Document:

Exhibit

FORM OF SUBSCRIPTION ESCROW AGREEMENT 

THIS FORM OF SUBSCRIPTION ESCROW AGREEMENT dated as of September __, 2019 (this “Agreement”), is entered into among Preferred Capital Securities, LLC (the “Dealer Manager”), Preferred Apartment Communities, Inc. (the “Company”) and UMB Bank, National Association, a national banking association, as escrow agent (the “Escrow Agent”).

WHEREAS, the Company intends to raise cash funds from Investors (as defined below) pursuant to a public offering (the “Offering”) of up to 1,000,000 shares of preferred stock, having a purchase price of $1,000 per share of preferred stock (for an aggregate offering amount of $1,000,000,000), consisting of (i) shares of Series A1 Redeemable Preferred Stock, par value $0.01 per share, and (ii) shares of Series M1 Redeemable Preferred Stock, par value $0.01 per share, of the Company (collectively, the “Securities”), pursuant to the registration statement on Form S-3 of the Company (No. 333-233576) (as amended, the “Offering Document”). 

WHEREAS, the Escrow Agent is willing to accept appointment as escrow agent only for the express duties set forth herein.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto, intending to be legally bound, hereby agree as follows:

1.     Proceeds to be Escrowed.   On or before the date the Offering Document is declared effective by the Securities and Exchange Commission, the Company shall establish an escrow account with the Escrow Agent to be invested in accordance with Section 7 entitled “ESCROW ACCOUNT FOR THE BENEFIT OF INVESTORS OF A1M1PREFERRED STOCK OF PREFERRED APARTMENT COMMUNITIES, INC.” (including such abbreviations as are required for the Escrow Agent’s systems) (the “Escrow Account”) with two separate subaccounts (a “A1 Subaccount” and a “M1 Subaccount”).  All checks, wire transfers and other funds received from subscribers of Securities via “Direct Registration Settlement” (as described in the Offering Document) (“Investors”) in payment for the Securities (“Investor Funds”) will be delivered to the Escrow Agent within one business day following the day upon which such Investor Funds are received by the Company or its agents, and shall, upon receipt by the Escrow Agent, be retained in escrow by the Escrow Agent.  Upon receipt of any such Investor Funds, the Company shall direct the Escrow Agent in writing whether such funds shall be deposited into the A1 Subaccount or the M1 Subaccount.  In the absence of the receipt of such written direction, the Escrow Agent shall have no obligation to determine whether such investor funds shall be deposited into the A1 Subaccount or the M1 Subaccount.  During the term of this Agreement, the Company or its agents shall cause all checks received by and made payable to it for payment for the Securities to be endorsed in favor of the Escrow Agent and delivered to the Escrow Agent for deposit in the Escrow Account.  

The initial escrow period shall commence upon the effectiveness of this Agreement and shall continue until the Termination Date (as defined herein)  The Escrow Account shall not be an interest-bearing account.

PAC:19638.2 

The Escrow Agent shall have no duty to make any disbursement, investment or other use of Investor Funds until and unless it has good and collected funds.  If any checks deposited in the Escrow Account are returned or prove uncollectible after the funds represented thereby have been released by the Escrow Agent, then the Company shall promptly reimburse the Escrow Agent for any and all costs incurred for such.  The Escrow Agent shall be under no duty or responsibility to enforce collection of any check delivered to it hereunder.  

2.     Investors.  Investors will be instructed by the Dealer Manager or any soliciting dealers retained by the Dealer Manager (the “Soliciting Dealers”) to remit the purchase price in the form of checks ( “instruments of payment”) payable to the order of, or funds wired in favor of, “UMB BANK, N.A., ESCROW AGENT FOR PREFERRED APARTMENT COMMUNITIES, INC.”  Any checks made payable to a party other than the Escrow Agent shall be returned to the Dealer Manager or Soliciting Dealer that submitted the check.  

