Document:

Unassociated Document

     

    FORM
OF

     

    SUBSCRIPTION
ESCROW AGREEMENT

    

    THIS SUBSCRIPTION ESCROW AGREEMENT
dated as of ___, 2010 (this “Agreement”), is entered into
among Realty Capital Securities, LLC (the “Dealer Manager”), American
Realty Capital Trust III, Inc. (the “Company”) and Wells Fargo
Bank, National Association, as escrow agent (the “Escrow Agent”).

    

    WHEREAS, the Company intends
to raise cash funds from investors (the “Investors”) pursuant to a
public offering (the “Offering”) of not less than
200,000 (the “Minimum
Amount”) nor more than 100,000,000 shares of common stock, par value
$0.01 of the Company (the “Securities”), pursuant to the
registration statement on Form S-11 of the Company (No. 333-170298) (as amended,
the “Offering
Document”) a copy of which is attached as Exhibit A
hereto.

    

    WHEREAS, the Escrow Agent is
willing to accept appointment as escrow agent only for the expressed duties
outlined 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 first date of the Offering, the Company shall establish an escrow
account with the Escrow Agent to be invested in accordance with Section 7 hereof
entitled “ESCROW ACCOUNT FOR THE BENEFIT OF INVESTORS FOR COMMON STOCK OF
AMERICAN REALTY CAPITAL TRUST III, INC.” (including such abbreviations as are
required for the Escrow Agent’s systems) (the “Escrow
Account”).  All funds received from subscribers of Securities
(“Investors”, which
term shall also include Pennsylvania Investors and Tennessee Investors unless
the context otherwise requires) in payment for the Securities (“Investor Funds”) will be
delivered to the Escrow Agent within one (1) 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 and
invested as stated herein. During the term of this Agreement, the Company or its
agents shall cause all checks received by and made payable to it in 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.

    

    Proceeds
received from Pennsylvania Investors shall be accounted for separately in a
subaccount entitled “Escrow Account for the Benefit of Pennsylvania Investors
for American Realty Capital Trust III, Inc.” (including such abbreviations as
are required for the Escrow Agent’s systems) (the “Pennsylvania Escrow
Account”), until such Pennsylvania Escrow Account has closed pursuant to
Section
4.  The Company shall, and shall cause its agents to, cooperate
with the Escrow Agent in separately accounting for Investor Funds from
Pennsylvania Investors in the Pennsylvania Escrow Account, and the Escrow Agent
shall be entitled to rely upon information provided by the Company or its agents
in this regard.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Proceeds received from Tennessee
Investors shall be accounted for separately in a subaccount entitled “Escrow
Account for the Benefit of Tennessee Investors for American Realty Capital Trust
III, Inc.” (including such abbreviations as are required for the Escrow Agent’s
systems) (the “Tennessee
Escrow Account,” and together with the Escrow Account and the
Pennsylvania Escrow Account, the “ARCT III Escrow Accounts”),
until such Tennessee Escrow Account has closed pursuant to Section
5.  The Company shall, and shall cause its agents to, cooperate
with the Escrow Agent in separately accounting for Investor Funds from Tennessee
Investors in the Tennessee Escrow Account, and the Escrow Agent shall be
entitled to rely upon information provided by the Company or its agents in this
regard.

    

    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 ARCT III Escrow Accounts 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, upon request, and the Escrow Agent shall deliver the returned checks to
the Company.  The Escrow Agent shall be under no duty or
responsibility to enforce collection of any check delivered to it
hereunder. 
The Escrow Agent reserves the right to deny, suspend or terminate participation
by an Investor to the extent the Escrow Agent deems it advisable or necessary to
comply with applicable laws or to eliminate practices that are not consistent
with the purposes of the Offering.

    

    2.           Investors. Investors
(including Pennsylvania and Tennessee Investors) will be instructed by the
Dealer Manager or any soliciting dealers to remit the purchase price in the form
of checks (hereinafter “instruments of payment”) payable to the order of, or
funds wired in favor of, “WELLS FARGO BANK, NA, ESCROW AGENT FOR AMERICAN REALTY
CAPITAL TRUST III, INC.”  Any checks made payable to a party other
than the Escrow Agent shall be returned to the soliciting dealer who submitted
the check.  By 12:00 p.m. (Noon) the next business day after receipt
of instruments of payment from the Offering, the Company or the Dealer Manager
shall furnish the Escrow Agent with a list of the Investors who have paid for the
Securities showing the name, address, tax identification number, the amount of
Securities subscribed for purchase, the amount paid and whether such Investors
are Pennsylvania Investors or Tennessee Investors.  The information
comprising the identity of Investors shall be provided to the Escrow Agent in
substantially the format set forth in the “List of Investors” attached hereto as
Exhibit B.  The Escrow Agent shall be
entitled to conclusively rely upon the List of Investors in determining whether
Investors are Pennsylvania Investors or Tennessee Investors, and shall have no duty to
independently determine or verify the same.

    

    When
Soliciting Dealer’s internal supervisory procedures are conducted at the site at
which the subscription agreement and check were initially received by Soliciting
Dealer from the subscriber, Soliciting Dealer shall transmit the subscription
agreement and check to the Escrow Agent by the end of the next business day
following receipt of the check and subscription agreement. When, pursuant to
Soliciting Dealer’s internal supervisory procedures, Soliciting Dealer’s final
internal supervisory procedures are conducted at a different location (the
“Final Review Office”), Soliciting Dealer shall transmit the check and
subscription agreement to the Final Review Office by the end of the next
business day following Soliciting Dealer’s receipt of the subscription agreement
and check. The Final Review Office will, by the end of the next business day
following its receipt of the subscription agreement and check, forward both the
subscription agreement and check to the Escrow Agent. If any subscription
agreement solicited by Soliciting Dealer is rejected by the Dealer Manager or
the Company, then the subscription agreement and check will be returned to the
rejected subscriber within ten (10) business days from the date of
rejection.

     

    
      
        
        

      

      
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    All
Investor Funds deposited in the ARCT III Escrow Accounts 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 ARCT III
Escrow Accounts and no such funds shall become the property of the Company, or
any other entity except as released to the Company pursuant to Sections 3, 4 or 5
hereto. 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.  The Company and the Escrow Agent will treat all Investor
information as confidential.  The Escrow Agent shall not be required
to accept any Investor Funds which are not accompanied by the information on the
List of Investors.

