FORM OF RESTRICTED STOCK AGREEMENT PURSUANT TO THE PREFERRED APARTMENT COMMUNITIES, INC.
FORM OF RESTRICTED
STOCK AGREEMENT
PURSUANT
TO THE
PREFERRED
APARTMENT COMMUNITIES, INC.
2010
STOCK INCENTIVE PLAN
THIS
AGREEMENT (this
“Agreement”)
made as of the ___ day of ,
2010, by and between Preferred Apartment Communities, Inc. (the “Company”) and
(the “Participant”).
WITNESSETH:
WHEREAS, the Company has
adopted the Preferred Apartment Communities, Inc. 2010 Stock Incentive Plan (the
“Plan”), which
is administered by a Committee appointed by the Company’s Board of Directors
(the “Committee”);
and
WHEREAS, pursuant to Section
8.1 of the Plan, the Committee may grant to Non-Employee Directors shares of its
Class A Common Stock, par value $0.01 per share (“Common Stock”), in
the amount set forth below; and
WHEREAS, the Shares (as
defined below) are to be subject to certain restrictions;
NOW, THEREFORE, for and in
consideration of the mutual promises herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Grant of
Shares. Subject to the
restrictions, terms and conditions of this Agreement, the Company awarded the
Participant [●] shares
of validly issued Common Stock (the “Shares”) on ,
2010 (the “Grant
Date”). Pursuant to Section 2, the Shares
are subject to certain restrictions, which restrictions relate to the passage of
time as director of the Company. While such restrictions are in
effect, the Shares subject to such restrictions shall be referred to herein as
“Restricted
Stock.”
2. Restrictions
on Transfer. The Participant
shall not sell, transfer, pledge, hypothecate, assign or otherwise dispose of
the Shares, except as set forth in the Plan or this Agreement. Any
attempted sale, transfer, pledge, hypothecation, assignment or other disposition
of the Shares in violation of the Plan or this Agreement shall be void and of no
effect and the Company shall have the right to disregard the same on its books
and records and to issue “stop transfer” instructions to its transfer
agent.
3. Restricted
Stock.
(a) Retention
of Certificates. Promptly
after the date of this Agreement, the Company shall issue stock certificates
representing the Restricted Stock unless, to the extent permitted under
applicable law, it elects to issue the Shares in the form of uncertificated
shares and recognize such ownership through an uncertificated book entry account
maintained by the Company (or its designee) on behalf of the Participant or
through another similar method. The stock certificates shall be registered in
the Participant’s name and shall bear any legend required under the Plan or
Section
4(a). Unless held in uncertificated book entry form, such
stock certificates shall be held in custody by the Company (or its designated
agent) until the restrictions thereon shall have lapsed. Upon the
Company’s request, the Participant shall deliver to the Company a duly signed
stock power, endorsed in blank, relating to the Restricted Stock. If
the Participant receives a stock dividend on the Restricted Stock or the shares
of Restricted Stock are split or the Participant receives any other shares,
securities, moneys or property representing a dividend on the Restricted Stock
(other than cash dividends on or after the date of this Agreement) or
representing a distribution or return of capital upon or in respect of the
Restricted Stock or any part thereof, or resulting from a split-up,
reclassification or other like changes of the Restricted Stock, or otherwise
received in exchange therefor, or any warrants, rights or options issued to the
Participant in respect of the Restricted Stock (collectively “RS Property”), the
Participant will also immediately deposit with and deliver to the Company any of
such RS Property, including, without limitation, any certificates representing
shares duly endorsed in blank or accompanied by stock powers duly executed in
blank, and such RS Property shall be subject to the same restrictions,
including, without limitation, the restrictions in this Section 3(a), as the
Restricted Stock with regard to which they are issued and shall herein be
encompassed within the term “Restricted Stock.”
