Document:

exhibit10_1.htm

Exhibit 10.1

Dated 22-August, 2013

 

 

 Agreement

 

between

 

Great China Mania Holdings INC

 

and

 

New Era Global Enterprises Limited

 

 

 

 

8th Floor, 1 New York Street, Manchester, M1 4AD

 

Tel: 0161 236 8992 Fax: 0161 234 8846  Ref: 21981.1

  

  

  

 

Contents

 

Clause

	
1.

	
Interpretation

	
1

	
2.

	
The Business

	
3

	
3.

	
Obligations on the Company

	
3

	
4.

	
Obligations on New Era and Licence

	
4

	
5.

	
Completion

	
5

	
6.

	
Directors and Management

	
5

	
7.

	
Finance for the Business

	
5

	
8.

	
Restrictions on the parties

	
6

	
9.

	
Anti-corruption

	
6

	
10.

	
The Business Plan

	
6

	
11.

	
Accounting

	
7

	
12.

	
Profit Share

	
7

	
13.

	
Term, Termination and liquidation

	
8

	
14.

	
Intellectual Property

	
9

	
15.

	
Confidentiality

	
9

	
16.

	
Whole agreement

	
10

	
17.

	
Assignments

	
10

	
18.

	
Variation and waiver

	
10

	
19.

	
Costs

	
11

	
20.

	
No partnership

	
11

	
21.

	
Third party rights

	
11

	
22.

	
Notice

	
11

	
23.

	
Interest on late payment

	
13

	
24.

	
Language

	
13

	
25.

	
Severance

	
13

	
26.

	
Further assurance

	
13

	
27.

	
Counterparts

	
13

	
28.

	
Agreement survives Completion

	
14

	
29.

	
Governing law and jurisdiction

	
14

Schedule

 

	
  

	 Schedule Matters reserved for New Era approval	
15

  

  

  

THIS  AGREEMENT is dated 22-AUGUST, 2013

 

Parties

 

	
(1)  

	
Great China Mania Holdings Inc incorporated and registered in Florida United States with company Federal Employer identification number 59-2318378 whose principal office is at 19F, Rm1902, Kodak House 2, Java Road, North Point, Hong Kong (“the Company”).

 

	
(2)  

	
New Era Global Enterprises Limited incorporated and registered in England and Wales with company number 06596865 whose registered office is at 17 Hardwidge Street, London, United Kingdom SE1 3SY (“New Era”).

 

Background

 

	
(A)  

	
The Company is an artist management and entertainment company in located in Hong Kong and with talents all over Asia. Its major businesses include talent management, event management, music publishing, movie and TV series productions, multimedia and merchandise licensing in Hong Kong, China and across Asia. To leverage on the popularity and publicity of GMEC's artists and celebrities in creating stories and events.

 

	
(B)  

	
New Era is in the business of publishing a magazine, #5, in the United Kingdom and selling various merchandise using the #5 brand.

 

	
(C)  

	
The Company intends to produce the Magazine and New Era agrees to grant the Company certain rights to enable it to do so on the terms of this agreement.

 

	
(D)  

	
The Company shall carry on the Business in accordance with the terms and conditions of this agreement.

 

Agreed terms

 

	
1.  

	
Interpretation

 

	
1.1  

	
The definitions and rules of interpretation in this clause apply in this agreement.

 

Act: the Companies Act 2006.

 

Board: the board of directors of the Company as constituted from time to time.

 

Business: has the meaning given in clause 2.

 

Business Plan: has the meaning given in clause 10.

 

Completion: the completion of the formation of the Business in accordance with clause 5.

 

  

1

  

 

        Confidential Information: has the meaning given in clause 15.

 

Electronic form: has the meaning given in section 1168 of the Act.

 

New Era’s Intellectual Property: patents, rights to inventions, copyright and related rights, trade marks, (registered at the Trade Marks Registry under 2504234 and 2504235) business names and domain names, rights in get-up, goodwill and the right to sue for passing off, rights in designs, database rights, rights to use, and protect the confidentiality of, confidential information (including know-how), and all other intellectual property rights, in each case whether registered or unregistered and including all applications and rights to apply for and be granted, renewals or extensions of, and rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist now or in the future in any part of the world relating to #5 and Five by Rio.

 

Licence Fee: £2,500 (two thousand five hundred pounds sterling) per issue of the Magazine.  For the avoidance of doubt, the Licence Fee is due per issue in digital form and a further Licence Fee shall be paid if a further print version is produced.

 

Magazine: the Chinese version of New Era #5 Magazine.

 

New Era Director: Peter Smith or such other person as New Era nominate from time to time.

 

New Era Shares: 10,000,000 restricted common shares in the Company.

 

Operating Costs: reasonable expenses including direct translation, production, printing, marketing, distribution and retailing of the Magazine and the Products.

 

Operating Profits: all income (including sales, advertising, revenues and miscellaneous associated revenues) from the Magazine and the Products less any Operating Costs calculated every Quarter Date.

 

Products: any baseball caps, t-shirts or other apparel agreed by the parties in writing which is branded #5.

 

Quarter Date: 31 March, 30 June, 30 September and 31 December.

 

Reserved Matters: the matters listed in the Schedule.

 

Territory: China (including Hong Kong, Macau, and Taiwan) and such other countries as may be agreed in writing between the parties from time to time.

 

	
1.2  

	
Clause, schedule and paragraph headings do not affect the interpretation of this agreement.

 

	
1.3  

	
A reference to a clause or a schedule is a reference to a clause of, or schedule to, this agreement. A reference to a paragraph is to a paragraph of the relevant schedule.

 

  

2

  

 

	
1.4  

	
A person includes a natural person, a corporate or unincorporated body (whether or not having a separate legal personality).

 

	
1.5  

	
Unless the context otherwise requires, words in the singular include the plural and in the plural include the singular.

 

	
1.6  

	
A reference to writing or written includes faxes but no other electronic form, save for the purposes of clause 22 where a reference to writing or written includes electronic forms and the sending or supply of notices in electronic form.

 

	
1.7  

	
Where the words include(s), including or in particular are used in this agreement, they are deemed to have the words "without limitation" following them.

 

	
1.8  

	
Any obligation in this agreement on a person not to do something includes an obligation not to agree or allow that thing to be done.

 

	
2.  

	
The Business

 

	
2.1  

	
The Business is the production, promotion and sale of the Magazine and the manufacture and sale of the Products in the Territory.

 

	
2.2  

	
Each party shall use its reasonable endeavours to promote and develop the Business to the best advantage of the parties.

 

	
3.  

