Document:

PromissoryNote-Emerson

PROMISSORY NOTE

$2,639,000                                               January 16, 2013
      Atlanta, Georgia

FOR VALUE RECEIVED, J. Steven Emerson ("Borrower") promises to pay to the order of Preferred Apartment Communities, Inc. or its assigns ("Payee" or "Holder") the principal sum of TWO MILLION SIX HUNDRED THIRTY NINE THOUSAND DOLLARS ($2,639,000.00), in legal tender of the United States, with interest thereon at the rate of 0.5% per annum, beginning January 23, 2013, on the unpaid principal balance until paid.  The entire principal balance of this Promissory Note (this "Note"), together with all accrued and unpaid interest thereon shall be due and payable to Payee at One Overton Park, 3625 Cumberland Blvd, Suite 400, Atlanta, GA 30339 or at such other place as Payee may designate in writing, on January 25, 2013 (the "Maturity Date").  In the event any amount due under this Note is not paid with five (5) days following the Maturity Date, interest on the then outstanding principal amount of this Note shall thereafter accrue at the rate of ten percent (10%) per annum until this Note is paid in full. TIME SHALL BE OF THE ESSENCE OF THIS NOTE.  All computations of interest on this Note shall be made on the actual number of days elapsed over a year of 365 or 366 days, as applicable, for any partial month and based on equal monthly payments for any full month.  Borrower acknowledges and agrees that this Note contains the entire agreement between Borrower and Payee regarding the indebtedness evidenced hereby and that there are no prior or contemporaneous agreements between Borrower or any of its members and Payee limiting or affecting Payee’s right to demand payment under this Note at any time.
Should this Note, or any part of the indebtedness evidenced hereby, be collected by law or through an attorney-at-law, Borrower agrees to pay, and the Holder shall be entitled to collect, reasonable attorney's fees actually incurred, and all costs of collection, whether or not suit be brought.
This Note may be prepaid at any time, and from time to time, in whole or in part, without premium or penalty, but with interest thereon through the date of prepayment.  Any payments on this Note shall first be applied to any costs and fees (including reasonable attorneys’ fees) actually incurred in connection with the collection of this Note, then to accrued but unpaid interest, and then to outstanding principal.
Presentment for payment, demand, protest and notice of demand, protest and nonpayment and all other notices are hereby waived by the undersigned, who hereby further waives and renounces, to the fullest extent permitted by law, all rights to the benefits of any statute of limitations, moratorium, reinstatement, marshalling, forbearance, valuation, stay, extension, redemption, appraisement, exemption and homestead now or hereafter provided by the Constitution and laws of the United States of America and of each state thereof, both as to itself and in and to all of its property, real and personal, against the enforcement and collection of the obligations evidenced by this Note.  This Note may not be changed orally, but only by an agreement in writing signed by Payee.
From time to time, without affecting the obligation of Borrower to pay the outstanding principal balance of this Note and to observe the covenants of Borrower contained herein, and without liability on the part of the Holder, Holder may, at the option of Holder and with or without the consent of Borrower, extend the time for payment of said outstanding principal balance and interest accrued thereon, or any part thereof, reduce the payments thereon, release anyone liable on any of said outstanding principal balance, accept a renewal of this Note, modify the terms and time of payment of said outstanding principal balance and interest accrued thereon (provided that Holder shall only modify the terms and time of payment to reduce or delay payment obligations) or join in any extension or subordination agreement, and agree in writing with Borrower to modify the rate of interest or period of amortization of this Note or change the amount payable hereunder.  No one or more of such actions shall constitute a novation.
If from any circumstances whatsoever fulfillment of any provision of this Note, at the time performance of such provision shall be due, shall involve transcending the limit of validity presently prescribed by any applicable usury statute or any other applicable law, with regard to obligations of like character and amount, then ipso facto 