(b) Rights
with Regard to Restricted Stock. Subject to Section 8, the
Participant will have the right to vote the Restricted Stock, to receive and
retain any dividends payable to holders of record of Restricted Stock on and
after the transfer of the Restricted Stock (although such dividends shall be
treated, to the extent required by applicable law, as additional compensation
for tax purposes if paid on Restricted Stock and stock dividends will be subject
to the restrictions provided in Section 3(a)), and to
exercise all other rights, powers and privileges of a holder of Common Stock
with respect to the Restricted Stock set forth in the Plan, except
that: (i) the Participant shall not be entitled to delivery of the
stock certificate or certificates representing the Restricted Stock until the
Restriction Period shall have expired; (ii) the Company (or its designated
agent) shall retain custody of the stock certificate or certificates
representing the Restricted Stock and the other RS Property during the
Restriction Period; (iii) no RS Property shall bear interest or be segregated in
separate accounts during the Restriction Period; and (iv) the Participant shall
not sell, assign, transfer, pledge, exchange, encumber or dispose of the
Restricted Stock during the Restriction Period.
(c) Vesting. The Restricted
Stock shall become vested and cease to be Restricted Stock (but shall remain
subject to Section
5) pursuant to the following schedule; provided that the Participant has
not had a Termination any time prior to the vesting date:
Vesting Date
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Number of Shares
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First
Anniversary of Grant Date
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100%
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There
shall be no proportionate or partial vesting in the period prior to the vesting
date and all vesting shall occur only on the vesting date; provided, however, that no
Termination has occurred prior to such date.
The
Restricted Stock will become fully vested on a Change in
Control.
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The
provisions of the second paragraph of Section 8.1 of the Plan regarding
Detrimental Activity shall apply to the Restricted Stock.
When any
shares of Restricted Stock become vested, the Company shall promptly issue and
deliver, unless the Company is using book entry, to the Participant a new stock
certificate registered in the name of the Participant for such shares of
Restricted Stock without the legend set forth in Section 4(a) and
deliver to the Participant any related other RS Property, subject to applicable
withholding.
(d) Forfeiture. The Participant
shall forfeit to the Company, without compensation, other than repayment of any
par value paid by the Participant for the Shares (if any), any and all
Restricted Stock (but no vested Shares) and RS Property upon the Participant’s
Termination of Directorship for any reason.
(e) Withholding. Participant shall
pay, or make arrangements to pay, in a manner satisfactory to the Company, an
amount equal to the amount of all applicable federal, state and local or foreign
taxes that the Company is required to withhold at any time. In the
absence of such arrangements, the Company or one of its Affiliates shall have
the right to withhold such taxes from the Participant’s normal pay or other
amounts payable to the Participant, including, but not limited to, the right to
withhold any of the Shares otherwise deliverable to the Participant
hereunder. In addition, any statutorily required withholding
obligation may be satisfied, in whole or in part, at the Participant’s election,
in the form and manner prescribed by the Committee, by delivery of shares of
Common Stock (including, without limitation, the Shares issued under this
Agreement).
(f) Section
83(b). If the
Participant properly elects (as required by Section 83(b) of the Code) within 30
days after the issuance of the Restricted Stock to include in gross income for
federal income tax purposes in the year of issuance the fair market value of
such shares of Restricted Stock, the Participant shall pay to the Company or
make arrangements satisfactory to the Company to pay to the Company upon such
election, any federal, state or local taxes required to be withheld with respect
to the Restricted Stock. If the Participant shall fail to make such
payment, the Company shall, to the extent permitted by law, have the right to
deduct from any payment of any kind otherwise due to the Participant any
federal, state or local taxes of any kind required by law to be withheld with
respect to the Restricted Stock, as well as the rights set forth in Section
3(e). The Participant acknowledges that it is the
Participant’s sole responsibility, and not the Company’s, to file timely and
properly the election under Section 83(b) of the Code and any corresponding
provisions of state tax laws if the Participant elects to utilize such
election.