	
Obligations on the Company

 

	
3.1  

	
The Company shall:

 

	
(a)  

	
Pay the Licence Fee within 7 days of the publication or release of the Magazine;

 

	
(b)  

	
establish a separate division within the Company to run the Business and maintain separate accounts for the Business;

 

	
(c)  

	
be responsible for the translation, production, printing, marketing (subscriptions and advertisements), distribution, and retailing activities related to the Magazine and Products in the Territory;

 

	
(d)  

	
be responsible for the costs and expenses of the Business;

 

	
(e)  

	
act in good faith at all times to New Era;

 

	
(f)  

	
notify New Era immediately if the Company is notified of any potential legal proceedings against it and/or legal proceedings are commenced against it in relation to the Business;

 

  

3

  

 

	
(g)  

	
notify New Era immediately if the Company becomes aware of any potential investigation, proceedings and/or potentially negative information or comment becoming known or disclosed to the general public in relation to the Business;

 

	
(h)  

	
use its best endeavours to ensure that the Magazine and Products are produced to the highest standard;

 

	
(i)  

	
seek to maximise revenues from the production and sale of the Magazine and Products in the Territory;

 

	
(j)  

	
ensure that high quality materials are used at all times and to ensure that the Magazine and Products are finished and presented to a high standard;

 

	
(k)  

	
ensure that all quality control checks in relation to the Magazine and the Products are carried out to a reasonable standard;

 

	
(l)  

	
liaise with the manufacturers, designers of the Magazine and the Products and any third party diligently;

 

	
(m)  

	
establish and maintain a commercial framework sufficient to exploit and develop all commercial opportunities for the Magazine and the Products;

 

	
(n)  

	
develop and establish sufficient infrastructure to support and maintain the commercial objectives of the Business;

 

	
(o)  

	
use all expertise and efforts to generate revenues from all sources in the furtherance of Operating Profits of the Business;

 

	
(p)  

	
produce monthly management accounts relating to the Business;

 

	
(q)  

	
to produce and act in accordance with the Business Plan; and

 

	
(r)  

	
undertake not to grant others the right to use the New Era Intellectual Property;

 

	
(s)  

	
pay for two return business class flights from England to China or Hong Kong plus hotel and accommodation for two people for New Era per annum;

 

	
(t)  

	
pay any costs incurred by Rio Ferdinand in relation to this agreement (including, without limitation, flights, hotel and accommodation); and

 

	
(u)  

	
Publish or release at least 6 issues of the Magazine per annum.

 

	
4.  

	
Obligations on New Era and Licence

 

	
4.1  

	
New Era shall:

 

	
(a)  

	
provide the Company with the English version of #5 each month;

 

	
(b)  

	
act in good faith at all times to the Company;

 

  

4

  

	
(c)  

	
use its reasonable endeavours to procure Rio Ferdinand to promote the Magazine and the Products on his Twitter and Weibo accounts from time to time.

 

	
(d)  

	
use its reasonable endeavours to procure Rio Ferdinand to promote the Magazine and the Products on any visit to Hong Kong in relation to this agreement.  For the avoidance of doubt this does not include any visit in his capacity as a player or ambassador for Manchester United FC and not for any visit undertaken as a holiday.  Any visit to Hong Kong in relation to this agreement shall be agreed with New Era in advance and will be subject to his schedule which will take precedence over the same.  For the avoidance of doubt this clause does not oblige Rio Ferdinand to make such visit and Rio Ferdinand, at his absolute discretion, may refuse to such promotion or limit any promotional activity.

 

	
4.2  

	
New Era, in consideration for the obligations on behalf of the Company in this agreement and in consideration of the Licence Fee, hereby grants to the Company an exclusive licence to use the New Era Intellectual Property in relation to the Magazine and the Products in the Territory, including in connection with the manufacture, promotion, distribution and sales of the Magazine and the Products.

 

	
5.  

	
Completion

 

	
5.1  

	
Completion shall take place on the date of this agreement.

 

	
5.2  

	
At Completion the Company shall procure that such shareholder and board meetings of the Company are held as may be necessary to:

 

	
(a)  

	
issue credited as fully paid New Era Shares and enter New Era in the register of members of the Company as the holder of New Era Shares and issue a share certificate to New Era in respect of all such shares; and

 

	
(b)  

	
appoint the New Era Director.

 

	
6.  

	
Directors and Management

 

	
6.1  

	
The Board has responsibility for the supervision and management of the Business but shall obtain the prior written approval of New Era before taking any decision in relation to any of the Reserved Matters.

 

	
6.2  

	
New Era shall be entitled to appoint such person as it shall determine as the New Era Director to the Board from time to time.

 

  

5

  

 

	
7.  

	
Finance for the Business

 

	
7.1  

	
The parties agree that the Business shall be financed, and if it requires any additional finance and so far as practicable, by the Company.

 

	
8.  

	
Restrictions on the parties

 

	
8.1  

	
Neither party nor any of its subsidiaries shall (unless otherwise agreed in writing by the other party), in the Territory during the term of this agreement, carry on or be employed, engaged or interested in any business which would be in competition with any part of the Business.  Further, the Company shall not carry on or be employed, engaged or interested in any business which would be in competition with New Era during the duration of this agreement and for a period of one year from termination for whatever reason.

 

	
9.  

	
Anti-corruption

 

	
9.1  

	
Each party undertakes to the other party that it will not engage in any activity, practice or conduct which would constitute an offence under sections 1, 2 or 6 of the Bribery Act 2010.

 

	
9.2  

	
Breach of any of the undertakings in this clause shall be deemed to be a material breach of the agreement.

 

	
10.  

	
The Business Plan

 

	
10.1  

	
The Business Plan is an annual business plan for the Business prepared by the Company and it shall include in relation to any calendar year to which it relates:

 

	
(a)  

	
a cashflow statement giving an estimate of the working capital requirements;

 

	
(b)  

	
a monthly projected profit and loss account;

 

	
(c)  

	
an operating budget (including capital expenditure requirements) and balance sheet forecast;

 

	
(d)  

	
a management report giving business objectives for the year; and

 

	
(e)  

	
a financial report which shall include an analysis of the estimated results of the Business for the previous Financial Year compared with the Business Plan for that year, identifying variations in sales revenues, costs and other material items.

 

	
10.2  

	
The Business Plan for every year shall be:

 

  

6

  

 

	
(a)  

	
prepared by the Company 45 days before any year shall commence; and

 

	
(b)  

	
adopted and approved by the parties by agreement in writing as soon as possible after it has been prepared.

 

	
11.  

	
Accounting

 

	
11.1  

	
The Business shall at all times maintain accurate and complete accounting and other financial records.

 

	
11.2  

	
Each party and its authorised representatives shall be allowed access at all reasonable times to examine the books and records of the Company and the Business.

 

	
11.3  

	
The Company shall supply New Era with the financial and other information necessary to keep it informed about how effectively the Business is performing and in particular shall supply:

 

	
(a)  

	
a copy of each year's Business Plan for approval in accordance with clause 10;

 

	
(b)  

	
a copy of the annual accounts of the Business within 3 months of the end of the year to which the accounts relate;

 

	
(c)  

	
monthly management accounts of the Business to be supplied within 4 days of the end of the month to which they relate (the first day being the first day of the following month) and the accounts shall include a profit and loss account, a balance sheet and a cashflow statement; and

 

	
(d)  

	
a copy of a report prepared by the Business in respect of each year, such report to be provided within 28 days of the end of the year to which it relates.

 

	
11.4  

	
New Era shall be entitled to require the Company, and the Company shall as soon as possible comply with such a request, to provide any documents, information and correspondence necessary to enable New Era to monitor its rights under this agreement and to comply with filing, elections, returns or any other requirements of HM Revenue & Customs or of any other revenue or tax authority.

 

	
12.  

	
Profit Share

 

	
12.1  

	
The Company and New Era shall split the Operating Profits in equal shares (50:50).

 

	
12.2  

	
The distribution of any Operating Profits will be on every Quarter Date on all Operating Profits earned during the previous 3 complete months.

 

  

7

  

 

	
12.3  

	
New Era shall have the right pursuant to clause 11.4 above to inspect any and all documents including the accounts in relation to the Business and in particular in relation to the Operating Profits.  New Era shall also be entitled to appoint an expert to verify the same.

 

	
13.  