    

    3.           Disbursement of
Funds.  Once the Escrow Agent is in receipt of good and
collected Investor Funds totaling at least the Minimum Amount from Investors
(excluding funds from Pennsylvania and Tennessee Investors), the Escrow Agent
shall notify the Company of same in writing. Additionally, at the end of the
third business day following the Termination Date (as defined in Section 6), the
Escrow Agent shall notify the Company of the amount of the Investor Funds
received.  If the Minimum Amount has been obtained on or before the
Termination Date, the Escrow Agent shall promptly notify the Company and, upon
receiving acknowledgement of such notice and written instructions from the
Company’s President or Chief Financial Officer to disburse the Investor Funds,
the Escrow Agent shall disburse to the Company, by check or wire transfer, the
funds in the Escrow Account, except for amounts payable by the Company to the
Escrow Agent pursuant to Exhibit D to this
Agreement that remain outstanding.  The Escrow Agent agrees that funds
in the Escrow Account shall not be released to the Company until and unless the
Escrow Agent receives written instructions to release the funds from the
Company’s President or Chief Financial Officer.

    

    If the Minimum Amount has not been
obtained prior to the Termination Date, the Escrow Agent shall promptly
following the Termination Date, but in no event more than thirty (30) days after
the Termination Date, refund to each Investor by check, funds deposited in the
Escrow Account, or shall return the instruments of payment delivered to Escrow
Agent if such instruments have not been processed for collection prior to such
time, directly to each Investor at the address provided on the List of
Investors. Included in the remittance shall be a proportionate share of the
income earned in the account allocable to each Investor’s investment in
accordance with the terms and conditions specified herein, except that in the
case of Investors who have not provided an executed Form W-9 or substitute Form
W-9 (or the applicable substitute Form W-8 for foreign investors), the Escrow
Agent shall withhold the applicable percentage of the earnings attributable to
those Investors in accordance with IRS regulations. Notwithstanding the
foregoing, the Escrow Agent shall not be required to remit any payments until
funds represented by such payments have been collected by Escrow
Agent.

     

    
      
        
        

      

      
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    If the Escrow Agent receives written
notice from the Company that the Company intends to reject an Investor’s
subscription, the Escrow Agent shall pay to the applicable Investor(s), within a
reasonable time not to exceed ten (10) business days after receiving notice of
the rejection, by first class United States Mail at the address provided on the
List of Investors, or at such other address as shall be furnished to the Escrow
Agent by the Investor in writing, all collected sums paid by the Investor for
Securities and received by the Escrow Agent, together with the interest earned
on such Investor Funds (determined in accordance with the terms and conditions
specified herein).

    

    4.           Disbursement of Proceeds for
Pennsylvania Investors.   Notwithstanding the foregoing,
proceeds from Pennsylvania Investors will not count towards meeting the Minimum
Amount for purposes of Section
3.  Proceeds received from Pennsylvania Investors will not be
released from the Pennsylvania Escrow Account until the Pennsylvania Minimum
Amount is obtained.  If the Pennsylvania Minimum Amount is obtained at
any time prior to the Termination Date, the Escrow Agent shall promptly notify
the Company and, upon receiving acknowledgement of such notice and written
instructions from the Company’s President or Chief Financial Officer, the Escrow
Agent shall disburse to the Company, by check or wire transfer, the funds in the
Pennsylvania Escrow Account, except for amounts payable by the Company to the
Escrow Agent pursuant to Exhibit D to this
Agreement that remain outstanding.  The Escrow Agent agrees that funds
in the Pennsylvania Escrow Account shall not be released to the Company until
and unless the Escrow Agent receives written instructions to release the funds
from the Company’s President or Chief Financial Officer.

    

    If the
Pennsylvania Minimum Amount has not been obtained prior to the Termination Date,
the Escrow Agent shall, within a reasonable time following the Termination Date,
but in no event more than thirty (30) days after the Termination Date, refund to
each Pennsylvania Investor by check funds deposited in the Pennsylvania Escrow
Account, or shall return the instruments of payment delivered to Escrow Agent if
such instruments have not been processed for collection prior to such time,
directly to each Pennsylvania Investor at the address provided on the List of
Investors. Included in the remittance shall be a proportionate share of the
income earned in the account allocable to each Pennsylvania Investor’s
investment in accordance with the terms and conditions specified herein, except
that in the case of Investors who have not provided an executed Form W-9 or
substitute Form W-9, the Escrow Agent shall withhold the applicable percentage
of the earnings attributable to those Investors in accordance with IRS
regulations. Notwithstanding the foregoing, the Escrow Agent shall not be
required to remit any payments until funds represented by such payments have
been collected by Escrow Agent.

    

    If the Escrow Agent is not in receipt
of evidence of subscriptions accepted on or before the close of business on such
date that is 120 days after commencement of the Offering (the Company will
notify the Escrow Agent in writing of the commencement date of the Offering)
(the “Initial Escrow
Period”), and instruments of payment dated not later than that date, for
the purchase of Securities providing for total purchase proceeds from all
nonaffiliated sources that equal or exceed the Pennsylvania Minimum Amount, the
Escrow Agent shall promptly notify the Company. Thereafter, the Company or its
agents shall send to each Pennsylvania Investor by certified mail within ten
(10) calendar days after the end of the Initial Escrow Period a
notification substantially in the form of Exhibit F.  If,
pursuant to such notification, a Pennsylvania Investor requests the return of
his or her Investor Funds within ten (10) calendar days after receipt of the
notification (the “Request
Period”), the Escrow Agent shall promptly refund directly to each
Pennsylvania Investor the collected funds deposited in the Pennsylvania Escrow
Account on behalf of such Pennsylvania Investor or shall return the instruments
of payment delivered, but not yet processed for collection prior to such time,
to the address provided on the List of Investors, upon which the Escrow Agent
shall be entitled to rely, together with interest income earned as determined in
accordance with the terms and conditions specified herein (which interest shall
be paid within five business days after the first business day of the succeeding
month). Notwithstanding the above, if the Escrow Agent has not received an
executed Form W-9 or substitute Form W-9 for such Pennsylvania Investor, the
Escrow Agent shall thereupon remit an amount to such Pennsylvania Investor in
accordance with the provisions hereof, withholding the applicable percentage for
backup withholding required by the Internal Revenue Code, as then in effect,
from any interest income earned on Investor Funds (determined in accordance with
the terms and conditions specified herein) attributable to such Pennsylvania
Investor. However, the Escrow Agent shall not be required to remit such payments
until the Escrow Agent has collected funds represented by such
payments.

     

    
      
        
        

      

      
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                  The
Investor Funds of Pennsylvania Investors who do not request the return of their
Investor Funds within the Request Period shall remain in the Pennsylvania Escrow
Account for successive 120-day escrow periods (a “Successive Escrow Period”),
each commencing automatically upon the termination of the prior Successive
Escrow Period, and the Company and Escrow Agent shall follow the notification
and payment procedure set forth above with respect to the Initial Escrow Period
for each Successive Escrow Period until the occurrence of the earliest of
(i) the Termination Date, (ii) the receipt and acceptance by the
Company of subscriptions for the purchase of Securities with total purchase
proceeds that equal or exceed the Pennsylvania Minimum Amount and the
disbursement of the Pennsylvania Escrow Account on the terms specified herein,
and (iii) all funds held in the Pennsylvania Escrow Account having been
returned to the Pennsylvania Investors in accordance with the provisions
hereof.

