may change any address or facsimile number to which notice is to be given
to it by giving notice of such change of address or facsimile number as provided
in this Section 11.10. The inability to deliver notice because of changed
address or facsimile number of which no notice was given shall be deemed to be
receipt of the notice as of the date such attempt was first made.

11.11 No Recourse. Notwithstanding any provision of this Agreement to the
contrary, the Corporation agrees that neither it nor any person acting on its
behalf may assert any claim or cause of action against any officer, director,
stockholder, controlling person, manager, member, partner, employer, agent,
representative, or affiliate of the Purchaser or the Purchaser’s officers,
directors, stockholders, controlling persons, managers, members, partners,
employees, agents, or representatives in connection with, arising out of, or
relating to this Agreement, the Transaction Documents, or the transactions
contemplated hereby or thereby.

11.12 Severability. If any provision of this Agreement or the application of
such provision to any person or circumstance shall be held (by a court of
competent jurisdiction) to be invalid, illegal, or unenforceable under the
applicable Law of any jurisdiction, (i) the remainder of this Agreement or the
application of such provision to other persons or circumstances or in other
jurisdictions shall not be affected thereby, and (ii) such invalid, illegal, or
unenforceable provision shall not affect the validity or enforceability of any
other provision of this Agreement.

 

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11.13 Specific Performance. The parties hereby acknowledge and agree that if any
party refuses to perform under this Agreement, monetary damages alone will not
be adequate to compensate the other parties for their injuries. Therefore, each
party shall, in addition to any other remedy that may be available to it, be
entitled to obtain specific performance of this Agreement. If any action, suit,
or proceeding is instituted by any party to enforce this Agreement, each of the
other party hereby waives the defense that there is an adequate remedy at law.
In the event of a default by any party that results in the filing of an action
for damages, specific performance, or other remedies, the other parties shall be
entitled to reimbursement by the defaulting party of all reasonable attorneys’
fees and expenses incurred by it.

11.14 Third-Party Beneficiaries. Nothing express or implied in this Agreement is
intended or shall be construed to confer upon or give any Person other than the
parties hereto and their respective permitted assigns any rights or remedies
under or by reason of this Agreement or the transactions contemplated hereby.

11.15 Waiver. The rights and remedies provided for herein are cumulative and not
exclusive of any right or remedy that may be available to any party whether at
law, in equity, or otherwise. No delay, forbearance, or neglect by any party,
whether in one or more instances, in the exercise or any right, power,
privilege, or remedy hereunder or in the enforcement of any term or condition of
this Agreement shall constitute or be construed as a waiver thereof. Any waiver
or consent shall be valid or binding only if expressly and affirmatively made in
writing and duly executed by the party to be charged with such waiver. No waiver
shall constitute or be construed as a continuing waiver or a waiver in respect
of any subsequent breach or default, either of similar or different nature,
unless expressly so stated in such writing.

[Remainder of page intentionally left blank. Signature page follows.]

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

 

LANDMARK APARTMENT TRUST OF AMERICA, INC. By:  

/s/ Stanley J. Olander

Name:   Stanley J. Olander Title:   Chief Executive Officer

 

Signature to Securities Purchase Agreement

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

 

2335887 LIMITED PARTNERSHIP,

by its general partner, 2335887 ONTARIO INC.

By:  

/s/ Robert A. S. Douglas

Name:   Robert A. S. Douglas Title:   President By:  

/s/ Joseph Lyn

Name:   Joseph Lyn Title:   Vice-President and Secretary

 

Signature to Securities Purchase Agreement