	
Term, Termination and liquidation

 

	
13.1  

	
This agreement shall come into effect on Completion and, subject to the remaining terms of this agreement, shall continue in full force and effect for a period of one year and thereafter shall be automatically renewed for a further year unless and until terminated by either party giving to the other not less than 3 months' written notice, expiring no earlier than the second anniversary of Completion or at any time thereafter.

 

	
13.2  

	
Either party shall be entitled to terminate this agreement at any time, by notice in writing to the other if:

 

	
(a)  

	
the other party is in material breach of this agreement which breach is irremediable or, if remediable, is not remedied by the defaulting party within 30 days of being requested to do so by the other. If the Company (1) submits an application to register New Era Intellectual Property without first consulting and obtaining the written agreement of New Era or (2) uses New Era Intellectual Property without the approval of New Era in accordance with clause 6.1, such party shall be deemed to be in material breach of this agreement; or

 

	
(b)  

	
the other party ceases to do business, becomes unable to pay its debts as they fall due, becomes or is deemed insolvent, has a receiver, liquidator, manager, administrator, administrative receiver or similar officer appointed in respect of the whole or any part of its assets or business (or is the subject of a filing with any court for the appointment of any such officer), makes any composition or arrangement with its creditors, takes or suffers any similar action in consequence of debt or an order or resolution is made for its dissolution or liquidation (other than for the purpose of solvent amalgamation or reconstruction), or any equivalent or similar action or proceeding is taken or suffered in any jurisdiction and the same is not dismissed or discharged within 30 days thereafter.

 

	
13.3  

	
Termination of this agreement shall not affect any rights or liabilities that the parties have accrued under it.

 

	
13.4  

	
If this agreement terminates for whatever reason, the Business is to be wound down and:

 

	
(a)  

	
the Business shall not enter into any new contractual obligations nor market or produce any further Magazines or Products;

 

  

8

  

 

	
(b)  

	
any stocks of Products shall be sold for the best price within 3 months of the termination and any remaining stocks thereafter shall be disposed of as New Era directs;

 

	
(c)  

	
a final distribution of Operating Profits shall be made thereafter; and

 

	
(d)  

	
any proprietary information or intellectual property rights belonging to or originating from a party shall be returned to it by the other party and all such proprietary information or intellectual property rights shall be erased from the computer systems (to the extent possible) of the party who is returning it.

 

	
13.5  

	
Where any party is required by any law, regulation or governmental or regulatory authority to retain any information (or copies of such information) of the other party or the Business, it shall notify the other party in writing of such retention giving details of the information that it has been required to retain.

 

	
13.6  

	
On termination the Company shall, subject to clause 13.4(b), immediately destroy, or at the request of New Era, return all Magazines and/or Products and shall remove, and use its best endeavours to require third parties to remove, any reference to the Magazine or Products on any platform including without limitation the World Wide Web, mobile applications etc.  Thereafter the Company shall not utilise in any way or associate itself with New Era, New Era’s Intellectual Property or Rio Ferdinand.

 

	
13.7  

	
The rights and licence granted in accordance with clause 4 shall cease on termination for whatever reason.

 

	
14.  

	
Intellectual Property

 

	
14.1  

	
Any intellectual property rights arising howsoever from the Magazine or Products shall be the property of New Era and shall become New Era Intellectual Property upon creation and then form part of the grant of rights at clause 4 above.

 

	
15.  

	
Confidentiality

 

	
15.1  

	
In this clause Confidential Information means any information which:

 

	
(a)  

	
either party may have or acquire (whether before or after the date of this agreement) in relation to the customers, suppliers, business, assets or affairs of the other;

 

	
(b)  

	
relates to the contents of this agreement (or any agreement or arrangement entered into pursuant to this agreement), but excludes the information in clause 15.2.

 

  

9

  

 

	
15.2  

	
Information is not Confidential Information if:

 

	
(a)  

	
it is or becomes public knowledge other than as a direct or indirect result of the information being disclosed in breach of this agreement;

 

	
(b)  

	
either party can establish to the reasonable satisfaction of the other party that it found out the information from a source not connected with the other party or its Group and that the source is not under any obligation of confidence in respect of the information;

 

	
(c)  

	
either party can establish to the reasonable satisfaction of the other party that the information was known to the first party before the date of this agreement and that it was not under any obligation of confidence in respect of the information; or

 

	
(d)  

	
the parties agree in writing that it is not confidential.

 

	
16.  

	
Whole agreement

 

	
16.1  

	
This agreement, and any documents referred to in it, constitute the whole agreement between the parties and supersede all previous arrangements, understandings and agreements between them, whether oral or written, relating to their subject matter.

 

	
16.2  

	
Each party acknowledges that in entering into this agreement, and any documents referred to in it, it does not rely on, and shall have no remedy in respect of, any representation or warranty (whether made innocently or negligently) that is not set out in this agreement or those documents.

 

	
16.3  

	
Nothing in this clause 16 shall limit or exclude any liability for fraud.

 

	
17.  

	
Assignments

 

	
17.1  

	
No party may assign, or grant any sub-contract, or deal in any way with, any of its rights and obligations under this agreement or any document referred to in it without the prior written consent of the other party.

 

	
18.  

	
Variation and waiver

 

	
18.1  

	
A variation of this agreement shall be in writing and signed by or on behalf of all parties.

 

  

10

  

 

	
18.2  

	
No failure to exercise or delay in exercising any right or remedy provided under this agreement or by law constitutes a waiver of such right or remedy or shall prevent any future exercise in whole or in part thereof.

 

	
18.3  

	
No single or partial exercise of any right or remedy under this agreement shall preclude or restrict the further exercise of any such right or remedy.

 

	
18.4  

	
Unless specifically provided otherwise, rights and remedies arising under this agreement are cumulative and do not exclude rights and remedies provided by law.

 

	
19.  

	
Costs

 

Unless otherwise provided, all costs in connection with the negotiation, preparation, execution and performance of this agreement, shall be borne by the Company.

 

	
20.  

	
No partnership

 

The parties to this agreement are not in partnership with each other and there is no relationship of principal and agent between them.

 

	
21.  

	
Third party rights

 

	
21.1  

	
A person who is not a party to this agreement shall not have any rights under or in connection with it by virtue of the Contracts (Rights of Third Parties) Act 1999.

 

	
21.2  

	
The right of the parties to terminate, rescind or agree any amendment, variation, waiver or settlement under this agreement is not subject to the consent of any person that is not a party to the agreement.

 

	
22.  

	
Notice

 

	
22.1  

	
A notice given under this agreement:

 

	
(a)  

	
shall be in writing in the English language (or be accompanied by a properly prepared translation into English);

 

	
(b)  

	
shall be sent for the attention of the person, and to the address, or fax number, given in this clause 22 (or such other address, fax number or person as the relevant party may notify to the other party); and

 

	
(c)  

	
shall be:

 

	
(i)  

	
delivered personally; or

 

	
(ii)  

	
delivered by commercial courier; or

 

  

11

  

 

	
(iii)  

	
sent by fax; or

 

	
(iv)  

	
sent by pre-paid United Kingdom first-class post or recorded delivery; or

 

	
(v)  

	
(if the notice is to be served or given outside the country from which it is sent) sent by reputable international overnight courier.