    

    5.           Disbursement of Proceeds for
Tennessee Investors.   Notwithstanding the foregoing, proceeds
from Tennessee Investors will not count towards meeting the Minimum Amount for
purposes of Section
3.  Proceeds received from Tennessee Investors will not be
released from the Tennessee Escrow Account until the Tennessee Minimum Amount is
obtained.  If the Tennessee Minimum Amount is obtained at any time
prior to the Termination Date, the Escrow Agent shall promptly notify the
Company and, upon receiving acknowledgement of such notice and written
instructions from the Company’s President or Chief Financial Officer, the Escrow
Agent shall disburse to the Company, by check or wire transfer, the funds in the
Tennessee Escrow Account, except for amounts payable by the Company to the
Escrow Agent pursuant to Exhibit D to this
Agreement that remain outstanding.  The Escrow Agent agrees that funds
in the Tennessee Escrow Account shall not be released to the Company until and
unless the Escrow Agent receives written instructions to release the funds from
the Company’s President or Chief Financial Officer.

    

    If the
Tennessee Minimum Amount has not been obtained prior to the Termination Date,
the Escrow Agent shall, within a reasonable time following the Termination Date,
but in no event more than thirty (30) days after the Termination Date, refund to
each Tennessee Investor by check funds deposited in the Tennessee Escrow
Account, or shall return the instruments of payment delivered to Escrow Agent if
such instruments have not been processed for collection prior to such time,
directly to each Tennessee Investor at the address provided on the List of
Investors. Included in the remittance shall be a proportionate share of the
income earned in the account allocable to each Tennessee Investor’s investment
in accordance with the terms and conditions specified herein, except that in the
case of Investors who have not provided an executed Form W-9 or substitute Form
W-9, the Escrow Agent shall withhold the applicable percentage of the earnings
attributable to those Investors in accordance with IRS regulations.
Notwithstanding the foregoing, the Escrow Agent shall not be required to remit
any payments until funds represented by such payments have been collected by
Escrow Agent.

     

    
      
        
        

      

      
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    6.           Term of Escrow. The “Termination Date” shall be
the earliest of:  (i) the close of business on [ ______, 20 __ ], the
one year anniversary of the date the Offering Document was declared effective by
the Securities and Exchange Commission; (ii) all funds held in the ARCT III
Escrow Accounts are distributed to the Company or to Investors pursuant to Section 3, for
Pennsylvania Investors, Section 4 and for Tennessee Investors, Section 5 and the
Company has informed the Escrow Agent in writing to close each of the ARCT III
Escrow Accounts; (iii) the date the Escrow Agent receives written notice from
the Company that it is abandoning the sale of the Securities; and (iv) 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 twenty (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.

    

    7.           Duty and Liability of the Escrow
Agent. The sole duty of the Escrow Agent shall be to receive Investor
Funds and hold them subject to release, in accordance herewith, and the Escrow
Agent shall be under no duty to determine whether the Company or the Dealer
Manager 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 any Offering Documents
(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 any Offering Document
(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 deliver to the Escrow Agent an authorized signers form in the
forms of Exhibit C
and Exhibit
C-1 to this Agreement.  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, 

     

    
      
        
        

      

      
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    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
(i) the rights of all interested parties shall have been fully and finally
adjudicated by a court of competent jurisdiction, or (ii) 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 agree that the Escrow Agent has no role in the
preparation of the Offering Documents (including the subscription agreement and
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
Documents (including the subscription agreement and 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.

    

    8.           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 D, which
compensation shall be paid by the Company. The fee agreed upon for the services
rendered hereunder is intended as full compensation for the Escrow Agent’s
services as contemplated by this Agreement; provided, however, that if the
conditions for the disbursement of funds under this Agreement are not fulfilled,
or the Escrow Agent renders any material service not contemplated in this
Agreement, or there is any assignment of interest in the subject matter of this
Agreement, or any material modification hereof, or if any material controversy
arises hereunder, or 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 8 shall
survive the resignation or removal of the Escrow Agent and the assignment or
termination of this Agreement.

    

    
      
        
        

      

      
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    9.           Investment of Investor Funds.
The Investor Funds shall be deposited in the ARCT III Escrow Accounts in
accordance with Section 3, for
Pennsylvania Investors, Section 4 and Tennessee Investors, Section
5.  The Escrow Agent is hereby directed to invest all funds received
under this Agreement, including principal and interest in, the Wells Fargo Bank
Money Market Deposit Account, as directed in writing in the form of Exhibit E to this
Agreement.  The Escrow Agent shall invest the Investor Funds in
alternative investments in accordance with written instructions as may from time
to time be provided to the Escrow Agent and signed by the Company.  In
the absence of written investment instructions from the Company to the contrary,
the Escrow Agent is hereby directed to invest the Investor Funds in the Wells
Fargo Bank Money Market Deposit Account.  Notwithstanding the
foregoing, Investor Funds shall not be invested in anything other than “Short
Term Investments” in compliance with Rule 15c2-4 of the Securities Exchange Act
of 1934, as amended.  The following are not permissible
investments:  (a) money market mutual funds; (b) corporate debt or
equity securities; (c) repurchase agreements; (d) banker’s acceptance; (e)
commercial paper; and (f) municipal securities.  Any interest received
by the Escrow Agent with respect to the Investor Funds, including reinvested
interest shall become part of the Investor Funds, and shall be disbursed
pursuant to Section
3, for Pennsylvania Investors, Section 4 and Tennessee Investors, Section
5.

     

    The
Escrow Agent shall be entitled to sell or redeem any such investments as
necessary to make any payments or distributions required under this
Agreement.  The Escrow Agent shall have no responsibility or liability
for any loss which may result from any investment made pursuant to this
Agreement, or for any loss resulting from the sale of such
investment.  The parties acknowledge that the Escrow Agent is not
providing investment supervision, recommendations, or advice.

    

    The
Company on the date of this Agreement shall provide the Escrow Agent with a
certified tax identification number by furnishing appropriate IRS form W-9 or
W-8 (or substitute Form W-9 or W-8) and other forms and documents that the
Escrow Agent may reasonably request, including without limitation a tax form for
each Investor.  The Company understands that if such tax reporting
documentation is not so certified to the Escrow Agent, the Escrow Agent may be
required by the Internal Revenue Code of 1986, as amended, to withhold a portion
of any interest or other income earned on the Investor Funds pursuant to this
Agreement.  For tax reporting purposes, all interest and other income
from investment of the Investor Funds shall, as of the end of each calendar year
and to the extent required by the Internal Revenue Service, be reported as
having been earned by the party to whom such interest or other income is
distributed, in the year in which it is distributed.

