<PAGE> 1
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
[NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]
For the fiscal year ended December 31,1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
---------- ----------
(Commission File No. 0-28048)
ROBERTS REALTY INVESTORS, INC.
(Name of small business issuer in its charter)
GEORGIA 58-2122873
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
8010 ROSWELL ROAD, SUITE 120, ATLANTA, GEORGIA 30350
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (770) 394-6000
Securities registered under Section 12(b) of the Act: NONE
Title of each class: Name of each exchange on which registered:
N/A N/A
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK
(Title of Class)
(Title of Class)
Check whether the issuer (1) filed all reports required to filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
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Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $15,197,000
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within the past 60 days. (See definition of affiliate in Rule 12b-2 of the
Exchange Act.) $34,878,300
Note: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by non-affiliates on the basis of reasonable
assumptions, if the assumptions are stated.
There is no active trading market for the Common Stock, and this calculation is
based upon an estimation of value of the Common Stock by the Company's
management. The Company can give no assurances that such estimated value is
correct.
<PAGE> 3
TABLE OF CONTENTS
PAGE
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<TABLE>
<S> <C>
PART I ............................................................. 1
ITEM 1. DESCRIPTION OF BUSINESS ............................. 1
ITEM 2. DESCRIPTION OF PROPERTY ............................. 6
ITEM 3. LEGAL PROCEEDINGS ................................... 27
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS .................................... 27
PART II ............................................................ 27
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS ................................. 27
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION ................................... 28
ITEM 7. FINANCIAL STATEMENTS ................................ 36
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE .......................................... 52
PART III ........................................................... 52
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(a)OF THE EXCHANGE ACT .................... 52
ITEM 10. EXECUTIVE COMPENSATION .............................. 52
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT ............................... 53
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS ........................................ 53
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K .................... 53
</TABLE>
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<PAGE> 4
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
Roberts Realty Investors, Inc. (the "Company") owns and operates
multifamily residential properties as a self-administered equity real estate
investment trust (a "REIT"). The Company conducts its business through Roberts
Properties Residential, L.P. (the "Operating Partnership"), a Georgia limited
partnership. The Company owns a 60.2% interest in the Operating Partnership
and is its sole general partner. References in this report to the Company's
strategies or intentions assume that the Company will continue to conduct its
business in this organizational structure, which is sometimes called an
"umbrella partnership" or "UPREIT."
The Company presently owns 11 multifamily apartment communities (the
"Communities") containing a total of 2,194 apartment homes. The existing
Communities of River Oaks, Rosewood Plantation, Plantation Trace, Preston Oaks,
Highland Park, Windsong, Autumn Ridge, Bentley Place, and Crestmark, containing
a total of 1,731 apartment units, are stabilized; the 146-unit Ivey Brook
Community is in its initial lease-up phase; and an 86-unit second phase of
Crestmark, the 180-unit Howell Ferry Community, and a 51-unit second phase of
Plantation Trace are now under construction or development. As of December 31,
1996, the Company owned nine stabilized Communities that had a physical
occupancy rate of 96.4%. (The Company considers a Community to have achieved
stabilized occupancy on the earlier of (a) attainment of 95% occupancy as of
the first day of any month, or (b) one year after completion of construction.)
All but one of the Communities are located in metropolitan Atlanta; the
Windsong Community is located on St. Simons Island, Georgia. Nine of the
eleven Communities were or are to be developed and constructed by affiliates of
Mr. Charles S. Roberts, the Chairman of the Board, Chief Executive Officer and
President of the Company. The Operating Partnership also owns two retail
centers totaling 15,698 square feet.
The Company is a Georgia corporation formed in July 1994 and expects to
continue to qualify as a REIT for federal income tax purposes. A REIT is a
legal entity that holds real estate interests and, through its payment of
distributions, is able to reduce or avoid incurring federal income tax at the
corporate level, allowing shareholders to participate in real estate
investments without the "double taxation" of income (i.e., at both the
corporate and shareholder levels) that generally results from investment in
shares of a corporation. To maintain its qualification as a REIT, the Company
must, among other things, distribute annually to its shareholders at least 95%
of its taxable income, subject to certain deductions, exclusions and additions.
There is no public or private trading market for the Common Stock.
The Company has engaged Roberts Properties Management, L.L.C. ("Roberts
Management") to manage the existing Communities it now owns and expects to
engage Roberts Management to manage the other Communities as they are
completed. (Mr. Roberts owns substantially all of the outstanding interests in
Roberts Management.) Roberts Management and certain other entities owned by
Mr. Roberts perform services for the Operating Partnership but are not owned by
the Company or the Operating Partnership. These entities, which in addition to
Roberts Management are Roberts Properties, Inc. ("Roberts Properties"), Roberts
Properties Group, L.L.C. ("Roberts Group"), and Roberts Properties
Construction, Inc. ("Roberts Construction"), are sometimes hereinafter
collectively referred to as the "Roberts Companies."
The Company's executive offices are located at 8010 Roswell Road, Suite
120, Atlanta, Georgia 30350, and its telephone number is (770) 394-6000. At
December 31, 1996, the Company had four employees.
<PAGE> 5
HISTORY
October 1994 Consolidation - River Oaks, Rosewood Plantation, Preston
Oaks, and Highland Park Communities. The Company assembled its initial
portfolio of four Communities in October 1994 in the simultaneous mergers of
four limited partnerships into the Operating Partnership (the "October 1994
consolidation"). All four partnerships were originally sponsored by Mr.
Charles S. Roberts. Upon consummating the October 1994 consolidation, which
received the consent of at least 92% in interest of the limited partners in
each of the four partnerships, the Company's assets consisted of a 53.8%
general partner interest in the Operating Partnership, which acquired the four
Communities. The partners of the four limited partnerships received a total of
1,043,647 shares of the Company's Common Stock, par value $.01 per share (the
"Shares" or the "Common Stock"), and 1,035,553 units of limited partnership
interest in the Operating Partnership ("Units") valued at $8.50 per Share/Unit,
or $17,673,200 in the aggregate.
Ivey Brook Community. In March 1995 after receiving the consent of 98% in
interest of the limited partners of Roberts Properties Holcomb Bridge, L.P.,
the Operating Partnership acquired the assets of such partnership, which had
previously acquired 11.8 acres of undeveloped land and raised the equity to
develop and construct a 146-unit apartment community - now named Ivey Brook -
at the intersection of Holcomb Bridge Road and Peachtree Corners Circle in
Gwinnett County, Georgia. The Company issued 609,873 Shares valued at $8.50
per Share, or $5,183,921 in the aggregate, to the partners of Roberts
Properties Holcomb Bridge, L.P.
Plantation Trace Community. In May 1995 after receiving the consent of
96% in interest of the limited partners of Roberts Properties Plantation Trace,
L.P., the Operating Partnership acquired the 182-unit Plantation Trace
Community, along with a 7,350 square foot retail center located in front of it,
by issuing 597,741 Units valued at $9.00 per Unit, or $5,379,669 in the
aggregate, to the partners of Roberts Properties Plantation Trace, L.P.
June-August 1995 Offering of Shares for Cash. In an offering conducted
from June 12, 1995 through August 25, 1995, the Company sold through Spalding &
Company an aggregate of 736,000 Shares at a price of $9.00 per Share.
Aggregate net proceeds of the offering were $5,988,080. On July 21, 1995 at
the initial closing of the offering, the Operating Partnership purchased 12.33
acres of land adjacent to Plantation Trace from Roberts Properties.
Construction of a second phase of Plantation Trace on such land is anticipated
to be completed in 1997. The remaining offering proceeds were used in December
1995 to fund the acquisition of the Autumn Ridge Community as described below.
Windsong. In September 1995 after receiving the consent of 98% in
interest of the limited partners of Roberts Properties-St. Simons, Ltd., the
Operating Partnership acquired Windsong, a 232-unit apartment community located
on St. Simons Island, Georgia, in exchange for 476,931 Units valued at $9.25
per Unit, or $4,411,612 in the aggregate, issued to the partners of Roberts
Properties-St. Simons, Ltd.
Autumn Ridge. On December 15, 1995, the Operating Partnership acquired
Laurelwood, a 207-unit apartment community that the Company has renamed Autumn
Ridge, from an independent third party for $7,775,000 in cash. The Operating
Partnership funded the acquisition out of its available cash and did not assume
or obtain any debt in connection with the acquisition. The Company recently
completed a $1,500,000 redevelopment program at Autumn Ridge that included new
carpet, appliances, HVAC units, kitchen flooring and other interior finishes,
as well as new roofs, landscaping and other exterior improvements.
Offering of Shares for Cash. On May 7, 1996 the Company closed an
"intrastate" offering in which it sold 699,175 Shares for $9.50 per Share (the
"Cash Offering"). Upon the initial closing of the offering on March 29, 1996,
the Operating Partnership paid Roberts Properties, Inc. $1,628,000 to purchase
approximately 22.5 acres of land in northeast metropolitan Atlanta and to
develop and construct the 180-unit Howell Ferry community on such property.
Additional net offering proceeds of approximately $2,186,000, along with an
$8,454,000 mortgage loan (for which the Company has not yet obtained a
commitment), will be used to develop and construct Howell Ferry. The Company
is using the remaining $2,240,000 in net proceeds of the Cash Offering for
general corporate purposes.
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<PAGE> 6
Bentley Place Community. In March 1996 after receiving the consent of 87%
in interest of the limited partners of Roberts Properties Bentley Place, L.P.
("Bentley Place, L.P."), the Operating Partnership acquired the 117-unit
Bentley Place Community by merger in consideration of the issuance of 744,940
Shares valued by the Company at $9.50 per Share, or $7,076,930 in the
aggregate, to the partners of Bentley Place, L.P. No debt was assumed or
obtained in connection with the acquisition.
Crestmark. In June 1996 after receiving the consent of 85% in interest of
the limited partners of The Crestmark Club, L.P. ("Crestmark, L.P."), the
Operating Partnership acquired the 248-unit Crestmark Community and 8.8 acres
of adjacent undeveloped property on which the Company is constructing an
86-unit second phase of Crestmark. Crestmark, L.P. was merged into the
Operating Partnership in consideration of the issuance of 746,715 Units valued
at $9.75 per Unit, or $7,280,471 in the aggregate, to the partners of
Crestmark, L.P.
Retail Centers. In addition to the 7,350 square foot Shoppes of
Plantation retail center acquired along with Plantation Trace as described
above, in December 1994 the Operating Partnership acquired a .86 acre parcel of
property located in front of the River Oaks Community for $296,693 in cash, and
construction of an 8,348 square foot, one story office/retail building was
completed in August 1995. In December 1995 the Operating Partnership sold The
Shoppes of Crestmark, a 7,078 square foot retail shopping center in Douglas
County, Georgia, for $940,000. The Company used the net proceeds of
approximately $903,000 for general corporate purposes. The Operating
Partnership had exchanged 104,478 Units valued at $8.50 per Unit, or $888,063
in the aggregate, for The Shoppes of Crestmark in January 1995.
The October 1994 consolidation and the Holcomb Bridge, Plantation Trace,
Windsong, Bentley Place, and Crestmark acquisitions were all structured as
statutory mergers under Georgia law in which the applicable limited
partnerships were merged into the Operating Partnership in exchange for Shares
or Units that were disbursed to the partners of such partnerships pursuant to
the terms of the merger agreements. (Out-of-state limited partners received
cash in lieu of Shares or Units.) The various Georgia limited partnerships
that have been merged into the Operating Partnership, and their dates of
formation, are: Roberts Properties River Oaks, L.P. - May 1991; Roberts
Properties Rosewood Plantation, L.P. - September 1992; Roberts Properties
Preston Oaks, L.P. - May 1993; Roberts Properties Highland Park, L.P. -
December 1993; Roberts Properties Holcomb Bridge, L.P. - October 1994; Roberts
Properties Plantation Trace, L.P. - September 1988; Roberts Properties-St.
Simons, Ltd. - December 1985; Roberts Properties Bentley Place, L.P. - December
1991; and The Crestmark Club, L.P. - August 1990.
THE OPERATING PARTNERSHIP
The Company conducts its business and owns all of its real estate assets
through Roberts Properties Residential, L.P., referred to in this report as the
Operating Partnership. The Company controls the Operating Partnership as its
sole general partner. The Board of Directors of the Company manages the
affairs of the Operating Partnership by directing the affairs of the Company.
The Company's ownership interest in the Operating Partnership entitles it to
share in cash distributions from, and in the profits and losses of, the
Operating Partnership generally in proportion to its ownership percentage. The
holders of Units, other than the Company, are: the former limited partners in
the limited partnerships that were merged into the Operating Partnership; Mr.
Roberts; and the former owner of The Shoppes of Crestmark.
Holders of Units in the Operating Partnership (other than the Company)
have the right to require the Operating Partnership to redeem their Units
beginning when both of the following conditions have been satisfied: (a) the
Shares potentially issuable to holders of Units have been listed on a national
securities exchange or Nasdaq (in either case, an "Exchange"), and (b) such
Shares have been registered with all applicable securities authorities. These
conditions have not yet been satisfied. In addition, the Company's articles of
incorporation limit ownership by any one holder to 6% of the outstanding Shares
(other than by Mr. Roberts, who is limited to 25%), and holders of Units
(sometimes referred to herein as "Unitholders") are not entitled to submit
Units for redemption if and to the extent that the issuance of Shares by the
Company to redeem those Units would cause such ownership limits to be violated.
Upon submittal of Units for redemption, the Operating Partnership will have
the option either (a) to pay cash for such Units in an amount equal to the
number of such Units multiplied by the average of the daily market prices of
the Shares for the 10 consecutive trading days prior to the redemption date
(the "Cash Redemption Price"), or (b) to require the Company to acquire such
Units in
3
<PAGE> 7
exchange for either (x) the Cash Redemption Price, or (y) a number of
Shares equal to the number of Units submitted for redemption. The Company
anticipates that it will issue Shares in exchange for any Units submitted for
redemption. The Company will have the right at its election to purchase all
outstanding Units from Unitholders in exchange for Shares when the conditions
that apply to the Unitholders' redemption right are satisfied. See Part II,
Item 5, "Market for Common Equity and Related Stockholder Matters" for a
discussion of the Company's intentions to seek to list the Shares on an
Exchange.
Whenever the Company issues Shares of Common Stock (or Preferred Stock),
the Company is obligated to contribute the net proceeds from such issuance to
the Operating Partnership, and the Operating Partnership will be obligated to
issue an equivalent number of Units, or equivalent other interests, to the
Company. The Operating Partnership Agreement permits the Operating
Partnership, without the consent of the Unitholders, to sell additional Units
or other partnership interests and add limited partners.
GROWTH STRATEGIES
The Company's business objectives are to maximize the current return to
its shareholders through increases in cash flow and to increase long-term total
returns to shareholders through appreciation in the value of the Common Stock.
The Company intends to manage its Communities intensively to seek to maximize
current and long-term income and to increase the value of its assets, to
develop high quality apartment communities for long-term ownership, and to
acquire existing apartment communities where opportunities for favorable
investment returns exist. The Company is committed to achieving these
objectives by pursuing the following growth strategies and by engaging third
parties, including the Roberts Companies, for assistance as appropriate:
- Maximize cash flow from operations of the Communities - by seeking through
intensive management to maintain high occupancy levels, obtain regular rent
increases, manage resident turnover efficiently, and control operating
expenses.
- Develop new multifamily apartment communities in Atlanta and also in the
Southeast region - consistent with management's historical policies of
constructing and effectively managing high quality multifamily communities
for long-term income and value enhancement.
- Acquire additional multifamily communities in Atlanta and also in the
Southeast region where, in the judgment of the Board of Directors, the
Company's business strengths have the potential to increase property value
and opportunities exist for enhanced investment returns.
- Pursue additional offerings of debt or equity securities to raise funds to
pursue the foregoing management, development and acquisition growth
strategies, each of which is discussed in more detail below.
Property Management Strategy. The Company believes that having its
Communities intensively managed is a fundamental element of its growth
strategy. Roberts Management will continue to manage the Communities for the
Company. As of December 31, 1996, Roberts Management employed approximately 45
property management personnel, including property managers, leasing managers,
leasing consultants, maintenance supervisors and technicians, and accounting
personnel. 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 Roberts Management's depth will enable it to deliver quality services,
thereby promoting resident satisfaction, improving resident retention, and
enhancing the value of each of the Communities.
Roberts Management's strategy will continue to be (i) to increase the
average occupancy and rental rates as market conditions permit, (ii) to
minimize resident turnover through strict review of creditworthiness and
ability to meet lease obligations, and (iii) to continue to monitor operating
expenses to increase net operating income at each of the Communities. The
geographic concentration of the Communities allows senior management of Roberts
Management to visit each of the Communities frequently and to supervise closely
the implementation of the marketing, leasing and maintenance programs developed
by Roberts Management. The Company may in the future seek to achieve the
benefits
4
<PAGE> 8
of operating as a self-managed REIT by acquiring Roberts Management or
another management company or by engaging its own employees.
Development Strategy. The Company currently intends to continue to
develop high quality apartment communities for long-term ownership. The
Company believes that the barriers to new development in the Atlanta market
will continue to constrain the rate of apartment community construction in
Atlanta. These barriers include governmental growth control; a difficult
rezoning and permitting process; and the limited availability of well-located
sites. The Company believes that these restraints on construction, coupled
with the predicted continued growth in population and household formations,
present an excellent opportunity for the Company to achieve favorable returns
on the development of well-located high quality apartment communities.
Roberts Properties has traditionally performed the development function
for limited partnerships sponsored by Mr. Roberts. Roberts Properties will
perform that function for the Operating Partnership with respect to the Howell
Ferry Community and the second phase of Plantation Trace, and Roberts
Properties may continue to do so for other projects in the future. The Company
may seek to perform its own development activities by engaging its own
employees or by acquiring Roberts Properties.
During the past 12 years the Roberts Companies have developed, constructed
and/or managed over 3,300 residential units. The Company believes that the
number and quality of the apartment units developed by the Roberts Companies,
the relationships Mr. Roberts and employees of the Roberts Companies have
developed with local permitting and governmental authorities, and the Roberts
Companies' experience with the development, construction and financing process
will minimize the barriers to new development often faced by less experienced
developers and national developers attempting to enter the Atlanta market.
Although the experience of the Roberts Companies will be most helpful to the
Company in the Atlanta area, the Company believes that such experience will
also enable the Company to develop multifamily apartment communities in other
areas in the Southeast. In such event the Company may, however, seek
experienced local real estate professionals to assist in developing communities
with the standards and features developed in the competitive Atlanta market.
Although the Company presently intends to engage the Roberts Companies in
its development activities, the Company may hire other development or
construction companies in Atlanta and elsewhere if it deems it to be in the
Company's best interests to do so. The most likely development scenario for
the Operating Partnership is for it to acquire properties and/or land purchase
contracts, together with existing development, construction, architectural,
land planning, and other related agreements, from Roberts Properties and/or an
entity formed by Mr. Roberts or his affiliates. This procedure is essentially
the one followed by syndicated limited partnerships sponsored by Mr. Roberts in
the past. The Company may engage the Roberts Companies to develop properties
on a fee basis; the Company may enter into joint venture agreements with the
Roberts Companies; or the Company may acquire communities developed by the
Roberts Companies and owned by other affiliates of Mr. Roberts. The Company
may also enter into any such arrangements with independent third parties.
In analyzing the potential development of a particular community, the
Company will evaluate certain geographic, demographic, economic and financial
data including household, population and employment growth; prevailing rental
and occupancy rates in the immediate market area and the perceived potential
for growth in those rates; costs that affect profitability of the investment,
including construction, financing, operating and maintenance costs; income
levels in the area; existing employment bases; traffic volume, transportation
access, proximity to commercial centers and regional malls; and proximity to
and quality of the area's schools. The Company will also consider certain
physical elements regarding a particular site, including the probability of
zoning approval (if required), availability of utilities and infrastructure,
and other physical characteristics of the site.
For information regarding the development and construction of the Howell
Ferry Community and a second phase of Plantation Trace, see Part I, Item 2,
"Description of Property."
5
<PAGE> 9
Acquisition Strategy. In addition to its management and development
strategies, the Company also intends to grow externally by selectively
acquiring existing apartment communities from third parties in Atlanta and the
Southeast. The Company will selectively seek to acquire well-located apartment
communities that can be improved, through capital improvement programs and
intensive management, to meet the quality and performance standards of the
existing Communities. Such communities may fall into one or both of the
following categories: (i) communities that are in need of physical
improvements, or (ii) communities that, although well-located, have a history
of poor management and/or experience occupancy and financial problems that, in
either event, the Company believes it will be able to solve.
The Company believes that a suitable acquisition target should furnish the
Company with significant opportunity for increasing property value through rent
increases, reduction of expenses, or a combination of both through effective
property management or repositioning. Prior to acquiring an existing property
from a third party, the Operating Partnership (or Roberts Properties on its
behalf) will conduct a detailed market survey consisting of a study of the
specific market area in which the apartment community is located, to assure
that local demographics and economics are within the parameters desired by the
Company. The Operating Partnership will also undertake a study of the
competitive rental market to ascertain the strength and depth of the market
area through rental rate, occupancy level, and unit mix analysis. Finally, the
Operating Partnership will perform a physical inspection, a review of resident
mix, an assessment of current vacancies, and a complete rental analysis for the
target property. Capital improvement alternatives will also be examined,
including the economic feasibility of leaving the property "as-is" compared to
the benefits of investing in site redevelopment such as landscaping, signage,
exterior architectural redesign and construction, and modernization of the unit
interior.
Summary. Consistent with the Company's overall growth strategies, the
Company intends to continue to evaluate and initiate development and
acquisition opportunities. Other than as described in Part I, Item 2,
"Description of Property," there are no current negotiations with regard to any
specific acquisition or development. Although acquisition and development
activities will initially be concentrated in the Atlanta metropolitan and
nearby areas, future development and investment activities will, as noted
above, not be limited to this area, but may be pursued in other major
metropolitan areas within the Southeast.
ITEM 2. DESCRIPTION OF PROPERTY.
GENERAL
The Operating Partnership presently owns 11 multifamily apartment
communities containing a total of 2,194 apartment homes, 463 of which are under
construction or development. The existing Communities of River Oaks, Rosewood
Plantation, Plantation Trace, Preston Oaks, Highland Park, Windsong, Autumn
Ridge, Bentley Place, and Crestmark, containing a total of 1,731 apartment
units, are stabilized; the 146-unit Ivey Brook Community is in its initial
lease-up phase; and an 86-unit second phase of Crestmark, the 180-unit Howell
Ferry Community, and a 51-unit second phase of Plantation Trace are now under
construction or development. As of December 31, 1996, the Company owned nine
stabilized Communities that had a physical occupancy rate of 96.4%. (The
Company considers a Community to have achieved stabilized occupancy on the
earlier of (a) attainment of 95% occupancy as of the first day of any month, or
(b) one year after completion of construction.) With the exception of
Windsong, all of the Communities are located in the Atlanta metropolitan area.
The 232-unit Windsong Community is located on St. Simons Island approximately
10 miles east of Brunswick, Georgia.
The Company believes that the demand for multifamily housing in Atlanta
will increase due to Atlanta's growing population. According to the Atlanta
Regional Commission (the "ARC"), both population and job growth in Atlanta are
projected to be above the national average for the foreseeable future. (The
ARC is the regional planning and governmental coordination agency for the
10-county Atlanta Region.) Based upon information provided by the ARC and the
U.S. Census Bureau, the population of the Atlanta metropolitan area is
projected to grow 40.9% for the period from 1990 to 2010. According to the
Georgia Department of Labor, the metropolitan Atlanta unemployment rate was
4.5% in 1995, which is below the 1995 Georgia unemployment rate of 5.2% and the
1995 U.S. unemployment rate of 5.6%.
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<PAGE> 10
According to the ARC, the population of metropolitan Atlanta increased by
50.14% from 1980 to 1995, and nine metropolitan Atlanta counties rank among the
nation's top 50 fastest growing counties. As reported by the ARC, the Atlanta
metropolitan area currently has a population of approximately 2,847,000, making
it the ninth largest metropolitan area in the country and the largest in the
Southeast.
Certain basic information regarding the Communities and the retail centers
is summarized in the table on following page.
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<PAGE> 11
THE COMMUNITIES
<TABLE>
<CAPTION>
Year
Completed Number Approximate Average
or to be Of Rentable Area Unit Size
Community Location Completed Units (Square Feet) (Square Feet)
--------- -------- --------- ------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Existing Communities:
Windsong St. Simons
Island, GA 1975 232 225,624 973
Plantation
Trace Duluth, GA 1990 182 229,202 1,259
River Oaks Duluth, GA 1992 216 276,046 1,278
Rosewood
Plantation Norcross, GA 1994 152 192,352 1,265
Preston Oaks Atlanta, GA 1995 189 235,532 1,246
Highland Park Atlanta, GA 1995 188 231,634 1,232
Autumn Ridge Atlanta, GA 1971 207 281,700 1,361
Bentley Place(3) Tucker, GA 1993 117 108,328 926
Crestmark(4) Douglasville, GA 1993 248 254,591 1,027
Communities Under Construction or to Be Developed:
Ivey Brook Norcross, GA 1997 146 195,456 1,339
Second Phase of
Crestmark Douglasville, GA 1997 86 105,560 1,227
Second Phase of
Plantation Trace Duluth, GA 1996 51 79,250 1,554
Howell Ferry Duluth, GA 1997 180 233,870 1,299
-------- --------- -----
Total/ 2,194 2,650,066
======== =========
Average 1,208
=====
- -------------------------
<CAPTION>
December 1996 Average
Average Rental Rates Occupancy
---------------------------------- for the 12
Per Square Months Ended
Community Per Unit Foot Dec. 31, 1996
--------- ---------- ----- -------------
<S> <C> <C> C>
Existing Communities:
Windsong $607 $0.62 98%
Plantation
Trace $837 $0.67 99%
River Oaks $869 $0.68 98%
Rosewood
Plantation $872 $0.69 99%
Preston Oaks $919 $0.74 99%
Highland Park $869 $0.71 N/A (1)
Autumn Ridge $724 $0.53 N/A (2)
Bentley Place(3) $730 $0.79 99%
Crestmark(4) $776 $0.76 98%
Communities Under Construction or to Be Developed:
Ivey Brook $925 $0.69 N/A (5)
Second Phase of
Crestmark N/A N/A N/A (6)
Second Phase of
Plantation Trace N/A N/A N/A
Howell Ferry N/A N/A N/A
</TABLE>
RETAIL CENTER
<TABLE>
<CAPTION>
Average
Year RETAIL CENTERS Occupancy
Completed Approximate December 1996 for the 12
or to be Rentable Area Average Rental Rates Months Ended
Retail Center Location Completed (Square Feet) Per Square Foot Dec. 31, 1996
------------- -------- --------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Shoppes of
Plantation Duluth, GA 1992 7,350 $1.40 100%
Shoppes of
River Oaks Duluth, GA 1995 8,348 $1.33 40%
--------
Total 15,698
========
</TABLE>
(1) Highland Park completed its lease-up phase in March 1996, and its 12 month
historical occupancy percentage is not comparable. Its occupancy as of
December 31, 1996 was 96%.
(2) Autumn Ridge underwent a redevelopment program in 1996 and its 12 month
historical occupancy percentage is not comparable. Its occupancy as of
December 31, 1996 was 92%.
(3) The Company acquired Bentley Place in March 1996 as described elsewhere in
this report.
(4) The Company acquired Crestmark in June 1996 as described elsewhere in this
report.
(5) Ivey Brook began its lease-up phase in September 1996, and its occupancy as
of December 31, 1996 was 27%.
(6) As of December 31, 1996, the second phase of Crestmark was under
construction.
8
<PAGE> 12
Certain annual operating data regarding 10 of the Communities and the
second phase of Crestmark are summarized in the following table. (The
remaining two Communities are still in initial lease-up or under development.)
Except for those figures noted with an asterisk, the occupancy rates shown
represent the average physical occupancy of the applicable Community calculated
by dividing the total number of vacant days by the total possible number of
vacant days for each year and then subtracting the resulting number from 100%.
The figures noted with asterisks reflect the applicable data on December 31 of
the specified year and are not annualized, because the applicable Community was
under construction and in its initial lease-up period during at least a portion
of that year. During lease-up, units are leased as they are constructed and
made ready for occupancy building by building, thus annualization of data is
not possible during that period.
<TABLE>
<CAPTION>
Occupancy Rate Average Effective Annual Rental Rates
-------------- -------------------------------------
1992 1993 1994
---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Month
Completed Per Per Per Per Per Per
Community Initial Leaseup 1992 1993 1994 1995 1996 Unit Sq. Ft. Unit Sq. Ft. Unit Sq. Ft.
- --------- --------------- ---- ---- ---- ---- ---- ---- ------- ---- ------- ---- -------
Windsong Prior to 1991 98% 98% 98% 98% 98% $514 $0.53 $528 $0.54 $563 $0.58
Plantation
Trace 9/90 98% 98% 98% 98% 99% $718 $0.56 $750 $0.59 $775 $0.61
River Oaks 2/93 77%* 100%* 98% 99% 98% $762* $0.60* $772* $0.61* $787* $0.62
Rosewood
Plantation 5/94 N/A 22% 100%* 99% 99% N/A N/A N/A $0.62* $796* $0.63*
Preston Oaks 8/95 N/A N/A N/A 100% 99% N/A N/A N/A N/A N/A N/A
Highland Park 3/96 N/A N/A N/A 68% 96%* N/A N/A N/A N/A N/A N/A
Autumn Not Not Not Not Not Not Not Not Not
Ridge (2) Prior to 1995 Avail. Avail. Avail. 89% 92% Avail. Avail. Avail. Avail. Avail. Avail.
Bentley
Place (3) 9/93 N/A N/A N/A 99% 99% N/A N/A N/A N/A $684 $0.74*
Crestmark(4) 4/94 N/A 75% 98%* 99% 98% N/A N/A N/A N/A $688 $0.67*
Ivey
Brook (5) [In process] N/A N/A N/A N/A 27% N/A N/A N/A N/A N/A N/A
Second Phase
of Crestmark [In process] N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
<CAPTION>
Average Effective Annual Rental Rates
-------------------------------------
1995 1996
---- ----
<S> <C> <C> <C> <C> <C>
Month
Completed Per Per Per Per
Community Initial Leaseup Unit Sq. Ft. Unit Sq. Ft.