(g) Delivery
Delay. The delivery of
any certificate representing the Restricted Stock or other RS Property may be
postponed by the Company for such period as may be required for it to comply
with any applicable federal or state securities law, or any national securities
exchange listing requirements and the Company is not obligated to issue or
deliver any securities if, in the opinion of counsel for the Company, the
issuance of the Shares shall constitute a violation by the Participant or the
Company of any provisions of any applicable federal or state law or of any
regulations of any governmental authority or any national securities
exchange.
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4. Legend. All certificates
representing the Restricted Stock shall have endorsed thereon the following
legends:
(a) “The
anticipation, alienation, attachment, sale, transfer, assignment, pledge,
encumbrance or charge of the shares of stock represented hereby are subject to
the terms and conditions (including forfeiture) of the Preferred Apartment
Communities, Inc. (the “Company”) 2010 Stock Incentive Plan (as the same may be
amended or amended and restated from time to time, the “Plan”) and an agreement
entered into between the registered owner and the Company dated __________.
Copies of such Plan and agreement are on file at the principal office of the
Company.”
(b) “The
shares represented by this certificate are subject to restrictions on beneficial
and constructive ownership and transfer for the purpose of the maintenance by
Preferred Apartment Communities, Inc. (the “Company”) of its
status as a real estate investment trust (“REIT”) under the
Internal Revenue Code of 1986, as amended (the “Code”). Subject to
certain further restrictions and except as expressly provided in the Company’s
charter, (i) no person, other than an excepted holder, shall beneficially own or
constructively own shares in excess of the aggregate share ownership
limit. No excepted holder shall beneficially own or constructively
own shares in excess of the excepted holder limit for such excepted holder, (ii)
no person shall beneficially own or constructively own shares to the extent that
such beneficial or constructive ownership of shares would result in the Company
being “closely held” within the meaning of Section 856(h) of the Code (without
regard to whether the ownership interest is held during the last half of a
taxable year), or otherwise failing to qualify as a REIT (including, but not
limited to, beneficial ownership or constructive ownership that would result in
the Company actually owning or constructively owning an interest in a tenant
that is described in Section 856(d)(2)(b) of the Code if the income derived by
the Company from such tenant would cause the Company to fail to satisfy any of
the gross income requirements of Section 856(c) of the Code), and (iii) any
transfer of shares that, if effective, would result in shares being beneficially
owned by less than 100 persons (determined under the principles of Section
856(a)(5) of the Code) shall be void ab initio, and the intended
transferee shall acquire no rights in such shares. If any of the
restrictions on transfer or ownership set forth in (i) through (iii) above are
violated, the shares of capital stock represented hereby will be automatically
transferred to a trustee of a trust for the benefit of one or more charitable
beneficiaries. In addition, the Company may take other actions,
including redeeming shares upon the terms and conditions specified by the Board
of Directors in its sole and absolute discretion if the Board of Directors
determines that ownership or a transfer or other event may violate the
restrictions described above. Furthermore, upon the occurrence of
certain events, attempted transfers in violation of the restrictions described
above may be void ab
initio. All capitalized terms in this legend have the meanings
defined in the charter of the Company, as the same may be amended from time to
time, a copy of which, including the restrictions on transfer and ownership,
will be furnished to each holder of capital stock of the Company on request and
without charge. Requests for such a copy may be directed to the
Secretary of the Company at its principal office.”
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(c) “The
Company will furnish to any stockholder, on request and without charge, a full
statement of the information required by Section 2-211(b) of the Corporations
and Associations Article of the Annotated Code of Maryland with respect to the
designations and any preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, and terms and conditions of redemption of the stock of each
class which the Company has authority to issue and, if the Company is authorized
to issue any preferred or special class in series, (i) the differences in the
relative rights and preferences between the shares of each series to the extent
set, and (ii) the authority of the Board of Directors to set such
rights and preferences of subsequent series. The foregoing summary
does not purport to be complete and is subject to and qualified in its entirety
by reference to the charter of the Company, a copy of which will be sent without
charge to each stockholder who so requests. Such request must be made
to the Secretary of the Company at its principal office.”
(d) Any
legend required to be placed thereon by applicable blue sky laws of any
state.