    

    The
Company agrees to indemnify and hold the Escrow Agent harmless from and against
any taxes, additions for late payment, interest, penalties and other expenses
that may be assessed against the Escrow Agent on or with respect to any payment
or other activities under this Agreement unless any such tax, addition for late
payment, interest, penalties and other expenses shall be determined by a court
of competent jurisdiction to have been caused by the Escrow Agent’s gross
negligence or willful misconduct.  The terms of this Section shall
survive the termination of this Agreement and the resignation or removal of the
Escrow Agent.

    

    10.           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:

    

    
      
        
        

      

      
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    If to the
Company:

    

    405 Park
Avenue

    New York,
New York 10022

    Fax:
(212) 421-5799

    Attention:  Edward
M. Weil, Jr., Executive Vice President and Secretary

    Attention:  Brian
S. Block, Executive Vice President and Chief Financial Officer

    

    with a
copy to:

    

    Proskauer
Rose LLP

    1585
Broadway

    New York,
New York 10036

    Fax:
(212) 969-2900

    Attention:
Peter M. Fass, Esq.

    Attention:  Steven
Fishman, Esq.

     

    If to the
Dealer Manager:

    

    Realty
Capital Securities, LLC

    Three
Copley Place

    Suite
3300

    Boston,
MA 02116

    Attention:  Louisa
Quarto, President

    

    with a
copy to:

    

    Proskauer
Rose LLP

    1585
Broadway

    New York,
New York 10036

    Fax:
(212) 969-2900

    Attention:
Peter M. Fass, Esq.

    

    and:

    

    American
Realty Capital Trust III, Inc.

    405 Park
Avenue

    New York,
New York 10022

    Fax:
(212) 421-5799

    Attention:  Edward
M. Weil, Jr., Executive Vice President and Secretary

    Attention:  Brian
S. Block, Executive Vice President and Chief Financial Officer

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    If to
Escrow Agent:

    

    Wells
Fargo Bank, National Association

    45
Broadway, 14th Floor

    New York,
NY  10006

    Fax:
(212) 509-1716

    Attention:  Matt
Sherman

    

    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.

    

    11.           Indemnification of Escrow Agent.
The Company and the Dealer Manager hereby jointly and severally
indemnify, defend and hold harmless the Escrow Agent from and against, any and
all loss, liability, cost, damage and expense, 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 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.

    

    12.           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 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 any further act.

    

    13.           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.

    

    14.           Severability. If any part 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.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    15.           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.

    

    16.           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.

    

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

    

    18.           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.

    

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

    

    20.           References to Escrow
Agent.  Other than the Offering Document (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 (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
Dealer Manager’s behalf, unless the Escrow Agent has first given specific
written consent thereto.

    

    [Signature
page follows]

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

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

    

    

    AMERICAN
REALTY CAPITAL TRUST III, INC.

     

    
      	
              By:

            	 
      	 
      
	 
      	
              Name: 

            	
              Nicholas
      S. Schorsch

            	 
      
	 
      	
              Title:

            	
              Chief
      Executive Officer

            	 
      

    

    

     

    REALTY
CAPITAL SECURITIES, LLC

     

    
      	
              By:

            	 
      	 
      
	 
      	
              Name: 

            	
              Louisa
      Quarto

            	 
      
	 
      	
              Title:

            	
              President

            	 
      

    

    

     

    WELLS
FARGO BANK, NATIONAL

    ASSOCIATION,
as Escrow Agent

     

    
      	
              By:

            	 
      	 
      
	 
      	
              Name: 

            	 
      	 
      
	 
      	
              Title:

            	 
      	 
      

    

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

    Exhibit
A

    

    Copy of
Offering Document

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    Exhibit
B

    

    List of
Investors

    

    Pursuant
to the Escrow Agreement dated as of ____, 2010, among Realty Capital Securities,
LLC, American Realty Capital Trust III, Inc. (the “Company”), and Wells Fargo
Bank, National Association (the “Escrow Agent”), the Company
hereby certifies that the following Investors have paid money for the purchase
of shares of the Company’s common stock, par value $0.01 (“Securities”), and the
money has been deposited with the Escrow Agent:

     

    
      
        	
                1. 

              	
                Name
      of Investor 
Address 
Tax Identification Number
      
Amount of Securities subscribed
      for 
Amount of money paid and deposited
      with Escrow Agent 
Is Investor a resident of
      Pennsylvania (Yes or No)? 
Is Investor a resident of
      Tennessee (Yes or
      No)?

              

      

    

     

    
      
        
          	
                  2. 

                	
                  Name
      of Investor 
Address 
Tax Identification Number
      
Amount of Securities subscribed
      for 
Amount of money paid and deposited
      with Escrow Agent 
Is Investor a resident of
      Pennsylvania (Yes or No)? 
Is Investor a resident of
      Tennessee (Yes or
No)?

                

        

      

    

    

     

    Dated:
_____________________________

    

    

    REALTY
CAPITAL SECURITIES, LLC

     

    
      	
              By:

            	 
      	 
	 
      	
              Name: 

            	
              Louisa
      Quarto

            	 
	 
      	
              Title:

            	
              President

            	 

    

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    Exhibit
C

    

    CERTIFICATE
AS TO AUTHORIZED SIGNATURES

     

    
      Account
Name:

    

    

    
      Account
Number:

    

     

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

    

    
      	
              Name/Title

            	
              Specimen
      Signature

            
	
              Nicholas
      S. Schorsch

              Chief
      Executive Officer

            	
              _______________________________

              Signature

            
	 
      	 
      
	
              William
      M. Kahane

              President
      and Treasurer

            	
              _______________________________

              Signature

            
	 
      	 
      
	
              Brian
      Block

              Executive
      Vice President and Chief Financial Officer

            	
              _______________________________

              Signature

            
	 
      	 
      
	
              Edward
      M. Weil, Jr.

              Executive
      Vice President and Secretary

            	
              _______________________________

              Signature

            
	 
      	 
      

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    Exhibit
C-1

    

    CERTIFICATE
AS TO AUTHORIZED SIGNATURES

     

    
      Account
Name:

    

    

    
      Account
Number:

    

     

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

     

    
      	
              Name/Title

               

            	
              Specimen
      Signature

            
	
              Louisa
      Quarto

              President

            	
              _______________________________

              Signature

            
	 
      	 
      
	
              Kamal
      Jafarnia

              Executive
      Vice President and Chief Compliance Officer

            	
              _______________________________

              Signature

            

    

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    Exhibit
D

    

    
      	
              Wells Fargo
      Bank

              Corporate Trust
      Services

              1445 Ross Avenue, 2nd Floor

              Mac T5303-022

              Dallas,
      TX  75202

            	
              [NAME]

              [POSITION]

              Tel:  [__________]

              Fax:  [__________]

              [EMAIL]

            	
              [logo]

            

    

    

    

    GENERAL SCHEDULE OF FEES

    to act as ESCROW AGENT for the

    American
Realty Capital Trust III, Inc. Subscription Escrow up to
$50,000,000

    

    
      	
              Acceptance
      Fee:

            	
              $500

            

    

     

    Initial
Fees as they relate to Wells Fargo Bank acting in the capacity of Escrow Agent –
includes review of the Escrow Agreement; acceptance of the Escrow appointment;
setting up of Escrow Account(s) and accounting records; and coordination of
receipt of funds for deposit to the Escrow Account(s).