If any subscription agreement for the purchase of Securities solicited by a Soliciting Dealer is rejected by the Company, then the subscription agreement, to the extent so received, and check for the purchase of Securities will be returned to the rejected subscriber within ten business days from the date of rejection.  The Company and Dealer Manager shall provide any necessary documentation to the Escrow Agent, upon which it may rely, to enable the Escrow Agent to return amounts to rejected subscribers.  

All Investor Funds deposited in the Escrow Account shall not be subject to any liens or charges by the Company or the Escrow Agent, or judgments or creditors’ claims against the Company, until and unless released to the Company as hereinafter provided.  The Company understands and agrees that the Company shall not be entitled to any Investor Funds on deposit in the Escrow Account and no such funds shall become the property of the Company, or any other entity except as released to the Company pursuant to Section 3. The Escrow Agent will not use the information provided to it by the Company for any purpose other than to fulfill its obligations as Escrow Agent hereunder.  The Escrow Agent will treat all Investor information as confidential; provided  if the Escrow Agent is compelled-in the absence of a protective order or other remedy-to disclose the Investor information, the Escrow Agent may without liability disclose the Investor information that is required but must exercise commercially reasonable efforts (at the sole expense of the Company) to preserve the confidential treatment of the Investor Information. Despite the foregoing, however, nothing in this Agreement prohibits, prevents, or limits the Escrow Agent from disclosing any Investor information, without notice to or consent of the Company, if the disclosure is made to a supervisory or governmental authority or a self-regulatory organization in the course of any examination, inquiry, or audit of the Escrow Agent or Company or any of the Escrow Agent’s representatives or businesses.  

3.     Disbursement of Funds.  The Escrow Agent, upon receipt of Escrow Release Notice, attached hereto as Exhibit C, shall periodically transfer any portion of the Investor Funds in the A1 Subaccount and/or the M1 Subaccount to the Company or such other parties as set forth in the applicable Escrow Release Notice.  The Escrow Agent shall effect such transfer by the close of business on the date the Escrow Agent receives the applicable Escrow Release Notice; provided, however, if the Escrow Agent receives the applicable Escrow Release Notice after 2pm Central Time, then the Escrow Agent shall effect such transfer by the close of business on the next succeeding business day.  Notwithstanding the foregoing, if requested by the Escrow Agent, 

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PAC:19638.2 

the Escrow Agent shall have no obligation totransfer Investor Funds to any party until after it has received an executed and valid IRS Form W-9, or valid substitute thereto, from such party.

Upon the Escrow Agent’s receipt of written notice that (i) the Company is abandoning the sale of the Securities; or (ii) the Securities and Exchange Commission or any other federal or state regulatory authority that a stop or similar order has been issued with respect to the Offering Document and has remained in effect for at least 20 days, the Escrow Agent shall return Investor Funds to Investors.    The Company and Dealer Manager shall provide any necessary documentation to the Escrow Agent, upon which it may rely, to enable the Escrow Agent to return amounts to Investors.

4.    Term of Escrow.  Unless otherwise extended, the “Termination Date” shall be the earliest of:  (a) the close of business on [___________], 2021, or [______________], 2022 if the Offering is extended to such date by the Company, and the Company shall give notice to the Escrow Agent of such; (b)  the date the Escrow Agent receives written notice from the Company that all the Securities offered pursuant to the Offering Document are sold, (c) the date all funds held in the Escrow Account are distributed to the Company or to Investors pursuant to Section 3 and the Company has informed the Escrow Agent in writing to close the Escrow Account; (d) the date the Escrow Agent receives written notice from the Company that it is abandoning the sale of the Securities; and (e) the date the Escrow Agent receives notice from the Securities and Exchange Commission or any other federal or state regulatory authority that a stop or similar order has been issued with respect to the Offering Document and has remained in effect for at least 20 days.  After the Termination Date, the Company and its agents shall not deposit, and the Escrow Agent shall not accept, any additional amounts representing payments by prospective Investors.  

