<PAGE> 1
- ------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
---------------------------------------
Date of Report (Date of earliest event reported): April 1, 1997
ROBERTS REALTY INVESTORS, INC.
(Exact name of Registrant as specified in charter)
<TABLE>
<S> <C> <C>
GEORGIA 0-28048 56-2122873
(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification Number)
</TABLE>
8010 ROSWELL ROAD, SUITE 120, ATLANTA, GEORGIA 30350
(Address of principal executive offices) (Zip Code)
(770) 394-6000
(Registrant's Telephone Number, including Area Code)
- -------------------------------------------------------------------------------
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 1, 1997, Roberts Realty Investors, Inc. (the "Company")
acquired Roberts Properties Management, L.L.C. ("Roberts Management"), the
property management company that has managed the Company's multifamily
apartment communities and other properties since the Company's inception. The
Company presently owns 11 multifamily apartment communities containing a total
of 2,194 apartment homes, 317 of which are under construction or development.
Because the Company will now internally manage its properties using the 45
property management personnel formerly employed by Roberts Management, the
Company will no longer pay 5% of gross property revenues to a third party for
property management services.
The acquisition was structured as a statutory merger of Roberts
Management into Roberts Properties Residential, L.P. (the "Operating
Partnership"), the limited partnership through which the Company owns its
properties and conducts its business. (The Company now owns a 55.4% interest in
the Operating Partnership and is its sole general partner.) The Operating
Partnership issued a total of 590,000 units of limited partnership interest
("Units") valued at $10.00 per Unit or $5,900,000 in the aggregate to the
members of Roberts Management. Charles S. Roberts, the Chairman of the Board,
Chief Executive Officer, President, and a Director of the Company, received
551,650 Units, and twelve other employees of Roberts Management received 38,350
Units that are subject to certain repurchase options held by Mr. Roberts which
are exercisable upon the holder's cessation of employment by the Operating
Partnership (which has subordinate repurchase options that are exercisable if
Mr. Roberts fails to exercise his option in any instance). The number of Units
subject to such options gradually declines to zero over a seven year period
from the date each holder acquired his or her member interest in Roberts
Management. No cash or consideration other than Units was paid in connection
with the merger.
The purchase price was negotiated by Mr. Roberts for Roberts
Management and a committee of the Company's Board of Directors for the Company
and the Operating Partnership. In agreeing to the acquisition price the
committee took into account, among other factors, the quality of management
services historically provided by Roberts Management, the value of continuity
in those services, the savings in management fees that the Company would no
longer have to pay, and a valuation of Roberts Management by an independent
valuation firm. The $10.00 per Unit value for the Units issued in the merger
was determined as a part of the negotiations in light of the Company's debt and
the beliefs of Mr. Roberts and the committee regarding the value of the
Company's assets.
In April 1995, Roberts Properties Management, Inc. was selected as the
Property Management Company of the Year by the National Association of Home
Builders' National Council of the Multifamily Industry. The Company believes
that the Roberts Management team will continue to enable the Company to deliver
quality services, thereby promoting resident satisfaction, improving resident
retention, and enhancing the value of each of the Company's communities.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The Company has determined that it is impracticable to file financial
statements with respect to Roberts Management with this report on Form 8-K
under Item 310 of Regulation S-B. Such financial statements, if required, will
be filed by amendment as soon as practicable, but in no event later than June
16, 1997.
<PAGE> 3
(b) Pro Forma Financial Statements
The Company has determined that it is impracticable to file pro forma
financial statements for the Company with this report on Form 8-K under Item
310 of Regulation S-B. Such pro forma financial statements, if required, will
be filed by amendment as soon as practicable, but in no event later than June
16, 1997.
(c) Exhibits
Exhibit No. Description
2.1 Agreement and Plan of Merger by and between Roberts Properties
Residential, L.P. and Roberts Properties Management, L.L.C., dated
April 1, 1997.
[The following schedules and attachments to the
foregoing Agreement and Plan of Merger are omitted
from this report pursuant to Item 601 of Regulation
S-B.]
Exhibit A Certificate and Articles of Merger (filed as
Exhibit 4.2.7 as noted below)
Exhibit B Repurchase Option Agreement by and among
Charles S. Roberts, the Members with Article
6A Interests, and Roberts Properties
Residential, L.P.
Exhibit C Articles of Organization of Roberts Properties
Management, L.L.C.
Exhibit D Operating Agreement of Roberts Properties
Management, L.L.C.
Schedule 2.5 Certain Financial Statements of Roberts
Properties Management, L.L.C.
Schedule 2.8 Headquarters and Other Locations
Schedule 2.10 Certificate of Insurance
Schedule 2.17 List of Manager Contracts
4.2.7 Certificate and Articles of Merger filed with the Georgia Secretary of
State on April 1, 1997 merging Roberts Properties Management, L.L.C.
with and into Roberts Properties Residential, L.P.
2
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be filed on its behalf by the
undersigned hereunto duly authorized.
ROBERTS REALTY INVESTORS, INC.
Dated: April 15, 1997 By: /s/ Charles R. Elliott
------------------------------
Charles R. Elliott
Chief Financial Officer,
Secretary and Treasurer
3
<PAGE> 1
EXHIBIT 2.1
------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
ROBERTS PROPERTIES RESIDENTIAL, L.P.
AND
ROBERTS PROPERTIES MANAGEMENT, L.L.C.
------------------------------------------------------------------
--------------------------------------------
DATED APRIL 1, 1997
--------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Conversion of Interests in Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Repurchase Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Restrictions on Transfer of Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 Appraisal or Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Rights of Former Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF MANAGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Organization, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Members' Ownership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 Title to Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.8 Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.9 Trademarks, Trade Names, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.11 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.12 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.13 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.14 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.15 Environmental Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.16 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.17 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.18 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.19 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF OWNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Organization, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3 Units of Partnership Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5 Form 10-KSB for 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
3.6 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.7 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.8 Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.9 Trademarks, Trade Names, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.12 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.13 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 4 CONDITIONS SATISFIED AT OR BEFORE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 5 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.4 Specific Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.6 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.9 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certificate and Articles of Merger
EXHIBIT B . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repurchase Option Agreement by
and among Charles S. Roberts, the Members with
Article 6A Interests, and Roberts Properties
Residential, L.P. ("Owner")
EXHIBIT C . . . . . . . . . . . . . . . . . . . . . . . . . . . . Articles of Organization of Roberts
Properties Management, L.L.C. ("Manager")
EXHIBIT D . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating Agreement of Manager
</TABLE>
ii
<PAGE> 4
SCHEDULES
<TABLE>
<S> <C>
Schedule 2.5 . . . . . . . . . . . . . . . . . . . . . . . . . . Certain Financial Statements of
Manager
Schedule 2.8 . . . . . . . . . . . . . . . . . . . . . . . . . . Headquarters and Other Locations
Schedule 2.10 . . . . . . . . . . . . . . . . . . . . . . . . . . Certificate of Insurance
Schedule 2.17 . . . . . . . . . . . . . . . . . . . . . . . . . . List of Manager Contracts
</TABLE>
iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated April 1,
1997, is made by and between ROBERTS PROPERTIES RESIDENTIAL, L.P., a Georgia
limited partnership ("Owner"), and ROBERTS PROPERTIES MANAGEMENT, L.L.C., a
Georgia limited liability company ("Manager").