 

	
22.2  

	
The addresses for service of notice are:

 

	
(a)  

	
The Company

 

Address:19F, Rm1902, Kodak House 2, Java Road , North Point ,HK

 

For the attention of: Kwong Kwan Yin, Roy

 

Fax number:  +852 2882 7020

 

	
(b)  

	
New Era

 

Address: 17 Hardwidge Street, London, United Kingdom SE1 3SY

 

For the attention of: Pete Smith

 

Fax number:   0207 403 0500

 

	
22.3  

	
If a notice has been properly sent or delivered in accordance with this clause, it will be deemed to have been received as follows:

 

	
(a)  

	
if delivered personally, at the time of delivery; or

 

	
(b)  

	
if delivered by commercial courier, at the time of signature of the courier's delivery receipt; or

 

	
(c)  

	
if sent or supplied by fax, one hour after the notice was sent or supplied;

 

	
(d)  

	
if sent by pre-paid United Kingdom first class post to an address in the United Kingdom or recorded delivery, 48 hours after it was posted or five business days after posting either to an address outside the United Kingdom or from outside the United Kingdom to an address within the United Kingdom, if (in each case) sent by reputable international overnight courier addressed to the intended recipient, provided that delivery in at least five business days was guaranteed at the time of sending and the sending party receives a confirmation of delivery from the courier service provider; or

 

	
(e)  

	
if deemed receipt under the previous paragraphs of this sub-clause is not within business hours (meaning 9.00 am to 5.30 pm Monday to Friday on a day that is not a public holiday in the place of receipt), when business next starts in the place of deemed receipt and all references to time are to local time in the place of deemed receipt.

 

  

12

  

 

	
22.4  

	
To prove delivery it is sufficient to prove that the notice was transmitted by fax to the fax number of the party or, in the case of post, that the envelope containing the notice was properly addressed and posted.

 

	
23.  

	
Interest on late payment

 

	
23.1  

	
Where a sum is required to be paid under this agreement but is not paid before or on the date the parties agreed, the person due to pay the sum shall also pay an amount equal to interest on that sum at the rate set out in clause 23.2 for the period beginning with the date on which the payment was due and ending with the date the sum is paid (and the period shall continue after as well as before judgment).

 

	
23.2  

	
The rate of interest shall be 5% per annum above the base lending rate from time to time of Lloyds Bank. Interest shall accrue on a daily basis and be compounded quarterly.

 

	
23.3  

	
This clause 23 is without prejudice to any claim for interest under the Late Payment of Commercial Debts (Interest) Act 1998.

 

	
24.  

	
Language

 

If this agreement is translated into any language other than English, the English language text shall prevail.

 

	
25.  

	
Severance

 

	
25.1  

	
If any provision of this agreement (or part of a provision) is found by any court or administrative body of competent jurisdiction to be invalid, unenforceable or illegal, the other provisions shall remain in force.

 

	
25.2  

	
If any invalid, unenforceable or illegal provision would be valid, enforceable or legal if some part of it were deleted or modified, the provision shall apply with whatever modification is necessary to give effect to the commercial intention of the parties.

 

	
26.  

	
Further assurance

 

Each party shall promptly execute and deliver all such documents, and do all such things, as the other party may from time to time reasonably require for the purpose of giving full effect to the provisions of this agreement.

 

  

13

  

 

	
27.  

	
Counterparts

 

This agreement may be executed in any number of counterparts, each of which is an original and which together have the same effect as if each party had signed the same document.

 

	
28.  

	
Agreement survives Completion

 

This agreement (other than obligations that have already been fully performed) remains in full force after Completion.

 

	
29.  

	
Governing law and jurisdiction

 

	
29.1  

	
This agreement and any disputes or claims arising out of or in connection with its subject matter or formation (including non-contractual disputes or claims) are governed by and construed in accordance with the law of England.

 

	
29.2  

	
The parties irrevocably agree that, subject to clause 29.3, the courts of England have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this agreement or its subject matter or formation (including non-contractual disputes or claims).

 

	
29.3  

	
Any dispute arising from or related to the present agreement, including any question regarding its existence, validity or termination, shall be submitted exclusively to the Court of Arbitration for Sport to be dealt with in Shanghai, China and resolved definitively in accordance with the Code of sports related arbitration.  The Panel will consist of one arbitrator.  The language of the arbitration will be English.

 

This agreement has been entered into on the date stated at the beginning of it.

  

14

  

	
Schedule Matters reserved for New Era approval

 

	
1.  

	
Adopting or amending the Business Plan in respect of each Financial Year.

 

	
2.  

	
Changing the nature of the Business or the commencement of any new business by the Business which is not ancillary or incidental to the Magazine or Products.

 

	
3.  

	
Appointing any agent or other intermediary to conduct any of the Business.

 

	
4.  

	
The Company shall not without the prior written consent of New Era (such consent may be given by email and may be given or withheld at New Era’s absolute discretion):

 

	
(a)  

	
use the New Era Intellectual Property or the name Rio Ferdinand or associate itself with New Era or Rio Ferdinand for any purpose;

 

	
(b)  

	
use any advertisements or promotional materials in relation to the Magazine or Products in any format or on any platform, including without limitation to World Wide Web;

 

	
(c)  

	
utilise (publish, distribute, etc.) the Magazine ; and

 

	
(d)  

	
utilise (advertise, produce, sell etc.) the Products.

 

  

15

  

 

	
Signed by

for and on behalf of GREAT CHINA MANIA HOLDINGS INC

4 December 2013

 

	
/s/ Kwong Kwan Yin Roy

Kwong Kwan Yin, Roy

CEO / Director

	
Signed by

for and on behalf of NEW ERA GLOBAL ENTERPRISES LIMITED

4 December 2013

	
/s/ Peter Smith

Director

 

  

16Second_Modification_Agreement_Increase_to_40M

SECOND MODIFICATION AGREEMENT

THIS SECOND MODIFICATION AGREEMENT (“Agreement”), dated December 5, 2013, is entered into by and between (i) PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (“Borrower”); (ii) PREFERRED APARTMENT COMMUNITIES, INC., a Maryland corporation (“PAC REIT”); (iii) the lenders from time to time party hereto (each a “Lender” and collectively, the “Lenders”); and (iv) KEYBANK NATIONAL ASSOCIATION, as administrative agent (“Administrative Agent”).

RECITALS:

(1)    Pursuant to the terms of that certain Credit Agreement, dated as of August 31, 2012, by and among Borrower, PAC REIT, Administrative Agent and Lenders, as amended by that certain Modification Agreement, dated as of April 4, 2013, by and among Borrower, PAC REIT, Administrative Agent and Lenders (as so amended and as amended and modified by this Agreement, the “Credit Agreement”), Lenders agreed to make revolving loans to Borrower in the maximum principal amount of THIRTY MILLION AND NO/100THS DOLLARS ($30,000,000.00) (the “Existing Commitments”).  The Existing Commitments are evidenced by that certain Amended and Restated Revolving Facility Note, dated as of April 4, 2013, executed by Borrower payable to the order of KeyBank National Association, as Lender (“KeyBank”), in the aggregate principal amount of the Existing Commitments (the “Existing Note”) and are further evidenced by certain other documents described in the Credit Agreement as Loan Documents. Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement.

(2)    As of the date hereof, KeyBank is the sole Lender.