5.     Duty and Liability of the Escrow Agent. The sole duty of the Escrow Agent shall be to receive Investor Funds and subscription agreements and hold them subject to release, in accordance herewith, and the Escrow Agent shall be under no duty to determine whether the Company, the Dealer Manager or any Soliciting Dealer is complying with requirements of this Agreement, the Offering or applicable securities or other laws in tendering the Investor Funds to the Escrow Agent. No other agreement entered into between the parties, or any of them, shall be considered as adopted or binding, in whole or in part, upon the Escrow Agent notwithstanding that any such other agreement may be referred to herein or deposited with the Escrow Agent or the Escrow Agent may have knowledge thereof, including specifically but without limitation the Offering Document or any other document related to the Offering (including the subscription agreement and exhibits thereto), and the Escrow Agent’s rights and responsibilities shall be governed solely by this Agreement.  The Escrow Agent shall not be responsible for or be required to enforce any of the terms or conditions of the Offering Document or any other document related to the Offering (including the subscription agreement and exhibits thereto) or other agreement between the Company and any other party.  The Escrow Agent may conclusively rely upon and shall be protected in acting upon any statement, certificate, notice, request, consent, order or other document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent shall have no duty or liability to verify any such statement, certificate, notice, request, consent, order or other document, and its sole responsibility shall be to act only as expressly set forth in this Agreement. Concurrent with the execution of this Agreement, the Company and the Dealer Manager shall each deliver to the 

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PAC:19638.2 

Escrow Agent an authorized signers form in the form of Exhibit A or Exhibit A-1 to this Agreement, as applicable.  The Escrow Agent shall be under no obligation to institute or defend any action, suit or proceeding in connection with this Agreement unless first indemnified to its satisfaction.  The Escrow Agent may consult counsel of its own choice with respect to any question arising under this Agreement and the Escrow Agent shall not be liable for any action taken or omitted in good faith upon advice of such counsel.  The Escrow Agent shall not be liable for any action taken or omitted by it in good faith except to the extent that a court of competent jurisdiction determines that the Escrow Agent’s gross negligence or willful misconduct was the primary cause of loss. The Escrow Agent is acting solely as escrow agent hereunder and owes no duties, covenants or obligations, fiduciary or otherwise, to any other person by reason of this Agreement, except as otherwise stated herein, and no implied duties, covenants or obligations, fiduciary or otherwise, shall be read into this Agreement against the Escrow Agent.  If any disagreement between any of the parties to this Agreement, or between any of them and any other person, including any Investor, resulting in adverse claims or demands being made in connection with the matters covered by this Agreement, or if the Escrow Agent is in doubt as to what action it should take hereunder, the Escrow Agent may, at its option, refuse to comply with any claims or demands on it, or refuse to take any other action hereunder, so long as such disagreement continues or such doubt exists, and in any such event, the Escrow Agent shall not be or become liable in any way or to any person for its failure or refusal to act, and the Escrow Agent shall be entitled to continue so to refrain from acting until (a) the rights of all interested parties shall have been fully and finally adjudicated by a court of competent jurisdiction, or (b) all differences shall have been adjudged and all doubt resolved by agreement among all of the interested persons, and the Escrow Agent shall have been notified thereof in writing signed by all such persons. Notwithstanding the foregoing, the Escrow Agent may in its discretion obey the order, judgment, decree or levy of any court, whether with or without jurisdiction and the Escrow Agent is hereby authorized in its sole discretion to comply with and obey any such orders, judgments, decrees or levies.  If any controversy should arise with respect to this Agreement the Escrow Agent shall have the right, at its option, to institute an interpleader action in any court of competent jurisdiction to determine the rights of the parties.  IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL LOSSES OR DAMAGES OF ANY KIND WHATSOEVER (INCLUDING WITHOUT LIMITATION LOST PROFITS), EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES AND REGARDLESS OF THE FORM OF ACTION.  The parties hereto agree that the Escrow Agent has no role in the preparation of the Offering Document (including the subscription agreement and other exhibits thereto) and makes no representations or warranties with respect to the information contained therein or omitted therefrom.  The Escrow Agent shall have no obligation, duty or liability with respect to compliance with any federal or state securities, disclosure or tax laws concerning the Offering Document or any other document related to the Offering (including the subscription agreement and other exhibits thereto) or the issuance, offering or sale of the Securities.  The Escrow Agent shall have no duty or obligation to monitor the application and use of the Investor Funds once transferred to the Company, that being the sole obligation and responsibility of the Company.

