Preferred Apartment Communities, Inc. Lock-Up Agreement
Preferred
Apartment Communities, Inc.
[______],
2010
Xxxx
Capital Partners, LLC
00
Xxxxxxxxx Xxxxx Xxxxx
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Xxxxxxxx
& Strudwick, Incorporated
000 Xxxx
Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx,
Xxxxxxxx 00000
Re: Preferred Apartment
Communities, Inc. – Lock-Up Agreement
Ladies
and Gentlemen:
The
undersigned understands that you, as representatives (the “Representatives”),
propose to enter into an Underwriting Agreement on behalf of the several
Underwriters named in Schedule I to such agreement (collectively, the
“Underwriters”), with
Preferred Apartment Communities, Inc., a Maryland corporation (the “Company”), providing
for a public offering (the “Public Offering”) of
shares of the Class A Common Stock, par value $.01 per share, of the Company
(the “Shares”)
pursuant to a Registration Statement on Form S-11, as amended, filed with the
Securities and Exchange Commission (the “SEC”). For
purposes of this Lock-Up Agreement (the “Agreement”), “Stock” means, at any
time, all shares of the Company’s capital stock issued and outstanding at such
time, including the issued and outstanding Class A Common Stock, par value $.01
per share, and the issued and outstanding Class B Common Stock, par value $.01
per share.
In
consideration of the agreement by the Underwriters to offer and sell the Shares,
and of other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the undersigned agrees that, during the period
specified in the following paragraph (the “Lock-Up Period”), the
undersigned will not (i) directly or indirectly, offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any shares of Stock of the Company, or any securities
convertible into or exercisable or exchangeable for shares of Stock of the
Company, or (ii) enter into any swap or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the shares of Stock of the Company, whether now
owned or hereinafter acquired, owned directly by the undersigned (including
holding as a custodian) or with respect to which the undersigned has beneficial
ownership within the rules and regulations of the SEC (collectively the "Undersigned's
Shares"), whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of shares of Stock of the Company or
such other securities, in cash or otherwise. The foregoing restriction is
expressly agreed to preclude the undersigned from engaging in any hedging or
other transaction which is designed to or which reasonably could be expected to
lead to or result in a sale or disposition of the Undersigned’s Shares even if
the Undersigned’s Shares would be disposed of by someone other than the
undersigned. Such prohibited hedging or other transactions would include without
limitation any short sale or any purchase, sale or grant of any right (including
without limitation any put or call option) with respect to any of the
Undersigned’s Shares or with respect to any security that includes, relates to,
or derives any significant part of its value from the Undersigned’s
Shares.
The
initial Lock-Up Period will commence on the date of this Agreement and continue
until 180 days after the date of the Public Offering set forth on the final
prospectus used to sell the Shares (the “Public Offering
Date”) pursuant to the Underwriting Agreement; provided, however, that if (1)
during the last 17 days of the initial Lock-Up Period, the Company issues an
earnings release or material news or a material event relating to the Company
occurs or (2) prior to the expiration of the initial Lock-Up Period, the Company
announces that it will release earnings results or becomes aware that material
news or a material event will occur during the 16-day period following the last
day of the initial Lock-Up Period, then in each case the Lock-Up Period will be
automatically extended until the expiration of the 18-day period beginning on
the date of release of the earnings results or the announcement of the material
news or material event, as applicable, unless the Representatives waive, in
writing, such extension.
The
undersigned hereby acknowledges that the Company has agreed to provide written
notice to the undersigned of any event that would result in an extension of the
Lock-Up Period pursuant to the previous paragraph and agrees that any such
notice properly delivered will be deemed to have been given to, and received by,
the undersigned. The undersigned hereby further agrees that, prior to
engaging in any transaction or taking any other action that is subject to the
terms of this Agreement during the period from the date of this Agreement to and
including the 34th day following the expiration of the initial Lock-Up Period,
it will give notice thereof to the Company and will not consummate such
transaction or take any such action unless it has received written confirmation
from the Company that the Lock-Up Period (as such may have been extended
pursuant to the previous paragraph) has expired.
Notwithstanding
the foregoing, the undersigned may transfer the Undersigned’s Shares (i) as
a bona fide gift or
gifts; provided, however, that the
donee or donees thereof agree to be bound in writing by the restrictions set
forth herein; (ii) by will or intestate succession upon the death of the
undersigned; provided, however, that the
distributee, legatee, executor and/or administrator thereof agrees to be bound
in writing by the restrictions set forth herein; (iii) to any trust for the
direct or indirect benefit of the undersigned or the immediate family of the
undersigned; provided, however, that the
trustee of the trust agrees to be bound in writing by the restrictions set forth
herein, and provided further, however, that any
such transfer shall not involve a disposition for value; (iv) to any general
partnership, limited partnership, limited liability company, corporation or
other legal entity which is wholly owned, directly or indirectly, by the
undersigned and/or immediate family of the undersigned; provided, however, that such
entity agrees to be bound in writing by the restrictions set forth herein, and
provided further, however, that any
such transfer shall not involve a disposition for value; or (v) with the prior
written consent of the Representatives on behalf of the
Underwriters. For purposes of this Agreement, “immediate family”
shall mean any relationship by blood, marriage or adoption, not more remote than
first cousin. In addition, notwithstanding the foregoing, if the
undersigned is a corporation, the corporation may transfer any of the
Undersigned’s Shares to any wholly owned subsidiary of such corporation; provided, however, that in any
such case, it shall be a condition to the transfer that the transferee execute
an agreement stating that the transferee is receiving and holding such of the
Undersigned’s Shares subject to the provisions of this Agreement and there shall
be no further transfer of such of the Undersigned’s Shares except in accordance
with this Agreement, and provided further, however, that any
such transfer shall not involve a disposition for value. The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company’s transfer agent and registrar against the transfer of the
Undersigned’s Shares except in compliance with the foregoing
restrictions.
The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Agreement. The undersigned
understands that the Company and the Underwriters are relying upon this
Agreement in proceeding toward consummation of the offering. The
undersigned further understands that this Agreement is irrevocable and shall be
binding upon the undersigned’s heirs, legal representatives, successors, and
assigns. Notwithstanding the foregoing, this Agreement will
automatically terminate and be of no force and effect if the closing of the
Public Offering does not occur on or before January 31, 2011.
This
Agreement and any claim, controversy or dispute arising under or related to this
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without regard to the conflict of laws principles
thereof.
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Very
truly yours,
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________________________________________
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Exact
Name of Stockholder
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________________________________________
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Authorized
Signature
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________________________________________
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