     

    Acceptance
Fee payable at time of Escrow Agreement execution.

    

    
      	
              Escrow Agent Annual
      Administration Fee:

            	
              $5,000.00
      on first offering, $3,500 on subsequent

            
	Pennsylvania
      Sub-Accounting Administration Fee:	
              $750

            
	Tennessee
      Sub-Accounting Administration Fee:	
              $750

            

    

    

    For
ordinary administrative services by Escrow Agent – includes daily routine
account management; investment transactions; cash transaction processing
(including wire and check processing); monitoring claim notices pursuant to the
agreement; disbursement of funds in accordance with the agreement; and mailing
of trust account statements to all applicable parties.  Float credit
received by the bank for receiving funds that remain uninvested are deemed part
of the Paying Agent/Escrow Agent’s compensation.  These fees do not
contemplate paying interest to Investors or providing 1099s which would be the
responsibility of the Company. If individual 1099s, interest checks, interest
accrual calculations or any individual Investor information are required
additional fees will be charged.  For rejected subscriptions or a
failed offering, the following fees will apply.

    

    1099
Reporting $25 each

    Interest
Rate Calculations and Interest Checks/Wires $ 35 each

    Returned
Item Charges $35 each

     

    The administrative fee is payable in
advance, with the first year fee due upon opening of the account. The
Annual Fee covers a full year or any part thereof, and therefore will not be
prorated or refunded in the year of early termination.  These fees do
not include bank activity fees associated with Desktop Deposit
system.  Fees for these services will be provided separately by our
Treasury Management Group.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    Wells Fargo’s bid is based on the following
assumptions:

     

    
      	
              ·

            	
              Number
      of Escrow Accounts to be established:  Three
    (3)

            
	
              ·

            	
              Number
      of Deposits to Escrow Accounts:  Electronically, approximately
      (10-20 per day)

            
	
              ·

            	
              Number
      of Withdrawals from Escrow Accounts:  Not more than two per
      week.

            
	
              ·

            	
              Term
      of Escrow:  One (1) year

            
	
              ·

            	
              APPOINTMENT
      SUBJECT TO RECEIPT OF REQUESTED DUE DILIGENCE INFORMATION AS PER THE USA
      PATRIOT ACT

            
	
              ·

            	
              THIS
      PROPOSAL ASSUMES THAT BALANCES IN THE ACCOUNT WILL BE INVESTED IN MONEY
      MARKET FUNDS

            
	
              ·

            	
              ALL
      FUNDS WILL BE RECEIVED FROM OR DISTRIBUTED TO A DOMESTIC OR AN
      APPROVED FOREIGN ENTITY

            
	
              ·

            	
              IF
      THE ACCOUNT(S) DOES NOT OPEN WITHIN THREE (3) MONTHS OF THE DATE SHOWN
      BELOW, THIS PROPOSAL WILL BE DEEMED TO BE NULL AND
  VOID

            

    

    

    
      	
              Out-of
      Pocket Expenses:

            	
              At
      Cost

            

    

     

    We will charge for out-of-pocket expenses in
response to specific tasks assigned by the client or provided for in the escrow
agreement.  Possible expenses would be,
but are not limited to, express mail and messenger charges, travel expenses to
attend closing or other meetings.   There are no charges for
indirect out-of- pocket expenses.

     

    This
fee schedule is based upon the assumptions listed above which pertain to the
responsibilities and risks involved in Wells Fargo undertaking the role of
Escrow Agent.  These assumptions are based on information provided to
us as of the date of this fee schedule.  Our fee schedule is subject
to review and acceptance of the final documents.  Should any of the
assumptions, duties or responsibilities change, we reserve the right to affirm,
modify or rescind our fee schedule. Extraordinary services (services other than
the ordinary administration services of Escrow Agent described above) are not
included in the annual administration fee and will be billed as incurred at the
rates in effect from time to time.

                                                                                                                                    Submitted
on:                       ,
2010

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    Exhibit
E

    

    Agency
and Custody Account Direction

    For
Cash Balances

    Wells
Fargo Bank Money Market Deposit Accounts

    

    Direction
to use the following Wells Fargo Bank Money Market Deposit Accounts for Cash
Balances for the escrow account (the “Account”) created under the
Escrow Agreement to which this Exhibit E is
attached.

    

    You are
hereby directed to deposit, as indicated below, or as we shall direct further in
writing from time to time, all cash in the Account in the following money market
deposit account of Wells Fargo Bank, National Association (“Bank”):

    

    Wells
Fargo Bank Money Market Deposit Account (“MMDA”)

    

    We
understand that amounts on deposit in the MMDA are insured, subject to the
applicable rules and regulations of the Federal Deposit Insurance Corporation
(the “FDIC”), in the
basic FDIC insurance amount of $250,000 per depositor, per insured bank. This
includes principal and accrued interest up to a total of $250,000.

    

    We
acknowledge that we have full power to direct investments in the
Account.

    

    We
understand that we may change this direction at any time and that it shall
continue in effect until revoked or modified by us by written notice to
you.

    

    
      	 
      	
              American
      Realty Capital Trust III, Inc.

            
	 
      	 
      	 
      
	 	By:	 
	 	 	Signature
	 	 	 
	 	 	 
	 	 	Date

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

    Exhibit
F

    

    [Form of
Notice to Pennsylvania Investors]

    

    You have
tendered a subscription to purchase shares of common stock of American Realty
Capital Trust III, Inc. (the “Company”). Your subscription
is currently being held in escrow.  The guidelines of the Pennsylvania
Securities Commission do not permit the Company to accept subscriptions from
Pennsylvania residents until an aggregate of $75,000,000 of gross offering
proceeds have been received by the Company. The Pennsylvania guidelines provide
that until this minimum amount of offering proceeds is received by the Company,
every 120 days during the offering period Pennsylvania Investors may
request that their subscription be returned.  If you wish to continue
your subscription in escrow until the Pennsylvania minimum subscription amount
is received, nothing further is required.

    

    If you
wish to terminate your subscription for the Company’s common stock and have your
subscription returned please so indicate below, sign, date, and return to the
Escrow Agent, Wells Fargo Bank, National Association at 45 Broadway, 14th Floor,
New York, NY  10006, Attn:  Matt Sherman.

    

    I hereby
terminate my prior subscription to purchase shares of common stock of American
Realty Capital Trust III, Inc. and request the return of my subscription
funds.  I certify to American Realty Capital Trust III, Inc. that I am
a resident of Pennsylvania.