6.     Escrow Agent’s Fee. The Escrow Agent shall be entitled to compensation for its services as stated in the fee schedule attached hereto as Exhibit B, which compensation shall be paid by the Company. The fee agreed upon for the services rendered hereunder is intended as full 

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PAC:19638.2 

compensation for the Escrow Agent’s services as contemplated by this Agreement; provided, however, that if (a) the conditions for the disbursement of funds under this Agreement are not fulfilled, (b) the Escrow Agent renders any material service not contemplated in this Agreement, (c) there is any assignment of interest in the subject matter of this Agreement, (d) there is any material modification hereof, (e) any material controversy arises hereunder, or (f) the Escrow Agent is made a party to any litigation pertaining to this Agreement or the subject matter hereof, then the Escrow Agent shall be reasonably compensated for such extraordinary services and reimbursed for all costs and expenses, including reasonable attorney’s fees, occasioned by any delay, controversy, litigation or event, and the same shall be recoverable from the Company.  The Company’s obligations under this Section 6 shall survive the resignation or removal of the Escrow Agent and the assignment or termination of this Agreement.

7.    Investment of Investor Funds.  Investor Funds shall be deposited in the Escrow Account in accordance with Section 1 and held un-invested in the Escrow Account, which shall be non-interest bearing.

8.     Notices.  All notices, requests, demands, and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of service if served personally on the party to whom notice is to be given, (b) on the day of transmission if sent by facsimile/email transmission bearing an authorized signature to the facsimile number/email address given below, and written confirmation of receipt is obtained promptly after completion of transmission, (c) on the day after delivery to Federal Express or similar overnight courier or the Express Mail service maintained by the United States Postal Service, or (d) on the fifth day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed, return receipt requested, to the party as follows:

If to the Company:
 
Preferred Apartment Communities, Inc.
3284 Northside Parkway, NW, Suite 150
Atlanta, Georgia  30327
Fax: (770) 818-4105
Attention:  Daniel M. DuPree, Chief Executive Officer
Attention:  Jeffrey Sprain, General Counsel and Secretary

with a copy to: 

Proskauer Rose LLP
Eleven Times Square
New York, New York 10036
Fax: (212) 969-2900
Attention: Peter M. Fass, Esq.
    James P. Gerkis, Esq.

If to the Dealer Manager:

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PAC:19638.2 

Preferred Capital Securities, LLC
3284 Northside Parkway, NW, Suite 150
Atlanta, Georgia  30327
Email: bcho@prefcapitalsecurities.com
Attention:  Brian Cho, Chief Compliance Officer

with a copy to: 

Kunzman & Bollinger, Inc.
5100 N. Brookline, Suite 600
Oklahoma City, OK 73112
Fax: (405) 942-3527
Email: wkunzman@kunzboll.net
Attention:  Wallace W. Kunzman, Jr.
           

If to Escrow Agent:

UMB Bank, National Association
1010 Grand Blvd. 4th Floor
Mail Stop: 1020409
Kansas City, Missouri 64106
Attention:  Lara Stevens, Corporate Trust & Escrow Services Dept.
Telephone: (816) 860-3017
Fax: (816) 860-3029
Email: lara.stevens@umb.com

Any party may change its address for purposes of this Section by giving the other party written notice of the new address in the manner set forth above.