- --------- --------------- ----- ------- ----- -------
Windsong Prior to 1991 $567 $0.59 $589 $0.61
Plantation
Trace 9/90 $786 $0.62 $817 $0.65
River Oaks 2/93 $820 $0.64 $855 $0.67
Rosewood
Plantation 5/94 $814 $0.64 $852 $0.67
Preston Oaks 8/95 $885 $0.71* $889 $0.71
Highland Park 3/96 $819* $0.67* $805 $0.65
Autumn
Ridge (2) Prior to 1995 $711(2) $0.52(2) $724 $0.53
Bentley
Place (3) 9/93 $675 $0.73 $709 $0.77
Crestmark(4) 4/94 $688 $0.67 $736 $0.72
Ivey
Brook (5) [In process] N/A N/A $925* $0.69*
Second Phase
of Crestmark [In process] N/A N/A $N/A N/A
</TABLE>
____________________
(1) Throughout this table, "N/A" means "not applicable," i.e., no unit in the
Community was available to be occupied during the relevant year.
(2) The Operating Partnership purchased Autumn Ridge from an independent
third party on December 15, 1995 and commenced redevelopment of Autumn
Ridge shortly thereafter. Occupancy and rental data regarding Autumn
Ridge prior to its acquisition are not available. For that reason, the
1995 Autumn Ridge occupancy rate and rental rates are as of December 31,
1995. In addition, Autumn Ridge underwent a redevelopment program during
1996, and the 1996 Autumn Ridge occupancy rate and rental rates are as of
December 31, 1996.
(3) The Company acquired Bentley Place in March 1996 as described elsewhere
in this report.
(4) The Company acquired Crestmark in June 1996 as described elsewhere in this
report.
(5) Ivey Brook began its lease-up phase in September 1996, and its occupancy
as of December 31, 1996 was 27%.
9
<PAGE> 13
As described below, the Communities are located in six submarkets of the
Atlanta metropolitan area and on St. Simons Island, Georgia. Each heading
identifies the Community or Communities within the specified submarket.
Population and employment data provided for each submarket were in each case
obtained from the ARC. Multiple Communities are located in each of the Duluth,
Peachtree Corners and Perimeter Center/North Springs submarkets, thus those
Communities compete not only with unaffiliated apartment communities but also
with each other. Please see "Summary of Debt Secured by the Communities,"
which follows the description of the individual Communities, for an explanation
of the terms of the Company's secured indebtedness.
DULUTH AREA - PLANTATION TRACE, RIVER OAKS, AND HOWELL FERRY COMMUNITIES
Duluth. The City of Duluth is located in northwest Gwinnett County, which
from 1985 until 1990 ranked first in the nation in growth among counties with a
population of more than 100,000. Since 1980, Gwinnett's population has
increased 118% to a current level of 362,800. Gwinnett's strong employment
base, transportation networks, excellent public education system and affordable
home prices are factors that contribute to the county's remarkable growth.
Home to more than 247 international firms and over 700 manufacturing and high
technology firms that generate many of its 182,300 jobs, the county leads all
metropolitan Atlanta counties in percentage employment growth, increasing 181%
since 1980. Duluth has exceeded even Gwinnett County as a whole in percentage
of population growth; its population has increased 223% since 1980. Duluth is
located near I-85 and Gwinnett Place Mall, a 1,100,000 square foot regional
mall.
Plantation Trace. Plantation Trace, which was completed in 1990, consists
of 20 two and three story Nantucket-style stone and wood sided buildings
located on a 16.9 acre site on Pleasant Hill Road approximately one-half mile
west of its intersection with Peachtree Industrial Boulevard. In 1990, this
182-unit garden apartment community received the Aurora Award from the
Southeast Builders' Conference for "Best Rental Apartment Community in the
Southeast."
The Plantation Trace Community, with its traditional award-winning
architecture and landscaped grounds, features a large clubhouse with a fitness
center, two lighted tennis courts, sand volleyball court, multi-station
playground, free-form swimming pool, small wading pool, stone paver pool deck
and a covered whirlpool spa. In addition to upscale amenities, Plantation
Trace offers such interior features as nine foot ceilings, crown molding,
pickled wood cabinetry in the kitchen and bath, marble vanity tops, fireplaces,
vaulted ceilings and Palladian windows in select units, designer wallcoverings
and full laundry rooms with washer and dryer connections.
Plantation Trace has a variety of floorplans, including 28 one bedroom
units ranging from 901 to 929 square feet, 48 two bedroom standard and 66 two
bedroom roommate units ranging from 1,228 to 1,298 square feet, and 40 three
bedroom units ranging from 1,471 to 1,494 square feet. The weighted average
unit size is 1,259 square feet. As of December 31, 1996, the Community was 98%
occupied and rental rates ranged from $695 to $985 per month, with a weighted
average monthly rent of $837 per unit and $0.67 per square foot. Local real
estate taxes were $166,571 in 1996.
51-Unit Second Phase of Plantation Trace. A second phase of 51 apartment
units is currently under development on 12.33 acres adjacent to the existing
Plantation Trace Community. Construction of this 51-unit expansion ("Phase
II") is expected to be completed in 1997. Phase II will contain 25 two bedroom
units of approximately 1,350 square feet each and 26 three bedroom units of
approximately 1,750 square feet each. Each of the 51 units will have an
approximately 200 square foot attached garage. The anticipated monthly rental
rates are $945 for a two bedroom garage unit and $1,075 for a three bedroom
garage unit, resulting in a weighted average monthly rent of $1,011 per unit
and $0.65 per square foot. Roberts Properties is developing Phase II for the
Operating Partnership and may, at its discretion, change the unit mix or site
plan, provided that any material change must be approved by the Company's Board
of Directors.
The architectural style, land planning, landscaping and amenities of Phase
II are expected to be similar to those of the Company's other Communities, and
the enlarged Plantation Trace Community will continue to be managed by Roberts
Management. A modern fitness and exercise facility and a second free-form
swimming pool will be added to the existing amenities at Plantation Trace. The
fitness facility to be located on the Phase II property will be approximately
10
<PAGE> 14
1,550 square feet in size, with individual aerobics equipment and workout
stations similar to the exercise facilities at the Company's other Communities.
The second swimming pool will be similar in design to the existing pools at
the Communities. Phase II will also provide the Plantation Trace Community
direct access to the Chattahoochee River, as well as to jogging trails and
nature areas to be developed around the existing lake and along the river.
The construction of Phase II will be completed pursuant to a fixed price
construction contract with Roberts Construction in the amount of $3,157,000.
Assuming that Phase II is built to the initial contract specifications, any
excess construction costs not approved by the Operating Partnership as a change
order will be borne by Roberts Construction, and if Roberts Construction's
costs are lower than anticipated, its savings will constitute additional
profit. Any adverse soil conditions that may be encountered and any stormwater
management facilities that may be required other than the existing lake will
not be covered by the fixed price construction contract, and any costs
associated with these conditions will be borne by the Operating Partnership.
If, during the construction of Phase II, the Operating Partnership upgrades the
contract plans and specifications from those agreed to initially, such change
orders may increase the amount paid to Roberts Construction. The Company
anticipates that there will be approximately $157,850, or approximately 5% of
the contract price, in net profit to Roberts Construction on the construction
contract.
The land on which Phase II will be constructed is presently unencumbered.
The development and construction of Phase II will be funded from the Company's
working capital.
River Oaks. River Oaks, which was completed in 1992, consists of 22 two
and three story Charleston-style brick and wood sided buildings located on a
31.6 acre site on Pleasant Hill Road adjacent to the Chattahoochee River to the
west and the Plantation Trace Community to the east. The River Oaks Community,
with its traditional architecture and landscaped grounds, features a large
clubhouse with a fitness center, two lighted tennis courts, sand volleyball
court, multi-station playground, free-form swimming pool, stone paver pool
deck, and covered whirlpool spa. In addition to upscale amenities, River Oaks
offers such interior features as nine foot ceilings, crown molding, garden
tubs, pickled pine cabinetry in the kitchen and bath, marble vanity tops,
fireplaces and vaulted ceilings in select units, designer wallcoverings, and
full laundry rooms with washer and dryer connections.
River Oaks has a variety of floor plans, including 40 one bedroom units at
approximately 907 square feet, 32 two bedroom roommate, 24 two bedroom deluxe
and 48 two bedroom standard units ranging from 1,276 to 1,309 square feet, and
72 three bedroom units with approximately 1,457 square feet. The weighted
average unit size is 1,278 square feet. As of December 31, 1996, the Community
was 96% occupied and rental rates ranged from $680 to $1,020 per month, with a
weighted average monthly rent of $869 per unit and $0.68 per square foot.
Local real estate taxes were $200,481 in 1996.
Howell Ferry. The 180-unit Howell Ferry Community will be located on an
approximately 22.5 acre property near the southeast corner of Peachtree
Industrial Boulevard and Howell Ferry Road in Duluth, approximately one mile
southeast of Plantation Trace and River Oaks. Howell Ferry will contain 28 one
bedroom units of approximately 915 square feet each, 46 two bedroom standard
units of approximately 1,275 square feet each, 47 two bedroom roommate units of
approximately 1,300 square feet each, and 59 three bedroom units of
approximately 1,500 square feet each. Leasing is anticipated to start in
October 1997, with anticipated monthly rental rates ranging from $675 to $950
per month, resulting in a weighted average monthly rent of $848 per unit and
$0.65 per square foot. Roberts Properties is developing Howell Ferry for the
Operating Partnership and may, at its discretion, change the unit mix, square
footages, or site plan, provided that any material change must be approved by
the Company's Board of Directors. The Company anticipates that local real
estate taxes will be approximately $180,000 in 1999, the first year the
Community will be taxed as a completed and stabilized property.
The architectural style, land planning, landscaping and amenities of
Howell Ferry are expected to be similar to those of the Company's other
Communities. The Howell Ferry Community will be managed by Roberts Management
and will feature a large clubhouse with fitness center, club room and laundry
room, similar to the clubhouses at the Company's other Communities. Howell
Ferry will also provide its residents a free-form swimming pool, two lighted
tennis courts, a children's playground, and an approximately 12 acre nature
area.
11
<PAGE> 15
The total estimated acquisition, development, and construction cost for the
Howell Ferry Community is $12,268,000. The Company acquired the site for Howell
Ferry on March 29, 1996 from Roberts Properties, Inc. for $1,628,000. The
Company will use $2,186,000 of its working capital, along with an $8,454,000
mortgage loan (for which the Company has not yet obtained a commitment), to
develop and construct Howell Ferry.
The construction of Howell Ferry will be completed pursuant to a fixed
price construction contract with Roberts Construction in the amount of
$8,828,600. Assuming that Howell Ferry is built to the initial contract
specifications, any excess construction costs not approved by the Operating
Partnership as a change order will be borne by Roberts Construction, and if
Roberts Construction's costs are lower than anticipated, its savings will
constitute additional profit. Any adverse soil conditions that may be
encountered or any additional stormwater management facilities that may be
needed other than the existing floodplain will not be covered by the fixed
price construction contract, and any costs associated with these conditions
will be borne by the Operating Partnership. If, during the construction of
Howell Ferry, the Operating Partnership upgrades the contract plans and
specifications from those agreed to initially, such change orders may increase
the amount paid to Roberts Construction. The Company anticipates that there
will be approximately $250,000, or approximately 2.8% of the contract price, in
net profit to Roberts Construction on the construction contract.
PEACHTREE CORNERS AREA - ROSEWOOD PLANTATION AND IVEY BROOK COMMUNITIES
Peachtree Corners. Located in west Gwinnett County, Peachtree Corners
benefits from the existing and improving transportation networks, employment
resources and consumer conveniences in the area. Over 400 firms are located in
the Peachtree Corners area, occupying more than 4,500,000 square feet of office
and distribution space and providing Gwinnett County with approximately 35% of
its total jobs. Peachtree Corners' most prominent office/institutional
development is Technology Park/Atlanta, which has become the premier location
in Georgia for national and international high tech companies. With over
2,100,000 square feet of space occupied by more than 70 firms, approximately
4,500 people are employed at Technology Park/Atlanta. Almost equidistant
within eight miles of three regional shopping malls, each containing over
1,000,000 square feet of retail space, the area is conveniently accessible to
major retail activity centers.
Rosewood Plantation. This Community, which was completed in May 1994,
targets the upper tier of the apartment resident market. The 152-unit
Community is located on Spalding Drive just southwest of Holcomb Bridge Road on
a 21 acre site. Since 1989 each of the elementary, middle and high schools
serving the Community has been designated as the Gwinnett County School of
Excellence by the Gwinnett County Board of Education for at least one year, and
the middle school has been designated as a Georgia School of Excellence by the
Georgia Department of Education and a National Blue Ribbon School of Excellence
by the U.S. Department of Education. Due partly to the highly-regarded public
school system in the area, Rosewood Plantation is an attractive choice for
white collar professionals and families who choose the rental lifestyle.
Rosewood Plantation is composed of 7 two and three story buildings with brick
accents and wood siding.
Rosewood Plantation has 29 one bedroom units with 914 square feet, 45 two
bedroom standard units with 1,247 to 1,276 square feet, 43 two bedroom roommate
units with 1,310 square feet, and 35 three bedroom units with 1,510 square
feet. The weighted average unit size is 1,265 square feet. As of December 31,
1996, the Community was 99% occupied and rental rates ranged from $700 to
$1,045, resulting in a weighted average monthly rent of $872 per unit and $0.69
per square foot. Local real estate taxes were $121,683 in 1996.
Rosewood Plantation's amenities include a clubhouse offering an exercise
room with weight equipment, and a clubroom with a big screen television and bar
with kitchen facilities. The recreational area includes a free-form swimming
pool with stone paver deck, lighted tennis court, children's playground,
walking trails through the nature area, and a two acre lake.
12
<PAGE> 16
Each building is patterned after the architecture of Charleston, featuring
columned porches, transom windows, and distinctive gables. The interior of
each apartment home offers high-end finishes such as crown molding, garden
tubs, marble vanity tops, bay windows, and large walk-in closets.
Ivey Brook. The Ivey Brook Community - now in its initial lease-up
phase - consists of 146 upscale apartment units comprising approximately 195,456
square feet in a total of 12 buildings located on an 11.8 acre site at the
intersection of Holcomb Bridge Road and Peachtree Corners Circle in the
Peachtree Corners area. Ivey Brook benefits from its excellent location at a
major intersection amidst an established multifamily market area in close
proximity to Gwinnett County's largest employment base.
Ivey Brook has 13 one bedroom units with approximately 956 square feet, 36
two bedroom standard units with approximately 1,231 square feet, 50 two bedroom
roommate units with approximately 1,321 square feet, and 47 three bedroom units
with approximately 1,546 square feet. The weighted average unit size is
approximately 1,339 square feet. As of December 31, 1996, Ivey Brook was 27%
occupied and its rental rates ranged from $765 to $1,090, resulting in a
weighted average monthly rent of $925 per unit and $0.69 per square foot. Ivey
Brook will be subject to local real estate taxes which, based on other similar
properties in Gwinnett County, the Operating Partnership anticipates will be
approximately $123,000 in 1998, the first year the Community will be taxed as a
completed and stabilized property.
The buildings are of traditional design with either stacked stone or brick
accents and wood or vinyl siding with the facades varying from building to
building. Exterior features include gables, bay windows, varying paint colors
with white trim, and private patios or balconies. Extensive landscaping
includes mature trees, flowers, and shrubbery. The interior features include
crown molding in the living/dining rooms, designer wallcoverings, separate
laundry rooms, breakfast bars, garden tubs, and private balconies.
Recreational amenities include a swimming pool and fitness center.
PERIMETER CENTER/NORTH SPRINGS AREA - PRESTON OAKS AND HIGHLAND PARK
COMMUNITIES
Perimeter Center/North Springs. The Perimeter Center/North Springs area
offers convenient proximity and access to both urban and suburban employment
bases and retail conveniences. Georgia 400 and I-285 provide direct access
within minutes to major regional malls such as North Point Mall and Perimeter
Center Mall. The Phipps Plaza/Lenox Mall/Buckhead area and downtown Atlanta's
Central Business District are readily accessible via the Georgia 400 extension,
which connects to I-85 South near downtown Atlanta.
Within this corridor is a large base of residential, commercial and office
developments. The south quadrant of the area includes medical facilities such
as Northside Hospital, St. Joseph's Hospital and Scottish Rite Children's
Hospital. Perimeter Center encompasses office developments that exceed
18,500,000 square feet of space, with such Class A facilities as Ravinia,
Northpark Town Center, Concourse and Perimeter Center Office Park. Several
prominent companies such as Holiday Inn, UPS and Hewlett-Packard have located
their worldwide or regional headquarters within the Perimeter Center area.
This area, which includes portions of Fulton and DeKalb Counties, has an
average household income of approximately $73,000, which is considerably higher
than the metropolitan Atlanta average of $44,913. The median value of a single
family home in this area exceeds $200,000.
Preston Oaks. This Community, which was completed in August 1995, is a
two and three story mid-density multifamily residential community consisting of
8 two and three story buildings located on Mt. Vernon Highway in the Perimeter
Center area. The traditional architecture consists of stacked stone and vinyl
siding incorporating details of gabled roofs, Palladian windows, columns, and
bay windows. The Community consists of 36 one bedroom units, 92 two bedroom
units, and 61 three bedroom units. The 189 units range in size from 902 to
1,440 square feet, with a weighted average unit size of 1,246 square feet.
13
<PAGE> 17
Preston Oaks is conveniently located less than one mile from Perimeter
Mall, a 1,200,000 square foot regional mall, and in close proximity to the
area's numerous office developments. Several stand-alone restaurants and major
retail centers either exist or are being developed near the Community.
The Community is located on a 10.4 acre site and features extensive
landscaping. The amenities are similar to those of the other existing
Communities, with custom swimming pool, lighted tennis court, fitness center
with individual work-out stations, and a large clubhouse. Interior features
include garden tubs, oversized walk-in closets, pickled pine cabinetry in the
kitchen and bath, crown molding, mirrored walls, and chair-railing in the
dining rooms.
As of December 31, 1996, Preston Oaks was 99% occupied and its rental
rates ranged from $720 to $1,100 per month, resulting in a weighted average
monthly rent of $919 per unit and $0.74 per square foot. The Company estimates
that local real estate taxes for 1996 will be approximately $182,000.
Highland Park. This Community consists of 188 upscale apartment units in
a total of eight buildings on a 10.9 acre site. Located on Dunwoody Place in
the North Springs area of north Fulton County, Highland Park benefits from its
close proximity to Georgia 400, which provides direct access within minutes to
major retail and employment areas to the north such as North Point Mall and
Windward, and to the south such as Perimeter Mall and Perimeter Center.
Highland Park has 42 one bedroom units with 902 square feet, 32 two
bedroom standard units with 1,225 square feet, 62 two bedroom roommate units
with 1,285 square feet, and 52 three bedroom units with 1,440 square feet. The
weighted average unit size is 1,232 square feet.
The buildings are of a traditional design with stacked stone accents and
vinyl siding with the facades varying from building to building. Exterior
features include gables, bay windows, various paint colors with white trim, and
private patios or balconies. Extensive landscaping includes mature trees,
flowers and shrubbery. The interiors feature crown molding in the
living/dining rooms, designer wallcoverings, separate laundry rooms, breakfast
bars, garden tubs and private balconies. Recreational amenities include a
swimming pool, tennis court, and fitness center.
As of December 31, 1996, Highland Park was 96% occupied and its monthly
rental rates ranged from $700 to $1,020 per month, resulting in a weighted
average monthly rent of $869 per unit and $0.71 per square foot. The Company
estimates that local real estate taxes for 1996 will be approximately $180,000.
EAST COBB AREA - AUTUMN RIDGE COMMUNITY
Cobb County. Autumn Ridge is located in the East Cobb area of Cobb
County, approximately one mile east of I-75 and approximately two and one-half
miles north of I-285. Cobb County is immediately northwest of Atlanta,
bisected by I-75 and encompassing approximately 340 square miles. Cobb County
ranks third in the metropolitan Atlanta area with a population of more than
516,000 residents and 205,000 households. Cobb's median household income is
among the area's highest at more than $48,000 per household. Between 1989 and
1994 Cobb's population increased approximately 16.5%. Manufacturing remains
strong in Cobb, with Lockheed Aeronautical Systems as the top employer in the
county, employing more than 10,500 workers.
Cobb also boasts a strong retail base with two regional malls, Cumberland
Mall and Town Center Mall, in the southern and northern portions of the county,
respectively. Each mall exceeds 1,000,000 square feet and is the retail hub of
its respective area. Four interstate highways (I-75, I-20, I-285 and I-575)
traverse Cobb.
Delk Road Area. Delk Road is the second I-75 exit north of I-285 and
connects I-75 with the area's two other major north/south thoroughfares: Cobb
Parkway to the west and Powers Ferry Road to the east. Several office and
business park developments that total more than 1,500,000 square feet of space
and include corporations such as Lockheed, Motorola, MetLife and State Farm
contribute to a large employment base of approximately 10,000 people within the
Delk Road area. Retail conveniences support the large work force with shopping
centers, restaurants, and entertainment facilities.
14
<PAGE> 18
Autumn Ridge. The Autumn Ridge Community, which was completed in 1971, is
situated on Bentley Road just south of Delk Road on approximately 17 acres and
consists of 21 two story buildings containing a total of 207 apartment units.
Autumn Ridge features large floor plans with either private entries at the
building fronts or through breezeways. The buildings have French stucco
exteriors, offering large private patios or balconies, with a mixture of
townhouse and garden apartments. Each of the units offers designer
wallcoverings and fully-equipped kitchens including frost-free refrigerators,
built-in dishwashers and washer/dryer connections. The on-site amenities
include a clubhouse, swimming pool and two children's' playgrounds.
Autumn Ridge has a variety of floorplans, including 143 two bedroom
garden and townhouse plans ranging from 1,200 to 1,500 square feet and 64 three
bedroom garden and townhouse plans ranging from 1,400 to 2,000 square
feet. The weighted average unit size is 1,361 square feet. As of December 31,
1996, Autumn Ridge was 92% occupied and rental rates ranged from $700 to $950
per month, with a weighted average monthly rent of $724 per unit and $0.53 per
square foot. Local real estate taxes were $76,748 in 1996.
The Company recently completed a $1,500,000 redevelopment program at
Autumn Ridge that included new appliances and kitchen flooring, new HVAC units
and new roofs on all the buildings. The redevelopment program also included
upgrading Autumn Ridge's clubhouse and amenities area, enhancing its
landscaping, and creating a new entrance area and sign to improve its
architectural appeal. The Company funded the cost of the program from its
working capital. The Company plans to rehabilitate units of vacating residents
as necessary.
The Company acquired Autumn Ridge for $7,775,000 in cash on December 15,
1995. The Company funded the purchase price from current working capital.
PLEASANTDALE AREA - BENTLEY PLACE COMMUNITY
DeKalb County. As one of Atlanta's core counties at the heart of the 18
county metropolitan statistical area, DeKalb County benefits not only from its
location but also from its mature infrastructure. DeKalb boasts an excellent
transportation network composed of three interstate highways: I-285, I-85 and
I-20. An established network of state and local secondary roads, including the
Stone Mountain Freeway, crosses the county, providing convenient accessibility
to all parts of the metropolitan area.
As metropolitan Atlanta's population recently surpassed 2,800,000, DeKalb
County's population topped 585,400, increasing by more than 102,300 or 21%
since 1990. An estimated 25% of the metropolitan Atlanta populace resides in
DeKalb County. The average household income in DeKalb County is $35,721. Home
to over 300 international companies and more than 240 Fortune 500 firms,
DeKalb-based businesses provide approximately 340,000 jobs.
Pleasantdale Area. The area in which Bentley Place is located is referred
to as Pleasantdale, which is a developed area convenient to I-85 and I-285 in
northwest DeKalb County and southeast Gwinnett County. Pleasantdale is home to
major employers such as UPS, Scientific-Atlanta, Kraft Foodservice, Rockwell
International and Westinghouse. The Pleasantdale area also includes the
Norfolk-Southern Industrial District, which contains more than 5,000,000 square
feet of warehouse/distribution space, including Lucent Technology's 1,300,000
square foot cable and fiber-optics manufacturing facility, which employs
approximately 3,500 people.
Bentley Place. Bentley Place, a 117-unit garden apartment community that
was completed in 1993, consists of 5 three story stacked stone and wood-sided
buildings located on a 4.6 acre site at the intersection of Pleasantdale Road
and Tucker-Norcross Road, approximately 1.7 miles southeast of the intersection
of Pleasantdale Road and I-85. The Company acquired Bentley Place in March
1996.
The Bentley Place Community, with its traditional award-winning
architecture and landscaped grounds, features a large clubroom with a fitness
center, free-form swimming pool, stone paver pool deck and a whirlpool spa. In
addition to upscale amenities, Bentley Place offers such interior features as
crown molding, pickled wood cabinetry in the kitchen
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and bath, marble vanity tops, vaulted and trey ceilings in select units,
Palladian windows, designer wallcoverings, and full laundry room with washer
and dryer connections.
Bentley Place has a variety of floor plans, including 41 one bedroom units
of approximately 700 square feet, 40 two bedroom standard units of
approximately 1,016 square feet, and 36 two bedroom roommate units of
approximately 1,083 square feet. The weighted average unit size is 926 square
feet. As of December 31, 1996, Bentley Place was 100% occupied and rental
rates ranged from $620 to $815 per month, with a weighted average monthly rent
of $730 per unit and $0.79 per square foot. Local real estate taxes were
$93,177 in 1996.
THORNTON ROAD/I-20 AREA - CRESTMARK COMMUNITY
Douglas County. Douglas County, one of the 18 counties in the Atlanta
metropolitan statistical area, is located west of Atlanta and encompasses 202
square miles. The county is surrounded by Fulton, Cobb, Carroll and Paulding
Counties, with the Chattahoochee River as its southeastern border. Its
population was estimated at 85,000 in 1995, an increase of 20% since 1990.
Douglas County's economic base is diversified, having generated approximately
28,000 jobs in 1995. Employment has been growing at an annual rate of nearly
12% over the last 10 years. Douglas County benefits from its accessibility to
downtown Atlanta to the east via I-20 and to Hartsfield International Airport
to the southeast via Thornton Road/Camp Creek Parkway. Just across the county
line to the east lies the Fulton Industrial District, the Southeast's largest
contiguous industrial park. The Fulton Industrial District consists of
54,400,000 square feet of both manufacturing and warehouse space and stretches
six miles north and south along Fulton Industrial Boulevard. It represents 20%
of Atlanta's total inventory of warehouse/industrial space, and an additional
1,000,000 square feet is under construction. Numerous Fortune 500 companies
are represented in the Fulton Industrial District, employing more than 100,000
people.
Thornton Road/I-20 Area. Thornton Road is the third exit west of I-285 on
I-20 and connects I-20 with Hartsfield International Airport to the southeast
and the significant residential base of West Cobb and Paulding counties to the
north and east. Several office and business parks that total more than
2,000,000 square feet of space and include corporations such as BellSouth,
Mitsubishi, Robert Bosch Corporation, TDK Electronics, and Saab-Scania
contribute to a large employment base of approximately 20,000 people within the
Thornton Road area. Restaurant, hospitality and retail conveniences support
the existing employment and residential base in the Thornton Road corridor.
The area also benefits from its close proximity to the Fulton Industrial
District as well as the Six Flags Over Georgia amusement park, both of which
are less than three miles away. At the northwest corner of the Thornton
Road/I-20 interchange is the Columbia/HCA Parkway Medical Center, a 320-bed
acute care medical facility that employs approximately 600 people.
Crestmark. Crestmark, which was completed in 1993, consists of 9 three
and four story stacked stone and wood sided buildings located on a 23.4 acre
site on Thornton Road, approximately one-half mile north of its intersection
with I-20 in Douglas County. In 1993, this 248-unit garden apartment community
received two Aurora Awards from the Southeast Builders' Conference, one for
"Best Landscape Design in the Southeast" and another for "Best Recreational
Facility in the Southeast."
The Crestmark Community, with its traditional award-winning architecture
and landscaped grounds, features a large 14,000 square foot clubhouse with a
club room, full kitchen, fitness center and aerobics room, a business center
and conference room, two lighted tennis courts, multi-station playground,
walking and jogging trail, free-form swimming pool, stone paver pool deck and a
whirlpool spa. In addition to the upscale amenities, Crestmark offers such
interior features as nine foot ceilings, crown and chair-rail molding, pickled
wood cabinetry in the kitchen and baths, marble vanity tops, fireplaces,
vaulted and trey ceilings, Palladian and bay windows in select units, designer
wallcoverings and full laundry rooms with washer and dryer connections.
Crestmark has a variety of floorplans including 29 one bedroom standard
units with 704 square feet, 50 one bedroom deluxe units with 816 square feet,
33 two bedroom standard units with 1,005 square feet, 86 two bedroom deluxe
units with 1,110 square feet, and 50 three bedroom units with 1,295 square
feet. The weighted average unit size is 1,027 square feet. As of December 31,
1996, the Community was 95% occupied and rental rates ranged from $610 to
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$950 per month, with a weighted average monthly rent of $776 per unit and $0.76
per square foot. Local real estate taxes were $156,101 in 1996.
The 8.8 acre tract of undeveloped land adjacent to Crestmark was
encumbered by the following secured loans that the Company repaid in full
shortly after the closing of the Crestmark, L.P. merger: a first priority
secured loan owed to NationsBank, N.A. (South) in the amount of $324,778; and a
second priority secured loan owed to Mr. Roberts in the amount of $1,410,092.
The Company also repaid, shortly after the closing, $121,423 owed to Roberts
Construction for change orders from the original construction and $28,077 owed
to another company affiliated with Mr. Roberts for management start-up costs.
86-Unit Second Phase of Crestmark. The Company is in the final stage of
constructing a second phase of 86 apartment units on 8.8 acres adjacent to the
existing Crestmark Community. The second phase contains 19 one bedroom
standard units of 901 square feet each, 21 two bedroom standard units of 1,223
square feet each, 22 two bedroom roommate units of 1,285 square feet each, and
24 three bedroom units of 1,437 square feet each. The weighted average unit
size is 1,227 square feet. As of December 31, 1996, no units were completed,
and anticipated monthly rental rates ranged from $700 to $950, resulting in a
weighted average monthly rent of $823 per unit and $0.67 per square foot. The
Company expects that local real estate taxes on the second phase will be
approximately $54,000 in 1998.
The architectural style, land planning, landscaping and amenities of the
second phase of Crestmark are similar to those of the Company's other
Communities, and the enlarged Crestmark Community continues to be managed by
Roberts Management. The second phase adds a second free-form swimming pool, 17
garages, and 24 storage units to Crestmark's amenities.
Construction of the second phase of Crestmark is being completed pursuant
to a fixed price construction contract with Roberts Construction in the amount
of $4,515,015, as amended to include charge orders approved by the Company. The
Company anticipates that Roberts Construction will receive approximately
$312,000, or approximately 7% of the contract price, in net profit on the
construction contract. The Company is using its working capital to fund the
development and construction of the second phase.