     

    
      
        	 
      	 	
                Signature:

              	 
      
	 	 	 	 
	 
      	 	
                Name:

              	 
      
	 
      	 	
                 

              	

                (please
      print)

              
	 	 	 	 
	 
      	 	
                Date:

              	 
      
	 	 	 	 
	
                Please
      send the subscription refund to:

              	 	 
      	 
      
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

      

      
        
          
          

        

        
          20Unassociated Document

    THIS
WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE SHARES ISSUABLE UPON
EXERCISE OF THIS WARRANT ARE SUBJECT TO RESTRICTIONS ON RESALE AND MAY NOT BE
RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.

    

    
      
        	
                No.
      of Shares:  150,000

              	
                Warrant
      No. ________

              

      

    

    

    Warrant
to Purchase Class A Common Stock

    

    of

    

    Preferred
Apartment Communities, Inc.

    

    WARRANT

    

    Dated:
[              ],
2010

    

    This
certifies that INTERNATIONAL ASSETS ADVISORY, LLC (“IAA”) or any of its permitted
transferees (IAA or any such permitted transferee is sometimes herein called the
“Holder”) is entitled to
purchase from Preferred Apartment Communities, Inc., a Maryland corporation (the
“Company”), up to
150,000 shares of Class A Common Stock (the “Shares”), par value $0.01 per
share, of the Company (the “
Class A Common Stock ”), at a purchase price of
$[       ] per Share, which purchase price is
equal to 125% of the gross per Share offering price to the public of the Class A
Common Stock in the Company’s initial public offering of Class A Common Stock
pursuant to the Company’s Registration Statement on Form S-11 (333-168407) filed
with the Securities and Exchange Commission on July 30, 2010, as amended from
time to time, subject to adjustment as described below (as so adjusted from time
to time, the “Exercise Price”) during
the four-year period as more fully set forth in Section
1.

     

    1.             Exercise. The
purchase rights represented by this Warrant shall be exercisable at the Exercise
Price, and during the period as follows:

     

    (a)                 During
the period beginning from the date hereof (the “Issue Date”) to and through
[              ],
2011 [NO LESS THAN 180 DAYS
AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT],
inclusive, the Holder shall have no right to purchase any Shares
hereunder.

    

    (b)  At
any time and from time to time between
[              ],
2011 and
[              ], 2015
[FOUR YEARS AFTER
THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT] (the latter
date is also referred to herein as the “Expiration Date”), inclusive,
the Holder shall have the right to purchase all or any portion of the Shares at
the Exercise Price.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (c)  After
the Expiration Date, the Holder shall have no right to purchase all or any
portion of the Shares hereunder.

    

    2.             Payment
for Shares; Issuance of Certificates; Net Exercise. 

     

    (a)  The
purchase rights represented by this Warrant may be exercised at any time within
the period specified in Section 1(b), in
whole or in part, by:  (i) the surrender of this Warrant for
cancellation (with the purchase form at the end hereof properly completed and
executed) at the principal executive office of the Company as set forth in Section 15 (or
such other office or agency of the Company as it may designate by notice to the
Holder pursuant to Section 15); and (ii)
payment to the Company of the aggregate Exercise Price then in effect for the
number of Shares specified in the above-mentioned purchase form, together with
applicable stock transfer taxes, if any.  This Warrant shall be deemed
to have been exercised, in whole or in part to the extent specified, immediately
prior to the close of business on the date this Warrant is surrendered and
payment is made in accordance with the foregoing provisions of this Section 2(a), and the
person or persons in whose name or names the certificates for the Shares
purchased shall be issuable upon such exercise shall become the holder or
holders of record of such Shares at that time and date.

    

    (b)  If
on the date of any exercise of this Warrant the Shares issuable upon such
exercise are not freely resalable without restriction under the Act, the Holder
may satisfy its obligation to pay the Exercise Price through a “cashless
exercise”, in which event the Company shall issue to the Holder the number of
Warrant Shares determined as follows:

    

    
      
        
          
            
              
                	 
      	
                        X =
      Y [(A-B)/A]

                      
	
                        where:

                      	 
      
	 
      	
                        X =
      the number of Shares to be issued to the Holder

                      
	 
      	 
      
	 
      	
                        Y =
      the number of Shares with respect to which this Warrant is being
      exercised

                      
	 
      	 
      
	 
      	
                        A =
      the Fair Market Value of one share of Class A Common
  Stock

                      
	 
      	 
      
	 
      	
                        B =
      the Exercise
Price

                      

              

            

          

        

      

    

    

    For the
purpose of any computation under this Section 2(b), the “Fair Market Value” per share
of Class A Common Stock at any date shall be deemed to be the average Closing
Price (as defined below) of the Class A Common Stock for the five Trading Days
(as defined below)  immediately preceding the date as of which the
Fair Market Value is being determined; provided however, that if the shares of
Class A Common Stock are not then listed or quoted on any market or exchange,
then the Fair Market Value shall be the average of the closing bid prices for
the Class A Common Stock on the OTC Bulletin Board, or, if such is not
available, the Pink Sheets LLC, or otherwise the average of the closing bid
prices for the Class A Common Stock quoted by two market-makers of the Class A
Common Stock, or otherwise the Fair Market Value shall be determined in good
faith by the Company.  “Trading Day” shall mean any
day on which the principal United States securities exchange or trading market
on which the shares of Class A Common Stock are listed, quoted or traded (the
“Principal Market”) as
reported by Bloomberg Financial Markets is open for trading.  “Closing Price” for any Trading
Day shall mean the last sale price for the Common Stock on the Principal Market
on such Trading Day.

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

     

    (c)  The
certificates for the Shares purchased pursuant to an exercise of this Warrant
pursuant to Sections
2(a) or
2(b) shall
be delivered to the Holder within a reasonable time, not exceeding ten business
days, after the purchase rights represented by this Warrant shall have been so
exercised.

    

    (d)  If
this Warrant is exercised in part pursuant to Sections 2(a) or
2(b), the
Company shall issue, in the name of the Holder, a new Warrant of like tenor
(including all substantive provisions hereof) and representing in the aggregate
rights to purchase the number of Shares as remain purchasable hereunder at such
time after giving effect to such partial exercise.

     

    3.             Transfer. 

    

    (a)  This
Warrant shall not be sold, assigned, pledged, hypothecated, encumbered or
otherwise transferred or disposed of, or be the subject of any hedging, short
sale, derivative, put or call transaction that would result in the effective
economic disposition of this Warrant or the Shares purchasable hereunder (each,
a “Transfer”), except
that a Transfer of this Warrant may be effected to successors by
operation of law of the Holder or with the prior consent of the
Company.