(3)    Subject to the terms and conditions of this Agreement, Lenders have agreed to 
 
(i) increase their aggregate Revolving Commitments to FORTY MILLION AND NO/100THS DOLLARS ($40,000,000.00) and (ii) modify and/or amend certain terms and provisions of the Loan Documents as of the Effective Date (hereinafter defined), as provided herein.  Concurrently with the execution of this Agreement, Borrower has executed and delivered to KeyBank a Second Amended and Restated Revolving Facility Note, dated as of the date hereof, in the maximum principal amount of FORTY MILLION AND NO/100THS DOLLARS ($40,000,000.00) (the “Amended Note”).  The Amended Note amends and restates the Existing Note in its entirety.  

(4)    Borrower, as a grantor, and the other grantors named therein have previously executed and delivered to Administrative Agent that certain Pledge and Security Agreement, dated as of August 31, 2012, as amended by that certain Reaffirmation of and Amendment to Pledge and Security Agreement, dated as of April 4, 2013 (as so amended and as amended in connection herewith, the “Security Agreement”). In connection with the increase in the Revolving Commitments described in Recital 3 above and the amendments pursuant hereto, the grantors have agreed to amend the Security Agreement pursuant to that certain Second Reaffirmation of and Amendment to Pledge and Security Agreement, dated as of the date hereof (the “Security Agreement Amendment”).

Page 1

(5)    The Note, Credit Agreement, the Security Agreement, this Agreement, the other documents described in the Credit Agreement as Loan Documents, together with all modifications, extensions, renewals and amendments thereto, including all modifications pursuant hereto, and any document required hereunder, are collectively referred to hereinafter as the “Loan Documents”.

(6)    By this Agreement, Borrower, PAC REIT, Lenders and Administrative Agent intend to modify and amend certain terms and provisions of the Credit Agreement.

NOW, THEREFORE, Borrower, PAC REIT, Lenders and Administrative Agent agree as follows:

ARTICLE 1

CONDITIONS PRECEDENT

The following are conditions precedent to Administrative Agent’s and Lenders’ obligations under this Agreement:

Section 1.01    Deliverables. Receipt by Administrative Agent of the following, each in form and content acceptable to Administrative Agent:
		
	(a)
	executed originals of this Agreement;

		
	(b)
	executed originals of the Security Agreement Amendment;

		
	(c)
	executed original of the Amended Note; 

		
	(d)
	executed originals of a separate Security Agreement Joinder executed by each of Aster Lely Mezzanine Lending, LLC, a Georgia limited liability company, Newport Overton Mezzanine Lending, LLC, a Georgia limited liability company, Haven West Mezzanine Lending, LLC, a Georgia limited liability company (“Haven West Lending”), Starkville Mezzanine Lending, LLC, a Georgia limited liability company, New Town Mezzanine Lending, LLC, a Georgia limited liability company, and GP Office Mezzanine Lending, LLC, a Georgia limited liability company (“New Town Lending”) (collectively, the “New Grantors”);

		
	(e)
	executed originals of a Reaffirmation of Guaranty;

		
	(f)
	executed originals of a separate Guaranty Supplement executed by each of the New Grantors;

		
	(g)
	executed originals of a Second Amended and Restated Environmental and     Hazardous Materials Indemnity Agreement;

		
	(h)
	executed originals of an Amended and Restated Buy-Sell Agreement for Trail Creek Apartments, LLC; 

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	(i)
	executed originals of a separate Collateral Assignment of Loan Documents executed by each of the New Grantors, together with the respective original notes and allonges;

		
	(j)
	an opinion or opinions from Borrower’s counsel in favor of     Administrative Agent, in form reasonably acceptable to Administrative     Agent; 

		
	(k)
	evidence of a minimum of $30,000,000 of new common equity capital raised by PAC REIT; 

		
	(l)
	written consent of (a) Atlantic Capital Bank consenting to the pledge by Borrower to Administrative Agent for the benefit of the Lenders of 100% of the equity interest of New Town Lending and any foreclosure of such pledge; and (b) Community & Southern Bank consenting to the pledge by Borrower to Administrative Agent for the benefit of the Lenders of 100% of the equity interest of Haven West Lending and any foreclosure of such pledge; and

		
	(m)
	any and all other documents and agreements which are required by this     Agreement or by any other Loan Document.

Section 1.02     Reimbursement of Costs and Expenses. Reimbursement to Administrative Agent by Borrower of Administrative Agent’s and Lenders’ reasonable costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby, including, without limitation, title insurance costs, recording fees, reasonable attorneys’ fees, appraisal, engineers’ and inspection fees and documentation costs and charges, whether such services are furnished by Administrative Agent’s employees or agents or by independent contractors.
Section 1.03    Representations and Warranties. The representations and warranties contained in this Agreement are true and correct;
Section 1.04    Payments. All payments due and owing to Administrative Agent and Lenders under the Loan Documents have been paid current as of the effective date of this Agreement; and
Section 1.05    Fees.     The payment of an upfront fee in the amount of $50,000 to Administrative Agent.
Section 1.06    Delivery of Evidence of 13th Street Payoff.  The following covenant shall be added to the Credit Agreement:
On or before January 15, 2014, Borrower shall deliver to Administrative Agent evidence of the payoff of the $6,400,000 loan made by 13th Street Lending, LLC (“13th Street Lending”) to TPKG 13th Street Development LLC (the “13th Street Loan”) if the 13th Street Loan is repaid by such date.  In the event that the 13th Street Loan has not been repaid on or before January 15, 2014, then Borrower shall notify Administrative Agent in writing to that effect, and Borrower shall either: (i) take title to the property securing the 13th Street Loan (the “13th Street Property”) by foreclosure of the mortgage or deed of trust securing the 13th Street Loan on or before March 15, 2014; or (ii) extend the 

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maturity date of the 13th Street Loan to a date not later than March 15, 2014, and take title of record on or before March 15, 2014 pursuant to a deed in lieu of foreclosure with respect to the 13th Street Loan.  If the 13th Street Loan is not paid off prior to such date, Borrower shall pledge to Administrative Agent, for the benefit of the Lenders, 100% of the equity interest of 13th Street Lending upon the earlier of (i) the date upon which 13th Street Lending takes title to the 13th Street Property by foreclosure or pursuant to a deed in lieu of foreclosure, or (ii) March 15, 2014.  In connection with such pledge, Borrower and 13th Street Lending, as applicable, shall deliver to Administrative Agent (i) a Security Agreement Joinder as required by Section 9.14 of the Security Agreement, (ii) a Guaranty Supplement as required by Section 16 of the Guaranty, (iii) an opinion or opinions from Borrower’s counsel in favor of Administrative Agent, in form reasonably acceptable to Administrative Agent, (iv) an officer’s certificate attaching all organizational and formation documents of 13th Street Lending and resolutions authorizing such pledge, and (v) any and all other documents and agreements which are required by any Loan Document.