ST. SIMONS ISLAND - WINDSONG COMMUNITY
St. Simons Island. St. Simons Island, located in Glynn County on the
southeast coast of Georgia, is approximately 75 miles north of Jacksonville, 85
miles south of Savannah, 275 miles southeast of Atlanta, and less than four
miles east of the city of Brunswick. Glynn County encompasses 439 square miles
and contains the "Golden Isles of Georgia," including St. Simons Island, Sea
Island, Jekyll Island, and Little St. Simons Island. Although its tropical
climate and coastal environment are inviting tourist attractions, large
companies such as Georgia Pacific, Hercules, Jered Brown Brothers, Rich SeaPak
and King & Prince Seafood have facilities in Glynn County and are the major
employers in Brunswick and on St. Simons Island. The population in both Glynn
County and on St. Simons Island has been increasing steadily since 1990, when
it totaled 62,496 and 13,784, respectively. According to the Brunswick/Glynn
County Development Authority, the 1995 estimated population was 66,930 for
Glynn County and 18,000 for St. Simons Island. Tourism is Glynn County's
largest employer and in 1994 supported approximately 52% of all employment in
Glynn County. The Golden Isles of Georgia are home to such high-end resorts as
the Cloister, the King & Prince Beach Resort, and the Sea Palms Golf & Tennis
Resort. Visitors to St. Simons Island will find a wide range of
accommodations, including seven hotels and more than 50 restaurants in the
quaint island village.
Windsong. Windsong, which was constructed in two phases in 1972 and 1974,
is situated on approximately 16 wooded acres and consists of 21 two story
buildings containing a total of 232 apartment units. It is located on Mallory
Street approximately two miles west of the Atlantic Ocean coastline. The
Community surrounds an approximately one acre lake.
The two story buildings within the Community are wood-sided, featuring
large private patios or balconies. With a mixture of townhouse and garden
apartments, Windsong offers either private entries at the building fronts or
through
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breezeways. Each of the units offers designer wallcoverings and fully equipped
kitchens including frost-free refrigerators, built-in dishwashers and
washer/dryer connections. The on-site amenities include two swimming pools,
two tennis courts, a heated jacuzzi pool, and a children's playground, as well
as picnic areas around the lake. The Company has recently improved the
amenities at Windsong, including construction of a new , pool, pool deck,
cabana, laundry facility, and maintenance building. The Company funded the
$382,000 cost of these improvements from its working capital.
Windsong has a variety of floorplans, including 56 one bedroom units of
approximately 695 square feet, 128 two bedroom garden and townhouse plans
ranging from 920 to 1,178 square feet, and 48 three bedroom garden and
townhouse plans ranging from 1,150 to 1,386 square feet. The weighted average
unit size is 973 square feet. As of December 31, 1996, Windsong was 95%
occupied and rental rates ranged from $525 to $750 per month, with a weighted
average monthly rent of $607 per unit and $0.62per square foot. Local real
estate taxes were $68,042 in 1996.
The table on the following page summarizes the amenities of each of the
Communities.
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<PAGE> 22
Summary of Amenities of the Communities
<TABLE>
<CAPTION>
Club-
Patio Washer house
Porch & Dryer Garden Fire- Vaulted Swimming Fitness Whirl- Car Tennis
Community Balcony Hook-ups Tubs places* Ceilings* Pool Center pool Wash Court(s)
- --------- ------- -------- ------ ------ --------- -------- ------- ------ ---- --------
Existing Communities
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Windsong Yes Yes No No No Yes-2 Yes (1) Yes No Yes-2
Plantation Yes Yes No Yes Yes Yes Yes Yes Yes Yes-2
Trace
River Oaks Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes-2
Rosewood Yes Yes Yes No No Yes Yes No Yes Yes-1
Plantation
Preston Oaks Yes Yes Yes No Yes Yes Yes No Yes Yes-1
Highland Yes Yes Yes No Yes Yes Yes No Yes Yes-1
Park
Laurelwood Yes Yes No No No Yes Yes (1) No No No
Bentley Place Yes Yes Yes No Yes Yes Yes Yes No No
Crestmark Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes-2
Communities Under Construction or to Be Developed:
Ivey Brook Yes Yes Yes No Yes Yes Yes No Yes No
Second Phase Yes Yes Yes No Yes Yes Yes (2) No No No
of Plantation
Trace
Second Phase Yes Yes Yes No Yes Yes No No No No
of Crestmark
Howell Ferry Yes Yes Yes No Yes Yes Yes No Yes Yes-2
<CAPTION>
Sand
Volley- Play Laundry
Community Ball ground Room Other
- --------- --------- ------- -------- ------
Existing Communities
<S> <C> <C> <C> <C>
Windsong No Yes Yes lake
Plantation Yes Yes Yes lake
Trace
Yes Yes Yes riverfront,
River Oaks nature preserve
Rosewood No Yes Yes lake,
Plantation nature preserve
Preston Oaks No No Yes
Highland No Yes Yes
Park
Laurelwood No Yes Yes
Bentley Place No No Yes
Crestmark No Yes Yes nature preserve
jogging trail
Communities Under Construction or to Be Developed:
Ivey Brook No No Yes
Second Phase No No No riverfront,
of Plantation lake,
Trace nature preserve
Second Phase No No No
of Crestmark
Howell Ferry No Yes Yes nature preserve
</TABLE>
____________________
*In select units
(1) Clubhouse only, no fitness center
(2) Fitness center, no clubhouse
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SUMMARY OF DEBT SECURED BY THE COMMUNITIES
Certain information regarding the Company's indebtedness secured by the
Communities is as follows:
<TABLE>
<CAPTION>
Principal Principal Fixed Monthly Payments
Balance at Maturity Balance at Interest Amortization of Principal and
Community Dec. 31, 1996 Date Maturity Rate Schedule Interest
--------- ------------- ---- -------- ---- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Plantation Trace $7,886,172 09-15-00 $7,481,501 (1) 7.75% 28-year $59,860
River Oaks $9,242,639 11-15-03 $8,513,092 (2) 7.15% 30-year $62,475
Rosewood Plantation $6,446,506 06-01-01 $6,042,040 (3) 7.375% 28-year $46,849
Preston Oaks $8,611,269 10-15-02 $8,024,627 (2) 7.21% 30-year $59,188
Highland Park $8,113,077 02-15-03 $7,554,673 (2) 7.30% 30-year $56,066
Autumn Ridge $4,950,573 04-15-06 $3,981,139 (2) 7.125% 25-year $35,739
Bentley Place $4,086,703 08-15-06 $3,554,094 (2) 7.10% 30-year $27,553
Crestmark $9,786,700 05-01-01 $9,195,508 (4) 7.50% 28-year $71,999
Windsong $4,218,747 02-01-00 $3,771,728 (5) 9.0% 22-year $37,918
</TABLE>
(1) The loan secured by the Plantation Trace Community may be prepaid upon
payment of a premium equal to the greater of (a) 1% multiplied by a
fraction having as its numerator the number of months to maturity and its
denominator the number of months in the full term of the loan, or (b) the
present value of the loan less the amount of principal and accrued
interest being repaid.
(2) Each of the loans secured by the River Oaks, Preston Oaks, Highland Park,
Autumn Ridge, and Bentley Place Communities may be prepaid in full upon
payment of a premium equal to the greater of (a) 1% of the outstanding
principal balance of the loan, or (b) the sum of the present value of the
scheduled monthly payments to the maturity date and the present value of
the balloon payment due on the maturity date, less the outstanding
principal balance of the loan on the date of prepayment. Each such loan
may be prepaid in full during the last 90 days prior to its maturity date
without any prepayment premium.
(3) The loan secured by the Rosewood Plantation Community may not be prepaid
prior to June 1, 1997 but can be prepaid at any time thereafter subject to
the payment of a premium of 4% of the amount prepaid in the loan year June
1, 1997 through May 31, 1998; such prepayment premium will be reduced by
1% each loan year until March 2, 2001, after which date no prepayment
premium will be due.
(4) The loan secured by the Crestmark Community may not be prepaid prior to
May 1, 1997 but can be prepaid at any time thereafter subject to the
payment of a premium of 4% of the amount prepaid in the loan year May 1,
1997 through April 30, 1998; such prepayment premium will be reduced by 1%
each loan year until January 31, 2001, after which date no prepayment
premium will be due
(5) The loan secured by the Windsong Community may not be prepaid on or prior
to February 1, 1998 but may be prepaid in full thereafter upon payment of
a premium equal to the greater of (a) 1% of the then outstanding principal
balance, or (b) an amount calculated according to a yield maintenance
formula. The loan may be prepaid without payment of a premium during the
last 90 days prior to its maturity.
In addition to the loans outstanding at December 31, 1996 as summarized
above, the Operating Partnership obtained a $6,420,000 loan secured by the Ivey
Brook Community on January 30, 1997. The Ivey Brook loan will mature on
February 15, 2007 with a principal balance of $5,570,481. The loan bears
interest at a fixed rate of 7.14% per annum, is payable on a 30-year
amortization schedule, and requires monthly payments of principal and interest
in the
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<PAGE> 24
amount of $43,318. The Company's guaranty of the Ivey Brook loan is secured by
a $1,140,000 letter of credit. The guaranty will terminate and the letter of
credit will be released when Ivey Brook generates annualized net operating
income (as defined ) of at least 110% of the annual debt service payments due
under the loan for a period of at least three consecutive calendar months. The
Ivey Brook loan may be prepaid upon the same terms as the loans secured by the
River Oaks, Preston Oaks, Highland Park, Autumn Ridge, and Bentley Place
Communities as described in footnote (2) above.
POSSIBLE ADDITIONAL COMMUNITIES TO BE DEVELOPED
From time to time Roberts Properties plans the development of other
apartment communities to be located on property owned by Roberts Properties or
other affiliates of Mr. Roberts, or on property that one of such entities is
interested in acquiring. Mr. Roberts may elect to raise the required equity
for any such community by syndicating a limited partnership. Alternatively,
the Company may seek to raise the equity required to purchase and develop the
community by selling Shares. If Mr. Roberts elects to raise equity through a
limited partnership, Mr. Roberts may seek to cause such partnership to be
merged into the Operating Partnership at a later date. Such a transaction
would require the consent of a majority in interest of the limited partners of
such partnership and of a majority of the disinterested members of the
Company's Board of Directors, and no assurances can be given regarding whether
Mr. Roberts will ultimately determine to seek a merger in that manner, or
whether such a merger would in fact be approved by the requisite majority in
interest of limited partners in such partnership and by a majority of the
disinterested members of the Board.
COMPETITION
All of the Communities are located in developed areas, and numerous other
apartment projects are located within the market area of each Community. The
number of competitive apartment communities in the area could have a material
effect on the Company's ability to lease the Company's apartments at the rental
rates anticipated, and no assurances can be given regarding the development of
additional competing multifamily communities in the future. The remainder of
this section summarizes the competition for each of the Communities. The
following information reflects the study by Roberts Properties of apartment
complexes in each submarket that are believed by the Company to be closely
competitive with the Community or Communities within such submarket. This
section includes certain summary information obtained from various sources -
including developers and real estate brokers, as well as on-site visits -
regarding those apartment communities. Although Roberts Properties has
attempted to verify such information and believes that it is substantially
accurate on the whole, information regarding a particular community may be
incorrect due to the sources relied upon or erroneous information supplied by
competitors.
Windsong. The St. Simons market area, which the Company considers to be
all of St. Simons Island and the City of Brunswick, currently consists of 13
multifamily communities (including Windsong) containing 1,485 existing
apartment units. Of the 13 existing communities in the area, 12 were built
between 1972 and 1985. The remaining community, Glynn Place in Brunswick, was
built in 1993. The Company believes that Windsong draws residents from all of
the other communities located in the market area, but only two, Island Square
and Island Retreat, compete closely with Windsong due to their location on St.
Simons Island. In addition to the 13 existing communities in the market area,
two multifamily communities totaling approximately 250 units are planned for
construction on St. Simons Island. Because these communities will be new and
will offer modern amenities not found at Windsong, their rental rates will be
higher and they will compete closely with Windsong. The proposed site plans
for both new communities must be reviewed and approved by the Glynn County
Board of Commissioners. If approved, construction on both communities is
anticipated to begin in mid-1997.
Plantation Trace, River Oaks, and Howell Ferry. The Duluth market area,
which the Company considers to be a two mile radius from these Communities,
currently consists of 15 multifamily communities (including River Oaks and
Plantation Trace) containing 4,487 existing apartment units. (Although the
Bridgewater apartment community - which was previously developed and sold by an
affiliate of Mr. Roberts - is located more than two miles from Plantation
Trace, it is also included in the Duluth market area described herein because
it offers units with attached garages and its
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<PAGE> 25
architecture and amenities are similar to Plantation Trace and its Phase II.)
Of the 15 existing communities in the area, six were built between 1983 and
1988. The remaining nine communities - including Plantation Trace and River
Oaks - have been built since 1988. Due to the quality of construction, age of
the communities, type of amenities, resident profiles and rental rates, the
Company believes that only the other seven communities built since 1988 -
Wesley Plantation (both Highlands and Meadows), Tree Summit, Bridgewater,
Bristol Park, Aylesbury Farm, and AMLI at Pleasant Hill - are in direct
competition with Plantation Trace and River Oaks and will be in direct
competition with Howell Ferry.
In addition, two multifamily communities totaling approximately 650 units
are either planned or currently under construction in the Duluth market area.
The Company believes that as these 650 new units are completed, they will
compete directly with Plantation Trace, River Oaks, and Howell Ferry, which
could adversely affect the operating results for those Communities.
Rosewood Plantation and Ivey Brook. The Peachtree Corners multifamily
market area, which is a three mile radius from these two Communities, currently
consists of 22 multifamily communities (including Rosewood Plantation and Ivey
Brook) totaling 6,422 apartment units. Of the 22 existing communities in the
market area, only three - Rosewood Plantation, Wynfield Trace, and Ivey Brook -
have been built since 1988. The remaining communities range from approximately
eight to 23 years old. The Company believes that Rosewood Plantation and Ivey
Brook draw residents from all of the other 20 communities located in the market
area but that only five of the 20 communities compete closely with Rosewood
Plantation and Ivey Brook. In addition to the 6,422 existing apartment units,
another multifamily apartment community, AMLI at River Park, totaling 192
units, is currently under construction within one-half mile of Rosewood
Plantation. Upon its anticipated completion in May 1997, this community will
also compete with Rosewood Plantation and Ivey Brook.
Preston Oaks. The Company believes that the north central Perimeter
multifamily market area is a two mile radius around this Community. It is
generally bounded by Roswell Road to the west, Ashford Dunwoody Road to the
east, Spalding Drive to the north and Glenridge Drive to the south, and it
currently consists of 23 multifamily communities (excluding Preston Oaks)
totaling 6,273 apartment units. Of the 23 existing communities in the market
area, only four were built prior to 1983, totaling 756 apartment units. The
remaining 19 communities totaling 5,517 units range from approximately two to
six years of age. The Company believes that Preston Oaks competes with all 23
existing communities. In addition to the 6,273 existing apartment units, a
260-unit apartment community that will compete with Preston Oaks is now under
construction.
Highland Park. The North Springs multifamily market area is an
approximately two mile radius around this Community. It is generally bounded
by the Chattahoochee River to the north and west, Georgia 400 to the east and
Dalrymple Road to the south, and currently consists of 34 communities
(excluding Highland Park) totaling 10,550 apartment units. Of the 34 existing
communities in the market area, only five have been built since 1989. The
remaining communities range in age from six years to over 20 years. The
Company believes that Highland Park will draw residents from all of the 34
communities located in the market area, but that only 11 of the 34 communities
will compete closely with Highland Park.
Autumn Ridge. The East Cobb/Delk Road multifamily submarket, which the
Company considers to be within a one mile radius of Autumn Ridge, currently
consists of 14 multifamily communities (including Autumn Ridge) containing
4,429 existing apartment units. All of the 14 existing communities in the area
were built between 1969 and 1986. Two of these communities, Stonemill and Park
Knoll, were recently renovated on the exterior and interior of each unit.
Although 22 and 12 years old, respectively, each community has been upgraded
with modern features and amenities. The Company believes Autumn Ridge draws
residents from all of the communities in the submarket but competes closely
with only 10 of the 14 communities due to their age, quality of construction
and resident profile.
Bentley Place. The Pleasantdale multifamily market area, which is a two
mile radius around Bentley Place, currently consists of 27 multifamily
communities (including Bentley Place) totaling 7,097 apartment units. Of the
27 existing communities in the market area, only four (Bentley Place, Arbor
Mill, Shadow Lake, and Gwinnett Station)
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have been built since 1989, totaling 799 apartment units. The remaining
properties range from approximately five to 21 years old. The Company believes
that Bentley Place draws residents from all of the other 26 properties located
in the market area. However, based upon a comparison of factors such as
quality of features, architecture, number and type of amenities, construction
quality and age of community, the Company believes that only eight of the 26
communities compete closely with Bentley Place. Each of these eight properties
was constructed between 1986 and 1995.
Crestmark. The Thornton Road multifamily market area is an approximately
two mile radius around the Crestmark Community. It is generally bounded by
I-20 to the south, Blairs Bridge Road to the east, and Georgia Highway 78 to
the north and west, and it currently consists of six communities (including
Crestmark) totaling 2,032 apartment units. Of the six existing communities in
the market area, only three have been built since 1990. The remaining
communities range in age from seven years to 10 years. Of the 2,032 units
currently in the market, approximately 41% are one-bedroom units, 48% are
two-bedroom units and 11% are three-bedroom units. The Company believes that
Crestmark will draw residents from all of the five other communities located in
the market area, but due to their amenities, quality of construction and
resident profile, only three of the five other communities will compete closely
with Crestmark.
OTHER REAL ESTATE ASSETS
In addition to the Communities, the Operating Partnership owns two retail
centers totaling 15,698 square feet. The Shoppes of Plantation is a 7,350
square foot retail center located on Pleasant Hill Road in front of Plantation
Trace on a .85 acre parcel. The Shoppes of River Oaks is a 8,348 square foot,
one story office/retail building located on a .86 acre parcel on Pleasant Hill
Road in front of River Oaks. The retail centers together compose less than 2%
of the Company's assets and generated less than 2% of its gross revenues for
1996.
ENVIRONMENTAL AND OTHER REGULATORY MATTERS
Under various federal, state and local laws and regulations, an owner of
real estate is liable for the costs of removal or remediation of certain
hazardous or toxic substances on such property. Such laws often impose such
liability without regard to whether the owner knew of, or was responsible for,
the presence of such hazardous or toxic substances. The costs of remediation
or removal of such substances may be substantial, and the presence of such
substances, or the failure to promptly remediate such substances, may adversely
affect the owner's ability to sell such real estate or to borrow using such
real estate as collateral. In connection with its ownership and operation of
the Communities and its other real estate assets, the Operating Partnership may
be potentially liable for (a) such remediation and removal costs, and (b)
damages to persons or property arising from the existence or maintenance of
such hazardous or toxic substances.
All of the Communities and the other real estate assets have been subject
to Phase I or similar environmental assessments that are intended to discover
information regarding, and to make a preliminary evaluation of the
environmental condition of, the surveyed properties and surrounding properties.
The Phase I assessments of Windsong and Autumn Ridge revealed the existence of
asbestos containing materials that in their current state require no removal.
The Phase I assessments recommended, and the Company has implemented, an
operations and maintenance program that outlines the procedures to be followed
in the event that such materials were to be disturbed. The Phase I assessment
of Bentley Place revealed an adjacent site that was listed on the regulatory
lists of the Georgia Environmental Protection Division ("EPD"). The Phase I
assessment recommended, and the Company performed, additional environmental
investigation which determined that a petroleum product release was discovered
in 1990 on property adjacent to Bentley Place. Fina Oil & Chemical Company
("Fina"), the adjacent property owner, repaired the source of the release in
1990. Since that time, Fina has submitted a proposed corrective action plan to
the EPD. The corrective action plan, together with other submittals by Fina to
the EPD, indicate that Fina has begun to remove the released product. The
semi-annual monitoring reports on file at the EPD reveal the possibility that
petroleum constituents have migrated via groundwater onto Bentley Place. The
Company has been advised by its attorneys and environmental consultants that
Fina is responsible for cleaning up the release to the extent required by the
EPD regulations. Also, the Company's environmental consultants have informed
the Company that despite a possible groundwater impact at Bentley Place, no
threat to human health or safety is suggested. The Company and its
environmental consultants are monitoring the EPD files to ensure compliance by
Fina with the EPD regulations.
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The Phase I assessments of the other Communities and other real estate
assets have not revealed any environmental liability that the Company believes
would have material adverse effect on the Operating Partnership's business,
assets or results of operations, nor is the Company aware of any such
liability. Nevertheless, it is possible that these assessments did not reveal
all environmental liabilities or that there are material environmental
liabilities of which the Company is unaware.
COSTS OF COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT AND SIMILAR LAWS
Under the American with Disabilities Act of 1990 (the "ADA"), all places
of public accommodation are required to meet certain federal requirements
related to access and use by disabled persons. These requirements became
effective in 1992. Although management of the Company believes that the
Communities are substantially in compliance with present requirements of the
ADA, final regulations under the ADA have not yet been promulgated and the
Company may incur additional costs of complying with the ADA. A number of
additional federal, state and local laws exist which also may require
modifications to the Communities, or restrict certain further renovations to
them, with respect to access by disabled persons. For example, the Fair
Housing Amendments Act of 1988 (the "FHAA") requires apartment communities
first occupied after March 13, 1990 to be accessible to the handicapped.
Noncompliance with the FHAA could result in the imposition of fines or an award
of damages to private litigants. The Company believes that the Communities
that are subject to the FHAA are in compliance with such law.
Additional legislation may impose further burdens or restrictions on
owners with respect to access by disabled persons. The ultimate amount of the
cost of compliance with the ADA or such legislation is not currently
ascertainable, and, while such costs are not expected to have a material effect
on the Company, such costs could be substantial. Limitations or restrictions
on the completion of certain renovations may limit application of the Company's
investment strategy in certain instances or reduce overall returns on the
Company's investments.
INSURANCE
The Company carries comprehensive liability, fire, extended coverage and
rental loss insurance with respect to all of its existing Communities, with
policy specifications, insured limits and deductibles customarily carried for
similar properties. The Company carries similar insurance with respect to its
other properties, but with such exceptions as are appropriate given the
undeveloped nature of certain of these properties. In the opinion of
management, the Communities and the Company's other properties are adequately
covered by insurance. There are, however, certain types of losses (such as
losses arising from acts of war) that are not generally insured because they
are either uninsurable or not economically insurable. Should an uninsured loss
or a loss in excess of insured limits occur, the Company could lose its capital
invested in a property, as well as the anticipated future revenues from such
property, and would continue to be obligated on any mortgage indebtedness or
other obligations related to the property. Any such loss would adversely
affect the Company.
POLICIES WITH RESPECT TO CERTAIN ACTIVITIES
The following is a discussion of investment policies, financing policies,
conflict of interest policies and policies with respect to certain other
activities of the Company and the Operating Partnership. The policies with
respect to these activities have been determined by the Company's Board of
Directors and may be amended or revised from time to time at the discretion of
the Board without a vote of the shareholders of the Company or any vote of the
partners of the Operating Partnership, except that (i) the Company cannot
change its policy of holding its assets and conducting its business exclusively
through the Operating Partnership without amending the Operating Partnership
Agreement (which will generally require the consent of the holders of a
majority in interest of the limited partners in the Operating Partnership
including, if applicable, the Company), and (ii) changes in certain policies
with respect to conflicts of interest must be approved by a majority of the
independent directors and otherwise be consistent with legal requirements.
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INVESTMENT POLICIES
Investments in Real Estate or Interests in Real Estate. The Company
conducts all of its investment activities through the Operating Partnership and
will do so for so long as the Operating Partnership exists. (The Agreement of
Limited Partnership of the Operating Partnership provides that it is not
required to be dissolved until 2093.) The Company's investment objectives are
to achieve stable cash flow available for distributions and, over time, to
increase cash flow and portfolio value by (i) continuing to develop multifamily
apartment communities for long-term ownership; (ii) acquiring additional
multifamily apartment communities that will produce additional cash flow; and
(iii) to a significantly lesser degree, acquiring and/or developing retail
centers and other income-producing real estate. The Company's policy is to
acquire or develop assets where the Company believes that favorable investment
opportunities exist based on market conditions at the time of the investment.
The Company expects to pursue its investment objectives primarily through
the direct ownership of properties by the Operating Partnership, although, as
discussed below, the Company may also pursue indirect property ownership
opportunities. The Company intends to acquire or develop multifamily apartment
communities primarily in the Atlanta metropolitan area and the Southeast.
Future development or investment activities will not be limited by the
governing documents of the Company and the Operating Partnership to any
geographic area, product type or specified percentage of the Company's assets.
Possible Acquisition of Communities Developed by Mr. Roberts or His
Affiliates. Mr. Roberts and Roberts Properties have been engaged in the
development of residential and commercial real estate since the early 1970s,
and Mr. Roberts expects that he and Roberts Properties will continue to engage
in real estate development. Provided that any transaction or agreement must
comply with the policies discussed under "Conflict of Interest Policies," the
Company and/or the Operating Partnership may engage in transactions of various
types with Mr. Roberts, Roberts Properties and/or other affiliates of Mr.
Roberts in connection with the development or acquisition of real estate. Such
transactions may include: hiring Mr. Roberts or Roberts Properties to develop
real estate under a fee arrangement; acquiring undeveloped property from Mr.
Roberts or his affiliates for future development; or acquiring from Mr. Roberts
or his affiliates partially or completely constructed properties, whether in
their lease-up phase or already leased-up. The particular terms of any
arrangement have not been determined, other than the Communities now under
development as described above.
Securities of or Interest in Persons Primarily Engaged in Real Estate
Activities and Other Issuers. Subject to the percentage of ownership
limitations and gross income tests necessary for REIT qualification under the
Internal Revenue Code, the Company and the Operating Partnership also may
invest in securities of other entities engaged in real estate activities or
invest in securities of other issuers, including investments by the Company and
the Operating Partnership for the purpose of exercising control over such
entities. No such investments will be made, however, unless the Board of
Directors determines that the proposed investment would not cause the Company
or the Operating Partnership to be an "investment company" within the meaning
of the Investment Company Act of 1940, as amended. The Company or the
Operating Partnership may acquire all or substantially all of the securities or
assets of other REITs or similar entities where such investments would be
consistent with the Company's investment policies. The Company does not
currently intend to invest in the securities of other issuers except in
connection with acquisitions of indirect interests in properties, such as the
acquisition of limited partnership interests in a single asset limited
partnership.
No Investments in Mortgages. The Company does not own any mortgages and
does not currently intend to invest in mortgages or to engage in originating,
servicing, or warehousing mortgages.
FINANCING POLICIES
The organizational documents of the Company and the Operating Partnership
impose no limits on the amount of indebtedness they may incur. The Company has
an informal policy that the Company and the Operating Partnership will not
incur indebtedness in excess of 75% of what the Board of Directors believes is
the fair market value of the Operating Partnership's assets at any given time.
The Company may, however, from time to time re-evaluate its borrowing policies
in light of then current economic conditions, relative costs of debt and equity
capital, market value of the Operating
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<PAGE> 29
Partnership's real estate assets, growth and acquisition opportunities and
other factors. Modification of such policy may adversely affect the interests
of the shareholders of the Company.
To the extent that the Board of Directors determines to seek additional
capital, the Company may raise such capital through additional equity
offerings, debt financing or retention of cash flow (subject to provisions in
the Internal Revenue Code requiring the distribution by a REIT of a certain
percentage of taxable income and taking into account taxes that would be
imposed on undistributed taxable income), or a combination of these methods.
As long as the Operating Partnership is in existence, the net proceeds of all
equity capital raised by the Company will be contributed to the Operating
Partnership in exchange for Units or other interests in the Operating
Partnership.
The Company has not established any limit on the number or amount of
mortgages that may be placed on any single property or on the Operating
Partnership's portfolio as a whole.
CONFLICT OF INTEREST POLICIES
The Board of Directors is subject to certain provisions of Georgia law
that are designed to eliminate or minimize certain potential conflicts of
interest. The Company cannot assure, however, that these policies will always
be successful in eliminating the influence of such conflicts. If these
policies are not successful, the Board could make decisions that might fail to
reflect fully the interests of all shareholders.
Pursuant to Georgia law, each director will be subject to restrictions on
misappropriation of corporate opportunities to himself or his affiliates
learned of solely as a result of his service as a member of the Board of
Directors. In addition, under Georgia law, a transaction effected by the
Company or any entity controlled by the Company (including the Operating
Partnership) in which a director or certain related persons and entities of the
director has a conflicting interest of such financial significance that it
would reasonably be expected to exert an influence on the director's judgment
may not be enjoined, set aside or give rise to damages on the grounds of such
interest if (a) the transaction is approved, after disclosure of the interest,
by the affirmative vote of a majority of the disinterested directors, or by the
affirmative vote of a majority of the votes cast by disinterested shareholders,
or (b) the transaction is established to have been fair to the Company. The
Board of Directors has adopted a policy that all such conflicting interest
transactions must be authorized by a majority of the disinterested directors,
but only if there are at least two directors who are disinterested with respect
to the matter at issue.
CERTAIN POLICIES WITH RESPECT TO OTHER ACTIVITIES
The Company and the Operating Partnership have authority to offer their
securities and to repurchase and otherwise reacquire their securities, and they
may engage in such activities in the future. The Company presently anticipates
that it will elect to issue Shares to holders of Units in the Operating
Partnership upon the exercise of the Unitholders' rights of redemption. In the
future, the Company and the Operating Partnership may make loans to joint
ventures in which they participate in order to meet working capital needs. The
Company and the Operating Partnership have not engaged in trading,
underwriting, agency distribution or sale of securities of other issuers and do
not intend to do so. The Company and the Operating Partnership intend to make
investments in a manner such that they will not be treated as an investment
company under the Investment Company Act of 1940, as amended.
At all times, the Company intends to make investments in a manner so as to
be consistent with the requirements of the Internal Revenue Code for the
Company to qualify as a REIT unless, because of changing circumstances or
changes in the Internal Revenue Code (or in Treasury Regulations), the Board of
Directors decides that it is no longer in the best interests of the Company to
qualify as a REIT.
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<PAGE> 30
ITEM 3. LEGAL PROCEEDINGS.
Neither the Company, the Operating Partnership, nor the Communities are
presently subject to any material litigation nor, to the Company's knowledge,
is any material litigation threatened against any of them. Routine litigation
arising in the ordinary course of business is not expected to result in any
material losses to the Company and the Operating Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders during the fourth
quarter of 1996.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
NO PUBLIC TRADING MARKET
There is no public or private trading market for the Common Stock or for
Units in the Operating Partnership. On December 31, 1996 there were 857
holders of record of the Common Stock.