Notwithstanding
the foregoing, in no event shall the Company be obligated to deliver to the
Participant a certificate representing the Restricted Stock prior to the vesting
dates set forth above.
5. Securities
Representations. The Shares are
being issued to the Participant and this Agreement is being made by the Company
in reliance upon the following express representations and warranties of the
Participant.
The
Participant acknowledges, represents and warrants that:
(a) The
Participant has been advised that the Participant may be an “affiliate” within
the meaning of Rule 144 under the Securities Act of 1933, as amended (the “Act”) and in this
connection the Company is relying in part on the Participant’s representations
set forth in this Section
5.
(b) If
the Participant is deemed an affiliate within the meaning of Rule 144 of the
Act, the Shares must be held indefinitely unless an exemption from any
applicable resale restrictions is available or the Company files an additional
registration statement (or a “re-offer prospectus”) with regard to the Shares
and the Company is under no obligation to register the Shares (or to file a
“re-offer prospectus”).
(c) If
the Participant is deemed an affiliate within the meaning of Rule 144 of the
Act, the Participant understands that the exemption from registration under Rule
144 will not be available unless (i) a public trading market then exists for the
Common Stock of the Company, (ii) adequate information concerning the Company is
then available to the public, and (iii) other terms and conditions of Rule 144
or any exemption therefrom are complied with; and that any sale of the Shares
may be made only in limited amounts in accordance with such terms and
conditions.
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6. No
Obligation to Continue Employment. This Agreement is not an
agreement of employment. This Agreement does not guarantee that the
Company or its Affiliates will employ or retain, or continue to employ or
retain, the Participant during the entire, or any portion of the, term of this
Agreement, including, but not limited to, any period during which the Restricted
Stock is outstanding, nor does it modify in any respect the Company’s or its
Affiliate’s right to terminate or modify the Participant’s terms of service or
compensation.
7. Power of
Attorney. The Company, its
successors and assigns are hereby appointed the attorneys-in-fact, with full
power of substitution, of the Participant for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any instruments
which such attorneys-in-fact may deem necessary or advisable to accomplish the
purposes of this Agreement, which appointment as attorneys-in-fact is
irrevocable and coupled with an interest. The Company, as
attorney-in-fact for the Participant, may in the name and stead of the
Participant, make and execute all conveyances, assignments and transfers of the
Shares and property provided for in this Agreement, and the Participant hereby
ratifies and confirms all that the Company, as said attorney-in-fact, shall do
by virtue hereof. Nevertheless, the Participant shall, if so
requested by the Company, execute and deliver to the Company all such
instruments as may, in the judgment of the Company, be advisable for such
purpose.
8. Rights as
a Stockholder. The Participant shall have no rights as a
stockholder with respect to any Restricted Stock unless and until the
Participant has become the holder of record of the Shares, whether the Shares
are represented by a certificate or through book entry or another similar
method, and no adjustments shall be made for dividends in cash or other
property, distributions or other rights in respect of any Shares, except as
otherwise specifically provided for in the Plan or this Agreement.
9. Provisions
of Plan Control. This Agreement is subject to all the terms,
conditions and provisions of the Plan, including, without limitation, the
amendment provisions thereof, and to such rules, regulations and interpretations
relating to the Plan as may be adopted by the Committee and as may be in effect
from time to time. The Plan is incorporated herein by
reference. Capitalized terms in this Agreement that are not otherwise
defined shall have the respective meanings set forth in the Plan. If
and to the extent that this Agreement conflicts or is inconsistent with the
terms, conditions and provisions of the Plan, the Plan shall control, and this
Agreement shall be deemed to be modified accordingly. This Agreement
contains the entire understanding of the parties with respect to the subject
matter hereof and supersedes any prior agreements between the Company and the
Participant with respect to the subject matter hereof.
10. Amendment. To the extent
applicable, the Board or the Committee may at any time and from time to time
amend, in whole or in part, any or all of the provisions of this Agreement to
comply with Section 409A of the Code and the regulations thereunder or any other
applicable law and may also amend, suspend or terminate this Agreement subject
to the terms of the Plan. The award of Restricted Stock pursuant to
this Agreement is not intended to be considered “deferred compensation” for the
purposes of Section 409A of the Code.