9.     Indemnification of Escrow Agent. The Company and the Dealer Manager hereby agree to, jointly and severally, indemnify, defend and hold harmless the Escrow Agent from and against, any and all losses, liabilities, costs, damages and expenses, including, without limitation, reasonable counsel fees and expenses, which the Escrow Agent may suffer or incur by reason of any action, claim or proceeding brought against the Escrow Agent arising out of or relating in any way to this Agreement or any transaction to which this Agreement relates unless such loss, liability, cost, damage or expense is finally determined by a court of competent jurisdiction to have been primarily caused by the gross negligence or willful misconduct of the Escrow Agent.  The terms of this Section shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent.

10.     Successors and Assigns. Except as otherwise provided in this Agreement, no party hereto shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other parties hereto and any such attempted assignment without such prior written consent shall be void and of no force and effect. This Agreement shall inure to the benefit of and shall be binding upon the successors and permitted assigns of the parties hereto.  Any 

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PAC:19638.2 

corporation or association into which the Escrow Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer all or substantially all of its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which the Escrow Agent is a party, shall be and become the successor Escrow Agent under this Agreement and shall have and succeed to the rights, powers, duties, immunities and privileges as its predecessor, without the execution or filing of any instrument or paper or the performance of any further act.

11.     Governing Law; Jurisdiction. This Agreement shall be construed, performed, and enforced in accordance with, and governed by, the internal laws of the State of New York, without giving effect to the principles of conflicts of laws thereof.

12.     Severability. If any provision of this Agreement is declared by any court or other judicial or administrative body to be null, void, or unenforceable, said provision shall survive to the extent it is not so declared, and all of the other provisions of this Agreement shall remain in full force and effect.

13.     Amendments; Waivers. This Agreement may be amended or modified, and any of the terms, covenants, representations, warranties, or conditions hereof may be waived, only by a written instrument executed by the parties hereto, or in the case of a waiver, by the party waiving compliance. Any waiver by any party of any condition, or of the breach of any provision, term, covenant, representation, or warranty contained in this Agreement, in any one or more instances, shall not be deemed to be nor construed as further or continuing waiver of any such condition, or of the breach of any other provision, term, covenant, representation, or warranty of this Agreement.  The Company and the Dealer Manager agree that any requested waiver, modification or amendment of this Agreement shall be consistent with the terms of the Offering.  

14.     Entire Agreement. This Agreement contains the entire agreement and understanding among the parties hereto with respect to the escrow contemplated hereby and supersedes and replaces all prior and contemporaneous agreements and understandings, oral or written, with regard to such escrow.

15.     Section Headings. The section headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

16.     Counterparts. This Agreement may be executed (including by facsimile transmission) with counterpart signature pages or in counterparts, each of which shall be deemed an original, but all of which shall constitute the same instrument.  Copies, telecopies, facsimiles, electronic files and other reproductions of original executed documents shall be deemed to be authentic and valid counterparts of such original documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law.  The parties hereto agree that the transactions described herein may be conducted and related documents may be stored by electronic means.

17.     Resignation. The Escrow Agent may resign upon 30 days’ advance written notice to the parties hereto. If a successor escrow agent is not appointed by the Company within the 30-day period following such notice, the Escrow Agent may petition any court of competent jurisdiction 

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PAC:19638.2 

to name a successor escrow agent, or may interplead the Investor Funds with such court, whereupon the Escrow Agent’s duties hereunder shall terminate.

18.    References to Escrow Agent.  Other than the Offering Document, any of the other documents related to the Offering (including the subscription agreement and exhibits thereto) and any amendments thereof or supplements thereto, no printed or other matter in any language (including, without limitation, notices, reports and promotional material) which mentions the Escrow Agent’s name or the rights, powers, or duties of the Escrow Agent shall be issued by the Company or the Dealer Manager, or on the Company’s or the Dealer Manager’s behalf, unless the Escrow Agent shall first have given its specific written consent thereto.  Notwithstanding the foregoing, any amendment or supplement to the Offering Document or any other document related to the Offering (including the subscription agreement and exhibits thereto) that revises, alters, modifies, changes or adds to the description of the Escrow Agent or its rights, powers or duties hereunder shall not be issued by the Company or the Dealer Manager, or on the Company’s or the Dealer Manager’s behalf, unless the Escrow Agent has first given specific written consent thereto.