The Company currently has 4,186,329 Shares outstanding. In addition,
2,773,430 Shares have been reserved for issuance to Unitholders from time to
time upon their exercise of certain redemption rights as explained below and in
Part I, Item 1, "Description of Business - The Operating Partnership."
COMPANY'S INTENTIONS TO SEEK TO LIST THE SHARES ON AN EXCHANGE
The Company intends to seek to list the Shares on an Exchange to provide
shareholders with a way to sell their Shares should they desire to do so. The
Company cannot provide assurances that the Shares will in fact be listed on an
Exchange or that an active trading market for the Shares will develop.
In addition to the Company's desire to provide shareholders with a way to
sell their Shares should they decide to do so, the Company is contractually
obligated to seek a listing of the Shares on an Exchange. The Operating
Partnership Agreement provides that Unitholders have a right to require the
Operating Partnership to redeem their Units at any time and from time to time
after March 31, 1996 if certain conditions have been satisfied. These
conditions include listing the Shares that the Company intends to exchange for
Units submitted for redemption, and the Company has agreed in the Operating
Partnership Agreement to use reasonable efforts to cause Shares sufficient to
purchase all Units that may be submitted for redemption to be listed on an
Exchange and to be registered with all appropriate federal and state securities
authorities so that the Shares may be issued to the Unitholder seeking
redemption.
Although the Company believes that it presently meets all of the
requirements for the alternate listing category under the AMEX requirements,
the Company has not applied for a listing, and no assurances can be given that
the Shares will in fact be listed. The timing of any listing of the Shares is
uncertain.
Assuming the Shares are listed and are registered with all appropriate
federal and state securities authorities, as many as 2,773,430 Units could be
redeemed for Shares, and the holders of such Shares may seek to sell them on
the market. The Company cannot predict what effect, if any, that future sales
of Shares of Common Stock, or the availability of Shares for future sale, will
have on the market price prevailing from time to time. Sales of substantial
amounts of Shares of Common Stock (including Shares issued upon the redemption
of Units), or the perception that such sales could occur, could adversely
affect the prevailing market price of the Shares.
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<PAGE> 31
DISTRIBUTIONS
The Company depends upon distributions from the Operating Partnership to
fund its distributions to shareholders. Distributions by the Operating
Partnership, and thus distributions by the Company, will continue to be at the
discretion of the Board of Directors and will be equal in amount for each Unit
or Share. Until 1996 the Company had paid no distributions on the Common Stock
since its inception in 1994. The Company and the Operating Partnership
declared quarterly distributions for 1996 that totaled $0.48125 per Share/Unit
per annum. Approximately 80% of such distributions will be treated as ordinary
income, with the remaining 20% treated as a return of capital.
The Company elected to become a REIT beginning with the partial year ended
December 31, 1994. To maintain its qualification as a REIT under the Internal
Revenue Code, the Company must make annual distributions to shareholders of at
least 95% of its taxable income (which does not include net capital gains).
Under certain circumstances, the Company may be required to make distributions
in excess of cash available for distribution in order to meet such distribution
requirements.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
OVERVIEW
The following discussion should be read in conjunction with the
Consolidated Financial Statements of Roberts Realty Investors, Inc. and the
Notes thereto appearing elsewhere herein.
RESULTS OF OPERATIONS
Comparison of Year Ended December 31, 1996 to Year Ended December 31,
1995. The changes in operating results for the year ended December 31, 1996
compared to the year ended December 31, 1995 are primarily the result of
increases in the number of apartment homes owned due to: (1) the completion of
the Preston Oaks and Highland Park Communities during 1995, and (2) the
acquisition of the Plantation Trace, Windsong, Autumn Ridge, Bentley Place and
Crestmark Communities in May 1995, September 1995, December 1995, March 1996 and
June 1996, respectively. For the twelve months ended December 31, 1996, the
Company posted a net loss of $180,000 or $0.05 per share (after minority
interest and extraordinary item) compared to a net loss of $272,000 or $0.13 per
share (after minority interest and extraordinary item) for the twelve months
ended December 31, 1995. The Company's operating performance is summarized in
the following table.
<TABLE>
<CAPTION>
Percentage
Change from Year Ended December 31,
1995 to 1996 1996 1995
------------ ---- ----
<S> <C> <C> <C>
Total operating revenues 118% $15,197,000 $ 6,966,000
Property operating expenses (1) 129% $ 5,851,000 $ 2,554,000
General and administrative expenses 115% $ 926,000 $ 430,000
Depreciation of real estate assets 114% $ 4,974,000 $ 2,326,000
Income from operations 108% $ 3,446,000 $ 1,656,000
Average stabilized occupancy (2) (1.8%) 97.2% 99.0%
Operating expense ratio (3) 1.8% 38.5% 36.7%
</TABLE>
- -----------------------
(1) Property operating expenses include personnel, utilities, real estate
taxes, insurance, maintenance, landscaping, marketing, management and
other fees.
(2) Represents the average physical occupancy of the Company's stabilized
properties calculated by dividing the total number of vacant days by
the total possible number of vacant days for each year and
subtracting the resulting number from 100%. The 1996 calculation does
not include Ivey Brook, which started its lease-up phase in September
1996 and had physical occupancy of 27% on December 31, 1996. The 1996
calculation does include the following: (1) Highland Park beginning
March 1, 1996, which is the date the community achieved stabilized
occupancy, and (2) Bentley Place and Crestmark beginning March 1,
1996 and June 1, 1996, respectively, which are the dates the
communities were acquired by the Company.
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<PAGE> 32
(3) Represents the total of property operating expenses divided by
property operating revenues expressed as a percentage.
Operating results for the two communities that were fully stabilized
throughout both the 1996 period and the 1995 period (the River Oaks and Rosewood
Plantation Communities) are summarized as follows:
<TABLE>
<CAPTION>
Percentage
Change from Year Ended December 31,
1995 to 1996 1996 1995
------------ ---- ----
<S> <C> <C> <C>
Rental income 3.9% $3,729,000 $3,589,000
Total operating revenues 4.0% $3,859,000 $3,710,000
Property operating expenses (1) 4.8% $1,365,000 $1,302,000
Net operating income (2) 3.6% $2,494,000 $2,408,000
Average stabilized occupancy (3) (0.5%) 98.9% 99.4%
Operating expense ratio (4) 0.3% 35.4% 35.1%
</TABLE>
- --------------------
(1) Property operating expenses include personnel, utilities, real estate
taxes, insurance, maintenance, landscaping, marketing, management and
other fees.
(2) Net operating income is defined as total operating revenues less
property operating expenses.
(3) Represents the average physical occupancy of River Oaks and Rosewood
Plantation calculated by dividing the total number of vacant days by
the total possible number of vacant days for each year and
subtracting the resulting number from 100%.
(4) Represents the total of property operating expenses divided by
property operating revenues expressed as a percentage.
The following discussion encompasses the significant fluctuations in
financial statement amounts dealt with in the Company's comparisons of
statements of operations for the years ended December 31, 1996 and 1995.
Rental income increased $7,974,000 or 119% from $6,677,000 for the
twelve months ended December 31, 1995 to $14,651,000 for the twelve months ended
December 31, 1996. Of the $7,974,000 increase in rental income, $5,170,000 is
due to the acquisition of the Plantation Trace, Windsong, Autumn Ridge, Bentley
Place and Crestmark Communities in May 1995, September 1995, December 1995,
March 1996 and June 1996, respectively. Preston Oaks and Highland Park completed
their lease-ups during the third quarter of 1995 and the first quarter of 1996,
respectively, resulting in an increase in 1996 rental income of $2,613,000.
Rental income from River Oaks and Rosewood Plantation, the two fully stabilized
Communities included in the Company's portfolio during both 1995 and 1996,
increased $140,000 or 3.9% from $3,589,000 to $3,729,000.
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<PAGE> 33
Property operating expenses increased $3,297,000 or 129% from
$2,554,000 to $5,851,000. The increase is due primarily to the acquisition of
the Plantation Trace, Windsong, Autumn Ridge, Bentley Place and Crestmark
Communities and the completion of construction of the Preston Oaks and Highland
Park Communities. Property operating expenses as a percentage of operating
revenues increased from 36.7% during 1995 to 38.5% during 1996. The increase in
operating expenses as a percent of operating revenues is due primarily to the
following: (1) the Company's accounting policy of expensing all expenditures for
carpet, appliances, HVAC units, water heaters and pool furniture which expenses
increased from $44,000 during 1995 to $170,000 during 1996, and (2) a decrease
in average stabilized occupancy from 99.0% during 1995 to 97.2% during 1996.
Depreciation expense increased $2,648,000 or 114% from $2,326,000 to
$4,974,000. The increase is due primarily to the following: (1) the completion
of the Preston Oaks and Highland Park Communities because depreciation expense
is recorded as rental units are completed and available for occupancy
($685,000), and (2) the acquisition of the Plantation Trace, Windsong, Autumn
Ridge, Bentley Place and Crestmark Communities ($1,860,000).
General and administrative expenses increased $496,000 or 115% from
$430,000 to $926,000 and includes legal, accounting and tax fees, marketing and
printing fees, salaries, director fees and other costs. The increase of $496,000
was due primarily to higher salaries expense and legal and accounting fees
associated with the Company's filing of its Form 10-SB registration statement
with the Securities and Exchange Commission. The Company expects that as it
continues to grow, such expenses will decline as a percentage of operating
revenues, even though general and administrative expenses will increase in
absolute terms. General and administrative expenses as a percentage of operating
revenues decreased from 6.2% for the year ended December 31, 1995 to 6.1% for
the year ended December 31, 1996.
Interest income increased $76,000 or 27% from $277,000 to $353,000. The
increase is due to higher cash equivalent investment balances during 1996
resulting from the following: (1) the proceeds of the Company's offering of
699,175 Shares for cash that was concluded in May 1996, (2) the proceeds from
the financing of the Highland Park, Autumn Ridge and Bentley Place Communities
in January 1996, March 1996 and August 1996, respectively, and (3) increasing
cash flow from operations.
Interest expense increased $1,718,000 or 86% from $2,006,000 to
$3,724,000. The increase is due primarily to the following: (1) an increase in
debt associated with the completion of the Preston Oaks and Highland Park
Communities as they progressed from the construction phase (where interest is
capitalized) during 1995 to the operating phase (where interest is expensed)
during 1996, (2) the debt assumed in the acquisition of the Plantation Trace,
Windsong and Crestmark Communities in May 1995, September 1995 and June 1996,
respectively, and (3) the $5,000,000 loan secured by Autumn Ridge obtained in
March 1996 and the $4,100,000 loan secured by Bentley Place obtained in August
1996.
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<PAGE> 34
Mortgage notes payable secured by Preston Oaks and Highland Park were
refinanced in 1995 and 1996, respectively, in each case prior to its contractual
maturity. The unamortized loan costs related to these mortgage notes payable at
the time of their refinancing were charged to expense as an extraordinary item.
The extraordinary item (early extinguishment of a debt) for the twelve months
ended December 31, 1996 was $163,000 (including the minority interests' share of
$64,000) compared to the extraordinary item of $183,000 (including the minority
interests' share of $81,000) for the twelve months ended December 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
Comparison of Year Ended December 31, 1996 to Year Ended December 31,
1995. Cash and cash equivalents increased $1,758,000 during 1996 compared to an
increase of $396,000 during 1995. The increase is due to the excess of cash flow
provided by operating and financing activities over cash used in investing
activities.
A primary source of liquidity to the Company is cash flow from
operations. Operating cash flows have historically been determined by the number
of apartment homes, rental rates and operating expenses with respect to such
apartment homes. Net cash provided by operating activities increased $3,768,000
from $1,799,000 in 1995 to $5,567,000 in 1996 due primarily to the acquisition
of the Plantation Trace, Windsong, Autumn Ridge, Bentley Place and Crestmark
Communities and the completion of the construction and lease-up phases of the
Preston Oaks and Highland Park Communities. The highly competitive Atlanta
apartment market is currently experiencing weaker market conditions which is
being reflected in lower occupancy rates and rent concessions in certain
submarkets. The Company's average stabilized occupancy during 1996 decreased
1.8% from 99.0% during 1995 to 97.2% during 1996. The effects of revenue and
expense accruals are not material in understanding the Company's cash flow from
operations. Generally, depreciation and amortization expenses are the most
significant adjustments to net income (loss) in arriving at cash provided by
operating activities.
Net cash used in investing activities decreased $4,810,000 from
$21,119,000 in 1995 to $16,309,000 in 1996 due primarily to the construction of
Preston Oaks and Highland Park and the acquisition of Autumn Ridge during 1995
(a total of 584 apartment homes) compared to the construction of Ivey Brook and
the second phase of Crestmark during 1996 (a total of 232 apartment homes).
Net cash provided by financing activities decreased $7,216,000 from
$19,716,000 in 1995 to $12,500,000 in 1996 due primarily to the following: (1) a
higher level of net borrowings during 1995 associated with the financing of the
construction of the Preston Oaks and Highland Park Communities, (2) the payment
to an affiliate of a note payable assumed in the acquisition of the Crestmark
Community in June 1996, and (3) the payment of quarterly distributions on Shares
and Units beginning January 1, 1996.
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<PAGE> 35
The Operating Partnership acquired the fully operating Plantation Trace
and Windsong Communities in 1995 by issuing Units. Similarly, the Operating
Partnership acquired the Crestmark Community and its 8.8 acres of adjacent
undeveloped property in June 1996 by issuing Units. The Company issued Shares:
(1) in March 1995 to acquire the Ivey Brook Community, which is in the final
stages of construction, (2) in July 1995 in the Cash Offering to acquire the
land for and fund the development of the second phase of Plantation Trace, (3)
in March 1996 to acquire the existing Bentley Place Community, (4) in March 1996
in the Cash Offering to acquire the land for and fund the development of the
Howell Ferry Community, and (5) in May 1996 to fund current renovation and
rehabilitation projects at Autumn Ridge and Windsong. The Operating Partnership
is also constructing a second phase to the existing Crestmark Community as well
as developing a second phase of Plantation Trace. The Company anticipates that
each Community's rental and other operating revenues will be adequate to provide
short-term liquidity for the payment of direct rental operating expenses,
interest and amortization of principal on related mortgage notes payable, and
capital expenditures.
The Company expects to meet its other short-term liquidity requirements
generally through its net cash provided by operations. The Company believes that
its net cash provided by operations will be adequate to meet its operating
requirements and to satisfy applicable REIT dividend payment requirements in
both the short-term and in the long-term. Improvements and renovations at
existing Communities are also expected to be funded from property operations.
The Company expects to meet its long-term liquidity requirements, including
future developments, debt maturities and possible acquisitions, through the
issuance of additional equity securities of the Company and the proceeds from
future mortgage financings. Management expects that construction of Howell Ferry
will be funded from an $8,454,000 loan for which the Company has not yet
obtained a commitment and from the Company's working capital. Construction of
the second phase of Plantation Trace will be funded from the Company's working
capital.
On August 10, 1995, the Company received a commitment from Nationwide
Life Insurance Company to refinance the existing loan secured by Highland Park
for $8,178,000 at a fixed interest rate of 7.30% per annum for a seven-year
term. The refinancing was completed on January 31, 1996. Based on a 30-year
amortization schedule, the monthly payment of principal and interest on the loan
is $56,066.
On September 20, 1995, the Company refinanced the $8,711,000 loan
secured by Preston Oaks with a new loan from Nationwide Life Insurance Company
at a fixed interest rate of 7.21% per annum for a seven-year term. Based on a
30-year amortization schedule, the monthly payment of principal and interest on
the loan is $59,188.
The Operating Partnership sold The Shoppes of Crestmark on December 8,
1995 for a price of $940,000, and the net proceeds were added to the Company's
working capital.
On December 15, 1995, the Company, through the Operating Partnership,
acquired the Autumn Ridge Community from an independent third party for
$7,775,000 in cash. On March 28, 1996, the Company obtained a $5,000,000
permanent loan from Nationwide Life Insurance
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<PAGE> 36
Company that is secured by the Autumn Ridge Community. The loan has a ten-year
term with monthly payments of principal and interest in the amount of $35,739
based on a 25-year amortization schedule and a fixed interest rate of 7.13% per
annum.
On January 23, 1996, the Company received a commitment from Nationwide
Life Insurance Company for a $9,250,000 permanent loan to refinance the debt on
the River Oaks Community, which was scheduled to mature with a principal balance
of $8,827,000 in November 1996. The refinancing was completed on October 17,
1996. The loan has a seven-year term with monthly payments of principal and
interest in the amount of $62,475 based on a 30-year amortization schedule and a
fixed interest rate of 7.15% per annum.
On February 27, 1996, the Company received a commitment from Nationwide
Life Insurance Company for a permanent loan to be secured by Ivey Brook. The
financing was completed on January 30, 1997. The principal amount of the note is
$6,420,000 at a fixed interest rate of 7.14% per annum for a ten-year term.
Based on a 30-year amortization schedule, the monthly payment of principal and
interest on the loan is $43,318.
On April 2, 1996, the Company received a commitment from Nationwide
Life Insurance Company for a $4,100,000 permanent loan to be secured by Bentley
Place. The financing was completed on August 14, 1996. The loan has a ten-year
term with monthly payments of principal and interest in the amount of $27,553
based on a 30-year amortization schedule and a fixed interest rate of 7.10% per
annum.
On May 7, 1996 the Company closed an "intrastate" offering (the "Cash
Offering") in which it sold 699,175 Shares in the aggregate for $9.50 per Share.
Upon the initial closing of the offering on March 29, 1996 at which 443,675
Shares were issued, the Operating Partnership paid Roberts Properties, Inc.
$1,628,000 to purchase approximately 22.5 acres of land for the development and
construction of the 180-unit Howell Ferry Community on such property. Upon the
final closing of the Cash Offering on May 7, 1996, the Company issued 255,500
Shares and received additional net proceeds of $2,257,000 which were used to
fund current renovation and rehabilitation projects at Autumn Ridge and
Windsong.
The Company's existing mortgage indebtedness will require balloon
payments (in addition to monthly principal amortization) coming due over the
years 2000 to 2006 as summarized below:
<TABLE>
<S> <C>
2000 $11,253,000
2001 15,238,000
2002 8,025,000
2003 16,068,000
2006 7,535,000
------------
Total $58,119,000
</TABLE>
33
<PAGE> 37
Because the Company anticipates that only a small portion of the
principal of such indebtedness will be repaid prior to maturity and that the
Company may not have funds on hand sufficient to repay such indebtedness, it
will be necessary for the Company to refinance such debt through (a) debt
financing collateralized by mortgages on individual Communities or groups of
Communities or uncollateralized private or public debt offerings, and/or (b)
additional equity offerings.
Management believes that these sources of debt financing, equity
capital, operating cash flow and working capital of the Company will provide the
liquidity and adequate capital resources to begin and complete its planned
development and construction activities. The Company expects liquidity and
capital resources for additional acquisition and development to be provided by a
combination of secured long-term borrowing and issuance of equity securities.
FUNDS FROM OPERATIONS
The Company considers Funds From Operations ("FFO") to be an important
measure of its operating performance. While FFO does not represent cash flows
from operating, investing or financing activities as defined by generally
accepted accounting principles ("GAAP"), FFO does provide investors with
additional information with which to evaluate the ability of a REIT to pay
dividends, meet required debt service payments and fund capital expenditures.
The Company believes that in order to gain a clear understanding of its
operating results, FFO should be evaluated in conjunction with net income
(determined in accordance with GAAP). Based on published recommendations of a
task force of the National Association of Real Estate Investment Trusts
("NAREIT") during the first quarter of 1995, the Company defines FFO as net
income (loss) computed in accordance with GAAP, excluding non-recurring items
and net realized gains (losses), plus depreciation of real property and minority
interest of Unitholders in the Operating Partnership. Funds From Operations
should not be considered as an alternative to net income (determined in
accordance with GAAP) as an indication of the Company's financial performance,
or to cash flow from operating activities (determined in accordance with GAAP)
as a measure of liquidity. The following table reconciles net income (loss) to
FFO (dollars in thousands).
<TABLE>
<CAPTION>
Twelve Months Ended December 31,
1996 1995
---- ----
<S> <C> <C>
Net loss $ (180) $ (272)
Add: Minority interest of Unitholders (52) (134)
Add: Extraordinary item 99 102
Add: Amortization (real estate related) 67 69
Add: Depreciation expense 4,974 2,326
----- -----
Funds From Operations $4,908 $2,091
====== ======
Weighted average Shares and Units
outstanding during the period 6,244,513 3,617,320
</TABLE>
34
<PAGE> 38
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of. Such adoption had no material
effect on the financial statements.
INFLATION
Substantially all apartment leases are for an initial term of not more
than 12 months and thus may enable the Company to seek increases in rents after
the expiration of each lease. Additionally, the construction contracts for the
Ivey Brook and Howell Ferry Communities and for the second phases of Plantation
Trace and Crestmark will be at fixed prices and equal substantially all of the
anticipated construction costs. The short-term nature of these leases and the
fixed price construction contracts serve to reduce the risk to the Company of
the adverse effects of inflation.
35
<PAGE> 39
ITEM 7. FINANCIAL STATEMENTS.
The financial statements and schedules listed below are filed as part of
this annual report on Form 10-KSB on the pages indicated.
ROBERTS REALTY INVESTORS, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Independent Auditors' Report 37
Consolidated Financial Statements as of and for the years ended
December 31, 1996 and 1995:
Balance Sheets 38
Consolidated Statements of Operations 39
Consolidated Statements of Shareholders' Equity 40
Consolidated Statements of Cash Flows 41
Notes to Financial Statements 42
</TABLE>
36
<PAGE> 40
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Roberts Realty Investors, Inc.:
We have audited the accompanying consolidated balance sheets of Roberts Realty
Investors, Inc. (the "Company") as of December 31, 1996 and 1995 and the
related consolidated statements of operations, shareholders' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Roberts Realty Investors, Inc. as
of December 31, 1996 and 1995 and the results of its operations and cash flows
for the years then ended, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Atlanta, Georgia
February 28, 1997
37
<PAGE> 41
ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31,
------------------------
1996 1995
--------- --------
<S> <C> <C>
ASSETS
REAL ESTATE ASSETS - At cost: (Notes 4 and 7)
Land $ 19,937 $ 13,170
Buildings and improvements 80,441 54,422
Furniture, fixtures, and equipment 10,429 6,651
--------- --------
110,807 74,243
Less accumulated depreciation (8,915) (3,940)
--------- --------
Operating real estate assets 101,892 70,303
Construction-in-progress and real estate under development 10,230 4,083
--------- --------
Net real estate assets 112,122 74,386
CASH AND CASH EQUIVALENTS 3,162 1,404
RESTRICTED CASH AND CASH EQUIVALENTS 532 392
DEFERRED FINANCING COSTS - Net of accumulated amortization of
$111 and $513 at December 31, 1996 and 1995, respectively 658 511
OTHER ASSETS - Net 341 631
--------- --------
$ 116,815 $ 77,324
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Mortgage notes payable (Notes 4 and 6) $ 63,342 $ 44,019
Accounts payable and accrued expenses 1,053 524
Dividends and distributions payable 870
Due to affiliates (including retainage payable of $316 and $246 at
December 31, 1996 and 1995, respectively) 2,540 808
Security deposits and prepaid rents 462 372
--------- --------
Total liabilities 68,267 45,723
COMMITMENTS AND CONTINGENCIES (Note 8)
MINORITY INTEREST OF THE UNITHOLDERS
IN THE OPERATING PARTNERSHIP (Note 5) 19,322 13,873
--------- --------
SHAREHOLDERS' EQUITY:
Preferred shares, $.01 par value, 20,000,000 shares authorized, no shares
issued and outstanding
Common shares, $.01 par value, 100,000,000 shares authorized, 4,186,329 and
2,676,381 shares issued and outstanding at December 31, 1996 and 1995, respectively 42 26
Additional paid-in capital 29,902 18,240
Accumulated deficit (718) (538)
--------- --------
Total shareholders' equity 29,226 17,728
--------- --------
$ 116,815 $ 77,324
========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
38
<PAGE> 42
ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
-------------------------
1996 1995
--------- --------
<S> <C> <C>
OPERATING REVENUES:
Rental operations $ 14,651 $ 6,677
Other operating income 546 289
----------- -----------
Total operating revenues 15,197 6,966
OPERATING EXPENSES:
Personnel 1,365 651
Utilities 932 401
Repairs, maintenance, and landscaping 956 398
Real estate taxes 1,149 488
Management fees to related party 760 347
Marketing, insurance, and other 689 269
General and administrative expenses 926 430
Depreciation of real estate assets 4,974 2,326
----------- -----------
Total operating expenses 11,751 5,310
----------- -----------
INCOME FROM OPERATIONS 3,446 1,656
----------- -----------
OTHER INCOME (EXPENSES):
Interest income 353 277
Gain on sale of real estate asset 16
Interest expense (3,724) (2,006)
Amortization of deferred financing costs (141) (178)
Other amortization expense (67) (69)
----------- -----------
Total other income (expenses) (3,579) (1,960)
----------- -----------
INCOME (LOSS) BEFORE MINORITY INTEREST
AND EXTRAORDINARY ITEM (133) (304)
MINORITY INTEREST OF THE UNITHOLDERS
IN THE OPERATING PARTNERSHIP 52 134
----------- -----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (81) (170)
EXTRAORDINARY ITEM - Early extinguishment of debt, net of
minority interest of unitholders in the Operating Partnership (99) (102)
----------- -----------
NET INCOME (LOSS) $ (180) $ (272)
=========== ===========
PER SHARE DATA: (Note 9)
Income (loss) before extraordinary item $ (0.02) $ (.08)
=========== ===========
Net income (loss) $ (0.05) $ (.13)
=========== ===========
Dividends declared $ 0.48125 $ 0.00
=========== ===========
Weighted average common shares 3,799,567 2,023,358
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
39
<PAGE> 43
ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON SHARES
--------------------- ADDITIONAL TOTAL
NUMBER PAID-IN ACCUMULATED SHAREHOLDERS'
OF SHARES AMOUNT CAPITAL DEFICIT EQUITY
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDERS' EQUITY,
DECEMBER 31, 1994 1,206,708 $12 $ 5,889 $(266) $ 5,635
Proceeds of share offering, net 736,000 7 5,982 5,989
Conversion of units to shares 123,800 1 697 698
Issuance of common shares in the acquisition
of partnerships 609,873 6 5,134 5,140
Adjustment for minority interest in the
Operating Partnership 538 538
Net loss (272) (272)
-------------------------------------------------------------------
SHAREHOLDERS' EQUITY,
DECEMBER 31, 1995 26 18,240 (538) 17,728
2,676,381
Proceeds of share offering, net 699,175 7 6,045 6,052
Conversion of units to shares 65,833 1 447 448
Issuance of common shares in the acquisition
of partnerships 744,940 8 7,068 7,076
Dividends declared (1,834) (1,834)
Adjustment for minority interest in the
Operating Partnership (64) (64)
Net loss (180) (180)
-------------------------------------------------------------------
SHAREHOLDERS' EQUITY,
DECEMBER 31, 1996 4,186,329 $42 $29,902 $(718) $29,226
===================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
40
<PAGE> 44
ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------
1996 1995
---------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (180) $ (272)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Minority interest of unitholders in the Operating Partnership (52) (134)
Depreciation and amortization 5,127 2,591
Extraordinary item 99 102
Gain on sale of real estate asset (16)
Change in assets and liabilities net of amounts acquired:
Decrease (increase) in restricted cash 85 (88)
Decrease (increase) in other assets 247 (397)
Increase in accounts payable and
accrued expenses relating to operations 471 122
(Decrease) in due to affiliates relating to operations (225) (291)
(Decrease) increase in security deposits and prepaid rent (5) 182
--------- --------
Net cash provided by operating activities 5,567 1,799
--------- --------
INVESTING ACTIVITIES:
Proceeds from sale of real estate asset 903
Acquisition and construction of real estate assets (15,343) (21,483)
Purchase of furniture, fixtures and equipment (1,130) (3,029)
Cash acquired in mergers 164 2,490
--------- --------
Net cash used in investing activities (16,309) (21,119)
--------- --------
FINANCING ACTIVITIES:
Proceeds from mortgage notes payable 26,528 22,948
Principal reductions on mortgage notes payable (17,334) (8,841)
Payment of loan costs (451) (179)
Proceeds from issuance of shares 6,589 6,586
Payment of share and unit issuance costs (613) (703)
Payment of dividends and distributions (2,219)
Capital distribution to predecessors (95)
--------- --------
Net cash provided by financing activities 12,500 19,716
--------- --------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 1,758 396
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,404 1,008
--------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,162 $ 1,404
========= ========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid for interest, net of capitalized interest $ 4,347 $ 1,999
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
41
<PAGE> 45
ROBERTS REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND FORMATION OF THE COMPANY
Roberts Realty Investors, Inc. (the "Company"), a Georgia corporation,
was formed July 22, 1994 to serve as a vehicle for investments in, and
ownership of, a professionally managed real estate portfolio of
multifamily apartment communities. The Company owns and operates
multifamily residential properties as a self-administered equity real
estate investment trust (a "REIT"). Approximately 88% of the Company's
total apartment units are located in the Atlanta metropolitan area.
The Company conducts all of its operations and owns all of its assets
in and through Roberts Properties Residential, L.P., a Georgia limited
partnership (the "Operating Partnership"), of which the Company is the
sole general partner. As the sole general partner of the Operating
Partnership, the Company controls the Operating Partnership. The Board
of Directors of the Company manages the affairs of the Operating
Partnership by directing the affairs of the Company.
The Company began operations upon completion of a business combination
(the "Consolidation") with four limited partnerships (the
"Predecessors") sponsored by Charles S. Roberts ("Mr. Roberts"), the
sole general partner of each of the four partnerships. The
Consolidation, which was completed October 13, 1994 and became
effective October 1, 1994, was a reorganization of entities under
common ownership and management. The initial capitalization of the
Company included the issuance of 163,061 shares of the Company's Common
Stock ("Shares") and 1,645 units of limited partnership interest
("Units"). In connection with the Consolidation, a total of 1,043,647
Shares and 1,035,553 Units of the Operating Partnership were issued.
The four limited partnerships and the number of Shares and Units issued
in connection with the Consolidation were as follows:
<TABLE>
<CAPTION>
SHARES UNITS
------ -----
<S> <C> <C>
Roberts Properties River Oaks, L.P. ("River Oaks, L.P.") 638,596
Roberts Properties Rosewood Plantation, L.P. ("Rosewood Plantation, L.P.") 396,957
Roberts Properties Preston Oaks, L.P. ("Preston Oaks, L.P.") 535,176
Roberts Properties Highland Park, L.P. ("Highland Park, L.P.") 508,471
--------- ---------
1,043,647 1,035,553
</TABLE>
During 1995 and 1996, the Company acquired the following five limited
partnerships. No goodwill was recorded as a result of these
transactions.