PREAMBLE
The Board of Directors of Roberts Realty Investors, Inc. (the
"Company"), a Georgia corporation that is the sole general partner of Owner,
desiring to acquire a property management company and thereby become a
self-managed real estate investment trust (a "REIT"), has agreed with all of
the members of Manager for Manager to merge with and into Owner and for all of
Manager's issued and outstanding ownership interests (collectively, the
"Interests") to be converted into units of limited partnership interest
("Units") of Owner, all on the terms and conditions set forth herein, thereby
acquiring all of the assets and liabilities and succeeding to and continuing
the business operations of Manager.
Certain terms used in this Agreement are defined in Section 5.1
hereof.
NOW, THEREFORE, in consideration of the above and the mutual
representations, warranties, covenants and agreements set forth herein, and
subject to the terms and conditions set forth herein, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE 1
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this
Agreement, on the Effective Date, Manager shall be merged with and into Owner
pursuant to the provisions of Section 14-9-206.1 of the Georgia Revised Uniform
Limited Partnership Act and Section 14-11-901 of the Georgia Limited Liability
Company Act, and Owner shall be the surviving entity (the "Surviving
Partnership") and shall continue its existence under the laws of the state of
Georgia under the name "Roberts Properties Residential, L.P."
1.2 EFFECTIVE DATE. Subject to the satisfaction of all requirements
of law and the terms and conditions of this Agreement, the Merger shall become
effective on the date (the "Effective Date") and at the time when the
Certificate and Articles of Merger for the Merger (in the form attached hereto
as Exhibit A) are accepted for filing by the Georgia Secretary of State
pursuant to the Georgia Limited Partnership Act and the Georgia LLC Act;
provided that if the Certificate and Articles of Merger are accepted for filing
after April 1, 1997, the Merger shall be deemed to have become effective on
April 1, 1997 for all business, accounting, and financial reporting purposes to
the extent legally permissible.
1.3 CLOSING. The Closing shall take place at 10:00 a.m. on the
Effective Date at the offices of Nelson Mullins Riley & Scarborough, L.L.P.,
First Union Plaza, Suite 1400, 999
<PAGE> 6
Peachtree Street, N.E., Atlanta, Georgia 30309, or at such other time
and place as the parties may mutually agree.
1.4 EFFECT OF MERGER. On the Effective Date, the certificate of
limited partnership and agreement of limited partnership of the Surviving
Partnership shall be the certificate of limited partnership and agreement of
limited partnership of Owner in effect immediately prior to the Effective Date.
The Company shall continue to be the sole general partner of the Surviving
Partnership, and the officers and directors of the Company immediately prior to
the Effective Date shall be the officers and directors of the Company as of the
Effective Date and until their successors are duly appointed or elected in
accordance with applicable law and the Articles of Incorporation and Bylaws of
the Company.
1.5 CONVERSION OF INTERESTS IN MANAGER. By virtue of the Merger,
automatically and without any action on the part of the members of Manager
(individually a "Member" and collectively, the "Members"), the Interests issued
and outstanding on the Effective Date shall become and be converted, pro rata
based upon each Member's ownership interest in Manager as stated in Section 2.3
below, into Five Hundred and Ninety Thousand (590,000) Units valued at $10.00
per Unit, or $5,900,000 in the aggregate. The 6,959,759 Units of the Surviving
Partnership issued and outstanding immediately prior to the Effective Date
shall remain outstanding and unchanged after the Merger. Upon the Effective
Date a total of 7,549,759 Units of the Surviving Partnership shall be issued
and outstanding.
1.6 EXCHANGE PROCEDURES. Owner shall cause new certificates
representing the Units into which the respective Interests have been converted
to be sent to each former Member as promptly as practicable after the Effective
Date. The certificates shall bear legends reflecting the restrictions on
transfer noted in Section 1.8 below.
1.7 REPURCHASE OPTIONS. There are options to repurchase "Article 6A
Interests" provided in Manager's Operating Agreement, which options shall, as
provided in Article 6A of such Operating Agreement, be held upon and after the
Effective Date by Charles S. Roberts, with Owner to have a subordinate option
to repurchase Article 6A Interests if Mr. Roberts or his successor elects not
to exercise such option. (The terms and conditions of the repurchase options
are being restated in the form of that certain Repurchase Option Agreement by
and among Charles S. Roberts, the Members with Article 6A Interests, and Owner
in the form attached hereto as Exhibit B.) Other than the foregoing repurchase
options, there are no outstanding options to acquire or dispose of interests in
Manager.
1.8 RESTRICTIONS ON TRANSFER OF UNITS. The Units received by Members
in the Merger are subject to certain restrictions on transfer as described
below.
(a) "Intrastate" Transfer Restrictions. The Units are not being
registered under the federal securities laws in reliance upon the "intrastate"
exemption from such registration. Pursuant to Rule 147 promulgated by the
Securities and Exchange Commission regarding intrastate offerings, the Units
may not be transferred other than to a bona fide resident of the State of
Georgia until a period of at least nine months has elapsed from the date of the
last issuance of Units pursuant to the Merger (and of any other securities
deemed to be a part of
2
<PAGE> 7
the same issue of securities). The certificates evidencing the Units
shall have a legend describing the foregoing restrictions on transfer typed or
printed on them, and Owner will issue stop transfer instructions to its transfer
agent with respect to such Units. Further, the foregoing restrictions on
transfer and procedures shall apply in connection with the issuance of new
certificates for any of the Units that are presented for transfer during such
nine month period.
(b) Transfer Restrictions on Units under Operating Partnership
Agreement. In addition to the foregoing, Units may be transferred only
as follows: (a) such disposition is not made to any person who is incompetent
or to a minor; (b) the Company as the general partner of Owner has consented in
writing to such transfer (the general partner is under no circumstances
obligated to give such consent); (c) the transferring and purchasing parties
execute and deliver to the general partner such instruments as are in form
satisfactory to the general partner; and (d) no disposition may be made if it
would violate any federal or state securities law. The transferring holder of
Units shall be responsible for paying any legal fees or other costs associated
with the transfer, which the Company estimates to be approximately $200. An
assignee of an interest of a limited partner in Owner may become a substituted
limited partner with respect to such interest only with the written consent of
the general partner, who shall under no circumstances be obliged to give such
consent. Assuming such consent is obtained, a substituted limited partner must
execute appropriate instruments, assume obligations of the transferor limited
partner, and pay for all of the expenses incurred by Owner in connection with
such person's becoming a substituted limited partner, including Owner's legal
fees.