19.    Regulatory Compliance.  The Company and the Dealer Manager shall provide to the Escrow Agent upon the execution of this Agreement any documentation requested and any information reasonably requested by the Escrow Agent to comply with the USA Patriot Act of 2001, as amended from time to time and the Bank Secrecy Act, as amended from time to time.  

[Signature page follows.]

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PAC:19638.2 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the date and year first set forth above.

PREFERRED APARTMENT COMMUNITIES, INC.

	
				
	By:
	 
	 

	 
	Name:
	Jeffrey R. Sprain
	 

	 
	Title:
	Executive Vice President- Legal, General Counsel & Corporate Secretary
	 

PREFERRED CAPITAL SECURITIES, LLC

	
				
	By:
	 
	 

	 
	Name:
	Brian Cho
	 

	 
	Title:
	Chief Compliance Officer
	 

UMB BANK, NATIONAL 
ASSOCIATION, as Escrow Agent

	
				
	By:
	 
	 

	 
	Name:
	 Lara L. Stevens
	 

	 
	Title:
	 Vice President
	 

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PAC:19638.2 

Exhibit A

CERTIFICATE AS TO AUTHORIZED SIGNATURES

The specimen signatures shown below are the specimen signatures of the individuals who have been designated as Authorized Representatives of Preferred Apartment Communities, Inc. and are authorized to initiate and approve transactions of all types for the above-mentioned account on behalf of Preferred Apartment Communities, Inc. 

	
		
	Name/Title
 
 
	Specimen Signature

	Daniel M. DuPree
Chief Executive Officer
	_______________________________
Signature

	 
	 

	Leonard A. Silverstein
President and Chief Operating Officer
	_______________________________
Signature

	 
	 

	Michael J. Cronin
Executive Vice President, Chief Accounting Officer and Treasurer
	

_______________________________
Signature

	 
	 

	Jeffrey R. Sprain
Executive Vice President – Legal, General Counsel and Secretary
	_______________________________
Signature

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PAC:19638.2 

Exhibit A-1

CERTIFICATE AS TO AUTHORIZED SIGNATURES
The specimen signatures shown below are the specimen signatures of the individuals who have been designated as Authorized Representatives of Preferred Capital Securities, LLC and are authorized to initiate and approve transactions of all types for the above-mentioned account on behalf of Preferred Capital Securities, LLC.

	
		
	Name/Title
 
 
	Specimen Signature

	Jeff Smith
Chief Executive Officer
	_______________________________
Signature

	 
	 

	Brian Cho
Chief Compliance Officer
	_______________________________
Signature

	 
	 

	Greg Mausz
Executive Vice President – Operations & Due Diligence
	_______________________________
Signature

	
		
	Alex Evans
Vice President of Operations
	_______________________________
Signature

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PAC:19638.2 

Exhibit B

ESCROW FEES AND EXPENSES

Annual Fee 
Annual Escrow Agent                        $[______]

Annual Fee will be payable upon the effectiveness of this agreement and will be billed annually in advance thereafter.  Other fees and expenses will be billed as incurred. 
Fees specified are for the regular, routine services contemplated by this Agreement, and any additional or extraordinary services, including, but not limited to disbursements involving a dispute or arbitration, or administration while a dispute, controversy or adverse claim is in existence, will be charged based upon time required at the then standard hourly rate.  