Roberts Properties Holcomb Bridge, L.P. ("Holcomb Bridge, L.P.") In
March 1995, the Company acquired the assets and liabilities of Holcomb
Bridge, L.P. (Ivey Brook) which included 11.8 acres of undeveloped land
for construction of a 146-unit apartment community. In connection with
the acquisition, the Company issued 609,873 Shares valued at $8.50 per
Share (totaling $5,140,000, net of issuance costs) in exchange for the
assets and liabilities of Holcomb Bridge, L.P.
42
<PAGE> 46
Roberts Properties Plantation Trace, L.P. ("Plantation Trace, L.P.") In
May 1995, the Operating Partnership acquired the assets and liabilities
of Plantation Trace, L.P. which included a 182-unit apartment community
along with a 7,350 square foot retail center located at the entrance to
the community. In connection with the acquisition, the Operating
Partnership issued 597,741 Units valued at $9.00 per Unit (totaling
$5,339,000, net of issuance costs) in exchange for the assets and
liabilities of Plantation Trace, L.P.
Roberts Properties-St. Simons, Ltd. ("St. Simons, Ltd.") In September
1995, the Operating Partnership acquired the assets and liabilities of
St. Simons, Ltd. which included the 232-unit Windsong apartment
community. In connection with the acquisition, the Operating
Partnership issued 476,931 Units valued at $9.25 per Unit (totaling
$4,391,000, net of issuance costs) in exchange for the assets and
liabilities of St. Simons, Ltd.
Roberts Properties Bentley Place, L.P. ("Bentley Place, L.P.") In March
1996, the Company acquired the assets and liabilities of Bentley Place,
L.P. which included a 117-unit apartment community. In connection with
the acquisition, the Company issued 744,940 Shares valued at $9.50 per
Share (totaling $7,076,000, net of issuance costs) in exchange for the
assets and liabilities of Bentley Place, L.P.
The Crestmark Club, L.P. ("Crestmark, L.P.") In June 1996, the Company
acquired the assets and liabilities of Crestmark, L.P. which included a
248-unit apartment community and 8.8 acres of adjoining land for the
development of an 86-unit second phase to the Crestmark community. In
connection with the acquisition, the Operating Partnership issued
746,715 Units valued at $9.75 per Unit (totaling $7,280,000 net of
issuance costs) in exchange for the assets and liabilities of
Crestmark, L.P.
In an offering conducted from June 12, 1995 through August 25, 1995,
the Company sold an aggregate of 736,000 Shares at $9.00 per Share. The
offering proceeds were used in December 1995 to fund the purchase of
Autumn Ridge (formerly known as Laurelwood), a 207-unit apartment
community, from an independent third party for $7,775,000 in cash.
On November 1, 1995, the Company commenced an offering of up to 631,580
Shares ("Cash Offering") at a price of $9.50 per Share. On April 19,
1996, the Company increased the size of the Cash Offering from 631,580
Shares to 736,850 Shares after the original Cash Offering was fully
subscribed, and extended the termination date of the Cash Offering to
May 10, 1996. Upon the initial closing of the Cash Offering on March
29, 1996 at which 443,675 Shares were issued, the Operating Partnership
purchased 22.5 acres of land for $1,628,000 from an affiliate of Mr.
Roberts, the President and Chief Executive Officer of the Company, for
the development and construction of a 180-unit apartment community
(Howell Ferry). Development and construction costs are anticipated to
be approximately $12,268,000 and include the purchase of the land,
entering into a fixed price construction contract with an affiliate of
Mr. Roberts in the amount of $8,829,000 and other contracts with
Roberts Properties, Inc. related to design, development, and
construction administration in the aggregate amount of $735,000. Upon
the final closing of the Cash Offering on May 7, 1996, the Company
issued 255,500 Shares and received additional net proceeds of
$2,257,000 which were used to fund current renovation and
rehabilitation projects at Autumn Ridge and Windsong.
2. BASIS OF PRESENTATION
The accompanying financial statements include the consolidated accounts
of the Company and the Operating Partnership. The Consolidation was
accomplished using an umbrella partnership, or "UPREIT", structure.
With respect to the Consolidation and the subsequent acquisitions of
Holcomb Bridge, L.P., Plantation Trace, L.P., St. Simons, Ltd., Bentley
Place, L.P. and Crestmark, L.P. into the
43
<PAGE> 47
Operating Partnership, the partners (including Mr. Roberts for his
general partner interests) received either Shares or Units. The
Consolidation was accounted for as a reorganization of entities under
common ownership and management and, accordingly, net assets were
recorded at historical cost in a manner similar to that in pooling of
interests accounting. The subsequent acquisitions were accounted for as
purchases and include the results of operations from the dates of
acquisition. The purchase prices of these subsequently acquired
partnerships have been allocated to the respective assets and
liabilities acquired based on their fair values.
Following is a summary of certain operating results presented on a pro
forma basis as if the partnerships purchased in 1995 and 1996 had been
acquired as of the beginning of the periods presented:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1996 1995
---- ----
<S> <C> <C>
Operating Revenues $16,315,000 $13,048,000
Income (loss) before extraordinary items $ (190,000) $ (328,000)
Net income (loss) $ (287,000) $ (437,000)
Net income (loss) per share $ (0.07) $ (0.11)
</TABLE>
All significant intercompany accounts and transactions have been
eliminated in consolidation. The financial statements of the Company
have been adjusted for the minority interest of the unitholders in the
Operating Partnership. Subject to certain conditions, Units will become
exchangeable for cash, or at the option of the Company, for Shares on a
one-for-one basis. The minority interest of the unitholders in the
earnings or loss of the Operating Partnership is calculated based on
the weighted average number of Shares and Units outstanding during the
period.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
REAL ESTATE ASSETS AND DEPRECIATION All real estate assets are to be
held and used and are recorded at depreciated cost less reductions for
impairment, if any. In identifying potential impairment, management
considers such factors as declines in a property's operating
performance or market value, a change in use, or adverse changes in
general market conditions. In determining whether an asset is impaired,
management estimates the future cash flows expected to be generated
from the asset's use and its eventual disposition. If the sum of these
estimated future cash flows on an undiscounted basis is less than the
asset's carrying cost, the asset is written down to its fair value.
None of the Company's real estate assets have required write-downs.
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." Such
adoption had no material effect on the financial statements.
Expenditures directly related to the development, acquisition and
improvement of real estate assets are capitalized at cost as land,
buildings and improvements. Ordinary repairs and maintenance, including
all carpet and appliance replacements, are expensed as incurred. Carpet
and appliance replacements totaled $153,000 and $35,000 for the years
ended December 31, 1996 and 1995, respectively. Major replacements and
betterments are capitalized and depreciated over their estimated useful
lives. Buildings
44
<PAGE> 48
are generally depreciated over 27.5 years. Land improvements are
depreciated over 15 years, and furniture, fixtures and equipment are
depreciated over 5 to 7 years.
REVENUE RECOGNITION The Company leases its residential properties
under operating leases with terms generally one year or less. Rental
income is recognized when earned, which is not materially different
than revenue recognition on a straight-line basis.
CASH AND CASH EQUIVALENTS All investments purchased with an original
maturity of three months or less are considered to be cash equivalents.
RESTRICTED CASH Restricted cash consists of resident security
deposits and monies held by lenders for the payment of real estate
taxes and insurance.
DEFERRED FINANCING COSTS Deferred financing costs include fees and
costs incurred to obtain financings and are amortized on the
straight-line method over the terms of the related debt.
INTEREST AND REAL ESTATE TAXES Interest and real estate taxes
incurred during the construction period are capitalized and
depreciated over the estimated useful lives of the constructed assets.
Interest capitalized was $527,000 and $582,000 for the years ended
December 31, 1996 and 1995, respectively.
INCOME TAXES The Company elected to be taxed as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code"), commencing with
the taxable year ended December 31, 1994. As a result, the Company
generally will not be subject to federal and state income taxation at
the corporate level to the extent it distributes annually at least 95%
of its taxable income, as defined in the Code, to its shareholders and
satisfies certain other requirements. Accordingly, no provision has
been made for federal and state income taxes in the accompanying
consolidated financial statements.
4. MORTGAGE NOTES PAYABLE
Mortgage notes payable were secured by the following communities at
December 31, as follows:
<TABLE>
<CAPTION>
FIXED INTEREST PRINCIPAL OUTSTANDING
RATE AS OF DECEMBER 31,
MATURITY 12/31/96 1996 1995
-------- -------- ---- ----
<S> <C> <C> <C> <C>
Autumn Ridge 04/15/06 7.13% $ 4,950,573
Bentley Place 08/15/06 7.10% 4,086,703
Crestmark Club 05/01/01 7.50% 9,786,700
Highland Park 02/15/03 7.30% 8,113,077 $ 7,554,642
Plantation Trace 09/15/00 7.75% 7,886,172 7,988,948
Preston Oaks 10/15/02 7.21% 8,611,269 8,697,260
River Oaks 11/15/03 7.15% 9,242,639 8,888,508
Rosewood Plantation 06/01/01 7.38% 6,446,506 6,529,892
Windsong 02/01/00 9.00% 4,218,747 4,359,950
------------ ------------
$ 63,342,386 $ 44,019,200
============ ============
</TABLE>
45
<PAGE> 49
Fixed interest rates on mortgage debt outstanding at December 31, 1995
ranged from 7.21% to 9.38%.
The December 31, 1996 and 1995 principal balances of the Windsong
mortgage include unamortized premiums of $165,656 and $220,876,
respectively. Amortization of this premium of $55,220 in 1996 and
$18,406 in 1995 is included in interest expense.
In May 1995, in connection with the acquisition of Plantation Trace,
L.P., the Operating Partnership assumed a mortgage note in the amount
of $8,045,000 secured by the Plantation Trace community. The mortgage
note includes a fixed interest rate of 7.75% payable in monthly
installments of $59,860 based on a 28-year amortization schedule. The
note matures on September 15, 2000.
In September 1995, in connection with the acquisition of St. Simons,
Ltd., the Operating Partnership assumed a mortgage note in the amount
of $4,159,000 secured by the Windsong community. The mortgage note
includes a fixed interest rate of 9.00% payable in monthly installments
of $37,918 based on a 22-year amortization schedule. The note, which
may not be prepaid on or prior to February 1, 1998, matures on February
1, 2000.
On September 20, 1995, the Company completed the refinancing of the
mortgage note secured by the Preston Oaks community. The new mortgage
note is in the amount of $8,711,000 at a fixed interest rate of 7.21%
payable in monthly installments of $59,188 based on a 30-year
amortization schedule. The note matures on October 15, 2002.
At December 31, 1995, Mr. Roberts had personally guaranteed the
mortgage notes payable on the Highland Park and Rosewood Plantation
communities. The guaranty on Highland Park was released when the
mortgage note payable for Highland Park was refinanced on January 31,
1996. The guaranty on Rosewood Plantation was released in March 1996
after the Highland Park community achieved a 90% leasing and occupancy
level.
On January 31, 1996, the Company completed the refinancing of the
mortgage note secured by the Highland Park community. The new mortgage
note is in the amount of $8,178,000 at a fixed interest rate of 7.30%
payable in monthly installments of $56,066 based on a 30-year
amortization schedule. The note matures on February 15, 2003. The
previous note had an interest rate of 8.50%.
On February 27, 1996, the Company received a commitment to provide
financing in the amount of $6,420,000 secured by the Ivey Brook
community. Ivey Brook is under construction and was unencumbered at
December 31, 1996. The financing closed on January 30, 1997. The new
mortgage note is in the amount of $6,420,000 at a fixed interest rate
of 7.14% payable in monthly installments of $43,318 based on a 30-year
amortization schedule. The note matures on February 15, 2007. In
connection with the financing, a letter of credit was issued to the
lender in the amount of $1,140,000 with an expiration date of January
30, 1998.
On March 28, 1996, the Company completed the financing of the Autumn
Ridge community. The new mortgage note is in the amount of $5,000,000
at a fixed interest rate of 7.13% payable in monthly installments of
$35,739 based on a 25-year amortization schedule. The note matures on
April 15, 2006.
In June 1996, in connection with the acquisition of Crestmark, L.P.,
the Operating Partnership assumed a mortgage note in the amount of
$9,850,000 secured by the Crestmark community. The mortgage note
includes a fixed interest rate of 7.50% payable in monthly installments
of $72,000 based on a 28-year amortization schedule. The note matures
on May 1, 2001.
46
<PAGE> 50
On August 14, 1996, the Company completed the financing of the Bentley
Place community. The new mortgage note is in the amount of $4,100,000
at a fixed interest rate of 7.10% payable in monthly installments of
$27,553 based on a 30-year amortization schedule. The note matures on
August 15, 2006.
On October 17, 1996, the Company completed the refinancing of the
mortgage note secured by the River Oaks community. The new mortgage
note is in the amount of $9,250,000 at a fixed interest rate of 7.15%
payable in monthly installments of $62,475 based on a 30-year
amortization schedule. The note matures on November 15, 2003.
The scheduled principal maturities of all debt outstanding at December
31, 1996 for each of the years ending December 31, are as follows:
<TABLE>
<S> <C>
1997 $ 817,000
1998 881,000
1999 950,000
2000 12,196,000
2001 15,744,000
Thereafter 32,754,000
----------
Mortgage notes payable $63,342,000
</TABLE>
Real estate assets having a combined depreciated cost of approximately
$92,101,000 serve as collateral for the outstanding debt at December
31, 1996.
EXTRAORDINARY ITEMS The 1996 extraordinary item resulted from the
write-off of unamortized deferred financing costs associated with the
January 31, 1996 refinancing of the mortgage note secured by the
Highland Park community. The extraordinary item is net of $64,000 which
was allocated to the minority interest of the unitholders in the
Operating Partnership, calculated on the weighted average number of
Units outstanding during 1996. The 1995 extraordinary item resulted
from the write-off of unamortized deferred financing costs associated
with the September 20, 1995 refinancing of the mortgage note secured by
the Preston Oaks community. The extraordinary item is net of $81,000
which was allocated to the minority interest of the unitholders in the
Operating Partnership, calculated on the weighted average number of
Units outstanding during 1995.
5. MINORITY INTEREST
The Company, as the general partner of the Operating Partnership, does
not hold any limited partner interests in the Operating Partnership.
The Company's general partner interest was 60.2% and 56.1% at December
31, 1996, and 1995, respectively. Units outstanding at December 31,
1996 and 1995 were 2,773,430 and 2,092,548, respectively. Units held by
the minority interest as a percentage of total Units and Shares
outstanding was 39.8% and 43.9% at December 31, 1996 and 1995,
respectively. The minority interest of the unitholders in the Operating
Partnership was $19,322,000 and $13,873,000 at December 31, 1996 and
1995, respectively. Subject to certain conditions, Units will become
exchangeable for cash, or at the option of the Company, for Shares on a
one-for-one basis. The minority interest of the unitholders in the
Operating Partnership is calculated based on the minority interest
ownership percentage multiplied by the Operating Partnership's net
assets (total assets less total liabilities). The minority interest
percentage reflects the number of Shares and Units outstanding and will
change as additional Shares and Units are issued.
47
<PAGE> 51
6. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
The following disclosures of estimated fair value were determined by
management using available market information and appropriate valuation
methodologies. Because considerable judgment is necessary to interpret
market data and develop the related estimates of fair value, the
estimates presented herein are not necessarily indicative of the
amounts that could be realized upon disposition of the financial
instruments. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value
amounts.
Cash and cash equivalents, accounts payable, accrued expenses, security
deposits and other liabilities, due to their short-term nature, are
carried at amounts which reasonably approximate their fair values at
December 31, 1996 and 1995. Fixed rate mortgage debt with carrying
values of $63,342,386 and $44,019,200 at December 31, 1996 and 1995,
respectively, is estimated by management to approximate fair value
based upon interest rates available to the Company for debt with
similar terms and maturities.
7. RELATED PARTY TRANSACTIONS
On January 31, 1995, the Operating Partnership acquired a 7,078 square
foot retail center ("Shoppes of Crestmark") valued at $888,000 from an
affiliate of a director of the Company in exchange for 104,478 Units.
The retail center was subsequently sold for $940,000 in December 1995.
On July 21, 1995, the Company acquired, through the Operating
Partnership, a 12.3-acre tract of land located adjacent to the existing
Plantation Trace community from Roberts Properties, Inc., an affiliate
of Mr. Roberts, for $445,000. The Company intends to develop a second
phase to the Plantation Trace community on this tract.
On March 29, 1996, the Operating Partnership acquired a 22.5 acre tract
of land for the development of a 180-unit apartment community located
in Gwinnett County, Georgia from Roberts Properties, Inc. for
$1,628,000.
CONSTRUCTION CONTRACTS The Company and the Predecessors entered into
fixed price construction contracts with Roberts Properties
Construction, Inc., an affiliate of Mr. Roberts. These contract amounts
from inception through December 31, 1996 are summarized in the
following table:
<TABLE>
<CAPTION>
TOTAL REMAINING
CONTRACT AMOUNT CONTRACTUAL
AMOUNT INCURRED COMMITMENT
--------------------------------------------------------
<S> <C> <C> <C>
River Oaks $ 8,532,000 $ 8,532,000
Rosewood Plantation 6,083,000 6,083,000
Preston Oaks 7,806,000 7,806,000
Highland Park 8,021,000 8,021,000
Ivey Brook 6,420,000 6,153,000 $ 267,000
Crestmark Club - Phase II 3,795,000 2,235,000 1,560,000
Plantation Trace - Phase II 3,157,000 0 3,157,000
Howell Ferry 8,829,000 0 8,829,000
------------ ------------ -----------
$ 52,643,000 $ 38,830,000 $13,813,000
============ ============ ===========
</TABLE>
48
<PAGE> 52
In addition, certain of the Predecessors and partnerships acquired
subsequent to the Consolidation have paid or will pay Roberts
Properties Construction, Inc. for purchases made on their behalf and
for additional features added or built on their property that are not
part of the original construction contracts. These amounts aggregated
$2,250,000 and $538,000 during 1996 and 1995, respectively. The
Predecessors and partnerships acquired subsequent to the Consolidation
also paid Roberts Properties Construction, Inc. for labor and materials
to perform repairs and maintenance for the communities in the amount of
$2,174,000 and $115,000 in 1996 and 1995, respectively.
DEVELOPMENT FEES Roberts Properties, Inc. received fees for various
development services including market studies, business plans, design,
finish selection, interior design and construction administration. Fees
incurred totaled $430,000 and $0 for the years ended December 31, 1996
and 1995, respectively.
MANAGEMENT FEES Roberts Properties Management, L.L.C.., an affiliate
of Mr. Roberts, provided property management services to the Company
for a fee of 5% of gross income. Property management fees incurred
totaled $760,000 and $347,000 for the years ended December 31, 1996
and 1995, respectively. In addition, the Company reimbursed Roberts
Properties Management for the salaries of the on-site property
management personnel.
CONSULTING FEES Affiliates of Mr. Roberts have contracted with each
of the Predecessors and partnerships acquired subsequent to the
Consolidation to provide consulting services in the event of a sale of
the community, with consulting fees ranging from 3% to 6% of the gross
sales proceeds of the property sold. These consulting fees as of
December 31, 1996 are summarized in the following table:
<TABLE>
<S> <C>
Bentley Place 3%
River Oaks 5%
Rosewood Plantation 5%
Preston Oaks 5%
Highland Park 5%
Ivey Brook 5%
Windsong 5%
Crestmark 5%
Plantation Trace 6%
Shoppes of Plantation Trace 6%
</TABLE>
Although the consulting fee was waived at the time of the Consolidation
and upon subsequent acquisitions of partnerships, the Company and the
Operating Partnership have assumed these contracts as a term of each
merger. There have been no sales of any of the apartment communities.
OTHER FEES During 1996 and 1995, affiliates of Mr. Roberts received
fees and cost reimbursements for services related to (1) construction
and leasing administration services at the Shoppes of River Oaks
($60,000), (2) the sale of the Shoppes of Crestmark ($28,000), (3) the
acquisition of the Autumn Ridge community ($125,000), (4) the merger of
St. Simons, Ltd. into the Operating Partnership ($50,000), (5) the
merger of Bentley Place, L.P. into the Operating Partnership ($50,000),
(6) the merger of Crestmark, L.P. into the Operating Partnership
($65,000), (7) the acquisition of a 1.1 acre parcel of undeveloped land
located adjacent to the existing Preston Oaks community ($21,000), and
(8) miscellaneous fees and cost reimbursements ($80,000). These fees
and costs incurred totaled $226,000 and $253,000 for the years ended
December 31, 1996 and 1995, respectively.
49
<PAGE> 53
BROKER-DEALER FEES A director of the Company owns all of the
outstanding stock of an NASD member broker-dealer that has participated
as the distributor or solicitation agent in numerous offerings by the
Company and the Operating Partnership. Fees incurred for these services
totaled $487,000 and $596,000 for the years ended December 31, 1996 and
1995, respectively.
LOAN ORIGINATION FEES A director of the Company is president of a
commercial mortgage banking firm that has originated loans for the
Company and its Predecessors. Loan origination fees incurred totaled
$184,000 and $87,000 for the years ended December 31, 1996 and 1995,
respectively. Additional fees will be paid as additional communities
are financed during 1997, as more fully described in Note 4.
8. COMMITMENTS AND CONTINGENCIES
As a result of the mergers of River Oaks, L.P., Rosewood Plantation,
L.P., Plantation Trace, L.P., St. Simons, Ltd. and Crestmark, L.P. into
the Operating Partnership, the former partners of these five
partnerships received Units. Holders of Units have the right to require
the Operating Partnership to redeem their Units beginning when the
Shares are listed on a national securities exchange or Nasdaq (an
"Exchange"), subject to certain conditions. Upon submittal of Units for
redemption, the Operating Partnership will have the option either (a)
to pay cash for such Units at their fair market value, which will be
based upon the then current trading price of the Shares on an Exchange,
or (b) to acquire such Units in exchange for Shares (on a one-for-one
basis). The Company anticipates that it will issue Shares in exchange
for all such Units submitted. There were 2,773,430 Units outstanding at
December 31, 1996 that could be exchanged for Shares, subject to the
conditions described above.
At December 31, 1996, the Company had outstanding a Letter of Credit in
the amount of $128,000 issued in connection with the financing of the
Ivey Brook community. The Letter of Credit was returned to the Company
in February 1997 upon completing the financing of Ivey Brook on January
30, 1997.
The Company enters into contractual commitments in the normal course of
business related to the development of real estate assets. At December
31, 1996, these commitments totaled $13,813,000 consisting of the
remaining contractual commitments relating to the construction of Ivey
Brook, the second phase of Crestmark, Howell Ferry and the second phase
of Plantation Trace (See Note 7). Management does not believe that the
completion of these commitments will result in a material adverse
effect on the Company's financial position or results of operations.
9. EARNINGS PER SHARE
Earnings (loss) per common share before extraordinary item and net loss
for the years ended December 31, 1996 and 1995 have been computed by
dividing loss before extraordinary item and net loss by the weighted
average number of Shares outstanding during the periods of 3,799,567
and 2,023,358, respectively.
50
<PAGE> 54
10. SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash investing and financing activities for the years ended
December 31, 1996 and 1995 were as follows:
A. The Operating Partnership issued 104,478 Units, valued at
$888,000, in exchange for a 7,078 square foot retail center in
1995. The retail center was subsequently sold in December
1995.
B. The Company issued 609,873 Shares in exchange for the assets
and liabilities of Holcomb Bridge, L.P. valued at $5,139,000
including cash of $1,728,000.
C. The Operating Partnership issued 1,074,672 Units in exchange
for the assets and liabilities of Plantation Trace, L.P. and
St. Simons, Ltd. valued at $9,730,000 including cash of
$651,000. Mortgage debt of $12,219,000 was assumed in
connection with these acquisitions.
D. The Company issued 744,940 Shares in exchange for the assets
and liabilities of Bentley Place, L.P. valued at $7,076,000
including cash of $165,000. No mortgage debt was assumed in
connection with this acquisition.
E. The Operating Partnership issued 746,715 Units in exchange for
the assets and liabilities of Crestmark, L.P. valued at
$7,280,000 including cash of $117,000. Mortgage debt of
$10,184,000 and a note payable to Mr. Roberts in the amount of
$1,403,000 were assumed in connection with this acquisition.
The note to Mr. Roberts was repaid in full immediately
following the Crestmark closing.
11. DIVIDENDS
On December 17, 1996, the Company's Board of Directors declared a
quarterly distribution in the amount of $0.125 per common Share and
Unit payable on January 15, 1997 to shareholders and unitholders of
record on December 17, 1996. Of the total dividends declared for 1996
totaling $0.48125 per share, approximately $0.39 per share represents
ordinary income and $0.09 per share represents a return of capital to
the shareholders.
51
<PAGE> 55
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
Incorporated by reference from the Company's definitive proxy statement
for the Company's 1997 annual shareholders meeting to be filed with the
Securities and Exchange Commission.
ITEM 10.EXECUTIVE COMPENSATION.
Incorporated by reference from the Company's definitive proxy statement
for the Company's 1997 annual shareholders meeting to be filed with the
Securities and Exchange Commission.
52
<PAGE> 56
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Incorporated by reference from the Company's definitive proxy statement
for the Company's 1997 annual shareholders meeting to be filed with the
Securities and Exchange Commission.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Incorporated by reference from the Company's definitive proxy statement
for the Company's 1997 annual shareholders meeting to be filed with the
Securities and Exchange Commission.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The Company has filed certain of the exhibits required by Item 601 of
Regulation S-B with previous registration statements or reports. As
specifically noted in the following Index to Exhibits, such previously filed
exhibits are incorporated into this annual report on Form 10-KSB by reference
thereto. All exhibits contained in the following Index to Exhibits that are
designated with an asterisk are incorporated into this annual report by
reference from the Company's initial Registration Statement on Form 10-SB filed
with the Securities and Exchange Commission on March 22, 1996; the applicable
exhibit number in such Registration Statement is provided beside the asterisk.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
3.1 Articles of Incorporation of Roberts Realty Investors, Inc. filed
with the Georgia Secretary of State on July 22, 1994. [*2.1]
3.2 Bylaws of Roberts Realty Investors, Inc. [*2.2]
4.1 Agreement of Limited Partnership of Roberts Properties Residential,
L.P., dated as of July 22, 1994. [*3.1]
4.1.1 First Amended and Restated Agreement of Limited Partnership of
Roberts Properties Residential, L.P., dated as of October 1, 1994.
[*3.1.1]
4.1.2 Amendment #1 to First Amended and Restated Agreement of Limited
Partnership of Roberts Properties Residential, L.P., dated as of
October 13, 1994. [*3.1.2]
4.2 Certificate of Limited Partnership of Roberts Properties
Residential, L.P. filed with the Georgia Secretary of State on July
22, 1994. [*3.2]
4.2.1 Certificate of Merger filed with the Georgia Secretary of State on
October 13, 1994, merging Roberts Properties River Oaks, L.P.;
Roberts Properties Rosewood Plantation, L.P.; Roberts Properties
Preston Oaks, L.P.; and Roberts Properties Highland Park, L.P. with
and into Roberts Properties Residential, L.P. (1994 Consolidation).
[*3.2.1]
4.2.2 Certificate of Merger filed with the Georgia Secretary of State on
March 24, 1995, merging Roberts Properties Holcomb Bridge, L.P. with
and into Roberts Properties Residential, L.P. (Holcomb Bridge
Merger). [*3.2.2]
4.2.3 Certificate of Merger filed with the Georgia Secretary of State on
May 16, 1995, merging Roberts Properties Plantation Trace, L.P. with
and into Roberts Properties Residential, L.P. (Plantation Trace
Merger). [*3.2.3]
</TABLE>
53
<PAGE> 57
<TABLE>
<S> <C>
4.2.4 Certificate of Merger filed with the Georgia Secretary of State on
September 27, 1995, merging Roberts Properties-St. Simons, L.P. with
and into Roberts Properties Residential, L.P. (Windsong Merger).
[*3.2.4]
4.2.5 Certificate of Merger filed with the Georgia Secretary of State on
March 21, 1996, merging Roberts Properties Bentley Place, L.P. with
and into Roberts Properties Residential, L.P. (Bentley Place
Merger). [Incorporated by reference to Exhibit 4.2.5 from the
Company's quarterly report on Form 10-QSB for the quarter ended
June 30, 1996.]
4.2.6 Certificate of Merger filed with the Georgia Secretary of State on
June 26, 1996, merging The Crestmark Club, L.P. with and into
Roberts Properties Residential, L.P. (Crestmark Merger).
[Incorporated by reference to Exhibit 4.2.6 from the Company's
quarterly report on Form 10-QSB for the quarter ended June 30,
1996.]
10.1.1 Property Management Agreement between Roberts Properties Preston
Oaks, L.P. and Roberts Properties Management, Inc., dated July 21,
1993 (Preston Oaks Syndication). [*6.1.8]
10.1.1.1 Amendment #1 to Property Management Agreement regarding Preston
Oaks, dated October 13, 1994 (1994 Consolidation). [* 6.1.8.1]
10.1.2 Real Estate Note executed by Roberts Properties Residential, L.P. in
favor of Nationwide Life Insurance Company, dated September 20,
1995, in the original principal amount of $8,711,000.00 (Preston
Oaks). [*6.11.1]
10.1.3 Deed to Secure Debt and Security Agreement executed by Roberts
Properties Residential, L.P. in favor of Nationwide Life Insurance
Company, dated September 20, 1995, and related collateral documents
(Preston Oaks). [*6.11.2]
10.2.1 Property Management Agreement between Roberts Properties Highland
Park, L.P. and Roberts Properties Management, Inc., dated May 9,
1994 (Highland Park Syndication). [*6.2.7]
10.2.1.1 Amendment #1 to Property Management Agreement regarding Highland
Park, dated October 13, 1994 (1994 Consolidation). [*6.2.7.1]
10.2.2 Real Estate Note A executed by Roberts Properties Residential, L.P.
in favor of Nationwide Life Insurance Company, dated January 31,
1996, in the original principal amount of $6,678,000.00 (Highland
Park). [*6.18.1]
10.2.3 Real Estate Note B executed by Roberts Properties Residential, L.P.
in favor of Employers Life Insurance Company of Wausau, dated
January 31, 1996, in the original principal amount of $1,500,000.00
(Highland Park). [*6.18.2]
10.2.4 Deed to Secure Debt and Security Agreement executed by Roberts
Properties Residential, L.P. in favor of Nationwide Life Insurance
Company and Employers Life Insurance Company of Wausau, dated
January 31, 1996, and related collateral documents (Highland Park).