(c) Repurchase Option Restrictions. As noted in section 3 of the
Ballot and Acknowledgment executed by each of the Members, the certificates
representing the Units to be delivered to the Members holding Article 6A
Interests shall bear a legend referring to the repurchase options held by
Charles S. Roberts and Owner with respect to certain of those Units.
1.9 APPRAISAL OR DISSENTERS' RIGHTS. Pursuant to Section 3.5 of
Manager's Operating Agreement, Members shall have no dissenters' or appraisal
rights.
1.10 RIGHTS OF FORMER MEMBERS. Upon the Effective Date Members shall
have no rights with respect to their interests in Manager other than the right
to receive the applicable number of Units in exchange therefor.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF MANAGER
Manager hereby represents and warrants to Owner as follows:
2.1 ORGANIZATION, ETC. Manager is a limited liability company duly
organized and existing under the laws of the state of Georgia and has the power
and authority to carry on its business as and where now conducted and to own,
lease and operate its Assets and to
3
<PAGE> 8
incur its Liabilities. Manager has in effect all federal, state, local
and foreign governmental authorizations necessary to carry on its business as
now conducted, to own, lease and operate its Assets, and to incur its
Liabilities, the absence of which, either individually or in the aggregate,
would have a Material Adverse Effect on Manager.
2.2 AUTHORITY. Manager has the power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
limited liability company action of Manager, including without limitation the
approval of this Agreement by a majority in interest of the Members. This
Agreement represents a legal, valid and binding obligation of Manager,
enforceable against Manager in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding may be brought. Neither
the execution and delivery of this Agreement by Manager, nor the consummation
by Manager of the transactions contemplated hereby, nor the compliance by
Manager with any of the provisions hereof, will (a) conflict with or result in
a breach of any provision of Manager's Articles of Organization or Operating
Agreement (true and correct copies of which are attached hereto as Exhibit C
and Exhibit D, respectively), or (b) constitute or result in a Default under,
or require any Consent pursuant to, or result in the creation of any Lien on
any Asset of Manager under, any Contract or Permit of Manager, where such
Default or Lien, or any failure to obtain such Consent, is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on it, or (c)
violate any Law or Order applicable to Manager or any of its Assets or
Liabilities. Other than notices to or filings with the Internal Revenue
Service with respect to any employee benefit plans, no notice to, filing with,
or Consent of any public body or authority is necessary for the consummation by
Manager of the Merger and the other transactions contemplated hereby.
[SECTION 2.3 BEGINS ON FOLLOWING PAGE.]
4
<PAGE> 9
2.3 MEMBERS' OWNERSHIP INTERESTS. The Members' respective ownership
interests are as follows:
<TABLE>
<CAPTION>
Ownership Number of Units
Member Interest to be Received
------ -------- --------------
<S> <C> <C>
Charles S. Roberts 88.5% 522,150
Jennifer H. Roberts Trust 5.0% 29,500
Pamela J. Hallmark 1.0% 5,900
Judith Q. Ottinger .5% 2,950
Ronald Johnson .5% 2,950
Anthony P. Brimer .5% 2,950
Keeley Bruce .5% 2,950
E. Michele Mann .5% 2,950
Cynthia I. Marsh .5% 2,950
Kristine J. Bowman .5% 2,950
Lynda U. Altfeder .5% 2,950
Rebecca L. Cleveland .5% 2,950
Stephen A. Glenn .5% 2,950
Cheryl L. Teaford .5% 2,950
---- -------
Total 100% 590,000
==== =======
</TABLE>
All of the issued and outstanding Interests are duly and validly
issued and are fully paid and nonassessable. None of the outstanding Interests
have been issued in violation of any preemptive rights of the current or past
Members of Manager or in violation of the Securities Laws. Except as set forth
above and as provided in Article 6A of Manager's Operating Agreement, there are
no interests or other equity securities of Manager authorized, issued or
outstanding, and there are no outstanding options, warrants, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, interests in Manager
or Contracts by which Manager was or may be bound to issue additional interests
or options, warrants, or rights to purchase or acquire any additional
interests. Manager has no liability for distributions declared or accrued, but
unpaid, with respect to the Interests.
2.4 SUBSIDIARIES. Manager does not own any capital stock of or other
equity interest in any Subsidiary.
2.5 FINANCIAL STATEMENTS. Each of the balance sheets of Manager
delivered to Owner (including the related notes and schedules) fairly presents
the financial position of Manager as of its date (December 31, 1996 and
February 28, 1997, respectively), and each of the statements of income of
Manager delivered to Owner (including any related notes and schedules)
fairly presents the results of operations of Manager for the periods set forth
therein (April 1, 1996 through December 31, 1996 and January 1, 1997 through
February 28, 1997, respectively). (The foregoing financial statements -- the
"Manager Financial Statements" -- are attached hereto as Schedule 2.5.)
Manager has no liabilities or obligations, except for (i) liabilities or
obligations that were so reserved on, or reflected in (including the notes to),
the balance sheet of Manager as of February 28, 1997; (ii) liabilities
5
<PAGE> 10
or obligations arising in the ordinary course of business since February
28, 1997; and (iii) liabilities or obligations which would not, individually or
in the aggregate, have a Material Adverse Effect on Manager.
2.6 TITLE TO ASSETS. Except as reserved against in the financial
statements delivered to Owner, Manager has good and marketable title, free and
clear of all material Liens or Defaults of whatever character, to all of the
material Assets, tangible or intangible, reflected on the most recent financial
statements as being owned by Manager.
2.7 LEASES. All buildings, and all fixtures, equipment and other
Assets which are material to its business held under leases or subleases by
Manager, are held under valid instruments enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought).
There is not under any such lease or sublease any Default or claim of Default
by Manager or, to the Knowledge of Manager, by any other party to any such
lease or sublease; provided that the sublease for the headquarters of Manager
was entered into without the lessor's consent, and the sublessor's master lease
requires the consent of lessor to sublet any portion of the sublessor's
premises. A copy of Manager's sublease is attached to Schedule 2.17.
2.8 OFFICES. The headquarters of Manager and each other office,
branch or facility maintained and operated by Manager and the locations thereof
are listed on Schedule 2.8. Except as set forth on Schedule 2.8, Manager
maintains no other office or branch or conducts business at no other location,
nor has Manager applied for or received permission to open any additional
office or branch or to operate at any other location.