11. Notices. Any notice or
communication given hereunder (each, a “Notice”) shall be in writing and shall
be sent by personal delivery, by courier or by regular United States mail, first
class and prepaid, to the appropriate party at the address set forth
below:
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If to the
Company, to:
Preferred
Apartment Communities, Inc.
0000
Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxx 00000
Attention.:
General Counsel
If to the
Participant, to the address of the Participant on file with the
Company;
or such
other address or to the attention of such other person as a party shall have
specified by prior Notice to the other party. Each Notice shall only
be given and effective upon actual receipt (or refusal of receipt).
12. Acceptance. As required by
Section 8.2(b) of the Plan, the Participant shall forfeit the Restricted Stock
if the Participant does not execute this Agreement within a period of 60 days
from the date the Participant receives this Agreement (or such other period as
the Committee shall provide).
13. Waiver of
Jury Trial. EACH OF THE
PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR
ACTION OF ANY PARTY HERETO.
14. Miscellaneous.
(a) This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, legal representatives, successors and
assigns.
(b) All
questions concerning the construction, validity and interpretation of this Agreement
will be governed by, and construed in accordance with, the domestic laws of the State of
Maryland, without giving effect to any choice of law or conflict of law provision or
rule (whether of
the State of
Maryland or any other jurisdiction) that would cause the application
of the laws
of any
jurisdiction other than the State of
Maryland.
(c) In
the event of any dispute, controversy or claim between the Company or any
Affiliate and the Participant in any way concerning, arising out of or relating
to the Plan or this Agreement (a “Dispute”), including without limitation any
Dispute concerning, arising out of or relating to the interpretation,
application or enforcement of the Plan or this Agreement, the parties hereby (i)
agree and consent to the personal jurisdiction of the courts of the State of
Georgia located in Xxxx County and/or the Federal courts of the United States of
America located in the Northern District of Georgia (collectively, the “Agreed
Venue”) for resolution of any such Dispute, (ii) agree that those courts in the
Agreed Venue, and only those courts, shall have exclusive jurisdiction to
determine any Dispute, including, without limitation, any appeal, and (iii)
agree that any cause of action arising out of this Agreement shall be deemed to
have arisen from a transaction of business in the State of
Georgia. The parties also hereby irrevocably (A) submit to the
jurisdiction of any competent court in the Agreed Venue (and of the appropriate
appellate courts therefrom), (B) to the fullest extent permitted by law, waive
any and all defenses the parties may have on the grounds of lack of jurisdiction
of any such court and any other objection that such parties may now or hereafter
have to the laying of the venue of any such suit, action or proceeding in any
such court (including without limitation any defense that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum), and (C) consent to service of process in any such suit, action or
proceeding, anywhere in the world, whether within or without the jurisdiction of
any such court, in any manner provided by applicable law. Without
limiting the foregoing, each party agrees that service of process on such party
pursuant to a notice as provided in Section 11 shall be
deemed effective service of process on such party. Any action for
enforcement or recognition of any judgment obtained in connection with a Dispute
may enforced in any competent court in the Agreed Venue or in any other court of
competent jurisdiction.
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(d) This
Agreement may be executed in one or more counterparts, all of which taken
together shall constitute one contract.
(e) The
failure of any party hereto at any time to require performance by another party
of any provision of this Agreement shall not affect the right of such party to
require performance of that provision, and any waiver by any party of any breach
of any provision of this Agreement shall not be construed as a waiver of any
continuing or succeeding breach of such provision, a waiver of the provision
itself, or a waiver of any right under this Agreement.
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IN WITNESS WHEREOF, the
parties have executed this Agreement on the date and year first above
written.
PREFERRED
APARTMENT COMMUNITIES,
INC.
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By:
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Name:
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Title:
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PARTICIPANT
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Signature
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