[*6.18.3]
10.3.1 Property Management Agreement between Roberts Properties Management,
Inc. and Roberts Properties River Oaks, L.P., dated August 21, 1991
(River Oaks Syndication). [*6.3.4]
</TABLE>
54
<PAGE> 58
<TABLE>
<S> <C>
10.3.1.1 Amendment #1 to Property Management Agreement regarding River Oaks,
dated October 13, 1994 (1994 Consolidation). [*6.3.4.1]
10.3.2 Application/Contract for Mortgage Loan between Roberts Properties
Residential, L.P. and Nationwide Life Insurance Company, dated
January 23, 1996 (River Oaks). [*6.16]
10.3.3 Real Estate Note A executed by Roberts Properties Residential, L.P.
in favor of Nationwide Life Insurance Company, dated October 17,
1996, in the original principal amount of $7,250,000.00 (River
Oaks).
10.3.4 Real Estate Note B executed by Roberts Properties Residential, L.P.
in favor of Nationwide Life & Annuity Insurance Company, dated
October 17, 1996, in the original principal amount of $2,000,000.00
(River Oaks).
10.3.5 Deed to Secure Debt and Security Agreement executed by Roberts
Properties Residential, L.P. in favor of Nationwide Life Insurance
Company and Nationwide Life & Annuity Insurance Company, dated
October 17, 1996, and related collateral documents (River Oaks).
10.4.1 Property Management Agreement between Roberts Properties Rosewood
Plantation, L.P. and Roberts Properties Management, Inc., dated
January 5, 1993 (Rosewood Syndication). [*6.3.11]
10.4.1.1 Amendment #1 to Property Management Agreement regarding Rosewood,
dated October 13, 1994 (1994 Consolidation). [*6.3.11.1]
10.4.2 Real Estate Note executed by Roberts Properties Rosewood Plantation,
L.P. in favor of Commonwealth of Pennsylvania State Employes' [sic]
Retirement Board, dated May 25, 1994, in the original principal
amount of $6,650,000.00, as assigned to Legg Mason Real Estate
Services South, Inc., as further assigned to Federal Home Loan
Mortgage Corporation (Rosewood). [*6.3.12]
10.4.3 Deed to Secure Debt and Security Agreement executed by Roberts
Properties Rosewood Plantation, L.P. in favor of Commonwealth of
Pennsylvania State Employes' [sic] Retirement Board, dated May 25,
1994, and related collateral documents, as assigned to Legg Mason
Real Estate Services South, Inc. by instruments dated August 23,
1995, as further assigned to Federal Home Loan Mortgage Corporation
by instruments dated August 24, 1995 (Rosewood). [*6.3.13]
10.4.4 First Amendment to Deed to Secure Debt and Security Agreement
between Roberts Properties Rosewood Plantation, L.P. and
Commonwealth of Pennsylvania State Employes' [sic] Retirement
Board, dated August 1, 1994, as assigned to Legg Mason Real Estate
Services South, Inc. by instruments dated August 23, 1995, as
further assigned to Federal Home Loan Mortgage Corporation by
instruments dated August 24, 1995 (Rosewood). [*6.3.14]
10.4.5 Assumption Agreement between Roberts Properties Residential, L.P.
and Commonwealth of Pennsylvania State Employes' [sic] Retirement
Board, dated October 13, 1994 (1994 Consolidation). [*6.3.15]
10.5.1 Organization, Loan Acquisition and Financial Advisory Agreement
between Roberts Properties Holcomb Bridge, L.P. and Roberts
Properties, Inc., dated January 24, 1995 (Holcomb Bridge
Syndication - the Holcomb Bridge Community is now referred to as
the Ivey Brook Community). [*6.5.1]
10.5.2 Design and Development Agreement between Roberts Properties
Holcomb Bridge, L.P. and Roberts
</TABLE>
55
<PAGE> 59
<TABLE>
<S> <C>
Properties, Inc., dated January 24, 1995 (Holcomb Bridge
Syndication). [*6.5.2]
10.5.3 Finish Selection and Interior Design Agreement between Roberts
Properties Holcomb Bridge, L.P. and Roberts Properties, Inc., dated
January 24, 1995 (Holcomb Bridge Syndication). [*6.5.3]
10.5.4 Construction Administration Agreement between Roberts Properties
Holcomb Bridge, L.P. and Roberts Properties, Inc., dated January 24,
1995 (Holcomb Bridge Syndication). [*6.5.4]
10.5.5 Partnership Administration Agreement between Roberts Properties
Holcomb Bridge, L.P. and Roberts Properties, Inc., dated January 24,
1995 (Holcomb Bridge Syndication). [*6.5.5]
10.5.6 Standard Form of Agreement between Owner and Contractor between
Roberts Properties Holcomb Bridge, L.P. and Roberts Properties
Construction, Inc., dated as of January __, 1995 (Holcomb Bridge
Syndication). [Incorporated by reference to Exhibit 10.5.8 from the
Company's quarterly report on Form 10-QSB for the quarter ended
September 30, 1996.]
10.5.7 Consulting Agreement between Roberts Properties Holcomb Bridge, L.P.
and Roberts Properties, Inc., dated January 24, 1995 (Holcomb
Bridge Syndication). [*6.5.6]
10.5.8 Property Management Agreement between Roberts Properties Holcomb
Bridge, L.P. and Roberts Properties Management, Inc., dated January
24, 1995 (Holcomb Bridge Syndication). [*6.5.7]
10.5.8.1 Amendment #1 to Property Management Agreement Regarding Roberts
Properties Holcomb Bridge, L.P., effective as of March 24, 1995
(Holcomb Bridge Merger). [*6.5.7.1]
10.5.9 Solicitation Agreement by and among Spalding & Company, Roberts
Realty Investors, Inc., Roberts Properties Residential, L.P.,
Roberts Properties Holcomb Bridge, L.P., Charles S. Roberts and
Brian J. Sullivan, dated February 21, 1995 (Holcomb Bridge
Merger). [*6.7.1]
10.5.10 Acquisition Agreement and Plan of Merger by and among Roberts Realty
Investors, Inc., Roberts Properties Residential, L.P., Roberts
Properties Holcomb Bridge, L.P., Charles S. Roberts and Brian J.
Sullivan, dated March 24, 1995 (Holcomb Bridge Merger). [*6.7.2]
10.5.11 Application/Contract for Mortgage Loan between Roberts Properties
Residential, L.P. and Nationwide Life Insurance Company, dated
February 27, 1996 (Holcomb Bridge). [* 6.20]
10.5.12 Real Estate Note A executed by Roberts Properties Residential, L.P.
in favor of Nationwide Life Insurance Company, dated January 30,
1997, in the original principal amount of $5,670,000.00 (Ivey
Brook - formerly Holcomb Bridge).
10.5.13 Real Estate Note B executed by Roberts Properties Residential, L.P.
in favor of West Coast Life Insurance Company, dated January 30,
1997, in the original principal amount of $750,000.00 (Ivey Brook).
10.5.14 Deed to Secure Debt and Security Agreement executed by Roberts
Properties Residential, L.P. in favor of Nationwide Life Insurance
Company and West Coast Life Insurance Company, dated January 30,
1997, and related collateral documents (Ivey Brook).
</TABLE>
56
<PAGE> 60
<TABLE>
<S> <C>
10.5.15 Agreement Regarding Letter of Credit by Roberts Properties
Residential, L.P. for the benefit of Nationwide Life Insurance
Company and West Coast Life Insurance Company, dated January 30,
1997 (Ivey Brook).
10.5.16 Guaranty executed by Roberts Realty Investors, Inc. in favor of
Nationwide Life Insurance Company and West Coast Life Insurance
Company, dated January 30, 1997 (Ivey Brook).
10.6.1 Loan Agreement between First Union National Bank of Georgia and
Roberts Properties Residential, L.P., dated as of May 1, 1995 (Line
of Credit). [*6.8.1]
10.6.2 Promissory Note executed by Roberts Properties Residential, L.P. in
favor of First Union National Bank of Georgia, dated May 1, 1995, in
the original principal amount of $1,000,000.00 (Line of Credit).
[*6.8.2]
10.6.3 Unconditional Guaranty of Payment and Performance executed by
Roberts Realty Investors, Inc. for the benefit of First Union
National Bank of Georgia, dated as of May 1, 1995 (Line of Credit).
[*6.8.3]
10.6.4 Unconditional Guaranty of Payment and Performance executed by
Charles S. Roberts for the benefit of First Union National Bank of
Georgia, dated as of May 1, 1995 (Line of Credit). [*6.8.4]
10.7.1 Solicitation Agreement by and among Spalding & Company, Roberts
Realty Investors, Inc., Roberts Properties Residential, L.P.,
Roberts Properties Plantation Trace, L.P., and Charles S. Roberts,
dated April 14, 1995 (Plantation Trace Merger). [*6.9.1]
10.7.2 Merger Agreement and Plan of Merger by and among Roberts Realty
Investors, Inc., Roberts Properties Residential, L.P., Roberts
Properties Plantation Trace, L.P., and Charles S. Roberts, dated May
16, 1995 (Plantation Trace Merger). [*6.9.2]
10.7.3 Consulting Agreement by and between Roberts Properties Residential,
L.P. and Roberts Properties Management, Inc., dated May 16, 1995
(Plantation Trace Merger). [*6.9.3]
10.7.4 Property Management Agreement between Roberts Properties Plantation
Trace, L.P. and Roberts Properties Management, Inc., dated December
8, 1988 (Plantation Trace Syndication). [*6.9.4]
10.7.4.1 Amendment #1 to Property Management Agreement Regarding Roberts
Properties Plantation Trace, L.P., dated May 16, 1995 (Plantation
Trace Merger). [*6.9.4.1]
10.7.5 Promissory Note executed by Roberts Properties-Plantation Trace,
L.P. in favor of The Prudential Insurance Company of America, dated
August 12, 1993, in the original principal amount of $8,200,000.00
(Plantation Trace). [*6.9.5]
10.7.6 Deed to Secure Debt and Security Agreement from Roberts
Properties-Plantation Trace, L.P. to The Prudential Insurance
Company of America, dated August 12, 1993 (Plantation Trace).
[*6.9.6]
10.7.7 Assumption of Liability Agreement among The Prudential Insurance
Company of America, Roberts Properties-Plantation Trace, L.P. and
Roberts Properties Residential, L.P., dated May 16, 1995
(Plantation Trace Merger). [*6.9.7]
</TABLE>
57
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<TABLE>
<S> <C>
10.8.1 Dealer Agreement among Roberts Realty Investors, Inc., Spalding &
Company, and Roberts Properties Residential, L.P. (as to Section 7
only), dated June 12, 1995 (Summer 1995 Cash Offering). [*6.10.1]
10.8.1.1 Amendment No. 1 to Dealer Agreement, dated July 31, 1995 (Summer
1995 Cash Offering). [*6.10.1.1]
10.8.1.2 Amendment No. 2 to Dealer Agreement, dated August 10, 1995 (Summer
1995 Cash Offering). [*6.10.1.2]
10.8.2 Sales Contract between Roberts Properties, Inc., as Seller, and
Roberts Properties Residential, L.P., as Purchaser, dated July
14, 1995 (Summer 1995 Cash Offering). [*6.10.2]
10.8.3 Design and Development Agreement between Roberts Properties
Residential, L.P. and Roberts Properties, Inc. dated July 21,
1995 (Summer 1995 Cash Offering). [*6.10.3]
10.8.4 Escrow Agreement among Roberts Realty Investors, Inc., Spalding &
Company and First Union National Bank of Georgia, dated June 12,
1995 (Summer 1995 Cash Offering). [*6.10.4]
10.8.4.1 Amendment No. 1 to Escrow Agreement, dated July 31, 1995 (Summer
1995 Cash Offering). [*6.10.4.1]
10.9.1 Solicitation Agreement by and among Spalding & Company, Roberts
Realty Investors, Inc., Roberts Properties Residential, L.P.,
Roberts Properties-St. Simons, Ltd., and GP-St. Simons, Ltd., dated
August 25, 1995 (Windsong Merger). [*6.12.1]
10.9.2 Merger Agreement and Plan of Merger by and among Roberts Properties
Residential, L.P., GP-St. Simons, Ltd., and Roberts Properties-St.
Simons, Ltd., dated September 22, 1995 (Windsong Merger). [*6.12.2]
10.9.3 Consulting Agreement by and between Roberts Properties Residential,
L.P. and Roberts Properties, Inc., dated September 27, 1995
(Windsong Merger). [*6.12.3]
10.9.4 Management Contract between Roberts Properties-St. Simons, Ltd. and
Roberts Properties, Inc., dated December 27, 1985 (Windsong
Syndication). [*6.12.4]
10.9.4.1 Amendment #1 to Management Contract Regarding Windsong, dated
September 27, 1995 (Windsong Merger). [*6.12.4.1]
10.9.5 Promissory Note executed by Roberts Properties-St. Simons, Ltd. in
favor of John Hancock Mutual Life Insurance Company, dated March 1,
1988, in the original principal amount of $4,400,000.00 (Windsong).
[* 6.12.5]
10.9.5.1 Amendment to Promissory Note between Roberts Properties-St. Simons,
Ltd. and John Hancock Mutual Life Insurance Company, dated as of
March 1, 1988 (Windsong). [*6.12.5.1]
10.9.5.2 Amended and Restated Promissory Note dated January 28, 1993 in the
original principal amount of $4,350,000.00, attached as Exhibit
A to that certain Note Modification Agreement between Roberts
Properties-St. Simons, Ltd. and John Hancock Mutual Life Insurance
Company, dated January 28, 1993 (Windsong). [*6.12.5.2]
</TABLE>
58
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<TABLE>
<S> <C>
10.9.6 Deed to Secure Debt and Security Agreement executed by Roberts
Properties-St. Simons, Ltd. in favor of John Hancock Mutual Life
Insurance Company, dated March 1, 1988, and related collateral
documents (Windsong). [*6.12.6]
10.9.7 Modification to Security Instruments between Roberts Properties-St.
Simons, Ltd. and John Hancock Mutual Life Insurance Company, dated
January 28, 1993 (Windsong). [*6.12.7]
10.9.8 Modification to Promissory Note and Security Instruments dated
January 28, 1993 between Roberts Properties-St. Simons, Ltd. and
John Hancock Mutual Life Insurance Company (Windsong).
[*6.12.8]
10.9.9 Assumption Agreement between Roberts Properties Residential, L.P.
and John Hancock Mutual Life Insurance Company, dated September 27,
1995 (Windsong Merger). [*6.12.9]
10.10.1 Purchase/Sale Agreement between Prime MFP III Limited Partnership,
as Seller, and Roberts Properties Residential, L.P., as Purchaser,
dated October 27, 1995 (Laurelwood - the Laurelwood community is
now named Autumn Ridge). [*6.13]
10.10.2 Application/Contract for Mortgage Loan between Roberts Properties
Residential, L.P. and Nationwide Life Insurance Company, dated
February 15, 1996 (Autumn Ridge). [*6.19]
10.10.3 Real Estate Note A executed by Roberts Properties Residential, L.P.
in favor of Nationwide Life Insurance Company, dated March 28, 1996,
in the original principal amount of $4,250,000.00 (Autumn Ridge).
[Incorporated by reference to Exhibit 10.19.1 from the Company's
quarterly report on Form 10-QSB for the quarter ended June 30,
1996.]
10.10.4 Real Estate Note B executed by Roberts Properties Residential, L.P.
in favor of West Coast Life Insurance Company, dated March 28, 1996,
in the original principal amount of $750,000.00 (Autumn Ridge).
[Incorporated by reference to Exhibit 10.19.2 from the Company's
quarterly report on Form 10-QSB for the quarter ended June 30,
1996.]
10.10.5 Deed to Secure Debt and Security Agreement executed by Roberts
Properties Residential, L.P. in favor of Nationwide Life Insurance
Company and West Coast Life Insurance Company, dated March 28, 1996,
and related collateral documents (Autumn Ridge). [Incorporated by
reference to Exhibit 10.19.3 from the Company's quarterly report on
Form 10-QSB for the quarter ended June 30, 1996.]
10.11.1 Dealer Agreement among Roberts Realty Investors, Inc., Spalding &
Company, and Roberts Properties Residential, L.P. (as to Section 7
only), dated November 1, 1995 (1995-1996 Cash Offering).
[*6.14.1]
10.11.1.1 Amendment to Dealer Agreement among Roberts Realty Investors, Inc.,
Spalding & Company, and Roberts Properties Residential, L.P. (as to
Section 7 only), dated April 19, 1996 (1995-1996 Cash Offering).
[Incorporated by reference to Exhibit 10.14.1 from the Company's
quarterly report on Form 10-QSB for the quarter ended June 30,
1996.]
10.11.2 Escrow Agreement among Roberts Realty Investors, Inc., Spalding &
Company and First Union National Bank of Georgia, dated November 1,
1995 (1995-1996 Cash Offering). [*6.14.2]
</TABLE>
59
<PAGE> 63
<TABLE>
<S> <C>
10.11.2.1 Amendment to Escrow Agreement among Roberts Realty Investors, Inc.,
Spalding & Company and First Union National Bank of Georgia, dated
April 19, 1996 (1995-1996 Cash Offering). [Incorporated by
reference to Exhibit 10.14.2 from the Company's quarterly report on
Form 10-QSB for the quarter ended June 30, 1996.]
10.11.3 Sales Contract between Roberts Properties, Inc., as Seller, and
Roberts Properties Residential, L.P., as Purchaser, dated March 15,
1996 (for Howell Ferry Property) (1995-1996 Cash Offering).
[Incorporated by reference to Exhibit 10.14.3 from the Company's
quarterly report on Form 10-QSB for the quarter ended June 30,
1996.]
10.11.4 Design Agreement between Roberts Properties Residential, L.P. and
Roberts Properties, Inc., dated March 29, 1996 (1995-1996 Cash
Offering). [Incorporated by reference to Exhibit 10.14.4 from the
Company's quarterly report on Form 10-QSB for the quarter ended June
30, 1996.]
10.11.5 Development Agreement between Roberts Properties Residential, L.P.
and Roberts Properties, Inc., dated March 29, 1996 (1995-1996 Cash
Offering). [Incorporated by reference to Exhibit 10.14.5 from the
Company's quarterly report on Form 10-QSB for the quarter ended June
30, 1996.]
10.11.6 Finish Selection and Interior Design Agreement between Roberts
Properties Residential, L.P. and Roberts Properties, Inc., dated
March 29, 1996 (1995-1996 Cash Offering). [Incorporated by
reference to Exhibit 10.14.6 from the Company's quarterly report on
Form 10-QSB for the quarter ended June 30, 1996.]
10.11.7 Construction Administration Agreement between Roberts Properties
Residential, L.P. and Roberts Properties, Inc., dated March 29, 1996
(1995-1996 Cash Offering). [Incorporated by reference to Exhibit
10.14.7 from the Company's quarterly report on Form 10-QSB for the
quarter ended June 30, 1996.]
10.12.1 Sales Contract between Goodrich Enterprises, Inc., as Seller, and
Roberts Properties Residential, L.P., as Purchaser, dated January
25, 1995 (The Shoppes of Crestmark). [*6.6]
10.12.2 Sales Contract between Roberts Properties Residential, L.P., as
Seller, and Mike Atsalis and Nicholas Fridas, as Purchaser, dated
October 25, 1995, as assigned by Mike Atsalis and Nicholas Fridas to
The Shoppes of Crestmark, Inc. by Assignment of Sales Contract dated
December 8, 1995 (The Shoppes of Crestmark). [*6.15.1]
10.12.3 Limited Warranty Deed from Roberts Properties Residential, L.P. to
The Shoppes of Crestmark, Inc., dated December 8, 1995 (The Shoppes
of Crestmark). [* 6.15.2]
10.13.1 Solicitation Agreement by and among Spalding & Company, Roberts
Realty Investors, Inc., Roberts Properties Residential, L.P.,
Roberts Properties Bentley Place, L.P. and Charles S. Roberts, dated
January 26, 1996 (Bentley Place Merger). [*6.17]
10.13.2 Merger Agreement and Plan of Merger by and among Roberts Realty
Investors, Inc., Roberts Properties Residential, L.P., Roberts
Properties Bentley Place, L.P., and Charles S. Roberts, dated March
21, 1996 (Bentley Place Merger). [Incorporated by reference to
Exhibit 10.17.1 from the Company's quarterly report on Form 10-QSB
for the quarter ended June 30, 1996.]
</TABLE>
60
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10.13.3 Consulting Agreement by and between Roberts Properties Group, Inc.
and Roberts Properties Bentley Place, L.P., dated July 31, 1992
(Bentley Place Syndication). [Incorporated by reference to Exhibit
10.17.2 from the Company's quarterly report on Form 10-QSB for the
quarter ended June 30, 1996.]
10.13.3.1 Amendment #1 to Consulting Agreement regarding Bentley Place dated
March 21, 1996 (Bentley Place Merger). [Incorporated by reference to
Exhibit 10.17.2.1 from the Company's quarterly report on Form 10-QSB
for the quarter ended June 30, 1996.]
10.13.4 Property Management Agreement between Roberts Properties Bentley
Place, L.P. and Roberts Properties Management, Inc., dated July 31,
1992 (Bentley Place Syndication). [Incorporated by reference to
Exhibit 10.17.3 from the Company's quarterly report on Form 10-QSB
for the quarter ended June 30, 1996.]
10.13.4.1 Amendment #1 to Property Management Agreement regarding Bentley
Place, dated March 21, 1996 (Bentley Place Merger). [Incorporated by
reference to Exhibit 10.17.3.1 from the Company's quarterly report
on Form 10-QSB for the quarter ended June 30, 1996.]
10.13.5 Application/Contract for Mortgage Loan between Roberts Properties
Residential, L.P. and Nationwide Life Insurance Company, dated April
2, 1996 (Bentley Place). [Incorporated by reference to Exhibit
10.17.4 from the Company's quarterly report on Form 10-QSB for the
quarter ended June 30, 1996.]
10.13.6 Real Estate Note A executed by Roberts Properties Residential, L.P.
in favor of Nationwide Life Insurance Company, dated August 14,
1996, in the original principal amount of $3,350,000.00 (Bentley
Place). [Incorporated by reference to Exhibit 10.17.4.1 from the
Company's quarterly report on Form 10-QSB for the quarter ended
September 30, 1996.]
10.13.7 Real Estate Note B executed by Roberts Properties Residential, L.P.
in favor of West Coast Life Insurance Company, dated August 14,
1996, in the original principal amount of $750,000.00 (Bentley
Place). [Incorporated by reference to Exhibit 10.17.4.2 from the
Company's quarterly report on Form 10-QSB for the quarter ended
September 30, 1996.]
10.13.8 Deed to Secure Debt and Security Agreement executed by Roberts
Properties Residential, L.P. in favor of Nationwide Life Insurance
Company and West Coast Life Insurance Company, dated August 14,
1996, and related collateral documents (Bentley Place).
[Incorporated by reference to Exhibit 10.17.4.3 from the Company's
quarterly report on Form 10-QSB for the quarter ended September 30,
1996.]
10.14 Assignment/Assumption by Multifamily Management, Inc. (f/k/a Roberts
Properties Management, Inc.) to Roberts Properties Management,
L.L.C. dated April 30, 1996 assigning property management
agreements, together with Consent to Assignment and Assumption
executed by Roberts Properties Residential, L.P. dated April 30,
1996. [Incorporated herein by reference from the Company's Form
10-SB/A No. 1 filed on May 7, 1996.] [*6.21]
10.15.1 Solicitation Agreement by and among Spalding & Company, Roberts
Realty Investors, Inc., Roberts Properties Residential, L.P., The
Crestmark Club, L.P., and Charles S. Roberts, dated May 8, 1996
(Crestmark Merger). [Incorporated by reference to Exhibit 10.22.1
from the Company's quarterly report on Form 10-QSB for the quarter
ended June 30, 1996.]
</TABLE>
61
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10.15.2 Merger Agreement and Plan of Merger by and among Roberts Realty
Investors, Inc., Roberts Properties Residential, L.P., The Crestmark
Club, L.P., Charles S. Roberts, James M. and Penelope H. Goodrich,
and Norman A. Goldman, dated June 26, 1996 (Crestmark Merger).
[Incorporated by reference to Exhibit 10.22.2 from the Company's
quarterly report on Form 10-QSB for the quarter ended June 30,
1996.]
10.15.3 Property Management Agreement between The Crestmark Club, L.P. and
Roberts Properties Management, Inc., dated January 11, 1991
(Crestmark Syndication). [Incorporated by reference to Exhibit
10.22.3 from the Company's quarterly report on Form 10-QSB for the
quarter ended June 30, 1996.]
10.15.3.1 Amendment #1 to Property Management Agreement regarding Crestmark,
dated June 26, 1996 (Crestmark Merger). [Incorporated by reference
to Exhibit 10.22.3.1 from the Company's quarterly report on Form
10-QSB for the quarter ended June 30, 1996.]
10.15.3.2 Amendment #2 to Property Management Agreement regarding Crestmark,
dated June 26, 1996 (Crestmark Merger). ). [Incorporated by
reference to Exhibit 10.22.3.2 from the Company's quarterly report
on Form 10-QSB for the quarter ended June 30, 1996.]
10.15.4 Consulting Agreement regarding Crestmark by and between Roberts
Properties Residential, L.P. and Roberts Properties, Inc., dated
June 26, 1996 (Crestmark Merger). [Incorporated by reference to
Exhibit 10.22.4 from the Company's quarterly report on Form 10-QSB
for the quarter ended June 30, 1996.]
10.15.5 Assumption and Modification Agreement by and among The Crestmark
Club, L.P., Roberts Properties Residential, L.P., and Federal Home
Loan Mortgage Corporation dated as of June 26, 1996 (Crestmark
Merger). [Incorporated by reference to Exhibit 10.22.5 from the
Company's quarterly report on Form 10-QSB for the quarter ended June
30, 1996.]
10.15.6 Standard Form of Agreement between Owner and Contractor between
Roberts Properties Residential, L.P. and Roberts Properties
Construction, Inc., dated as of June 15, 1996 (Crestmark Merger).
[Incorporated by reference to Exhibit 10.22.6 from the Company's
quarterly report on Form 10-QSB for the quarter ended September 30,
1996.]
10.15.7 Real Estate Note executed by The Crestmark Club, L.P. in favor of
Commonwealth of Pennsylvania State Employes' [sic] Retirement Board,
dated April 27, 1994, in the original principal amount of
$10,100,000.00, along with a replacement Real Estate Note having
identical terms (the original having been lost), and related
collateral documents, as assigned to Legg Mason Real Estate Services
South, Inc. by instrument dated August 23, 1995, as further assigned
to Federal Home Loan Mortgage Corporation by instrument dated August
24, 1995, as amended by that certain Amendment to Assignment of
Assignment of Occupancy Agreement and Rents dated September 1, 1995
(Crestmark).
10.15.7.1 First Amendment to Deed to Secure Debt and Security Agreement
between The Crestmark Club, L.P. and Commonwealth of Pennsylvania
State Employes' [sic] Retirement Board, dated August 1, 1994
(Crestmark).
10.16.1 Amended and Restated Consulting Agreement between Roberts Properties
Residential, L.P. and Roberts Properties, Inc., dated June 26, 1996.
[Incorporated by reference to Exhibit 10.23.1 from the Company's
quarterly report on Form 10-QSB for the quarter ended June 30,
1996.]
</TABLE>
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10.16.2 Amended and Restated Consulting Agreement between Roberts Properties
Residential, L.P. and Roberts Properties Group, Inc., dated June 26,
1996. [Incorporated by reference to Exhibit 10.23.2 from the
Company's quarterly report on Form 10-QSB for the quarter ended
June 30, 1996.]
10.16.3 Amended and Restated Consulting Agreement between Roberts Properties
Residential, L.P. and Roberts Properties Management, L.L.C., dated
June 26, 1996. [Incorporated by reference to Exhibit 10.23.3 from the
Company's quarterly report on Form 10-QSB for the quarter ended June
30, 1996.]
21 Subsidiaries of the Small Business Issuer.
27 Financial Data Schedule.
</TABLE>
(b) The Company filed no reports on Form 8-K during the fourth quarter of
1996.
63
<PAGE> 67
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
ROBERTS REALTY INVESTORS, INC.
By: /s/ Charles S. Roberts
-----------------------------------------------
Charles S. Roberts, Chairman of the Board,
Chief Executive Officer, and President
Date: March 17, 1997
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Charles S. Roberts Chairman of the Board, Chief
- ------------------------ Executive Officer, and President March 17, 1997
Charles S. Roberts
/s/ Charles R. Elliott Secretary, Treasurer, and Chief March 17, 1997
- ------------------------ Financial Officer (Principal Financial
Charles R. Elliott Officer and Principal Accounting Officer)
/s/ James M. Goodrich Director March 17, 1997
- ------------------------
James M. Goodrich
/s/ Dennis H. James Director March 17, 1997
- ------------------------
Dennis H. James
/s/ Wm. Jarell Jones Director March 17, 1997
- ------------------------
Wm. Jarell Jones
/s/ Ben A. Spalding Director March 17, 1997
- ------------------------
Ben A. Spalding
/s/ George W. Wray, Jr. Director March 17, 1997
- ------------------------
George W. Wray, Jr.
</TABLE>
64
<PAGE> 68
EXHIBIT INDEX
The Company has filed certain of the exhibits required by Item 601 of
Regulation S-B with previous registration statements or reports. As
specifically noted in this Index to Exhibits, such previously filed exhibits
are incorporated into this annual report on Form 10-KSB by reference
thereto. All exhibits contained in this Index to Exhibits that are designated
with an asterisk are incorporated into this annual report by reference from
the Company's initial Registration Statement on Form 10-SB filed with the
Securities and Exchange Commission on March 22, 1996; the applicable exhibit
number in such Registration Statement is provided beside the asterisk.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
3.1 Articles of Incorporation of Roberts Realty Investors, Inc. filed
with the Georgia Secretary of State on July 22, 1994. [*2.1]
3.2 Bylaws of Roberts Realty Investors, Inc. [*2.2]
4.1 Agreement of Limited Partnership of Roberts Properties Residential,
L.P., dated as of July 22, 1994. [*3.1]
4.1.1 First Amended and Restated Agreement of Limited Partnership of
Roberts Properties Residential, L.P., dated as of October 1, 1994.
[*3.1.1]
4.1.2 Amendment #1 to First Amended and Restated Agreement of Limited
Partnership of Roberts Properties Residential, L.P., dated as of
October 13, 1994. [*3.1.2]
4.2 Certificate of Limited Partnership of Roberts Properties
Residential, L.P. filed with the Georgia Secretary of State on July
22, 1994. [*3.2]
4.2.1 Certificate of Merger filed with the Georgia Secretary of State on
October 13, 1994, merging Roberts Properties River Oaks, L.P.;
Roberts Properties Rosewood Plantation, L.P.; Roberts Properties
Preston Oaks, L.P.; and Roberts Properties Highland Park, L.P. with
and into Roberts Properties Residential, L.P. (1994 Consolidation).