2.9 TRADEMARKS, TRADE NAMES, ETC. Manager possesses the valid and
enforceable right to use its limited liability company name and any
trademarks, trade names, licenses and other intellectual property now used to
conduct its business, and there are no conflicts between such rights and rights
asserted by others. Manager has provided to Owner the Roberts Properties
Management, L.L.C. Method and Procedures Manual (revised September, 1996), which
contains all of the trademarks, trade names, licenses, know-how, procedures and
other intellectual property used to conduct Manager's business. Notwithstanding
the foregoing, the service mark "Creating Communities for Superior Lifestyles"
and the "Roberts" logotype and all of the rights of each and every kind to such
service marks and related intellectual property (collectively, the "Excluded
Mark") is hereby specifically excluded from this Section 2.9. Manager and Owner
hereby acknowledge that Manager has never owned the Excluded Mark and that the
Excluded Mark is solely and exclusively owned by Roberts Properties, Inc.
2.10 INSURANCE. The policies of fire, theft, liability, employee
dishonesty and other insurance maintained with respect to the Assets or
business of Manager provide adequate coverage against reasonably foreseeable
loss in accordance with good industry practice. A certificate of insurance
evidencing all such policies maintained by Manager is attached as Schedule
2.10.
6
<PAGE> 11
2.11 EMPLOYEES. Manager has provided to Owner a list of all
employees and staff of Manager, and the current annual rate of compensation
(and the portions thereof attributable to salary, bonus and other compensation,
respectively) of each such person. Manager is not bound by or subject to any
arrangement with any labor union, (ii) no employees of Manager are represented
by any labor union or covered by any collective agreement, (iii) no campaign to
establish such representation is in progress, and (iv) there is no pending or,
to the best of Manager's knowledge, threatened labor dispute involving Manager
or any group of its employees, nor has Manager experienced any labor
interruptions over the past three years.
2.12 EMPLOYEE BENEFIT PLANS. Listed in the Roberts Properties
Management, L.L.C. Handbook (revised December 20, 1996) provided by
Manager to Owner (the "Handbook") are every pension, retirement, profit-sharing,
deferred compensation, stock option, employee stock ownership, severance pay,
vacation, bonus or other incentive plan, any other written or unwritten employee
program, arrangement, agreement or understanding, any medical, vision, dental or
other health plan, any life insurance plan, or fringe benefit plan, including,
without limitation, any "employee benefit plan," as that term is defined in
Section 3(3) of ERISA, currently maintained by or contributed to by Manager or
any of its ERISA Affiliates (collectively, the "Manager Benefit Plans"). Any of
the Manager Benefit Plans which is an "employee pension benefit plan," as that
term is defined in Section 3(2) of ERISA, or an "employee welfare benefit plan"
as that term is defined in Section 3(1) of ERISA, is referred to herein as a
"Manager ERISA Plan." Neither Manager nor any of its ERISA Affiliates is now, or
has been, a contributing employer to a multi-employer plan within the meaning of
ERISA Section 3(37). Included in the Handbook or otherwise delivered by Manager
to Owner are true, correct and complete copies of all written Manager Benefit
Plans and all trust agreements or other funding arrangements, including
insurance contracts, all amendments thereto and, where applicable, with respect
to any such plans or plan amendments, all determination letters, rulings,
opinion letters, information letters, or advisory opinions issued by the
Internal Revenue Service or the United States Department of Labor after December
31, 1974, annual reports or Forms 5500, financial statements, and summary annual
reports for the most recent three plan years as required by law, the most recent
summary plan descriptions and any material modifications thereto. Any Manager
ERISA Plans and related trusts comply with, and, to the Knowledge of Manager,
have been administered in compliance with, the relevant provisions of ERISA and
the Internal Revenue Code and all other applicable laws, rules and regulations,
the violation of which would have a Material Adverse Effect on Manager.
Governmental approvals for the Manager ERISA Plans have been obtained,
including, but not limited to, determination letters on the qualification of the
Manager ERISA Plans and the tax exemption of related trusts, as applicable,
under the Internal Revenue Code, and all such governmental approvals continue in
full force and effect. Neither Manager nor to the Knowledge of Manager has any
administrator or fiduciary of any Manager ERISA Plan (or agent or delegate of
any of the foregoing) engaged in any transaction or acted or failed to act in
any manner which could subject Manager to any direct or indirect material
liability for a breach of any fiduciary, co-fiduciary, or other duty under
ERISA. To the Knowledge of Manager, no oral or written representation or
communication with respect to any aspect of the Manager Benefit Plans has been
made to employees of Manager which is not in accordance with the written or
otherwise
7
<PAGE> 12
preexisting terms and provisions of such Manager Benefit Plans. There
are no actions, suits or claims (other than routine claims for benefits) pending
or threatened, to the Knowledge of Manager, which could reasonably be expected
to be asserted against any Manager Benefit Plan, Manager or any of its ERISA
Affiliates. To the Knowledge of Manager, no non-exempt prohibited transaction
within the meaning of ERISA Section 406 or Internal Revenue Code Section 4975
has occurred or is occurring with respect to any Manager ERISA Plan. There has
been no (i) "reportable event" (as defined in Section 4043 of ERISA) or event
described in Section 4062(f) or Section 4063(a) of ERISA which has not been
officially waived by the United States Department of Labor, or (ii) termination,
partial termination, withdrawal or partial withdrawal with respect to any of the
Manager ERISA Plans. Manager has no employee pension benefit plan subject to
Title I, Subtitle B, Part 3 of ERISA. Manager has no material current or future
liability under any Manager Benefit Plan that is not reflected in the financial
statements delivered to Owner. Manager has not at any time, and does not now,
maintain a Manager Benefit Plan providing welfare benefits (as defined in ERISA
Section 3(l)) to employees after retirement. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated by this
Agreement will (i) result in any payment (including, without limitation,
severance, unemployment compensation, golden parachute or otherwise) becoming
due to any Member or any employee of Manager under any Manager Benefit Plan or
otherwise, (ii) increase any benefits otherwise payable under any Manager
Benefit Plan, or (iii) result in any acceleration of the time of payment or
vesting under any Manager Benefit Plan.
2.13 TAX MATTERS. All federal, state, and local Tax returns required
to be filed by or on behalf of Manager have been timely filed or requests for
extensions have been timely filed, granted and have not expired for periods
ending on or before December 31, 1996, and all Tax returns filed are complete
and materially accurate. All Taxes shown as due on filed tax returns have been
paid. There is no audit examination, deficiency, refund litigation or matter
in controversy with respect to any Taxes that might result in a determination
adverse to Manager, against which there are not adequate reserves in the
financial statements delivered to Owner. All Taxes, interest, additions and
penalties due with respect to completed and settled examinations or concluded
litigation have been fully paid. Manager has not executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due that is currently in effect. There are no federal, state, local or foreign
Taxes due or to become due for Manager.
2.14 COMPLIANCE WITH LAWS. Manager (a) is in compliance with all
Laws, Orders or Permits applicable to its business or employees conducting its
business, except for violations which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on it; and (b) has
received no notification since January 1, 1990, from any agency or department
of federal, state or local government (i) asserting that it is not in
compliance with any of the Laws or Orders which such governmental authority
enforces, which noncompliance is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on it, or (ii) threatening to revoke
any Permit the revocation of which is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on it.