the obligation to be fulfilled shall be reduced to the limit of such validity, so that in no way shall any exaction be possible under this Note that is in excess of the current limit of validity, but such obligation shall be fulfilled to the limit of validity.  Any payments charged to Borrower or collected by Holder that would constitute interest in excess of any applicable legal limit shall be applied by Holder to the reduction of the unpaid principal amount due hereunder or, if said principal amount is fully paid, returned to Borrower.
Notices and other communications pertaining to this Note shall be in writing and shall be deemed effectively given if delivered in person (including delivery by commercial courier service) or mailed U.S. certified mail, return receipt requested, postage prepaid, to Borrower or Holder at the addresses listed below:
if to Borrower:        J. Steven Emerson
1522 Ensley Ave
Los Angeles, CA 90024
c/o J. Stephen Emerson            

if to Holder:        Preferred Apartment Communities, Inc.
c/o Preferred Apartment Advisors, LLC 
3625 Cumberland Boulevard, Suite 400 
Atlanta, Georgia 30339
Attention: Jeffrey R. Sprain, General Counsel
Borrower is and shall be obligated to pay principal, interest and any and all other amounts which become payable hereunder absolutely and unconditionally and without any abatement, postponement, diminution or deduction and without any reduction for counterclaim or setoff.
This Note and the rights and obligations of the parties hereunder shall be construed and interpreted in accordance with the laws of the State of Georgia (excluding the laws applicable to conflicts or choice of law).  Borrower hereby submits to personal jurisdiction and venue in the Superior Court of Cobb County, Georgia and waives any and all rights under Georgia law to object to jurisdiction and venue in the Superior Court of Cobb County, Georgia for the purposes of any action, suit, proceeding or litigation to enforce such obligations of Borrower.
This Note will be extinguished should any entity Borrower advises indefeasibly pay full amount due.
IN WITNESS WHEREOF, the undersigned has executed this Note under seal as of the date first above written.
	
	
	

By:   /s/ J. Steve Emerson         (Seal) 
   J. Steven EmersonLossSharingAgreement

AGREEMENT
This Agreement (this “Agreement”) is made this 16th day of January, 2013 by and among Wunderlich Securities, Inc. a Tennessee corporation (“Wunderlich”), Compass Point Research & Trading, LLC, a Delaware limited liability company (“Compass”), National Securities Corporation, a Washington corporation (“National”) and Preferred Apartment Communities, Inc., a Maryland corporation (“PAC”).
Whereas, Steve Emerson (“Emerson”) has executed and delivered a promissory note  in favor of Preferred Apartment Communities, Inc., a Maryland corporation (“PAC”) for an aggregate of $2,639,000 (the “Note”) in connection with the purchase of 2,639 shares of Series B Mandatorily Convertible Cumulative Perpetual Preferred Stock (the “Series B”) from PAC by his IRA and Roth IRA; and
Whereas, Wunderlich and Compass agree to acquire the Note from PAC in the event Emerson defaults on the Note; Wunderlich and Compass intend to use the Agents Fee due them under that certain Placement Agreement dated January 11, 2013 among Wunderlich, Compass, National and PAC (the “Placement Agreement”) to acquire the Note.
Now, therefore, it is agreed among Compass, Wunderlich, National and PAC as follows:
1.  Placement Agents Fees and Note.  Notwithstanding anything to the contrary in the Placement Agreement, no Agents Fees (as defined in the Placement Agreement) shall be paid to any of the Placement Agents at Closing (as defined in the Placement Agreement).  To the extent Emerson has not indefeasibly paid when due an amount of the Note equal to $2,400,000, then Compass and Wunderlich shall pay to PAC an amount (the “Note Purchase Price”) equal to (a) $2,400,000 minus (b) the amount indefeasibly paid by Emerson (if any).  Such payment by Compass and Wunderlich shall be for the acquisition by them of a principal amount of the Note equal to the Note Purchase Price. Such payment by Compass and Wunderlich shall be made by a permanent reduction of the Agent Fees otherwise payable under the Placement Agreement. In such circumstances, PAC shall assign and transfer without representation or warranty express or implied such interest in the Note to Compass and Wunderlich. PAC shall maintain an interest in the Note of the amount of outstanding principal not acquired by Wunderlich and Compass.  Notwithstanding anything to the contrary in the Placement Agreement, National shall not be entitled to any Agents Fees or other amounts under the Placement Agreement. In the event of any such assignment and transfer of such interest in the Note to Compass and Wunderlich, then collections on the Note shall be shared pro rata among Wunderlich, Compass and PAC based on respective principal amounts held by them in the Note. The amounts credited for Wunderlich and Compass under this Agreement as their respective share of the Note Purchase Price are equal in the proportion of 60.5% and 39.5%, respectively. To the extent Emerson has indefeasibly paid when due an amount of the Note up to $2,400,000, then PAC shall promptly wire transfer to Compass and Wunderlich  such amount in payment of the remaining Agents Fees and other amounts (if any) due under the Placement Agreement. If Emerson indefeasibly pays the Note in full when due or equal to or in excess of $2,400,000, then PAC shall promptly wire transfer to the Placement Agents all the Agents Fees and other amounts (if any) respectively due them under the Placement Agreement.