[*3.2.1]
4.2.2 Certificate of Merger filed with the Georgia Secretary of State on
March 24, 1995, merging Roberts Properties Holcomb Bridge, L.P. with
and into Roberts Properties Residential, L.P. (Holcomb Bridge
Merger). [*3.2.2]
4.2.3 Certificate of Merger filed with the Georgia Secretary of State on
May 16, 1995, merging Roberts Properties Plantation Trace, L.P. with
and into Roberts Properties Residential, L.P. (Plantation Trace
Merger). [*3.2.3]
</TABLE>
<PAGE> 69
<TABLE>
<S> <C>
4.2.4 Certificate of Merger filed with the Georgia Secretary of State on
September 27, 1995, merging Roberts Properties-St. Simons, L.P. with
and into Roberts Properties Residential, L.P. (Windsong Merger).
[*3.2.4]
4.2.5 Certificate of Merger filed with the Georgia Secretary of State on
March 21, 1996, merging Roberts Properties Bentley Place, L.P. with
and into Roberts Properties Residential, L.P. (Bentley Place
Merger). [Incorporated by reference to Exhibit 4.2.5 from the
Company's quarterly report on Form 10-QSB for the quarter ended
June 30, 1996.]
4.2.6 Certificate of Merger filed with the Georgia Secretary of State on
June 26, 1996, merging The Crestmark Club, L.P. with and into
Roberts Properties Residential, L.P. (Crestmark Merger).
[Incorporated by reference to Exhibit 4.2.6 from the Company's
quarterly report on Form 10-QSB for the quarter ended June 30,
1996.]
10.1.1 Property Management Agreement between Roberts Properties Preston
Oaks, L.P. and Roberts Properties Management, Inc., dated July 21,
1993 (Preston Oaks Syndication). [*6.1.8]
10.1.1.1 Amendment #1 to Property Management Agreement regarding Preston
Oaks, dated October 13, 1994 (1994 Consolidation). [* 6.1.8.1]
10.1.2 Real Estate Note executed by Roberts Properties Residential, L.P. in
favor of Nationwide Life Insurance Company, dated September 20,
1995, in the original principal amount of $8,711,000.00 (Preston
Oaks). [*6.11.1]
10.1.3 Deed to Secure Debt and Security Agreement executed by Roberts
Properties Residential, L.P. in favor of Nationwide Life Insurance
Company, dated September 20, 1995, and related collateral documents
(Preston Oaks). [*6.11.2]
10.2.1 Property Management Agreement between Roberts Properties Highland
Park, L.P. and Roberts Properties Management, Inc., dated May 9,
1994 (Highland Park Syndication). [*6.2.7]
10.2.1.1 Amendment #1 to Property Management Agreement regarding Highland
Park, dated October 13, 1994 (1994 Consolidation). [*6.2.7.1]
10.2.2 Real Estate Note A executed by Roberts Properties Residential, L.P.
in favor of Nationwide Life Insurance Company, dated January 31,
1996, in the original principal amount of $6,678,000.00 (Highland
Park). [*6.18.1]
10.2.3 Real Estate Note B executed by Roberts Properties Residential, L.P.
in favor of Employers Life Insurance Company of Wausau, dated
January 31, 1996, in the original principal amount of $1,500,000.00
(Highland Park). [*6.18.2]
10.2.4 Deed to Secure Debt and Security Agreement executed by Roberts
Properties Residential, L.P. in favor of Nationwide Life Insurance
Company and Employers Life Insurance Company of Wausau, dated
January 31, 1996, and related collateral documents (Highland Park).
[*6.18.3]
10.3.1 Property Management Agreement between Roberts Properties Management,
Inc. and Roberts Properties River Oaks, L.P., dated August 21, 1991
(River Oaks Syndication). [*6.3.4]
</TABLE>
<PAGE> 70
<TABLE>
<S> <C>
10.3.1.1 Amendment #1 to Property Management Agreement regarding River Oaks,
dated October 13, 1994 (1994 Consolidation). [*6.3.4.1]
10.3.2 Application/Contract for Mortgage Loan between Roberts Properties
Residential, L.P. and Nationwide Life Insurance Company, dated
January 23, 1996 (River Oaks). [*6.16]
10.3.3 Real Estate Note A executed by Roberts Properties Residential, L.P.
in favor of Nationwide Life Insurance Company, dated October 17,
1996, in the original principal amount of $7,250,000.00 (River
Oaks).
10.3.4 Real Estate Note B executed by Roberts Properties Residential, L.P.
in favor of Nationwide Life & Annuity Insurance Company, dated
October 17, 1996, in the original principal amount of $2,000,000.00
(River Oaks).
10.3.5 Deed to Secure Debt and Security Agreement executed by Roberts
Properties Residential, L.P. in favor of Nationwide Life Insurance
Company and Nationwide Life & Annuity Insurance Company, dated
October 17, 1996, and related collateral documents (River Oaks).
10.4.1 Property Management Agreement between Roberts Properties Rosewood
Plantation, L.P. and Roberts Properties Management, Inc., dated
January 5, 1993 (Rosewood Syndication). [*6.3.11]
10.4.1.1 Amendment #1 to Property Management Agreement regarding Rosewood,
dated October 13, 1994 (1994 Consolidation). [*6.3.11.1]
10.4.2 Real Estate Note executed by Roberts Properties Rosewood Plantation,
L.P. in favor of Commonwealth of Pennsylvania State Employes' [sic]
Retirement Board, dated May 25, 1994, in the original principal
amount of $6,650,000.00, as assigned to Legg Mason Real Estate
Services South, Inc., as further assigned to Federal Home Loan
Mortgage Corporation (Rosewood). [*6.3.12]
10.4.3 Deed to Secure Debt and Security Agreement executed by Roberts
Properties Rosewood Plantation, L.P. in favor of Commonwealth of
Pennsylvania State Employes' [sic] Retirement Board, dated May 25,
1994, and related collateral documents, as assigned to Legg Mason
Real Estate Services South, Inc. by instruments dated August 23,
1995, as further assigned to Federal Home Loan Mortgage Corporation
by instruments dated August 24, 1995 (Rosewood). [*6.3.13]
10.4.4 First Amendment to Deed to Secure Debt and Security Agreement
between Roberts Properties Rosewood Plantation, L.P. and
Commonwealth of Pennsylvania State Employes' [sic] Retirement
Board, dated August 1, 1994, as assigned to Legg Mason Real Estate
Services South, Inc. by instruments dated August 23, 1995, as
further assigned to Federal Home Loan Mortgage Corporation by
instruments dated August 24, 1995 (Rosewood). [*6.3.14]
10.4.5 Assumption Agreement between Roberts Properties Residential, L.P.
and Commonwealth of Pennsylvania State Employes' [sic] Retirement
Board, dated October 13, 1994 (1994 Consolidation). [*6.3.15]
10.5.1 Organization, Loan Acquisition and Financial Advisory Agreement
between Roberts Properties Holcomb Bridge, L.P. and Roberts
Properties, Inc., dated January 24, 1995 (Holcomb Bridge
Syndication - the Holcomb Bridge Community is now referred to as
the Ivey Brook Community). [*6.5.1]
10.5.2 Design and Development Agreement between Roberts Properties
Holcomb Bridge, L.P. and Roberts
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Properties, Inc., dated January 24, 1995 (Holcomb Bridge
Syndication). [*6.5.2]
10.5.3 Finish Selection and Interior Design Agreement between Roberts
Properties Holcomb Bridge, L.P. and Roberts Properties, Inc., dated
January 24, 1995 (Holcomb Bridge Syndication). [*6.5.3]
10.5.4 Construction Administration Agreement between Roberts Properties
Holcomb Bridge, L.P. and Roberts Properties, Inc., dated January 24,
1995 (Holcomb Bridge Syndication). [*6.5.4]
10.5.5 Partnership Administration Agreement between Roberts Properties
Holcomb Bridge, L.P. and Roberts Properties, Inc., dated January 24,
1995 (Holcomb Bridge Syndication). [*6.5.5]
10.5.6 Standard Form of Agreement between Owner and Contractor between
Roberts Properties Holcomb Bridge, L.P. and Roberts Properties
Construction, Inc., dated as of January __, 1995 (Holcomb Bridge
Syndication). [Incorporated by reference to Exhibit 10.5.8 from the
Company's quarterly report on Form 10-QSB for the quarter ended
September 30, 1996.]
10.5.7 Consulting Agreement between Roberts Properties Holcomb Bridge, L.P.
and Roberts Properties, Inc., dated January 24, 1995 (Holcomb
Bridge Syndication). [*6.5.6]
10.5.8 Property Management Agreement between Roberts Properties Holcomb
Bridge, L.P. and Roberts Properties Management, Inc., dated January
24, 1995 (Holcomb Bridge Syndication). [*6.5.7]
10.5.8.1 Amendment #1 to Property Management Agreement Regarding Roberts
Properties Holcomb Bridge, L.P., effective as of March 24, 1995
(Holcomb Bridge Merger). [*6.5.7.1]
10.5.9 Solicitation Agreement by and among Spalding & Company, Roberts
Realty Investors, Inc., Roberts Properties Residential, L.P.,
Roberts Properties Holcomb Bridge, L.P., Charles S. Roberts and
Brian J. Sullivan, dated February 21, 1995 (Holcomb Bridge
Merger). [*6.7.1]
10.5.10 Acquisition Agreement and Plan of Merger by and among Roberts Realty
Investors, Inc., Roberts Properties Residential, L.P., Roberts
Properties Holcomb Bridge, L.P., Charles S. Roberts and Brian J.
Sullivan, dated March 24, 1995 (Holcomb Bridge Merger). [*6.7.2]
10.5.11 Application/Contract for Mortgage Loan between Roberts Properties
Residential, L.P. and Nationwide Life Insurance Company, dated
February 27, 1996 (Holcomb Bridge). [* 6.20]
10.5.12 Real Estate Note A executed by Roberts Properties Residential, L.P.
in favor of Nationwide Life Insurance Company, dated January 30,
1997, in the original principal amount of $5,670,000.00 (Ivey
Brook - formerly Holcomb Bridge).
10.5.13 Real Estate Note B executed by Roberts Properties Residential, L.P.
in favor of West Coast Life Insurance Company, dated January 30,
1997, in the original principal amount of $750,000.00 (Ivey Brook).
10.5.14 Deed to Secure Debt and Security Agreement executed by Roberts
Properties Residential, L.P. in favor of Nationwide Life Insurance
Company and West Coast Life Insurance Company, dated January 30,
1997, and related collateral documents (Ivey Brook).
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10.5.15 Agreement Regarding Letter of Credit by Roberts Properties
Residential, L.P. for the benefit of Nationwide Life Insurance
Company and West Coast Life Insurance Company, dated January 30,
1997 (Ivey Brook).
10.5.16 Guaranty executed by Roberts Realty Investors, Inc. in favor of
Nationwide Life Insurance Company and West Coast Life Insurance
Company, dated January 30, 1997 (Ivey Brook).
10.6.1 Loan Agreement between First Union National Bank of Georgia and
Roberts Properties Residential, L.P., dated as of May 1, 1995 (Line
of Credit). [*6.8.1]
10.6.2 Promissory Note executed by Roberts Properties Residential, L.P. in
favor of First Union National Bank of Georgia, dated May 1, 1995, in
the original principal amount of $1,000,000.00 (Line of Credit).
[*6.8.2]
10.6.3 Unconditional Guaranty of Payment and Performance executed by
Roberts Realty Investors, Inc. for the benefit of First Union
National Bank of Georgia, dated as of May 1, 1995 (Line of Credit).
[*6.8.3]
10.6.4 Unconditional Guaranty of Payment and Performance executed by
Charles S. Roberts for the benefit of First Union National Bank of
Georgia, dated as of May 1, 1995 (Line of Credit). [*6.8.4]
10.7.1 Solicitation Agreement by and among Spalding & Company, Roberts
Realty Investors, Inc., Roberts Properties Residential, L.P.,
Roberts Properties Plantation Trace, L.P., and Charles S. Roberts,
dated April 14, 1995 (Plantation Trace Merger). [*6.9.1]
10.7.2 Merger Agreement and Plan of Merger by and among Roberts Realty
Investors, Inc., Roberts Properties Residential, L.P., Roberts
Properties Plantation Trace, L.P., and Charles S. Roberts, dated May
16, 1995 (Plantation Trace Merger). [*6.9.2]
10.7.3 Consulting Agreement by and between Roberts Properties Residential,
L.P. and Roberts Properties Management, Inc., dated May 16, 1995
(Plantation Trace Merger). [*6.9.3]
10.7.4 Property Management Agreement between Roberts Properties Plantation
Trace, L.P. and Roberts Properties Management, Inc., dated December
8, 1988 (Plantation Trace Syndication). [*6.9.4]
10.7.4.1 Amendment #1 to Property Management Agreement Regarding Roberts
Properties Plantation Trace, L.P., dated May 16, 1995 (Plantation
Trace Merger). [*6.9.4.1]
10.7.5 Promissory Note executed by Roberts Properties-Plantation Trace,
L.P. in favor of The Prudential Insurance Company of America, dated
August 12, 1993, in the original principal amount of $8,200,000.00
(Plantation Trace). [*6.9.5]
10.7.6 Deed to Secure Debt and Security Agreement from Roberts
Properties-Plantation Trace, L.P. to The Prudential Insurance
Company of America, dated August 12, 1993 (Plantation Trace).
[*6.9.6]
10.7.7 Assumption of Liability Agreement among The Prudential Insurance
Company of America, Roberts Properties-Plantation Trace, L.P. and
Roberts Properties Residential, L.P., dated May 16, 1995
(Plantation Trace Merger). [*6.9.7]
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10.8.1 Dealer Agreement among Roberts Realty Investors, Inc., Spalding &
Company, and Roberts Properties Residential, L.P. (as to Section 7
only), dated June 12, 1995 (Summer 1995 Cash Offering). [*6.10.1]
10.8.1.1 Amendment No. 1 to Dealer Agreement, dated July 31, 1995 (Summer
1995 Cash Offering). [*6.10.1.1]
10.8.1.2 Amendment No. 2 to Dealer Agreement, dated August 10, 1995 (Summer
1995 Cash Offering). [*6.10.1.2]
10.8.2 Sales Contract between Roberts Properties, Inc., as Seller, and
Roberts Properties Residential, L.P., as Purchaser, dated July
14, 1995 (Summer 1995 Cash Offering). [*6.10.2]
10.8.3 Design and Development Agreement between Roberts Properties
Residential, L.P. and Roberts Properties, Inc. dated July 21,
1995 (Summer 1995 Cash Offering). [*6.10.3]
10.8.4 Escrow Agreement among Roberts Realty Investors, Inc., Spalding &
Company and First Union National Bank of Georgia, dated June 12,
1995 (Summer 1995 Cash Offering). [*6.10.4]
10.8.4.1 Amendment No. 1 to Escrow Agreement, dated July 31, 1995 (Summer
1995 Cash Offering). [*6.10.4.1]
10.9.1 Solicitation Agreement by and among Spalding & Company, Roberts
Realty Investors, Inc., Roberts Properties Residential, L.P.,
Roberts Properties-St. Simons, Ltd., and GP-St. Simons, Ltd., dated
August 25, 1995 (Windsong Merger). [*6.12.1]
10.9.2 Merger Agreement and Plan of Merger by and among Roberts Properties
Residential, L.P., GP-St. Simons, Ltd., and Roberts Properties-St.
Simons, Ltd., dated September 22, 1995 (Windsong Merger). [*6.12.2]
10.9.3 Consulting Agreement by and between Roberts Properties Residential,
L.P. and Roberts Properties, Inc., dated September 27, 1995
(Windsong Merger). [*6.12.3]
10.9.4 Management Contract between Roberts Properties-St. Simons, Ltd. and
Roberts Properties, Inc., dated December 27, 1985 (Windsong
Syndication). [*6.12.4]
10.9.4.1 Amendment #1 to Management Contract Regarding Windsong, dated
September 27, 1995 (Windsong Merger). [*6.12.4.1]
10.9.5 Promissory Note executed by Roberts Properties-St. Simons, Ltd. in
favor of John Hancock Mutual Life Insurance Company, dated March 1,
1988, in the original principal amount of $4,400,000.00 (Windsong).
[* 6.12.5]
10.9.5.1 Amendment to Promissory Note between Roberts Properties-St. Simons,
Ltd. and John Hancock Mutual Life Insurance Company, dated as of
March 1, 1988 (Windsong). [*6.12.5.1]
10.9.5.2 Amended and Restated Promissory Note dated January 28, 1993 in the
original principal amount of $4,350,000.00, attached as Exhibit
A to that certain Note Modification Agreement between Roberts
Properties-St. Simons, Ltd. and John Hancock Mutual Life Insurance
Company, dated January 28, 1993 (Windsong). [*6.12.5.2]
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10.9.6 Deed to Secure Debt and Security Agreement executed by Roberts
Properties-St. Simons, Ltd. in favor of John Hancock Mutual Life
Insurance Company, dated March 1, 1988, and related collateral
documents (Windsong). [*6.12.6]
10.9.7 Modification to Security Instruments between Roberts Properties-St.
Simons, Ltd. and John Hancock Mutual Life Insurance Company, dated
January 28, 1993 (Windsong). [*6.12.7]
10.9.8 Modification to Promissory Note and Security Instruments dated
January 28, 1993 between Roberts Properties-St. Simons, Ltd. and
John Hancock Mutual Life Insurance Company (Windsong).
[*6.12.8]
10.9.9 Assumption Agreement between Roberts Properties Residential, L.P.
and John Hancock Mutual Life Insurance Company, dated September 27,
1995 (Windsong Merger). [*6.12.9]
10.10.1 Purchase/Sale Agreement between Prime MFP III Limited Partnership,
as Seller, and Roberts Properties Residential, L.P., as Purchaser,
dated October 27, 1995 (Laurelwood - the Laurelwood community is
now named Autumn Ridge). [*6.13]
10.10.2 Application/Contract for Mortgage Loan between Roberts Properties
Residential, L.P. and Nationwide Life Insurance Company, dated
February 15, 1996 (Autumn Ridge). [*6.19]
10.10.3 Real Estate Note A executed by Roberts Properties Residential, L.P.
in favor of Nationwide Life Insurance Company, dated March 28, 1996,
in the original principal amount of $4,250,000.00 (Autumn Ridge).
[Incorporated by reference to Exhibit 10.19.1 from the Company's
quarterly report on Form 10-QSB for the quarter ended June 30,
1996.]
10.10.4 Real Estate Note B executed by Roberts Properties Residential, L.P.
in favor of West Coast Life Insurance Company, dated March 28, 1996,
in the original principal amount of $750,000.00 (Autumn Ridge).
[Incorporated by reference to Exhibit 10.19.2 from the Company's
quarterly report on Form 10-QSB for the quarter ended June 30,
1996.]
10.10.5 Deed to Secure Debt and Security Agreement executed by Roberts
Properties Residential, L.P. in favor of Nationwide Life Insurance
Company and West Coast Life Insurance Company, dated March 28, 1996,
and related collateral documents (Autumn Ridge). [Incorporated by
reference to Exhibit 10.19.3 from the Company's quarterly report on
Form 10-QSB for the quarter ended June 30, 1996.]
10.11.1 Dealer Agreement among Roberts Realty Investors, Inc., Spalding &
Company, and Roberts Properties Residential, L.P. (as to Section 7
only), dated November 1, 1995 (1995-1996 Cash Offering).
[*6.14.1]
10.11.1.1 Amendment to Dealer Agreement among Roberts Realty Investors, Inc.,
Spalding & Company, and Roberts Properties Residential, L.P. (as to
Section 7 only), dated April 19, 1996 (1995-1996 Cash Offering).
[Incorporated by reference to Exhibit 10.14.1 from the Company's
quarterly report on Form 10-QSB for the quarter ended June 30,
1996.]
10.11.2 Escrow Agreement among Roberts Realty Investors, Inc., Spalding &
Company and First Union National Bank of Georgia, dated November 1,
1995 (1995-1996 Cash Offering). [*6.14.2]
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10.11.2.1 Amendment to Escrow Agreement among Roberts Realty Investors, Inc.,
Spalding & Company and First Union National Bank of Georgia, dated
April 19, 1996 (1995-1996 Cash Offering). [Incorporated by
reference to Exhibit 10.14.2 from the Company's quarterly report on
Form 10-QSB for the quarter ended June 30, 1996.]
10.11.3 Sales Contract between Roberts Properties, Inc., as Seller, and
Roberts Properties Residential, L.P., as Purchaser, dated March 15,
1996 (for Howell Ferry Property) (1995-1996 Cash Offering).
[Incorporated by reference to Exhibit 10.14.3 from the Company's
quarterly report on Form 10-QSB for the quarter ended June 30,
1996.]
10.11.4 Design Agreement between Roberts Properties Residential, L.P. and
Roberts Properties, Inc., dated March 29, 1996 (1995-1996 Cash
Offering). [Incorporated by reference to Exhibit 10.14.4 from the
Company's quarterly report on Form 10-QSB for the quarter ended June
30, 1996.]
10.11.5 Development Agreement between Roberts Properties Residential, L.P.
and Roberts Properties, Inc., dated March 29, 1996 (1995-1996 Cash
Offering). [Incorporated by reference to Exhibit 10.14.5 from the
Company's quarterly report on Form 10-QSB for the quarter ended June
30, 1996.]
10.11.6 Finish Selection and Interior Design Agreement between Roberts
Properties Residential, L.P. and Roberts Properties, Inc., dated
March 29, 1996 (1995-1996 Cash Offering). [Incorporated by
reference to Exhibit 10.14.6 from the Company's quarterly report on
Form 10-QSB for the quarter ended June 30, 1996.]
10.11.7 Construction Administration Agreement between Roberts Properties
Residential, L.P. and Roberts Properties, Inc., dated March 29, 1996
(1995-1996 Cash Offering). [Incorporated by reference to Exhibit
10.14.7 from the Company's quarterly report on Form 10-QSB for the
quarter ended June 30, 1996.]
10.12.1 Sales Contract between Goodrich Enterprises, Inc., as Seller, and
Roberts Properties Residential, L.P., as Purchaser, dated January
25, 1995 (The Shoppes of Crestmark). [*6.6]
10.12.2 Sales Contract between Roberts Properties Residential, L.P., as
Seller, and Mike Atsalis and Nicholas Fridas, as Purchaser, dated
October 25, 1995, as assigned by Mike Atsalis and Nicholas Fridas to
The Shoppes of Crestmark, Inc. by Assignment of Sales Contract dated
December 8, 1995 (The Shoppes of Crestmark). [*6.15.1]
10.12.3 Limited Warranty Deed from Roberts Properties Residential, L.P. to
The Shoppes of Crestmark, Inc., dated December 8, 1995 (The Shoppes
of Crestmark). [* 6.15.2]
10.13.1 Solicitation Agreement by and among Spalding & Company, Roberts
Realty Investors, Inc., Roberts Properties Residential, L.P.,
Roberts Properties Bentley Place, L.P. and Charles S. Roberts, dated
January 26, 1996 (Bentley Place Merger). [*6.17]
10.13.2 Merger Agreement and Plan of Merger by and among Roberts Realty
Investors, Inc., Roberts Properties Residential, L.P., Roberts
Properties Bentley Place, L.P., and Charles S. Roberts, dated March
21, 1996 (Bentley Place Merger). [Incorporated by reference to
Exhibit 10.17.1 from the Company's quarterly report on Form 10-QSB
for the quarter ended June 30, 1996.]
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10.13.3 Consulting Agreement by and between Roberts Properties Group, Inc.
and Roberts Properties Bentley Place, L.P., dated July 31, 1992
(Bentley Place Syndication). [Incorporated by reference to Exhibit
10.17.2 from the Company's quarterly report on Form 10-QSB for the
quarter ended June 30, 1996.]
10.13.3.1 Amendment #1 to Consulting Agreement regarding Bentley Place dated
March 21, 1996 (Bentley Place Merger). [Incorporated by reference to
Exhibit 10.17.2.1 from the Company's quarterly report on Form 10-QSB
for the quarter ended June 30, 1996.]
10.13.4 Property Management Agreement between Roberts Properties Bentley
Place, L.P. and Roberts Properties Management, Inc., dated July 31,
1992 (Bentley Place Syndication). [Incorporated by reference to
Exhibit 10.17.3 from the Company's quarterly report on Form 10-QSB
for the quarter ended June 30, 1996.]
10.13.4.1 Amendment #1 to Property Management Agreement regarding Bentley
Place, dated March 21, 1996 (Bentley Place Merger). [Incorporated by
reference to Exhibit 10.17.3.1 from the Company's quarterly report
on Form 10-QSB for the quarter ended June 30, 1996.]
10.13.5 Application/Contract for Mortgage Loan between Roberts Properties
Residential, L.P. and Nationwide Life Insurance Company, dated April
2, 1996 (Bentley Place). [Incorporated by reference to Exhibit
10.17.4 from the Company's quarterly report on Form 10-QSB for the
quarter ended June 30, 1996.]
10.13.6 Real Estate Note A executed by Roberts Properties Residential, L.P.
in favor of Nationwide Life Insurance Company, dated August 14,
1996, in the original principal amount of $3,350,000.00 (Bentley
Place). [Incorporated by reference to Exhibit 10.17.4.1 from the
Company's quarterly report on Form 10-QSB for the quarter ended
September 30, 1996.]
10.13.7 Real Estate Note B executed by Roberts Properties Residential, L.P.
in favor of West Coast Life Insurance Company, dated August 14,
1996, in the original principal amount of $750,000.00 (Bentley
Place). [Incorporated by reference to Exhibit 10.17.4.2 from the
Company's quarterly report on Form 10-QSB for the quarter ended
September 30, 1996.]
10.13.8 Deed to Secure Debt and Security Agreement executed by Roberts
Properties Residential, L.P. in favor of Nationwide Life Insurance
Company and West Coast Life Insurance Company, dated August 14,
1996, and related collateral documents (Bentley Place).
[Incorporated by reference to Exhibit 10.17.4.3 from the Company's
quarterly report on Form 10-QSB for the quarter ended September 30,
1996.]
10.14 Assignment/Assumption by Multifamily Management, Inc. (f/k/a Roberts
Properties Management, Inc.) to Roberts Properties Management,
L.L.C. dated April 30, 1996 assigning property management
agreements, together with Consent to Assignment and Assumption
executed by Roberts Properties Residential, L.P. dated April 30,
1996. [Incorporated herein by reference from the Company's Form
10-SB/A No. 1 filed on May 7, 1996.] [*6.21]
10.15.1 Solicitation Agreement by and among Spalding & Company, Roberts
Realty Investors, Inc., Roberts Properties Residential, L.P., The
Crestmark Club, L.P., and Charles S. Roberts, dated May 8, 1996
(Crestmark Merger). [Incorporated by reference to Exhibit 10.22.1
from the Company's quarterly report on Form 10-QSB for the quarter
ended June 30, 1996.]
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10.15.2 Merger Agreement and Plan of Merger by and among Roberts Realty
Investors, Inc., Roberts Properties Residential, L.P., The Crestmark
Club, L.P., Charles S. Roberts, James M. and Penelope H. Goodrich,
and Norman A. Goldman, dated June 26, 1996 (Crestmark Merger).
[Incorporated by reference to Exhibit 10.22.2 from the Company's
quarterly report on Form 10-QSB for the quarter ended June 30,
1996.]
10.15.3 Property Management Agreement between The Crestmark Club, L.P. and
Roberts Properties Management, Inc., dated January 11, 1991
(Crestmark Syndication). [Incorporated by reference to Exhibit
10.22.3 from the Company's quarterly report on Form 10-QSB for the
quarter ended June 30, 1996.]
10.15.3.1 Amendment #1 to Property Management Agreement regarding Crestmark,
dated June 26, 1996 (Crestmark Merger). [Incorporated by reference
to Exhibit 10.22.3.1 from the Company's quarterly report on Form
10-QSB for the quarter ended June 30, 1996.]
10.15.3.2 Amendment #2 to Property Management Agreement regarding Crestmark,
dated June 26, 1996 (Crestmark Merger). ). [Incorporated by
reference to Exhibit 10.22.3.2 from the Company's quarterly report
on Form 10-QSB for the quarter ended June 30, 1996.]
10.15.4 Consulting Agreement regarding Crestmark by and between Roberts
Properties Residential, L.P. and Roberts Properties, Inc., dated
June 26, 1996 (Crestmark Merger). [Incorporated by reference to
Exhibit 10.22.4 from the Company's quarterly report on Form 10-QSB
for the quarter ended June 30, 1996.]
10.15.5 Assumption and Modification Agreement by and among The Crestmark
Club, L.P., Roberts Properties Residential, L.P., and Federal Home
Loan Mortgage Corporation dated as of June 26, 1996 (Crestmark
Merger). [Incorporated by reference to Exhibit 10.22.5 from the
Company's quarterly report on Form 10-QSB for the quarter ended June
30, 1996.]
10.15.6 Standard Form of Agreement between Owner and Contractor between
Roberts Properties Residential, L.P. and Roberts Properties
Construction, Inc., dated as of June 15, 1996 (Crestmark Merger).
[Incorporated by reference to Exhibit 10.22.6 from the Company's
quarterly report on Form 10-QSB for the quarter ended September 30,
1996.]
10.15.7 Real Estate Note executed by The Crestmark Club, L.P. in favor of
Commonwealth of Pennsylvania State Employes' [sic] Retirement Board,
dated April 27, 1994, in the original principal amount of
$10,100,000.00, along with a replacement Real Estate Note having
identical terms (the original having been lost), and related
collateral documents, as assigned to Legg Mason Real Estate Services
South, Inc. by instrument dated August 23, 1995, as further assigned
to Federal Home Loan Mortgage Corporation by instrument dated August
24, 1995, as amended by that certain Amendment to Assignment of
Assignment of Occupancy Agreement and Rents dated September 1, 1995
(Crestmark).
10.15.7.1 First Amendment to Deed to Secure Debt and Security Agreement
between The Crestmark Club, L.P. and Commonwealth of Pennsylvania
State Employes' [sic] Retirement Board, dated August 1, 1994
(Crestmark).
10.16.1 Amended and Restated Consulting Agreement between Roberts Properties
Residential, L.P. and Roberts Properties, Inc., dated June 26, 1996.
[Incorporated by reference to Exhibit 10.23.1 from the Company's
quarterly report on Form 10-QSB for the quarter ended June 30,
1996.]
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10.16.2 Amended and Restated Consulting Agreement between Roberts Properties
Residential, L.P. and Roberts Properties Group, Inc., dated June 26,
1996. [Incorporated by reference to Exhibit 10.23.2 from the
Company's quarterly report on Form 10-QSB for the quarter ended
June 30, 1996.]