8
<PAGE> 13
2.15 ENVIRONMENTAL PROTECTION. Manager is in full compliance with
all applicable Environmental Laws, other than those as to which the failure to
so comply would not have a Material Adverse Effect on it. There is no
Environmental Claim pending or, to the Knowledge of Manager, threatened (i)
against Manager, (ii) to the Knowledge of Manager, against any person or entity
whose liability for any Environmental Claim Manager has retained or assumed
either contractually or by operation of law, or (iii) to the Knowledge of
Manager, against any real or personal property which Manager owns, leases,
manages, supervises or participates in the management of, other than the
Bentley Place community and other than such as would not, either individually
or in the aggregate, have a Material Adverse Effect on Manager. There are no
past or present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission, discharge or
disposal of any Material of Environmental Concern, that could reasonably form
the basis of any Environmental Claim against Manager or, to the Knowledge of
Manager, against any person or entity whose liability for any Environmental
Claim Manager have or may have retained or assumed either contractually or by
operation of law, other than such as would not, either individually or in the
aggregate, have a Material Adverse Effect on Manager. There are no Permits and
other governmental authorizations currently held or being applied for by
Manager pursuant to the Environmental Laws. There are no outstanding loans to
Manager as to which Manager has submitted (or is required to submit) to a
lender any environmental audits, analyses or surveys of any real property
securing such loans.
2.16 LEGAL PROCEEDINGS. Except as set forth in the following
sentence, there are no actions, suits or proceedings instituted or pending, or,
to the Knowledge of Manager, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a reasonable probability
of an unfavorable outcome) against Manager or its properties, assets,
interests, or rights. A former senior vice president of Manager who worked for
Manager less than 90 days has threatened legal action against Manager regarding
his termination; no lawsuit has been filed, and Manager believes the person's
claims are without merit.
2.17 MATERIAL CONTRACTS. Except as set forth on Schedule 2.17,
neither Manager nor any of its Assets, businesses or operations is a
party to, or is bound or affected by, or receiving benefit under (a) any
employment, severance, termination, consulting or retirement Contract, (b) any
Contract relating to the borrowing of money by Manager or the guarantee by
Manager of any such obligation (other than Contracts evidencing trade payables
made in the ordinary course of business), (c) any Contract relating to
indemnification or defense of any Member or employee of Manager or any other
Person, (d) any Contract with any labor union, (e) any Contract relating to the
disposition or acquisition of any interest in any business enterprise, (f) any
Contract relating to the extension of credit to, provision of services for,
sale, lease or license of Assets to, engagement of services from, or purchase,
lease or license of Assets from, any Member beneficially owning a 2% or more
residual interest in Manager, employee of Manager, or any member of the
immediate family of the foregoing, (g) any Contract which limits the freedom of
Manager to compete in any line of business or with any Person, (h) any Contract
providing a power of attorney or similar authorization given by Manager, except
as issued in the ordinary course of business with respect to routine matters,
and (i) any Contract that involves the payment by Manager of
9
<PAGE> 14
amounts aggregating $10,000 or more in any twelve-month period or which
is not cancelable by Manager without payment of a penalty or other termination
fee aggregating $10,000 or more (together with all Contracts referred to in
Section 2.12, the "Manager Contracts"). Manager is not in Default under any
contract between Manager and Owner. To the Knowledge of Manager, Manager is not
in Default under any other Manager Contract.
2.18 ABSENCE OF UNDISCLOSED LIABILITIES. Manager has no Liabilities
that are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on it, except Liabilities which are reflected or
reserved against in the most recent statement of financial condition delivered
to Owner. Manager has not incurred or paid any Liability since February 28,
1997, except for Liabilities incurred or paid in the ordinary course of its
business consistent with past practices and which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on it.
2.19 STATEMENTS TRUE AND CORRECT. No information relating to Manager
furnished by Manager to Owner expressly pursuant to this Agreement, nor any
representation or warranty made by Manager in this Agreement, nor any written
statement or certificate or instrument furnished to Owner and included in an
Exhibit or Schedule by Manager in connection with this Agreement, nor any
written statement or certificate to be furnished by Manager to Owner expressly
pursuant to this Agreement contains or will contain any untrue statement of
material fact or omits or will omit to state a material fact necessary to make
the statements contained therein not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF OWNER
Owner hereby represents and warrants to Manager as follows:
3.1 ORGANIZATION, ETC. Owner is a Georgia limited partnership duly
organized and existing under the laws of the state of Georgia and has the power
and authority to carry on its business as and where now conducted and to own,
lease and operate its Assets and to incur its Liabilities. Owner has in effect
all federal, state, local and foreign governmental authorizations necessary to
carry on its business as now conducted, to own, lease and operate its Assets,
and to incur its Liabilities, the absence of which, either individually or in
the aggregate, would have a Material Adverse Effect on Owner.
3.2 AUTHORITY. Owner has the power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
partnership action of Owner. This Agreement represents a legal, valid and
binding obligation of Owner, enforceable against Owner in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive
10
<PAGE> 15
relief is subject to the discretion of the court before which any
proceeding may be brought. Neither the execution and delivery of this Agreement
by Owner, nor the consummation by Owner of the transactions contemplated hereby,
nor the compliance by Owner with any of the provisions hereof, will (a) conflict
with or result in a breach of any provision of Owner's certificate of limited
partnership or agreement of limited partnership, or (b) constitute or result in
a Default under, or require any Consent pursuant to, or result in the creation
of any Lien on any Asset of Owner under, any Contract or Permit of Owner, where
such Default or Lien, or any failure to obtain such Consent, is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Owner, or (c) violate any Law or Order applicable to Owner or any of its Assets
or Liabilities. Other than notices to or filings with the Internal Revenue
Service with respect to any employee benefit plans, no notice to, filing with,
or Consent of any public body or authority is necessary for the consummation by
Owner of the Merger and the other transactions contemplated hereby.
3.3 UNITS OF PARTNERSHIP INTEREST. A total of 6,959,759 Units are
issued and outstanding. All of the issued and outstanding Units are
duly and validly issued and are fully paid and nonassessable. None of the
outstanding Units has been issued in violation of any preemptive rights of the
current or past partners of Owner or in violation of the Securities Laws.
3.4 SUBSIDIARIES. The Company has no Subsidiaries other than Owner,
and Owner has no Subsidiaries.
3.5 FORM 10-KSB FOR 1996. Owner has delivered to Manager the
Company's annual report on Form 10-KSB for the year ended December 31, 1996
(the "Form 10-KSB"), which contains audited financial statements of the Company
(the "Company Financial Statements").
3.6 TITLE TO ASSETS. Except as disclosed in the Form 10-KSB, Owner
has good and marketable title, free and clear of all material Liens or Defaults
of whatever character, to all of the material Assets, tangible or intangible,
reflected on the most recent consolidated Statement of Financial Condition in
the Company Financial Statements as being owned by Owner as of the date of the
statement.