2.    Governing Law; Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all Actions concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, officers, directors, managers, members, employees or agents) may be commenced on a non-exclusive basis in the New York Courts. Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any Action, any defense or claim that it is not personally subject to the jurisdiction of any such New York Court, or that such Action has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Action by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

3.    Notices. All notices, consents, approvals, waivers or other communications (each, a “Notice”) required or permitted hereunder, except as herein otherwise specifically provided, shall be in writing and shall be:  (i) delivered personally or by commercial messenger; (ii) sent via a recognized overnight courier service, or (iii) sent by facsimile transmission, provided confirmation of receipt is received by sender and such Notice is sent or delivered contemporaneously by an additional method provided in this Section 3; in each case so long as such Notice is addressed to the intended recipient thereof.  Any Notice shall be deemed given upon actual receipt (or refusal of receipt).  Addresses for notices are as set forth in the Placement Agreement.
4.    Modification; Performance; Waiver. No provision of this Agreement may be changed or terminated except by a writing signed by the party or parties to be charged therewith. Unless expressly so provided, no party to this Agreement will be liable for the performance of any other party’s obligations hereunder. Any party hereto may waive compliance by the other with any of the terms, provisions and conditions set forth herein; provided, however, that any such waiver shall be in writing specifically setting forth those provisions waived thereby. No such waiver shall be deemed to constitute or imply waiver of any other term, provision or condition of this Agreement. This Agreement contains the entire agreement between the parties hereto and is intended to supersede any and all prior agreements between the parties relating to the same subject matter.
5.    Counterparts. This Agreement may be executed with counterpart signature pages or in two or more counterparts, each of which shall be deemed to be an original, and all of which taken together shall constitute one and the same agreement (and all signatures need not appear on any one counterpart). In the event that any signature is delivered by facsimile transmission or by e-mail 

delivery of a “.pdf’ format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf’ signature page were an original thereof. This Agreement shall become effective when one or more counterpart signature pages or counterparts has been signed and delivered by each of the parties hereto.
6.    Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future laws, such provision shall be fully severable. This Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of each such illegal, invalid or unenforceable provision there shall be deemed added automatically as a part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible to cause such provision to be legal, valid and enforceable.
7.    Headings. The captions and headings used in this Agreement are for convenience only and do not in any way affect, limit, amplify or modify the terms and provisions of this Agreement.
8.    Miscellaneous. This Agreement shall inure to the benefit of, and be binding upon, the successors of and assigns of the parties hereto.  Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, company or corporation, other than the parties hereto and their successors, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision hereof. 
9.    Entire Agreement. This Agreement constitutes the entire Agreement and understanding among Wunderlich and Compass with respect to the subject matter hereof and supersedes and cancels any and all prior or contemporaneous agreements, understandings, undertakings and agreements, written or oral, among any of them relating to the subject matter hereof.
[signature page follows]

In witness whereof, these parties have executed this Agreement as of the day and year just set forth above.
WUNDERLICH SECURITIES, INC.
By:/s/ Martin Gaia    
Name: Martin Gaia
Title: Managing Director
COMPASS POINT RESEARCH & TRADING, LLC
By:/s/ Burke Hayes    
Name: Burke Hayes
Title: Managing Director
NATIONAL SECURITIES CORPORATION

By:/s/ Jonathan C. Rich    
Name: Jonathan C. Rich 
Title: E.V.P. – Head of Investment Banking

PREFERRED APARTMENT COMMUNITIES, INC.

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

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