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PAC:19638.2 

Exhibit C

FORM OF ESCROW RELEASE NOTICE

Date:                 

UMB Bank, National Association
928 Grand Blvd. 12th Floor
Mail Stop: 1011201
Kansas City, Missouri 64106

Ladies and Gentlemen:

In accordance with the terms of Section 3 of the Subscription Escrow Agreement dated as of February 14, 2017 (as the same may be amended from time to time, the “Escrow Agreement”), among Preferred Apartment Communities, Inc. (the “Company”), Preferred Capital Securities, LLC (the “Dealer Manager”) and UMB Bank, National Association (the “Escrow Agent”), the Company and the Dealer Manager hereby notify the Escrow Agent that the ________ closing will be held on ___________ for gross proceeds of $_________.

PLEASE DISTRIBUTE FUNDS BY WIRE TRANSFER (or as indicated) AS FOLLOWS
(wire instructions attached) from the A1 Subaccount:

$
$

PLEASE DISTRIBUTE FUNDS BY WIRE TRANSFER (or as indicated) AS FOLLOWS
(wire instructions attached) from the M1 Subaccount:

$
$

Very truly yours,

PREFERRED APARTMENT COMMUNITIES, INC., 
as the Company

By:                             
    Name:                         
    Title:                        

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PAC:19638.2 

PREFERRED CAPITAL SECURITIES, LLC, 
as the Dealer Manager

By:                             
    Name:                        
Title:                        

14
PAC:19638.2d-ex101_6.htm

Exhibit 10.1

 

 

AMENDMENT

TO THE DOMINION ENERGY, INC. NEW EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN

 

This AMENDMENT to the Dominion Energy, Inc. New Executive Supplemental Retirement Plan, effective as of January 1, 2005, as amended (the “Plan”), by Dominion Energy, Inc. (the “Company”), shall be effective as of October 1, 2019.

 

WITNESSETH:

 

WHEREAS, the Company has the authority to amend the Plan and now wishes to do so;

 

NOW, THEREFORE, the Plan is hereby amended as follows:

 

	
 
	
1.
	
A new sentence is hereby added to the end of the Preamble of the Plan as follows:

 

Effective October 1, 2019, benefit accruals under the Plan are frozen and no additional benefits shall accrue under the Plan after that date, other than any cost-of-living adjustments to the frozen benefit as described in Section 3.1(d) below and the Restoration Match described in Article XIII below.

 

	
 
	
2.
	
A new sentence is hereby added to the end of Section 1.12 of the Plan as follows:

 

As of October 1, 2019, each active Participant’s Final Compensation shall be fixed based on the Participant’s annual base salary rate and target Incentive Compensation Amount in effect as of October 1, 2019.

 

	
 
	
3.
	
A new sentence is hereby added to the end of Section 1.16 of the Plan as follows:

 

The Lump Sum Equivalent of a Participant whose benefit under the Plan has been frozen as of October 1, 2019 shall be determined as of October 1, 2019 and shall not be adjusted after such date except in accordance with the last paragraph of Section 3.1(c) or Section 3.1(d).

 

	
 
	
4.
	
Section 3.1(a)(i) of the Plan is hereby amended in its entirety as follows:

 

(i) an annual amount equal to Twenty-Five Percent (25%) of the Regular Participant’s Final Compensation as determined as of the earlier of (1) the Participant’s Retirement or (2) October 1, 2019, payable in equal monthly installments for a period of one hundred twenty (120) months, minus

 

	
 
	
5.
	
Section 3.1(a)(ii) of the Plan is hereby amended in its entirety as follows:

 

 

 

(ii) if applicable, the annual amount payable to the Regular Participant under the Dominion Energy, Inc. Executive Supplemental Retirement Plan frozen as of December 31, 2004 (or the annual amount that would have been payable under such plan, but for its termination).

 

	
 
	
6.
	
Section 3.1(b)(i) of the Plan is hereby amended in its entirety as follows:

 

(i) an annual amount equal to Twenty-Five Percent (25%) of the Life Participant’s Final Compensation as determined as of the earlier of (1) the Participant’s Retirement or (2) October 1, 2019, payable in equal monthly installments for the life of the Participant, minus

 

	
 
	
7.
	