3.7 LEASES. All buildings, and all fixtures, equipment and other
Assets which are material to its business held under leases or subleases by
Owner, are held under valid instruments enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought).
There is not under any such lease any Default or claim of Default by Owner or,
to the Knowledge of Owner, by any other party to the lease.
11
<PAGE> 16
3.8 OFFICES. The headquarters of Owner is 8010 Roswell Road, Suite
120, Atlanta, Georgia 30350.
3.9 TRADEMARKS, TRADE NAMES, ETC. Owner possesses the valid and
enforceable right to use its name and any trademarks, trade names, licenses and
other intellectual property now used to conduct its businesses other than the
Excluded Mark, and there are no conflicts between such rights and rights
asserted by others (other than regarding the name "Highland Park").
3.10 INSURANCE. The policies of fire, theft, liability, employee
dishonesty and other insurance maintained with respect to the Assets or
business of Owner provide adequate coverage against reasonably foreseeable loss
in accordance with good industry practice.
3.11 COMPLIANCE WITH LAWS. Except as set forth in the last two
sentences of this Section 3.11, Owner: (a) is in compliance with all Laws,
Orders or Permits applicable to its business or employees conducting its
business, except for violations which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on it; (b) has
received no notification since January 1, 1990, from any agency or department
of federal, state or local government (i) asserting that it is not in
compliance with any of the Laws or Orders which such governmental authority
enforces, which noncompliance is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on it, or (ii) threatening to revoke
any Permit the revocation of which is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on it, and (c) is not subject
to, or currently under threat of, any written cease and desist order,
directive, agreement or understanding with any governmental authority with
respect to its Assets or business. In August 1996, Metro Fair Housing
Services, Inc. filed a complaint with the U.S. Department of Housing and Urban
Development alleging that certain design features of a portion of the Bentley
Place community do not meet the design criteria of the Americans With
Disabilities Act ("ADA"). Owner is evaluating the merits of the complaint.
3.12 LEGAL PROCEEDINGS. There are no actions, suits or proceedings
instituted or pending, or, to the Knowledge of Owner, threatened (or unasserted
but considered probable of assertion and which if asserted would have at least
a reasonable probability of an unfavorable outcome) against Owner or any of its
properties, assets, interests, or rights that either individually or in the
aggregate are reasonably expected to have a Material Adverse Effect on its
business, operations or financial condition or to impede the consummation of
the transactions contemplated by this Agreement.
3.13 MATERIAL CONTRACTS. Except as set forth in the exhibits to the
Form 10-KSB, neither Owner nor any of its Assets, businesses or operations, is
a party to, or is bound or affected by, or receiving benefit under any material
contracts (the "Owner Contracts"). Owner is not in Default under any Owner
Contract, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on it.
12
<PAGE> 17
ARTICLE 4
CONDITIONS SATISFIED AT OR BEFORE CLOSING
At or before Closing, the following conditions have been satisfied:
(a) The Members shall have approved this Agreement and the
Merger, and the consummation of the transactions contemplated thereby, as and
to the extent required by Law and by the provisions of any governing
instruments, and Manager shall have furnished Owner with the original ballots
duly executed by such Members evidencing the same.
(b) All partnership and corporate action necessary to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken by Owner and the Company.
ARTICLE 5
MISCELLANEOUS
5.1 DEFINITIONS. For purposes of this Agreement, except as otherwise
specifically provided herein, the following capitalized terms shall have the
meanings set forth below, respectively:
"Agreement": This Agreement and Plan of Merger including all Exhibits
and Schedules hereto.
"Assets": Of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued
or contingent, or otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not carried on the
books and records of such Person, and whether or not owned in the name of such
Person or any Affiliate of such Person and wherever located.
"Company": Roberts Realty Investors, Inc., a Georgia corporation.
"Company Financial Statements": As defined in Section 3.5.
"Closing": The closing of the transactions contemplated hereunder,
which, unless the Parties otherwise agree, will take place on the Effective
Date, as described in Article 1 of this Agreement.
"Consent": Any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"Contract": Any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding or
13
<PAGE> 18
undertaking of any kind or character, or other document to which any
Person is a party or that is binding on any Person or its capital stock, Assets
or business.
"Default": (i) Any breach or violation of or default under any
Contract, Order or Permit, (ii) any occurrence of any event that with the
passage of time or the giving of notice or both would constitute a breach or
violation of or default under any Contract, Order or Permit, or (iii) any
occurrence of any event that with or without the passage of time or the giving
of notice would give rise to a right to terminate or revoke, change the current
terms of, or renegotiate, or to accelerate, increase, or impose any Liability
under, any Contract, Order or Permit.
"Effective Date": The date and time on which the Merger contemplated
by this Agreement becomes effective pursuant to applicable law, as provided in
Section 1.2.
"Environmental Claim": Any claim, cause of action or notice (written
or oral) by any person or entity alleging potential liability (including,
without limitation, potential liability for investigatory costs, cleanup or
remediation costs, governmental response costs, natural resources damage,
property damages, personal injuries, penalties and fines, and similar costs of
third parties for which Manager is alleged to be responsible or potentially
responsible) arising out of, based on or resulting from (i) the presence, or
release into the environment, of any Material of Environmental Concern at any
location, whether or not owned by Manager or (ii) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws": All federal, state and local Law relating to
pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, ground water, land surface or
subsurface strata), including, without limitation, Laws relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate": Each and every corporation and other entity
which is a member of a controlled group of corporations with the relevant
Person or Persons within the meaning of Internal Revenue Code ("Code") Section
414(b), a trade or business which is under common control with the relevant
Person or Persons within the meaning of Code Section 414(c), or a member of an
affiliated service group within the meaning of Code Section 414(m).
"Exhibits" and "Schedules": The respective Exhibits and Schedules so
marked, each of which has been initialed for identification by an officer of
Owner and a Member of Manager, and bound sets of which have been delivered to
the respective Parties. Such Exhibits and Schedules are hereby incorporated by
reference herein and made a part hereof,
14
<PAGE> 19
and may be referred to in this Agreement and any other related
instrument or document without being attached hereto.
"Form 10-KSB": As defined in Section 3.5.
"Georgia Limited Partnership Act": The Georgia Revised Uniform
Limited Partnership Act.
"Georgia LLC Act": The Georgia Limited Liability Company Act.
"Governmental Authorities": All municipal, county, state and federal
governmental agencies, authorities, departments, divisions, courts and
officials having jurisdiction over the subject matter.
"Interests": All of the issued and outstanding member interests in
Manager.
"Internal Revenue Code": The Internal Revenue Code of 1986, as
amended.