    

    (b)  Any
Transfer of this Warrant that is permitted by Section 3(a) shall be
effected by the Holder by (i) executing the transfer form at the end hereof, and
(ii) surrendering this Warrant for cancellation at the office or agency of the
Company referred to in Section 2,
accompanied by (A) a certificate (signed by an officer of the Holder or such
other authorized representative reasonably satisfactory to the Company, if the
Holder is an entity) stating that such Transfer is permitted under
Section 3(a),
and (B) an opinion of counsel, reasonably satisfactory in form and substance to
the Company, to the effect that the Shares or this Warrant, as the case may be,
may be sold or otherwise transferred without registration under the Securities
Act of 1933, as amended (the “Act”).

     

    (c)  Upon
any Transfer of this Warrant or any part thereof in accordance with the
foregoing provisions of this Section 3, the
Company shall issue, in the name or names specified by the Holder (including the
Holder), a new Warrant or Warrants of like tenor (including all substantive
provisions hereof) and representing in the aggregate rights to purchase the same
number of Shares as are purchasable hereunder at such time.

     

    (d)  This
Warrant may not be exercised and neither this Warrant nor any of the Shares, nor
any interest in either, may be the subject of a Transfer, in whole or in part,
except in compliance with applicable United States federal and state securities
laws and the terms and conditions hereof.  Each Warrant issued upon a
Transfer or in replacement hereof shall bear a legend in substantially the same
form as the legend set forth on the first page of this Warrant.  Each
certificate for Shares issued upon exercise of this Warrant, unless at the time
of exercise such Shares are acquired pursuant to a registration statement that
has been declared effective under the Act and applicable blue sky laws, shall
bear a legend substantially in the following form:

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

    

    “THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”).  SUCH
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN
EXEMPTION THEREFROM. PREFERRED APARTMENT COMMUNITIES, INC. MAY REQUIRE AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT THAT A PROPOSED TRANSFER OR SALE
IS IN COMPLIANCE WITH THE ACT.”

     

    Any
certificate for any Shares issued at any time in exchange or substitution for
any certificate for any Shares bearing such legend also shall bear such legend
unless, in the opinion of counsel for the Company, the Shares represented
thereby need no longer be subject to the restriction contained
herein.  The provisions of this Section 3(d) shall be
binding upon all subsequent holders of certificates for Shares bearing the above
legend and all subsequent holders of this Warrant, if any.

    

    (e)  Any
attempted Transfer of this Warrant or any part thereof in violation of this
Section 3
shall be null and void ab
initio.

     

    4.             Shares to
be Fully Paid; Reservation of Shares. The Company covenants and agrees
that all Shares which may be purchased hereunder will, upon issuance and
delivery against payment therefor of the requisite purchase price, be duly and
validly issued, fully paid and nonassessable.  The Company further
covenants and agrees that, during the period within which this Warrant may be
exercised, the Company will at all times have authorized and reserved a
sufficient amount of Class A Common Stock to provide for the exercise of this
Warrant.

     

    5.             No Voting
or Dividend Rights. This Warrant shall not entitle the Holder to any
voting rights or any other rights, including without limitation notice of
meetings of other actions or receipt of dividends or other distributions, as a
stockholder of the Company.

     

    6.             Adjustment
of Exercise Price. The Exercise Price in effect at the time and the
number and kind of securities purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the happening of certain
events as follows:

    
      
         

      

      
        - 4
-

        
          

        

      

      
         

      

    

     

    (a)  In
case the Company shall, while this Warrant remains outstanding and unexpired,
(i) declare a dividend or make a distribution on its outstanding Class A Common
Stock in Class A Common Stock, (ii) subdivide or reclassify its outstanding
Class A Common Stock into a greater number of shares, (iii) combine or
reclassify its outstanding Class A Common Stock into a smaller number of shares,
or (iv) enter into any transaction whereby the outstanding shares of Class A
Common Stock are at any time changed into or exchanged for a different number or
kind of shares or other securities of the Company or of another entity through
reorganization, merger, consolidation, liquidation or recapitalization, then an
appropriate adjustment in the number of Shares (or other securities for which
such Shares have previously been exchanged or converted) purchasable under this
Warrant shall be made and the Exercise Price in effect at the time of the record
date for such dividend or distribution or of the effective date of such
subdivision, combination, reclassification, reorganization, merger,
consolidation, liquidation or recapitalization shall be proportionately adjusted
so that the Holder of this Warrant exercised after such date shall be entitled
to receive the aggregate number and kind of shares or other securities which, if
this Warrant had been exercised by such Holder immediately prior to such date,
the Holder would have been entitled to receive upon such dividend, distribution,
subdivision, combination, reclassification, reorganization, merger,
consolidation, liquidation or recapitalization.  For example, if the
Company declares a two-for-one stock subdivision (split) and the Exercise Price
hereof immediately prior to such event was $10.00 per Share and the number of
Shares issuable upon exercise of this Warrant was 150,000, the adjusted Exercise
Price immediately after such event would be $5.00 per Share and the adjusted
number of Shares issuable upon exercise of this Warrant would be
300,000.  Any such adjustment shall be made successively whenever any
event listed above shall occur.

    

    (b)  Whenever
any adjustment shall be made pursuant to Section 6(a), the
Company shall promptly make a certificate signed by its Chairman, Chief
Executive Officer, President, Vice President, Chief Financial Officer or
Treasurer, setting forth in reasonable detail the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated and the adjusted Exercise Price and the adjusted number of shares
of Class A Common Stock issuable upon exercise of this Warrant after giving
effect to such adjustment, and shall promptly cause copies of such certificates
to be sent to the Holder, and shall cause a certified copy thereof to be mailed
to the Company's transfer agent, if any.  The Company may retain a
firm of independent certified public accountants selected by the Board of
Directors (who may be the regular accountants employed by the Company) to make
any computation required by this Section 6, and a
certificate signed by such firm shall be conclusive evidence of the correctness
of such adjustment.

     

    (c)  If
at any time, as a result of an adjustment made pursuant to the provisions of
this Section 6,
the Holder thereafter shall become entitled to receive upon exercise of this
Warrant any shares of the Company other than Class A Common Stock, thereafter
the number of such other shares so receivable upon exercise of this Warrant
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Class A
Common Stock contained in Section 6(a).

     

    
      7.             Unenforceability.  The
invalidity or unenforceability of any section, paragraph or provision of this
Warrant shall not affect the validity or enforceability of any other section,
paragraph or provision hereof.  If any section, paragraph or provision
of this Warrant is for any reason determined to be invalid or unenforceable, or
is determined to be in conflict with Section 5110(f)(2)(H) or 5110(g)(1) of
the Rules of the Financial Industry Regulatory Authority (“FINRA”), there shall
be deemed to be made such changes as are necessary to make it valid and
enforceable.

      

      8.             FINRA
Compliance.  This Warrant is intended to comply with all
provisions of Section 5110(f)(2)(H) and 5110(g)(1) of the Rules of
FINRA.

    

     

    
      
         

      

      
        - 5
-

        
          

        

      

      
         

      

    

     

    
      9.             Governing
Law; Jurisdiction. 

      

      (a) This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
Delaware.