ARTICLE 2    
REPRESENTATIONS AND WARRANTIES
Section 2.01    No Event of Default. Borrower and PAC REIT hereby represent and warrant that no Default, breach or failure of condition has occurred, or would exist with notice or the lapse of time or both, under any of the Loan Documents (as modified by this Agreement) and that all representations and warranties herein are true and correct and all representations and warranties in the other Loan Documents are true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date hereof, except to the extent that such representations and warranties expressly relate to an earlier specified date, in which case such representations and warranties are true and correct as of the date when made, which representations and warranties shall survive execution of this Agreement.
Section 2.02    Authority. Each of Borrower and PAC REIT is authorized to execute, deliver and perform its obligations under this Agreement.  The respective obligations  of Borrower, PAC REIT, the other Credit Parties and their Subsidiaries under the Loan Documents, as modified by this Agreement, are valid, binding and enforceable obligations of each of them, subject to bankruptcy laws and other similar laws of general application affecting rights and remedies of creditors generally and subject to the application of the rules of equity and concepts of reasonableness, unconscionability, good faith and fair dealing.
Section 2.03    Amendment Documents. The execution and delivery of this Agreement and the other documents to be executed in connection herewith (collectively, the “Amendment Documents”) and Borrower’s, PAC REIT’s, the other Credit Parties’ and their Subsidiaries’ performance of and compliance with the terms hereof in the manner contemplated by this Agreement (a) will not violate the Organizational Documents of Borrower, PAC REIT, the other Credit Parties and their Subsidiaries, and (b) will not constitute a default (or any event which, with notice or expiration of grace/cure period or both, would constitute a default) under 

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any material contract, agreement or other instrument to which Borrower, PAC REIT, the other Credit Parties or any of their Subsidiaries is a party or which may be applicable to any of its assets, except in each case where such conflict would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 2.04    Organizational Documents. Borrower and PAC REIT have previously delivered to Administrative Agent all of the relevant Organizational Documents of Borrower, PAC REIT, each other Credit Party and the Subsidiaries, and all such Organizational Documents remain in full force and effect and have not been amended or modified since they were delivered to Administrative Agent. Borrower and PAC REIT hereby certify that: (i) the above documents are all of the relevant formation and organizational documents of Borrower, PAC REIT, each other Credit Party and the Subsidiaries; (ii) they remain in full force and effect; and (iii) they have not been amended or modified since they were previously delivered to Administrative Agent.

ARTICLE 3    
LOAN INCREASE AND MODIFICATION

The Loan Documents are hereby supplemented and modified to incorporate the following, which shall supersede and prevail over any conflicting provisions of the Loan Documents:
Section 3.01    Loan Increase.    Subject to the terms and conditions of this Agreement, Lenders hereby grant to Borrower and Borrower hereby accepts an increase in Lenders’ aggregate Revolving Commitments to FORTY MILLION AND NO/100THS DOLLARS ($40,000,000.00) (the “Increased Commitment”).  All references in the Loan Documents to the Revolving Commitments are hereby amended to reference the Increased Commitment.  
 
Schedule 1 to the Credit Agreement is hereby deleted and replaced with Schedule 1 attached hereto.
Section 3.02    Amended and Restated Promissory Note.  As a condition to this Agreement, Borrower shall execute and deliver a Second Amended and Restated Revolving Facility Note in the form attached hereto as Exhibit A, in the maximum principal amount of FORTY MILLION AND NO/100THS DOLLARS ($40,000,000.00). Borrower hereby agrees that all terms, covenants and conditions of the Amended Note shall be effective as of the Effective Date. As of the date hereof, the Amended Note is the Note referenced in the Credit Agreement.      
Section 3.03    Effective Date. The effective date of this Agreement and the Amended Note shall be the date all of the conditions precedent defined in Article 1 above have been met to Administrative Agent’s satisfaction (“Effective Date”).    
Section 3.04    Reference to Loan Documents. The Credit Agreement and any and all other agreements, instruments or documentation now or hereafter executed and delivered pursuant to the terms of the Credit Agreement as amended hereby, are hereby amended so that any reference therein 

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to the Loan Documents shall include the Loan Documents as amended hereby, the Credit Agreement as amended hereby, the Schedules to the Credit Agreement as amended hereby and the Security Agreement as amended by the Security Agreement Amendment.
Section 3.05    New Definition.  The following definition is hereby added to Section 1.01 of the Credit Agreement: 
“Approved Bridge Loan” means any bridge loan made by KeyBank National Association to Borrower to finance the acquisition of any new assets.

Section 3.06    Modified Definitions.  The following definitions in Section 1.01 of the Credit Agreement are hereby amended and restated to read in their entirety as follows:
“Applicable Revolving Loan Margin” means 400 basis points.

“Applicable Unused Fee Rate” means 40.00 basis points.

“Revolving Facility Termination Date” means the earlier of (i) December 5, 2014, or 
 
(ii) the date that the Commitments have been terminated pursuant to Section 8.02.

Section 3.07    Financial Covenants.  Sections 7.07(a) and (d) of the Credit Agreement are hereby amended to read in their entirety as follows:
		
	(a)
	Consolidated Net Worth.  The Credit Parties will not permit the Consolidated Net Worth of the Consolidated Entities to at any time be less than the sum of (i) $160,000,000 plus (ii) 75% of the net proceeds of any equity offering (or any debt offering to the extent converted into equity) by any Credit Party or any of their Subsidiaries.

		
	(a)
	Minimum Property Debt Yield.  The Credit Parties will not permit at any time the Property Debt Yield to be 8.25% or less.

Section 3.08    Agreement to Pay Fees.  Borrower shall pay to Administrative Agent as and when due all fees required to be paid in accordance that certain letter agreement regarding fees, dated as of March 13, 2013, between Borrower and Administrative Agent.

Section 3.09    Indebtedness.  The Credit Agreement is hereby amended by adding the following to the end of Section 7.04:

		
	(a)
	Any Approved Bridge Loan provided by KeyBank National Association and approved by Administrative Agent.

Section 3.10    Investments and Guaranty Obligations.  Section 7.05(k) of the Credit Agreement is hereby amended to read in its entirety as follows:

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(k)    the Investment by Borrower in the Advisor in the nature of a $6,000,000 revolving line of credit from the Borrower to the Advisor evidenced by a Promissory Note, dated as of January 3, 2013, made by the Advisor payable to the order of the Borrower, which may be increased by an additional $1,000,000 without prior written consent of Administrative Agent, provided that the Borrower provides prompt written notice to Administrative Agent of such increase, together with copies of all applicable documentation evidencing such increase; and provided further that after the occurrence and during the continuance of an Event of Default, the Borrower will cause all outstanding amounts thereunder to be paid in full and no further loans and advance will be permitted thereunder; and

ARTICLE 4    
RELEASE
Section 4.01    Release. As of the Effective Date, Borrower, PAC REIT, each of the other Credit Parties and each of their Subsidiaries and each of their past, present and future officers, directors, principals, employees, members, managers, shareholders, partners, agents, parents, subsidiaries and affiliates (hereinafter collectively referred to as the “Releasing Parties”), do hereby fully and forever release, discharge and acquit each of Administrative Agent and the Lenders and their respective past, present and future officers, directors, principals, employees, members, managers, shareholders, partners, agents, parents, subsidiaries and affiliates and their respective attorneys, accountants, legal representatives, agents and employees and their respective successors, heirs and assigns (collectively, “Released Parties”), of and from and against any and all claims, demands, obligations, duties, liabilities, damages, expenses, indebtedness, debts, breaches of contract, acts, omissions, misfeasance, malfeasance, causes of action, sums of money, accounts, compensation, contracts, controversies, promises, damages, costs, losses and remedies therefor, choses in action, rights of indemnity, rights of offsets, defenses or liability of any type, kind, nature, description or character whatsoever (collectively, the “Claims”), irrespective of how, why or by reason of what facts, whether known or unknown, whether liquidated or unliquidated, contingent or non-contingent, which any Releasing Party may now have or heretofore have had, from the beginning of the world to the Effective Date, against any of the Released Parties (including any Claim arising in connection with (i) the Loan, the Collateral, any notice of breach or default; (ii) the Released Parties’ acts, statements, conduct, representations and omissions made in connection with any of the foregoing, (iii) all relationships between any of the Releasing Parties and the Released Parties and any course of conduct between or among any of them made in connection with any of the foregoing, and (vi) any fact, matter, transaction or event relating to any of the foregoing, whether known or unknown). 
Section 4.02    No Defenses or Claims. Each of Borrower, PAC REIT, each other Credit Party and each of their Subsidiaries acknowledges and agrees that it has no defenses, counterclaims, offsets, cross-complaints, causes of action, rights, claims or demands of any kind or nature whatsoever, including, without limitation, any usury, lender liability or one-action claims or defenses, arising out of the Loan, the Loan Documents, the acts or omissions of Administrative Agent or Lenders taken with respect to the Loans, the Revolving Commitments or any past or 