Section 3.1(b)(ii) of the Plan is hereby amended in its entirety as follows:

 

(ii) if applicable, the annual amount payable to the Life Participant under the Dominion Energy, Inc. Executive Supplemental Retirement Plan frozen as of December 31, 2004 (or the annual amount that would have been payable under such plan, but for its termination). 

 

	
 
	
8.
	
Section 3.1(c) of the Plan is hereby amended by adding the following paragraph to the end thereof as follows:

 

Any Participant whose Annual Benefit has been frozen as of October 1, 2019 and who is entitled to a reduced Annual Benefit on such date because he or she is younger than age 55 (actually or as credited under any Benefit Agreement) on such date may continue to grow into an unreduced Annual Benefit based on increases in his or her age after October 1, 2019 until the date of his or her Retirement. The Lump Sum Equivalent (which is otherwise fixed as of October 1, 2019) of such a Participant’s Annual Benefit may increase to reflect the increase in the Participant’s Annual Benefit due to the Participant’s additional age after October 1, 2019 (but, for avoidance of doubt, without regard to any changes to such a Participant’s Final Compensation after October 1, 2019 and using the same actuarial factors and tax rates used to calculate the Lump Sum Equivalent of the Participant’s Annual Benefit on October 1, 2019). 

 

	
 
	
9.
	
Section 3.1 of the Plan is hereby amended by adding a new subsection (d) to the end thereof as follows:

 

(d)Cost-of-Living Adjustment to Annual Benefit. This Section 3.1(d) shall apply only to a Participant whose Annual Benefit has been frozen as of October 1, 2019. Effective each July 1 (starting July 1, 2020, and ending on the July 1 on or immediately preceding the date of the Participant’s Retirement), the Annual Benefit of each such Participant as determined under Section 3.1(a) or 3.1(b) above as of October 1, 2019 (and as increased, if applicable, pursuant to the final paragraph of Section 3.1(c) above as of each such July 1), shall be increased by a percentage equal to 1/2 of the first 5 percentage point increase in the average consumer price index 

 

 

(used for purposes of adjusting benefits payable under the Federal Social Security Act) for the first quarter of the calendar year in which the adjustment is to be made over the average of such consumer price index for the first quarter of the immediately preceding calendar year; provided, however, that no such cost-of-living increase shall result in the Participant having an Annual Benefit at his or her Retirement greater than the Annual Benefit he or she would have had at his or her Retirement if his or her Annual Benefit had not been frozen as of October 1, 2019. The Lump Sum Equivalent (which is otherwise fixed as of October 1, 2019) of such a Participant’s Annual Benefit may increase to reflect the increase in the Participant’s Annual Benefit due to the cost-of-living adjustments described herein (but, for avoidance of doubt, without regard to any changes to such a Participant’s Final Compensation after October 1, 2019 and using the same actuarial factors and tax rates used to calculate the Lump Sum Equivalent of the Participant’s Annual Benefit on October 1, 2019).

 

	
 
	
10.
	
Section 7.3 of the Plan is hereby amended in its entirety as follows:

 

Anything herein to the contrary notwithstanding, if a Participant is in the employ of the Company on the date of a Change in Control or a Potential Change in Control relating to that Company, the provisions of the Employment Continuity Agreement between the Participant and Dominion Resources, Inc., if any, shall control (a) the Participant’s subsequent participation in this Plan and (b) the eligibility for, computation of, and payment of any benefits under this Plan to the Participant; provided, however, that no benefits shall accrue under the Plan after October 1, 2019, except as otherwise provided herein. 

 

	
 
	
11.
	
In all other respects not amended, the Plan is hereby ratified and confirmed. 

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, the Company has caused this Amendment to be signed as of the effective date set forth above.

 

 

		
	
DOMINION ENERGY, INC.

	
 
	
 

	
By:
	
/s/ Carter M. Reid

	
Name:
	
Carter M. Reid

	
Its:
	
Executive Vice President, Chief Administrative & Compliance Officer and Corporate Secretary

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