"Knowledge" or "Known": Of, to or by either Party, the actual
knowledge of the officers and directors and/or Members, as applicable,
of such Party and that knowledge that any director or Member, as applicable, of
the Party would have obtained upon a reasonable examination of the books,
records and accounts of such director or Member, as applicable, and that
knowledge that any officer of the Party would have obtained upon a reasonable
examination of the books, records and accounts of such officer and such Party.
"Law": Any code, law, ordinance, regulation, reporting or licensing
requirement, rule, or statute applicable to a Person or its Assets, Liabilities
or business, including, without limitation, those promulgated, interpreted or
enforced by any of the Governmental Authorities.
"Liability": Any direct or indirect, primary or secondary, liability,
indebtedness, obligation, penalty, cost or expense (including, without
limitation, costs of investigation, collection and defense), claim, deficiency,
guaranty or endorsement of or by any Person (other than endorsements of notes,
bills, checks, and drafts presented for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien": Any conditional sale agreement, default of title, easement,
encroachment, encumbrance, hypothecation, infringement, lien, mortgage, pledge,
reservation, restriction, security interest, title retention or other security
arrangement, or any adverse right or interest, charge, or claim of any nature
whatsoever of, on, or with respect to any property or property interest, other
than (i) Liens for current property Taxes not yet due and payable, and (ii)
Liens which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on a Party.
15
<PAGE> 20
"Manager": Roberts Properties Management, L.L.C., a Georgia limited
liability company.
"Manager Benefit Plans": As defined in Section 2.12.
"Manager Contracts": As defined in Section 2.17.
"Manager ERISA Plan": As defined in Section 2.12.
"Manager Financial Statements": As defined in Section 2.5.
"Material Adverse Change": Any event, change or occurrence that has a
Material Adverse Effect on the financial condition, results of operations,
business or property of Manager.
"Material Adverse Effect": Any event, change or occurrence
that has a material adverse impact on the financial condition, results of
operations, business or properties of the Party.
"Materials of Environmental Concern": Includes (i) any hazardous
waste as defined by the Resource Conservation and Recovery Act of 1976 (42
U.S.C. Section 6901 et seq.), as amended from time to time, and regulations
promulgated thereunder from time to time; (ii) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C. Section 9601 et seq.), as amended from time to time, and
regulations promulgated thereunder from time to time; (iii) asbestos; (iv)
PCB's; (v) petroleum and petroleum by-products; (vi) any substance prohibited
from being present on the property of Manager by any applicable law, rule,
ordinance, or regulation of any federal, state, or local government or agency
thereof (collectively, "Governmental Requirement"); and (vii) any other
substance that requires special handling in connection with its collection,
storage, treatment or disposal pursuant to any Governmental Requirement.
"Merger": The merger of Manager into Owner as provided for in Article
1.
"Order": Any administrative decision or award, decree, injunction,
judgment, order, quasi-judicial decision or award, ruling, or writ of any
federal, state, local or foreign or other court, arbitrator, mediator,
tribunal, administrative agency or Regulatory Authority.
"Owner": Roberts Properties Residential, L.P., a Georgia limited
partnership.
"Owner Contracts": As defined in Section 3.13.
"Party": Either Owner or Manager; and "Parties": Owner and Manager.
"Permit": Any federal, state, local, and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit, or right to
16
<PAGE> 21
which any Person is a party or that is or may be binding upon or inure
to the benefit of any Person or its securities, Assets or business.
"Person": A natural person or any legal, commercial or governmental
entity, such as, but not limited to, a corporation, general partnership, joint
venture, limited partnership, limited liability company, trust, business
association, group acting in concert, or any person acting in a representative
capacity.
"Securities Laws": All federal and state Laws relating to
the offer, issue, and sale of securities.
"Subsidiaries": All those corporations, associations or other
entities of which the entity in question owns or controls 5% of more of the
outstanding equity securities either directly or through an unbroken chain of
entities as to each of which 5% or more of the outstanding equity securities is
owned directly or indirectly by its parent; provided, however, "Subsidiaries"
shall not include any such entity the equity securities of which are owned or
controlled in a fiduciary capacity.
"Surviving Partnership": Owner as the surviving limited partnership
in the Merger pursuant to Section 14-9- 206.1 of the Georgia Act.
"Taxes": Any federal, state, county, local, foreign and other taxes,
assessments, charges, fares, and impositions, including interest and penalties
thereon or with respect thereto.
5.2 NOTICES. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered
personally, by facsimile transmission or by registered or certified mail,
postage prepaid to the persons at the addresses set forth below (or at such
other address as may be provided hereunder), and shall be deemed to have been
delivered as of the date so delivered:
Owner: Roberts Properties Residential, L.P.
c/o Roberts Realty Investors, Inc.
8010 Roswell Road, Suite 120
Atlanta, GA 30350
Attn: Chief Financial Officer
Fax: (770) 396-0706
Copy to counsel: Nelson Mullins Riley & Scarborough,
L.L.P.
Suite 1400
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: Charles D. Vaughn, Esq.
Fax: (404) 817-6050
17
<PAGE> 22
Manager: Charles S. Roberts
8010 Roswell Road, Suite 280
Atlanta, GA 30350
Fax: (770) 551-5914
Copy to counsel: Holt Ney Zatcoff & Wasserman, L.L.P.
100 Galleria Parkway, Suite 600
Atlanta, GA 30339
Attention: Sanford H. Zatcoff, Esq.
Fax: (770) 956-1490
5.3 ENTIRE AGREEMENT. Except as otherwise expressly provided herein,
this Agreement contains the entire agreement among the Parties with respect to
the transactions contemplated hereunder, and the Agreement supersedes all prior
arrangements or understandings with respect thereto, written or oral. The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the Parties and their respective successors. Nothing in this
Agreement expressed or implied, is intended to confer upon any person, other
than the Parties or their respective successors, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
5.4 SPECIFIC ENFORCEABILITY. The Parties recognize and hereby
acknowledge that it is impossible to measure in money the damages that would
result to a Party by reason of the failure of any of the Parties to perform any
of the obligations imposed on it by this Agreement. Accordingly, if any Party
should institute an action or proceeding seeking specific enforcement of the
provisions hereof, each Party against which such action or proceeding is
brought hereby waives the claim or defense that the Party instituting such
action or proceeding has an adequate remedy at law and hereby agrees not to
assert in any such action or proceeding the claim or defense that such a remedy
at law exists.
5.5 EXPENSES. Except as provided elsewhere herein, each of the
Parties shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial or other consultants, investment
bankers, accountants and counsel.
5.6 BROKERS AND FINDERS. Each of the Parties represents and warrants
that neither it nor any of its officers, directors, employees or
affiliates has employed any broker or finder or incurred any liability for any
financial advisory fees, investment bankers' fees, brokerage fees, commissions,
or finders' fees in connection with this Agreement or the transactions
contemplated hereby. In the event of a claim by any broker or finder based upon
his or its representing or being retained by or allegedly representing or being
retained by either Owner or Manager, Owner or Manager, as the case may be,
agrees to indemnify and hold the other Party harmless of and from any such
claim.