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present relationship between or among the Borrower, PAC REIT, the other Credit Parties, any of their Subsidiaries, Administrative Agent, the Lenders, or any of their respective past, present and/or future parent, subsidiary and affiliated entitles and, with respect to each of the foregoing, their respective past and present officers, directors, shareholders, partners, limited partners, members, representatives, principals, owners, affiliates, attorneys, accountants, agents and employees, and their successors, heirs and assigns and each of them, that can be asserted either to reduce or eliminate all or any part of Borrower’s liability for the Loans, the liability of the Credit Parties or any of their Subsidiaries under the Loan Documents, the validity, priority, perfection and enforceability of the liens and security interests granted to Administrative Agent for the benefit of the Lenders under the Loan Documents or to seek affirmative relief or damages of any kind or nature from Administrative Agent or the Lenders. Each of the Borrower, PAC REIT, each other Credit Party and each of their Subsidiaries further acknowledges that to the extent that any such claim should in fact exist, including without limitation, any usury, lender liability or one-action claim, it is being fully, finally and irrevocably released by the Borrower, PAC REIT, each other Credit Party and each of their Subsidiaries as provided in Section 4.01 of this Agreement above. 
Section 4.03    No Representations. Each of the Releasing Parties does hereby acknowledge that it has not relied upon any representation of any kind made by any of the Released Parties in making the foregoing release. 
Section 4.04    No Assignment. Each of the Releasing Parties represents and warrants to each of the Released Parties that it has not heretofore assigned or transferred, or purported to assign or to transfer, to any person or entity any matter released by such party hereunder or any portion thereof or interest therein, and each of the Releasing Parties agrees to indemnify, protect, defend and hold each of the Released Parties harmless from and against any and all claims based on or arising out of any such assignment or transfer or purported assignment or transfer by any of the Releasing Parties. 
Section 4.05    No Admissions. It is hereby further understood and agreed that the acceptance of delivery of the foregoing release shall not be deemed or construed as an admission of liability of any nature whatsoever arising from or related to the subject of the within release. 
Section 4.06    Covenant Not to Sue. Each of the Releasing Parties hereby waives any right it may have to institute any action, claim or suit against any Released Parties or to raise any defense against any claim brought by any of the Released Parties against any of the Releasing Parties based on any matter directly or indirectly related to any Claim released hereunder. Each of the Releasing Parties covenants and agrees (a) not to sue any Released Party in any court or tribunal or bring (or aid in the institution or prosecution of) any action, lawsuit or cause of action (whether by way of direct action, counterclaim, cross-claim, objection, contested matter, adversary proceeding, interpleader or otherwise) based on any matter directly or indirectly related to any Claim released hereunder, and (b) to be forever barred from asserting or bringing or aiding in the bringing of any such action, lawsuit or cause of action or asserting any defense against any claim or action brought by any of the Released Parties based on any matter directly or indirectly related to any Claim. Nothing herein shall be construed to preclude any Released Party from enforcing the foregoing release and/or protecting its rights and interests hereunder. If any Releasing Party breaches this 

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covenant not to sue, or hereafter commences, joins In, or in any manner seeks relief through any suit arising out of, based upon, or relating to any of the Claims released hereunder or in any manner asserts against any Released Party any of the Claims released hereunder, then said Releasing Party will pay to such Released Party, in addition to any other damages caused thereby, all costs and expenses and attorneys’ fees incurred by such Released Party in defending or otherwise responding thereto, and said Releasing Party shall indemnify the Released Party from and against any and all liability, damage, loss or claim resulting therefrom. It is the intention of the parties that this indemnity does not require payment as a condition precedent to recovery under this indemnity. 
Section 4.07    No Waivers. Any acceptance now, or at any time in the future, by Administrative Agent or the Lenders of any full or partial payments may, unless otherwise agreed by Lenders, be applied to interest, principal, fees or other amounts due under and in accordance with the Loan Documents, and shall not be deemed to constitute (a) an agreement amending, modifying or qualifying in any respect the terms and provisions of the Loan Documents, (b) a waiver by Administrative Agent or the Lenders of any of Administrative Agent’s or the Lenders’ rights or remedies under the Loan Documents or under applicable law or in equity, (c) an accord or satisfaction with respect to all or a portion of the indebtedness evidenced and secured by the Loan Documents, or (d) a rescission of any notices theretofore sent to the Credit Parties.
ARTICLE 5    
MISCELLANEOUS
Section 5.01    Non-Impairment.  Except as expressly provided herein, nothing in this Agreement shall alter or affect any provision, condition, or covenant contained in the Note or other Loan Document or affect or impair any rights, powers, or remedies of Lender, it being the intent of the parties hereto that the provisions of the Note and other Loan Documents shall continue in full force and effect except as expressly modified hereby.
Section 5.02    Survival of Representations and Warranties.  All representations and warranties made in this Agreement shall survive the execution and delivery of this Agreement.
Section 5.03    Severability.  Any term or provision of this Agreement held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Agreement and the effect thereof shall be confined to the term or provision so held to be invalid or unenforceable.
Section 5.04    Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
Section 5.05    Headings.  The headings, captions and arrangements used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.
Section 5.06    Entire Agreement.  This Agreement shall be binding upon and inure to the benefit of Borrower, Agent and Lender and their respective permitted successors and assigns.  This Agreement is specifically limited to the matters expressly set forth herein.  The Credit Agreement, 

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this Agreement and the other Loan Documents and all other instruments, agreements and documentation executed and delivered in connection with this Agreement embody the final, entire agreement among the parties hereto with respect to the subject matter hereof and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to the matters covered by the Credit Agreement, this Agreement and the other Loan Documents, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto. There are no oral agreements among the parties hereto relating to the subject matter hereof or any other subject matter relating to the Credit Agreement and the other Loan Documents.
Section 5.07    Counterparts.     This Agreement may be executed by the parties hereto separately in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement.  Each party hereto may rely on the facsimile signature, or signature sent by e-mail in pdf format, of each other party hereto.
Section 5.08    Time.  Time is of the essence with respect to each and every provision of this Agreement.

[Signatures on following page.]

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IN WITNESS WHEREOF, Borrower, PAC REIT, Lender and Administrative Agent have caused this Agreement to be duly executed as of the date first above written.