    

     

    (b)  Each
of the parties hereby agrees that any claim, dispute or controversy (of any and
every kind or type, whether based on contract, tort, statute, regulation or
otherwise, and whether based on state, federal, foreign or any other law),
arising out of, relating to or in connection with this Warrant or any of the
transactions contemplated thereby, and including disputes relating to the
existence, validity, breach or termination of this Warrant (any such claim being
a “Covered
Claim”), shall be heard and determined exclusively in the Court of
Chancery of the State of Delaware and the appropriate appellate courts therefrom
(the “Chancery
Court”), and in no other court; provided, however, that if the Chancery
Court lacks subject matter jurisdiction over a Covered Claim, such claim shall
be heard and determined exclusively in another state or federal court sitting in
the State of Delaware and the appropriate appellate courts therefrom (an “Other Delaware
Court”).  Each of the parties expressly agrees and acknowledges
that the Delaware Chancery Court (or, if the Delaware Chancery Court lacks
subject matter jurisdiction, an Other Delaware Court) is an appropriate and
convenient forum for resolution of any and all Covered Claims, that it will not
suffer any undue hardship or inconvenience if required to litigate in such
court, and that such court is fully competent and legally capable of
adjudicating any Covered Claim.  Each of the parties hereby
irrevocably submits, generally and unconditionally, to the exclusive personal
jurisdiction of the Chancery Court and the Other Delaware Courts in respect of
Covered Claims. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and, to the extent permitted by
applicable law, over the subject matter of such dispute and agree that mailing
of process or other papers in connection with any such action or proceeding in
the manner provided in Section 15 or in such
other manner as may be permitted by applicable law shall be valid and sufficient
service thereof.

    

    (c)  The
parties each hereby waive all right to trial by jury in any legal proceeding
(whether based upon contract, tort or otherwise) in any way arising out of or
relating to this Warrant.

     

    10.             Binding
Effect on Successors. In case of any consolidation of the Company
with, or merger of the Company into, any other entity, or in case of any sale or
conveyance of all or substantially all the assets of the Company other than in
connection with a plan of complete liquidation of the Company at any time prior
to the Expiration Date, then the Company shall give written notice of
consolidation, merger, sale or conveyance to the Holder and, from and after the
effective time of such consolidation, merger, sale or conveyance, this Warrant
shall represent, upon exercise, only the right to receive the consideration that
would have been issuable in respect of the Shares purchasable under this Warrant
in such consolidation, merger, sale or conveyance had this Warrant been
exercised in full immediately prior to such effective time, and the Holder shall
have no further rights under this Warrant other than the right to receive such
consideration.

     

    11.             Fractional
Shares. No fractional shares shall be issued upon exercise of this
Warrant. The Company shall, in lieu of issuing any fractional share, pay the
holder entitled to such fraction a sum in cash equal to such fraction multiplied
by the then effective Exercise Price.

    
 

    
      
        
           

        

        
          - 6
-

          
            

          

        

        
           

        

      

    

     

    
      12.           Lost
Warrant. The Company represents and warrants to the Holder hereof
that upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction, or mutilation of this Warrant and, in the case of any
such loss, theft or destruction, upon receipt of an affidavit of loss and
indemnity reasonably satisfactory to the Company, or in the case of any such
mutilation upon surrender and cancellation of this Warrant, the Company, at its
expense, will make and deliver a new Warrant, of like tenor, in lieu of the
lost, stolen, destroyed or mutilated Warrant.

      

      13.           Headings. The
headings of the several sections of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant.

    

     

    14.           Modification
and Waiver. This Warrant and any provision hereof may be amended,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of the same is sought.

     

    15.           Notices.  Any
notice or other communication required or contemplated by this Warrant shall be
deemed to have been duly given if transmitted by registered or certified mail,
return receipt requested, or nationally recognized overnight delivery
service, to the Company
at its principal executive office located at One Overton Park, 3625 Cumberland
Boulevard, Suite 400, Atlanta, Georgia 30339, Attention:  Leonard A.
Silverstein, or to the Holder at the name and address set forth in the Warrant
Register maintained by the Company.

    
      
         

      

      
        - 7
-

        
          

        

      

      
         

      

    

    

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer as of the date first written above.

    

    
      
        	
                PREFERRED
      APARTMENT

                COMMUNITIES,
      INC.

              
	 
      	 
      
	
                By:

              	
                   

              
	 
      	
                Name:

              
	 
      	
                Title:

              

      

    

    

    
      
        	
                Acknowledged
      and Agreed to

                as
      of the date first written above:

              
	 
      	 
      
	
                INTERNATIONAL
      ASSETS ADVISORY, LLC

              
	 
      	 
      
	
                By:

              	
                  

              
	 
      	
                Name:

              
	 
      	
                Title:

              

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    PURCHASE
FORM

     

    (To be
signed only upon exercise of the foregoing Warrant)

     

    The
undersigned, the holder of the foregoing Warrant, hereby irrevocably elects to
exercise the purchase rights represented by such Warrant for, and to purchase
thereunder, _____________ shares(the “Purchased Shares”) of Class A Common
Stock, par value $0.01 per share, of Preferred Apartment Communities, Inc., for
an Exercise Price (as defined in the foregoing Warrant) and which Exercise Price
currently is $____ per Share, and either:

    
        

    

    o  tenders herewith
payment of the aggregate Exercise Price in respect of the Purchased Shares in
full, in the amount of $_________; or

     

    o  elects pursuant
to Section
2(b) of such Warrant to
convert such Warrant into Common Stock on a cashless exercise basis;
and

     

    o requests that the
certificates for the Purchased Shares issued in the name(s) of, and delivered to
_________________, whose address(es) is (are):

    

    Dated:
_________________

    

    
      
        
          
            
              
                
                  	 	
                          By:

                        	 
      
	 	 
      	 
      
	 	 
      	 
      
	 	 
      	 
      
	 	 
      	 
      
	 	 
      	 
      
	 	 
      	
                          Address

                        
	 	 
      	 
      
	 	 
      	
                          Social Security or
      other identifying Number:

                        
	 	 
      	 
      
	 	 
      	
                            

                        

                

              

            

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    TRANSFER
FORM

     

    (To be
signed only upon transfer of Warrant)

     

    For value
received, the undersigned hereby sells, assigns, and transfers unto
______________________________ the right to purchase Shares as defined in, and
represented by, the foregoing Warrant to the extent of __________ Shares, and
appoints _________________________ attorney to transfer such rights on the books
of Preferred Apartment Communities, Inc., with full power of substitution in the
premises.

    

    Dated:
__________________________

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	 	
                                        By:

                                      	 
      	 
	 	 
      	 
      	 
	 	 
      	 
      	 
	 	 
      	
                                          

                                      	 
	 	 
      	 
      	 
	 	 
      	
                                          

                                      	 
	 	 
      	
                                        Address

                                      	 
	 	 
      	 
      	 
	In
      the presence of:

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