18
<PAGE> 23
5.7 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Georgia except to the extent
federal law shall be applicable.
5.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute one and the same instrument.
5.9 SURVIVAL. The covenants, agreements, representations, and
warranties contained in or made pursuant to this Agreement shall survive the
Closing and any delivery of the Units to the Members, irrespective of any
investigation made by or on behalf of any party, for the earlier of (a) the
listing of the Company's Common Stock on either a national stock exchange or
Nasdaq; (b) the occurrence of a "change in control" of Owner; or (c) September
30, 1997. For purposes of this Agreement, a "change in control" means (a) any
transaction, whether by merger, consolidation, asset sale or otherwise, which
results in the acquisition of beneficial ownership by any person or group of
fifty percent (50%) or more of the outstanding shares of common stock of the
Company or of the outstanding units of Owner; (b) any sale of all or
substantially all of the assets of the Company or Owner, or (c) the liquidation
of the Company or Owner, except that no "change in control" shall be considered
to have occurred in the event of the sale of Owner's assets to the Company or
the merger of Owner into the Company if no change in control of the Company
occurs as a result.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be executed on its behalf and its corporate seal or seal to be hereunto affixed
where applicable and attested by officers thereunto duly authorized all as of
the day and year first above written.
ROBERTS PROPERTIES RESIDENTIAL, L.P.
By: ROBERTS REALTY INVESTORS, INC., its sole
General Partner
By: /s/ James M. Goodrich
------------------------------------------
James M. Goodrich
Vice Chairman
And By: /s/ Charles R. Elliott
--------------------------------------
Name: Charles R. Elliott
Title: Chief Financial Officer
19
<PAGE> 24
ROBERTS PROPERTIES MANAGEMENT, L.L.C.
By: /s/ Charles S. Roberts
------------------------------------------
Charles S. Roberts, Member
And By: Jennifer H. Roberts Trust, Member
By: /s/ Charles S. Roberts
------------------------------------------
Name:
Trustee:
And By: /s/ Pamela J. Hallmark
--------------------------------------
Pamela J. Hallmark, Member
And By: /s/ Judith Q. Ottinger
--------------------------------------
Judith Q. Ottinger, Member
And By: /s/ Ronald Johnson
--------------------------------------
Ronald Johnson, Member
And By: /s/ Anthony P. Brimer
--------------------------------------
Anthony P. Brimer, Member
And By: /s/ Keeley Bruce
--------------------------------------
Keeley Bruce, Member
And By: /s/ E. Michele Mann
--------------------------------------
E. Michele Mann, Member
[SIGNATURES CONTINUED ON FOLLOWING PAGE.]
20
<PAGE> 25
And By: /s/ Cynthia I. Marsh
--------------------------------------
Cynthia I. Marsh, Member
And By: /s/ Kristine J. Bowman
--------------------------------------
Kristine J. Bowman, Member
And By: /s/ Lynda U. Altfeder
--------------------------------------
Lynda U. Altfeder, Member
And By: /s/ Rebecca L. Cleveland
--------------------------------------
Rebecca L. Cleveland, Member
And By: /s/ Stephen A. Glenn
--------------------------------------
Stephen A. Glenn, Member
And By: /s/ Cheryl L. Teaford
--------------------------------------
Cheryl L. Teaford, Member
21
<PAGE> 1
EXHIBIT 4.2.7
CERTIFICATE AND ARTICLES OF MERGER
OF
ROBERTS PROPERTIES MANAGEMENT, L.L.C.
WITH AND INTO
ROBERTS PROPERTIES RESIDENTIAL, L.P.
1.
The name and state of domicile and jurisdiction of organization of each
business entity that is merging are as follows:
Roberts Properties Management, L.L.C. - Georgia limited liability
company; and
Roberts Properties Residential, L.P. - Georgia limited partnership.
2.
The name of the surviving limited partnership is Roberts Properties
Residential, L.P., and its state of domicile is Georgia.
3.
The executed Agreement and Plan of Merger is on file at the principal
place of business of the surviving limited partnership located at 8010 Roswell
Road, Suite 120, Atlanta, Georgia 30350. Roberts Properties Residential, L.P.
will furnish a copy of said Agreement and Plan of Merger, on request and
without cost, to any partner of Roberts Properties Residential, L.P. or member
of Roberts Properties Management, L.L.C.
4.
The Agreement and Plan of Merger has been duly authorized and approved
by the requisite action of each constituent business entity in accordance with
Section 14-11-903 of the Georgia Limited Liability Company Act and as required
by Section 14-9-206.1 of the Georgia Revised Limited Partnership Act.
[SIGNATURES ON FOLLOWING PAGE.]
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have caused this Certificate of
Merger to be duly executed on the 1st day of April, 1997.
ROBERTS PROPERTIES RESIDENTIAL, L.P.
By: ROBERTS REALTY INVESTORS, INC., a
Georgia corporation, its sole
general partner
By: /s/ James M. Goodrich
-------------------------------------
James M. Goodrich, Vice Chairman
And By: /s/ Charles R. Elliott
---------------------------------
Charles R. Elliott, Chief
Financial Officer
ROBERTS PROPERTIES MANAGEMENT, L.L.C.,
a Georgia limited liability company
By: /s/ Charles S. Roberts
-------------------------------------
Charles S. Roberts, Member
And By: Jennifer H. Roberts Trust,
Member
By: /s/ Charles S. Roberts
-------------------------------------
Name:
Trustee:
And By: /s/ Pamela J. Hallmark
---------------------------------
Pamela J. Hallmark, Member
[SIGNATURES CONTINUED ON FOLLOWING PAGE.]
2
<PAGE> 3
And By: /s/ Judith Q. Ottinger
---------------------------------
Judith Q. Ottinger, Member
And By: /s/ Ronald Johnson
---------------------------------
Ronald Johnson, Member
And By: /s/ Anthony P. Brimer
---------------------------------
Anthony P. Brimer, Member
And By: /s/ Keeley Bruce
---------------------------------
Keeley Bruce, Member
And By: /s/ E. Michele Mann
---------------------------------
E. Michele Mann, Member
And By: /s/ Cynthia I. Marsh
---------------------------------
Cynthia I. Marsh, Member
And By: /s/ Kristine J. Bowman
---------------------------------
Kristine J. Bowman, Member
[SIGNATURES CONTINUED ON FOLLOWING PAGE.]
3
<PAGE> 4
And By: /s/ Lynda U. Altfeder
---------------------------------
Lynda U. Altfeder, Member
And By: /s/ Rebecca L. Cleveland
---------------------------------
Rebecca L. Cleveland, Member
And By: /s/ Stephen A. Glenn
---------------------------------
Stephen A. Glenn, Member
And By: /s/ Cheryl L. Teaford
---------------------------------
Cheryl L. Teaford, Member
4