	
		
	 
	PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P., as the Borrower
By:  Preferred Apartment Advisors, LLC, its  
         manager

By:   /s/ Jeffrey R. Sprain   
Name:     Jeffrey R. Sprain
Title:   General Counsel and Secretary

	 
	

PREFERRED APARTMENT COMMUNITIES, INC., as a Credit Party
By:  Preferred Apartment Advisors, LLC, its  
        manager

By:   /s/ Jeffrey R. Sprain   
Name:     Jeffrey R. Sprain
Title:   General Counsel and Secretary

	 
	 

	 
	KEYBANK NATIONAL ASSOCIATION, as the sole initial Lender and as the Administrative Agent

By:   /s/ James K. Komperda   
Name:    James K. Komperda
Title:    Vice President

	

Signature Page
To 
Second Modification Agreement

Schedule 1
    

Schedule 1 
 
Lenders and Commitments
	
						
	Lender
	Revolving  
Commitment
	Revolving Facility Percentage as of  
December 5, 2013

	KeyBank National Association
	

	$40,000,000
	

	100
	%

	Total:
	

	$40,000,000
	

	100
	%

EXHIBIT A

Form of Promissory Note

	
		
	SECOND AMENDED AND RESTATED REVOLVING FACILITY NOTE

	 

	$________________
	________, 20__

	 
	New York, NY

FOR VALUE RECEIVED, the undersigned PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the “Borrower”), hereby promises to pay to the order of [______________________] (the “Lender”) the principal sum of _________________ ($__________) or, if less, the then unpaid principal amount of all Revolving Loans (such term and each other capitalized term used herein without definition shall have the meanings ascribed thereto in the Credit Agreement referred to below) made by the Lender to the Borrower pursuant to the Credit Agreement, in Dollars and in immediately available funds, at the Payment Office on the Revolving Facility Termination Date.
The Borrower also promises to pay interest in like currency and funds at the Payment Office on the unpaid principal amount of each Revolving Loan made by the Lender from the date of such Revolving Loan until paid at the rates and at the times provided in Section 2.06 of the Credit Agreement.
This Revolving Facility Note is one of the Notes referred to in the Credit Agreement, dated as of August 31, 2012, among the Borrower, Preferred Apartment Communities, Inc., a Maryland corporation (the “PAC REIT”), the lenders from time to time party thereto (including the Lender), and KeyBank National Association, as administrative agent (the “Administrative Agent”), as amended by that certain Modification Agreement, dated as of April 4, 2013, among the Borrower, the PAC REIT, the lenders and the Administrative Agent and that certain Second Modification Agreement, dated as of the date hereof, among the Borrower, the PAC REIT, the lenders and the Administrative Agent (as so amended and as the same may be amended, restated or otherwise modified from time to time, the “Credit Agreement”),  and is entitled to the benefits thereof and of the other Loan Documents.  As provided in the Credit Agreement, this Revolving Facility Note is subject to mandatory repayment prior to the Revolving Facility Termination Date, in whole or in part.
In case an Event of Default shall occur and be continuing, the principal of and accrued interest on this Revolving Facility Note may be declared to be due and payable in the manner and with the effect provided in the Credit Agreement.
The Borrower hereby waives presentment, demand, protest or notice of any kind in connection with this Revolving Facility Note, except as expressly set forth in the Credit Agreement. No failure to exercise, or delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of any such rights.
THIS REVOLVING FACILITY NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS REVOLVING FACILITY NOTE, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

    
    

This Note is given in replacement of the Amended and Restated Facility Note, dated as of April 4, 2013, in the original principal amount of $30,000,000 (the “Other Note”) previously delivered to the Lender pursuant to the Credit Agreement.  THIS NOTE IS NOT INTENDED TO BE, AND SHALL NOT BE CONSTRUED TO BE, A NOVATION OF ANY OF THE OBLIGATIONS OWING UNDER OR IN CONNECTION WITH THE OTHER NOTE.
 
[Signature Page Follows]

    
    

	
		
	 
	PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P.

By:  Preferred Apartment Advisors, LLC, its  
        manager

 
By:__________________________________
      Name:
      Title:

    
    

CONSENT TO MODIFICATION AGREEMENT

The undersigned (individually and collectively, the “Other Credit Parties”) consent to the foregoing Second Modification Agreement (the “Agreement”) and the transactions contemplated thereby.

The Other Credit Parties hereby affirm and make as though each is a party to the Agreement the releases and other agreements contained in Article 4 of the Agreement.  Each of the Other Credit Parties further affirms and makes as to itself each of the representations contained in the Agreement and consents and agrees to the terms and modifications of the Agreement and the modifications of the Loan Documents pursuant thereto.

[Signatures on following page.] 

    
    

Agreed and Acknowledged:

Dated as of:  December 5, 2013

	
		
	 
	SUMMIT CROSSING MEZZANINE LENDING, LLC

By:   Preferred Apartment Advisors, LLC, its advisor

By:   /s/ Jeffrey R. Sprain                              
   Name:  Jeffrey R. Sprain
   Title:  General Counsel and Secretary

	 
	IRIS CROSSTOWN MEZZANINE LENDING, LLC

By:   Preferred Apartment Advisors, LLC, its advisor

By:   /s/ Jeffrey R. Sprain                                                                                 
   Name:  Jeffrey R. Sprain
   Title:  General Counsel and Secretary

	 
	CITY VISTA MEZZANINE LENDING, LLC

By:  Preferred Apartment Advisors, LLC, its advisor

By:   /s/ Jeffrey R. Sprain                                                                                                            
   Name:  Jeffrey R. Sprain
   Title:  General Counsel and Secretary

	 
	CITY PARK MEZZANINE LENDING, LLC

By:  Preferred Apartment Advisors, LLC, its advisor

By:   /s/ Jeffrey R. Sprain                                                                                                                                      
   Name:  Jeffrey R. Sprain
   Title:  General Counsel and Secretary

Signature Page
To
Consent to Modification Agreement

    
    

	
		
	 
	CHARLES HIGHT SQUARE MEZZANINE LENDING, LLC

By:  Preferred Apartment Advisors, LLC, its advisor

By:   /s/ Jeffrey R. Sprain                                                                                                                                                                  
   Name:  Jeffrey R. Sprain
   Title:  General Counsel and Secretary

	 
	ASTER LELY MEZZANINE LENDING, LLC

By:   Preferred Apartment Advisors, LLC, its advisor

By:   /s/ Jeffrey R. Sprain                            
    Name:  Jeffrey R. Sprain
   Title:  General Counsel and Secretary

	 
	NEWPORT OVERTON MEZZANINE LENDING, LLC

By:   Preferred Apartment Advisors, LLC, its advisor

By:   /s/ Jeffrey R. Sprain                          
   Name:  Jeffrey R. Sprain
   Title:  General Counsel and Secretary

	 
	

HAVEN WEST MEZZANINE LENDING, LLC

By:   Preferred Apartment Advisors, LLC, its advisor

By:   /s/ Jeffrey R. Sprain
   Name: Jeffrey R. Sprain
   Title:  General Counsel and Secretary

Signature Page
To
Consent to Modification Agreement

    
    

	
		
	 
	

STARKVILLE MEZZANINE LENDING, LLC

By:   Preferred Apartment Advisors, LLC, its advisor

By:   /s/ Jeffrey R. Sprain
   Name:  Jeffrey R. Sprain
   Title:  General Counsel and Secretary

	 
	

NEW TOWN MEZZANINE LENDING, LLC

By:   Preferred Apartment Advisors, LLC, its advisor

By:   /s/ Jeffrey R. Sprain
   Name:  Jeffrey R. Sprain
   Title:  General Counsel and Secretary

	 
	

GP OFFICE MEZZANINE LENDING, LLC

By:   Preferred Apartment Advisors, LLC, its advisor

By:   /s/ Jeffrey R. Sprain
   Name:  Jeffrey R. Sprain
   Title:  General Counsel and Secretary

Signature Page
To
Consent to Modification Agreement

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