10.16.3 Amended and Restated Consulting Agreement between Roberts Properties
Residential, L.P. and Roberts Properties Management, L.L.C., dated
June 26, 1996. [Incorporated by reference to Exhibit 10.23.3 from the
Company's quarterly report on Form 10-QSB for the quarter ended June
30, 1996.]
21 Subsidiaries of the Small Business Issuer.
27 Financial Data Schedule.
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<PAGE> 1
EXHIBIT 10.3.3
REAL ESTATE NOTE A
$7,250,000.00 Atlanta, Georgia
October 17, 1996
FOR VALUE RECEIVED, THE UNDERSIGNED Roberts Properties Residential, L.P., a
Georgia limited partnership, whose sole general partner is Roberts Realty
Investors, Inc., a Georgia corporation (the "Maker") promises to pay to the
order of NATIONWIDE LIFE INSURANCE COMPANY, an Ohio corporation, its successors
and assigns (the "Holder") the principal sum of SEVEN MILLION TWO HUNDRED FIFTY
THOUSAND AND NO/100 DOLLARS ($7,250,000.00), together with interest on the
principal balance of this Real Estate Note A (the "Note"), from time to time
remaining unpaid, from the date of disbursement by the Holder hereof at the
applicable interest rate hereinafter set forth, together with all other sums due
hereunder or under the terms of the Security Deed (as hereinafter defined) in
lawful money of the United States of America which shall be legal tender in
payment of all debts at the time of payment. Both principal and interest and all
other sums due hereunder shall be payable at the office of the Holder at One
Nationwide Plaza, Columbus, Ohio 43215-2220, Attn: Real Estate Investment
Department, or at such other place either within or without the State of Ohio,
as the Holder hereof may from time to time designate. Said principal and
interest shall be paid over a term, at the times, and in the manner set forth
below, to wit:
Payment Provision:
(i) Interest accrued on the unpaid principal balance of this Note, from
the date of disbursement hereof at the rate of 7.15% percent per annum, shall
be due and payable on November 15, 1996.
(ii) Thereafter, principal and interest on the unpaid principal balance of
this Note at the rate of 7.15% percent per annum shall be paid in eighty three
(83) consecutive monthly installments commencing on December 15, 1996 and
continuing on the fifteenth day of each calendar month thereafter, with each
such installment to be in the sum of Forty Eight Thousand Nine Hundred Sixty Six
and 99/100 Dollars ($48,966.99).
Maturity:
The unpaid principal balance of this Note and all accrued unpaid interest
thereon, if not sooner paid, shall be due and payable in full on November 15,
2003 (the "Maturity Date").
Application of Payments:
All payments shall be applied first to the payment of accrued unpaid
interest on this Note and the balance, if any, shall be applied to the reduction
of the outstanding principal balance of this Note. Interest due hereunder shall
be calculated on the basis of a 360-day year composed of twelve (12) thirty (30)
day months; provided, in no event shall such calculation cause the interest rate
on this Note to exceed the maximum rate permitted under applicable law.
Late Payment Charge:
The Holder of this Note may collect a late payment charge, prior to the
acceleration of this Note, in an amount equal to five percent (5%) of the
aggregate monthly installment which is not paid on the due date, for the
purposes of covering the extra expenses involved in handling delinquent
installments. Any full payment of principal and/or interest which is postmarked
by the United States Postal Service on or before the due date shall not be
considered delinquent and a late payment charge shall not be assessed.
<PAGE> 2
Prepayment:
(A) Maker shall have the right to prepay, in full but not in part, the
obligation evidenced by this Note upon giving (i) not less than thirty (30)
days' prior written notice to Holder of Maker's intention to so prepay the Note,
and (ii) payment to Holder of the Prepayment Premium (as hereinafter defined),
if any, then due to Holder as hereinafter provided. As used herein, the term
"Prepayment Premium" shall mean the greater of (x) one percent (1.0%) of the
outstanding principal balance of this Note, or (y) a sum equal to (a) the
present value of the scheduled monthly payments hereunder from the date of
prepayment to the Maturity Date and (b) the present value of the amount of
principal and interest due on the Maturity Date (assuming all scheduled monthly
payments due hereunder prior to the Maturity Date were made when due), minus (c)
the outstanding principal balance hereof as of the date of prepayment. The
present value described in (a) and (b) of the immediately preceding sentence are
to be computed on a monthly basis as of the date of prepayment, discounted at
the yield to maturity of the U.S. Treasury Note or Bond that is closest in
maturity to the Maturity Date as reported in the Wall Street Journal (or if the
Wall Street Journal is no longer published, as reported in such other daily
financial publication of national circulation which shall be designated by
Holder) on the fifth (5th) business day preceding the date of prepayment. Maker
shall be obligated to prepay this Note on the date set forth in the notice to
Holder required hereinabove, after such notice has been delivered to Holder.
Notwithstanding the foregoing or any other provision herein to the contrary, if
the Holder elects to apply insurance proceeds, condemnation awards or any
escrowed amounts, if applicable, to the reduction of the principal balance of
this Note in the manner provided in the Security Deed (as hereinafter defined),
no Prepayment Premium shall be due or payable as a result of such application,
and the monthly installments due and payable hereunder shall be reduced
accordingly.
(B) In the event the Maturity Date of the indebtedness evidenced by this
Note is accelerated by Holder hereof at any time due to a default by Maker in
the terms, covenants or conditions contained in this Note, the Security Deed or
any of the other Loan Document (as hereinafter defined), then a tender of
payment of an amount necessary to satisfy the entire outstanding principal
balance and all accrued unpaid interest of this Note made by Maker, or by anyone
on behalf of Maker, at any time prior to, at, or as a result of, a foreclosure
sale or sale pursuant to power of sale shall constitute a voluntary prepayment
hereunder prior to the contracted Maturity Date of this Note thus requiring
payment to Holder of a Prepayment Premium equal to the applicable Prepayment
Premium as set forth in subparagraph (A) above.
(C) Maker acknowledges that Holder (a) has advanced the amounts evidenced
by this Note with the expectation that such amounts would be outstanding until
the Maturity Date unless prepaid in accordance with the foregoing prepayment
provisions, (b) would not have been willing to advance such amounts on the terms
set forth in this Note for a shorter period of time, (c) in making the loan
evidenced by this Note, is relying on Maker's creditworthiness and its agreement
to pay in strict accordance with the terms set forth in the Note, and (d) would
not make the loan without full and complete assurance by Maker of its agreement
not to prepay all or a part of the principal of this Note except as expressly
permitted herein. Maker acknowledges that if this Note were to be prepaid prior
to the Maturity Date other than in accordance with the foregoing prepayment
provisions, Maker would not receive the benefit of the bargain agreed to by
Maker and Holder. In addition, Maker has been advised and acknowledges that
Holder is relying on the receipt of payments under this Note to, among other
things, match and support its obligations under contracts entered into by Holder
with third parties and that in the event of a prepayment, Holder could suffer
loss and additional expenses which are extremely difficult and impractical to
ascertain. The Prepayment Premium is a good faith resolution by Maker and Holder
of the damages Holder would suffer, and it is not intended as a penalty.
(D) Notwithstanding anything in this "Prepayment" section of this Note to
the contrary, Maker may prepay in full, but not in part, the obligation
evidenced by this Note at any time during the last ninety (90) days prior to the
Maturity Date without any prepayment premium.
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<PAGE> 3
BY INITIALING BELOW, MAKER EXPRESSLY ACKNOWLEDGES THAT PURSUANT TO THE
PROVISIONS OF THIS NOTE, MAKER HAS NO RIGHT TO PREPAY THIS NOTE IN WHOLE OR IN
PART WITHOUT PAYMENT OF THE PREPAYMENT PREMIUM EXCEPT AS SET FORTH ABOVE, AND
THAT MAKER SHALL BE LIABLE FOR THE PAYMENT OF THE PREPAYMENT PREMIUM UPON ANY
PAYMENT OF THE OUTSTANDING PRINCIPAL OF THIS NOTE BEFORE ITS DUE DATE, WHETHER
VOLUNTARY OR INVOLUNTARY OR AFTER ACCELERATION OF THE NOTE WHETHER THE
ACCELERATION OF THE MATURITY HEREOF IS DUE TO MAKER'S DEFAULT OR OTHERWISE.
FURTHERMORE, BY INITIALING BELOW, MAKER WAIVES ANY RIGHTS IT MAY HAVE UNDER ANY
APPLICABLE STATE LAWS AS THEY RELATE TO ANY PREPAYMENT RESTRICTIONS CONTAINED IN
THIS PREPAYMENT SECTION OR OTHERWISE IN THIS NOTE AND EXPRESSLY ACKNOWLEDGES
THAT HOLDER HAS MADE THE LOAN IN RELIANCE UPON SUCH AGREEMENTS AND WAIVER OF
MAKER AND THAT HOLDER WOULD NOT HAVE MADE THE LOAN WITHOUT SUCH AGREEMENTS AND
WAIVER OF MAKER. MAKER ACKNOWLEDGES THAT SPECIFIC WEIGHT HAS BEEN GIVEN TO THE
CONSIDERATION GIVEN FOR SUCH AGREEMENTS, WHICH CONSIDERATION IS THE GRANTING OF
THE LOAN.
/s/ CSR
Borrower's initials
Additional Conditions:
This Note is secured by a Deed to Secure Debt and Security Agreement
(herein referred to as the "Security Deed") and by an Assignment of Leases,
Rents and Profits (herein referred to as the "Assignment") of even date herewith
encumbering certain real property located in Gwinnett County, Georgia and other
property as more particularly described in the Security Deed (hereinafter
collectively referred to as the "Property"). The Security Deed and the
Assignment contain terms and provisions which provide grounds for acceleration
of the indebtedness evidenced by this Note, together with additional remedies in
the event of default hereunder or thereunder. Failure on the part of the Holder
hereof to exercise any right granted herein or in the aforesaid Security Deed or
the Assignment shall not constitute a waiver of such right or preclude the
subsequent exercise and enforcement thereof. This Note, the Security Deed, the
Assignment and all other documents and instruments executed as further evidence
of, as additional security for, or executed in connection with the indebtedness
evidenced by this Note are hereinafter collectively referred to as the "Loan
Documents."
Except as otherwise provided, all parties to this Note, including
endorsers, sureties and guarantors, hereby jointly and severally waive
presentment for payment, demand, protest, notice of protest, notice of demand
and of nonpayment or dishonor and of protest, notice of intent to accelerate the
maturity of this Note, notice of acceleration of maturity of this Note, and any
and all other notices and demands whatsoever, and agree to remain bound hereby
until the principal and interest of this Note are paid in full, notwithstanding
any extensions of time for payment which may be granted by Holder, even though
the period of extension be indefinite, and notwithstanding any inaction by, or
failure to assert any legal rights available to the Holder of this Note.
If the obligations evidenced by this Note, or any part thereof, are
placed in the hands of an attorney for collection, whether by suit or otherwise,
at any time, or from time to time, Maker shall be liable to Holder, in each
instance, for all costs and expenses incurred in connection therewith,
including, without limitation, reasonable attorneys' fees (as hereinafter
defined).
Default:
If default shall be made in the payment of principal and/or interest as
stipulated above or in the payment of any other sums due hereunder or under any
of the other Loan Documents, or should any default be made in the performance of
any of the terms, covenants and conditions contained herein or in any of the
other Loan Documents, then in any or all of such events, at the
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<PAGE> 4
option of Holder, the entire outstanding principal balance of this Note,
together with all accrued unpaid interest thereon and all other sums advanced by
Holder on behalf of Maker shall become and be immediately due and payable then
or thereafter as Holder may elect, regardless of the Maturity Date hereof. All
such amounts shall bear interest after the Maturity Date, by acceleration or
otherwise, at the lesser of either (i) the highest rate of interest then allowed
by the laws of the State of Georgia, or, if controlling, the laws of the United
States, or (ii) the then applicable interest rate of this Note plus five-hundred
(500) basis points (five per cent per annum).
During the existence of any default, Holder may apply any sums received,
including but not limited to, insurance proceeds or condemnation awards to any
amount then due and owing hereunder or under the terms of any of the other Loan
Documents as Holder may determine. Neither the right nor the exercise of the
right herein granted unto Holder to apply such proceeds as aforesaid shall
preclude Holder from exercising its option to cause the entire indebtedness
evidenced by this Note to become immediately due and payable by reason of
Maker's default under the terms of this Note, or any of the other Loan
Documents.
Notwithstanding any provisions herein to the contrary, Holder's right,
power and privilege to accelerate the maturity of the indebtedness evidenced
hereby shall be conditioned upon, (a) with respect to any Monetary Default (as
hereafter defined), Holder giving Maker written notice of such Monetary Default
and a five (5) day period ("Monetary Cure Period") after the date of such notice
within which to cure such Monetary Default; provided, however, that such
Monetary Cure Period shall be limited to once per loan year for the term of the
Loan; and (b) with respect to any Non-Monetary Default (as hereinafter defined),
Holder giving Maker written notice of such Non-Monetary Default and a thirty
(30) day period after the date of such notice within which to cure such
Non-Monetary Default; provided, however, that if such Non-Monetary Default
cannot reasonably be cured within the 30 day period Maker shall have a
reasonable period of time in which to cure the Non-Monetary Default provided
that Maker commences the cure of such default within the 30 day period and
thereafter diligently pursues the cure to completion. Any notice required
hereunder shall be given as provided in the Security Deed. Holder shall have no
obligation to give Maker notice of any Incurable Default (as hereinafter
defined) prior to exercising its right, power and privilege to accelerate the
maturity of the indebtedness evidenced hereby and to declare same to be
immediately due and payable and exercise all other rights and remedies herein
granted or otherwise available to Holder at law or in equity. As used herein,
the term "Monetary Default" shall mean any default which can be cured by the
payment of money including, but not limited to, the payment of principal and
interest due under this Note and the payment of taxes, assessments and insurance
premiums when due as provided in the Security Deed. As used herein, the term
"Non-Monetary Default" shall mean any default which is not a Monetary Default or
an Incurable Default. As used herein, the term "Incurable Default" shall mean
(i) any voluntary or involuntary sale, assignment, encumbering or transfer in
violation of the covenants of Section 30 the Security Deed or (ii) if Maker or
its general partner should make an assignment for the benefit of creditors,
become insolvent, or file a petition in bankruptcy (including but not limited
to, a petition seeking a rearrangement or reorganization).
Savings Clause; Severability:
Notwithstanding any provisions herein or in the Security Deed to the
contrary, the total liability for payments in the nature of interest including
but not limited to Prepayment Premiums, default interest and late fees shall not
exceed the limits imposed by the laws of the State of Georgia or the United
States of America relating to maximum lawful rate of interest. Holder shall not
be entitled to receive, collect or apply, as interest on the indebtedness
evidenced hereby, any amount in excess of the maximum lawful rate of interest
permitted to be charged by applicable law or regulations, as amended or enacted
from time to time. In the event Holder ever receives, collects or applies, as
interest, any such excess, such amount which would be excessive interest shall
be applied to reduce the unpaid principal balance of the indebtedness evidenced
by this Note. If the unpaid principal balance of such indebtedness is paid in
full, any remaining excess shall be forthwith paid to Maker. If any clauses or
provisions herein contained operate or
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<PAGE> 5
prospectively operate to invalidate this Note, then such clauses or provisions
only shall be held for naught, as though not herein contained and the remainder
of this Note shall remain operative and in full force and effect.
Exculpation:
Except as expressly set forth herein, the liability of Maker with
respect to the payment of principal and interest hereunder shall be
"non-recourse" and, accordingly, Holder's source of satisfaction of said
indebtedness and Maker's other obligations hereunder and under the other Loan
Documents shall be limited to the Property and Holder's receipt of the rents,
issues and profits from the Property. Holder shall not seek to procure payment
out of any other assets of Maker, or any person or entity comprising Maker, nor
to seek judgment (except as hereinafter provided) for any sums which are or may
be payable under this Note or under any of the other Loan Documents, or for any
claim or judgment (except as hereinafter provided) for any deficiency remaining
after foreclosure of the Security Deed. Notwithstanding the above, nothing
herein contained shall be deemed to be a release or impairment of the
indebtedness evidenced by this Note or the security therefor intended by the
other Loan Documents, or be deemed to preclude Holder from exercising its rights
to foreclose, or exercise the power of sale in, the Security Deed or to enforce
any of its other rights or remedies under the Loan Documents.
Notwithstanding the foregoing, it is expressly understood and agreed
that the aforesaid limitation on liability shall in no way affect or apply to
Maker's continued personal liability for:
(1) fraud or misrepresentation made in or in connection with this
Note or any other Loan Documents;
(2) failure to pay taxes prior to delinquency or to pay assessments
prior to delinquency, or to pay charges for labor, materials or
other charges which can create liens on any portion of the
Property;
(3) the misapplication of (i) proceeds of insurance covering any
portion of the Property, or (ii) proceeds of the sale or
condemnation of any portion of the Property or (iii) rentals
received by or on behalf of Maker subsequent to the date on
which Holder makes written demand therefor pursuant to any of
the Loan Documents;
(4) causing or permitting waste to occur on, in or about the
Property, and failure to maintain the Property, excepting
ordinary wear and tear;
(5) loss by fire or casualty to the extent not compensated by
insurance proceeds collected by Holder;
(6) the return to Holder of all unearned advance rentals and
security deposits paid by tenants of the Property and not
refunded to or forfeited by such tenants;
(7) the return to Holder of any and all fees paid to Maker by
tenants of the Property which fees permit tenants to terminate
their leases;
(8) the return of, or reimbursement for, all personalty owned by
Maker taken from the Property by or on behalf of Maker, out of
the ordinary course of business, and not replaced by items of
equal or greater value than the original value of the personalty
so removed;
(9) all court costs and reasonable attorneys' fees actually
incurred which are provided for in this Note or in any other
Loan Document;
(10) (i) the removal of any chemical, material or substance, exposure
to which is prohibited, limited, or regulated by any Federal,
State, County, Regional or Local Authority which may or could
pose a hazard to the health and safety of the
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<PAGE> 6
occupants of the Property regardless of the source of
origination; (ii) the restoration of the Property to comply with
all governmental regulations pertaining to hazardous waste found
in, on or under the Property, regardless of the source of
origination; and (iii) any indemnity or other agreement to hold
the Holder harmless from and against any and all losses,
liabilities, damages, injuries, costs and expenses of any and
every kind arising under Paragraph 3 of the Security Deed
including, but not limited to, that certain Environmental
Indemnity Agreement from Maker to Holder of even date herewith.
Maker shall not be liable hereunder if such materials were
placed on the Property subsequent to the date of acquisition of
the Property by foreclosure of the Security Deed by Holder or
acceptance of a deed in lieu thereof, or relinquishment of
control of the Property pursuant to a transfer approved in
writing by Holder; provided that such transferee assumes in
writing all obligations of Maker pertaining to Hazardous
Materials (as defined in the Security Deed) pursuant to the Loan
Documents. Liability under this subparagraph shall extend beyond
the repayment of this Note and compliance with the terms of the
Security Deed, unless at such time Maker provides Holder with an
environmental assessment report acceptable to Holder showing the
Property to be free of Hazardous Materials and not in violation
of Hazardous Waste Laws (as defined in the Security Deed). Maker
shall bear the burden of proof in establishing the date on which
any such Hazardous Materials were placed or appeared in, on or
under the Property.
(11) (a) any and all costs incurred in order to cause the Property to
comply with the applicable accessibility provisions of The Fair
Housing Act of 1988, as the same may now or hereafter be
amended, and any and all rules and regulations that may now or
hereafter be promulgated in connection with said acts, and (b)
any indemnity or other agreement to hold the Holder harmless
from and against any and all losses, liabilities, damages,
injuries, costs and expenses of any and every kind arising under
Paragraph 3 of the Security Deed regarding accessibility for the
disabled or handicapped or under the Accessibility Indemnity
Agreement from Maker to Holder of even date herewith; provided,
however, Maker shall not be liable for compliance with any
accessibility laws that first become effective, or for any
violation of any accessibility laws resulting from alterations
or improvements to the Property that are performed, subsequent
to Holder's actually taking possession of the Property pursuant
to foreclosure of the Security Deed or acceptance of a deed in
lieu thereof, or subsequent to any transfer of ownership of the
Property that has the prior written approval of Holder; provided
that such transferee assumes in writing all obligations of Maker
with respect to compliance with accessibility laws under the
Security Deed and Accessibility Indemnity Agreement.
(12) Obligation of Maker for the face amount of any Letter of Credit
held by Holder and delivered by Maker in connection with the loan evidenced by
this Note in the event Holder is unable to collect the full amount of said
Letter of Credit for any reason.
The obligations of Maker in subparagraphs (1) through (12) above, except
as provided in subparagraphs (10) and (11), shall survive the repayment and
satisfaction of this Note and compliance with the terms of the Security Deed.
Notwithstanding any provisions herein to the contrary, Maker shall
become personally liable for the entire amount due under this Note (including
all principal, interest and other charges) in the event that Maker (i) violates
the covenants set forth in the Security Deed governing the placing of
subordinate financing on the Property or (ii) violates the covenants set forth
in the Security Deed restricting transfers in the Property or transfers of
ownership interests in Maker.
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<PAGE> 7
As used herein, the phrase "reasonable attorneys' fees" shall mean fees
charged by attorneys selected by Holder based upon such attorneys' then
prevailing hourly rates as opposed to any amount or percentage specified by any
statute then in effect in the State of Georgia.
This Note is one of a series of two notes of even date herewith executed
by the undersigned, both being secured by the Security Deed and other security
instruments in favor of the Holder of this Note. The other such note is
designated Real Estate Note B and has been executed by the undersigned in favor
of Nationwide Life & Annuity Insurance Company and is in the original principal
sum of Two Million and No/100 Dollars ($2,000,000.00). Real Estate Notes A and B
shall be of equal dignity and it is expressly stipulated and agreed that a
default under the terms of either of said Notes shall constitute an event of
default under both of said Notes authorizing the holders of said Notes to
accelerate the maturity of both of said Notes and to exercise all rights and
remedies granted to holders under the Notes, the Security Deed and any other
security instruments securing the payment of the Notes. It is further stipulated
and agreed that notwithstanding the prepayment privilege contained in this Note,
the undersigned shall have no right to prepay this Note unless the undersigned
also elects to prepay Real Estate Note B in accordance with the prepayment
provisions contained therein.
THE PROVISIONS of this Note shall be governed by the laws of the State
of Georgia and the United States and shall be binding upon the Maker, its
successors and assigns and shall inure to the benefit of Holder, its successors
and assigns. Time is of the essence of this contract.
IN WITNESS WHEREOF, the undersigned has executed this Note under seal as of the
day and year first above written.
Roberts Properties Residential, L.P., a Georgia
limited partnership
By: Roberts Realty Investors, Inc., its sole
General Partner
By: /s/ Charles S. Roberts
-------------------------
Name: Charles S. Roberts
Title: President
(CORPORATE SEAL)
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<PAGE> 1
EXHIBIT 10.3.4
REAL ESTATE NOTE B
$2,000,000.00 Atlanta, Georgia
October 17, 1996
FOR VALUE RECEIVED, THE UNDERSIGNED Roberts Properties Residential,
L.P., a Georgia limited partnership, whose sole general partner is Roberts
Realty Investors, Inc., a Georgia corporation (the "Maker") promises to pay to
the order of NATIONWIDE LIFE & ANNUITY INSURANCE COMPANY, an Ohio corporation,
its successors and assigns (the "Holder") the principal sum of TWO MILLION AND
NO/100 DOLLARS ($2,000,000.00), together with interest on the principal balance
of this Real Estate Note (the "Note"), from time to time remaining unpaid, from
the date of disbursement by the Holder hereof at the applicable interest rate
hereinafter set forth, together with all other sums due hereunder or under the
terms of the Security Deed (as hereinafter defined) in lawful money of the
United States of America which shall be legal tender in payment of all debts at
the time of payment. Both principal and interest and all other sums due
hereunder shall be payable at the office of the Holder c/o Nationwide Life
Insurance Company, at One Nationwide Plaza, Columbus, Ohio 43215-2220, Attn:
Real Estate Investment Department, or at such other place either within or
without the State of Ohio, as the Holder hereof may from time to time designate.
Said principal and interest shall be paid over a term, at the times, and in the
manner set forth below, to wit:
Payment Provision:
(i) Interest accrued on the unpaid principal balance of this Note,
from the date of disbursement hereof at the rate of 7.15%
percent per annum, shall be due and payable on November 15,
1996.
(ii) Thereafter, principal and interest on the unpaid principal
balance of this Note at the rate of 7.15% percent per annum
shall be paid in eighty three (83) consecutive monthly
installments commencing on December 15, 1996 and continuing on
the fifteenth day of each calendar month thereafter, with each
such installment to be in the sum of Thirteen Thousand Five
Hundred Eight and 13/100 Dollars ($13,508.13).
Maturity:
The unpaid principal balance of this Note and all accrued unpaid
interest thereon, if not sooner paid, shall be due and payable in full on
November 15, 2003 (the "Maturity Date").
Application of Payments:
All payments shall be applied first to the payment of accrued unpaid
interest on this Note and the balance, if any, shall be applied to the reduction
of the outstanding principal balance of this Note. Interest due hereunder shall
be calculated on the basis of a 360-day year composed of twelve (12) thirty (30)
day months; provided, in no event shall such calculation cause the interest rate
on this Note to exceed the maximum rate permitted under applicable law.
Late Payment Charge:
The Holder of this Note may collect a late payment charge, prior to the
acceleration of this Note, in an amount equal to five percent (5%) of the
aggregate monthly installment which is not paid on the due date, for the
purposes of covering the extra expenses involved in handling delinquent
installments. Any full payment of principal and/or interest which is postmarked
by the United States Postal Service on or before the due date shall not be
considered delinquent and a late payment charge shall not be assessed.
<PAGE> 2
Prepayment:
(A) Maker shall have the right to prepay, in full but not in part, the
obligation evidenced by this Note upon giving (i) not less than thirty (30)
days' prior written notice to Holder of Maker's intention to so prepay the Note,
and (ii) payment to Holder of the Prepayment Premium (as hereinafter defined),
if any, then due to Holder as hereinafter provided. As used herein, the term
"Prepayment Premium" shall mean the greater of (x) one percent (1.0%) of the
outstanding principal balance of this Note, or (y) a sum equal to (a) the
present value of the scheduled monthly payments hereunder from the date of
prepayment to the Maturity Date and (b) the present value of the amount of
principal and interest due on the Maturity Date (assuming all scheduled monthly
payments due hereunder prior to the Maturity Date were made when due), minus (c)
the outstanding principal balance hereof as of the date of prepayment. The
present value described in (a) and (b) of the immediately preceding sentence are
to be computed on a monthly basis as of the date of prepayment, discounted at
the yield to maturity of the U.S. Treasury Note or Bond that is closest in
maturity to the Maturity Date as reported in the Wall Street Journal (or if the
Wall Street Journal is no longer published, as reported in such other daily
financial publication of national circulation which shall be designated by
Holder) on the fifth (5th) business day preceding the date of prepayment. Maker
shall be obligated to prepay this Note on the date set forth in the notice to
Holder required hereinabove, after such notice has been delivered to Holder.
Notwithstanding the foregoing or any other provision herein to the contrary, if
the Holder elects to apply insurance proceeds, condemnation awards or any
escrowed amounts, if applicable, to the reduction of the principal balance of
this Note in the manner provided in the Security Deed (as hereinafter defined),
no Prepayment Premium shall be due or payable as a result of such application,
and the monthly installments due and payable hereunder shall be reduced
accordingly.
(B) In the event the Maturity Date of the indebtedness evidenced by this
Note is accelerated by Holder hereof at any time due to a default by Maker in
the terms, covenants or conditions contained in this Note, the Security Deed or
any of the other Loan Document (as hereinafter defined), then a tender of
payment of an amount necessary to satisfy the entire outstanding principal
balance and all accrued unpaid interest of this Note made by Maker, or by anyone
on behalf of Maker, at any time prior to, at, or as a result of, a foreclosure
sale or sale pursuant to power of sale shall constitute a voluntary prepayment
hereunder prior to the contracted Maturity Date of this Note thus requiring
payment to Holder of a Prepayment Premium equal to the applicable Prepayment
Premium as set forth in subparagraph (A) above.
(C) Maker acknowledges that Holder (a) has advanced the amounts
evidenced by this Note with the expectation that such amounts would be
outstanding until the Maturity Date unless prepaid in accordance with the
foregoing prepayment provisions, (b) would not have been willing to advance such
amounts on the terms set forth in this Note for a shorter period of time, (c) in
making the loan evidenced by this Note, is relying on Maker's creditworthiness
and its agreement to pay in strict accordance with the terms set forth in the
Note, and (d) would not make the loan without full and complete assurance by
Maker of its agreement not to prepay all or a part of the principal of this Note
except as expressly permitted herein. Maker acknowledges that if this Note were
to be prepaid prior to the Maturity Date other than in accordance with the
foregoing prepayment provisions, Maker would not receive the benefit of the
bargain agreed to by Maker and Holder. In addition, Maker has been advised and
acknowledges that Holder is relying on the receipt of payments under this Note
to, among other things, match and support its obligations under contracts
entered into by Holder with third parties and that in the event of a prepayment,
Holder could suffer loss and additional expenses which are extremely difficult
and impractical to ascertain. The Prepayment Premium is a good faith resolution
by Maker and Holder of the damages Holder would suffer, and it is not intended
as a penalty.
(D) Notwithstanding anything in this "Prepayment" section of this Note
to the contrary, Maker may prepay in full, but not in part, the obligation
evidenced by this Note at any time during the last ninety (90) days prior to the
Maturity Date without any prepayment premium.
BY INITIALING BELOW, MAKER EXPRESSLY ACKNOWLEDGES THAT PURSUANT TO THE
PROVISIONS OF THIS NOTE, MAKER HAS NO RIGHT TO
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<PAGE> 3
PREPAY THIS NOTE IN WHOLE OR IN PART WITHOUT PAYMENT OF THE PREPAYMENT PREMIUM
EXCEPT AS SET FORTH ABOVE, AND THAT MAKER SHALL BE LIABLE FOR THE PAYMENT OF THE
PREPAYMENT PREMIUM UPON ANY PAYMENT OF THE OUTSTANDING PRINCIPAL OF THIS NOTE
BEFORE ITS DUE DATE, WHETHER VOLUNTARY OR INVOLUNTARY OR AFTER ACCELERATION OF
THE NOTE WHETHER THE ACCELERATION OF THE MATURITY HEREOF IS DUE TO MAKER'S
DEFAULT OR OTHERWISE. FURTHERMORE, BY INITIALING BELOW, MAKER WAIVES ANY RIGHTS
IT MAY HAVE UNDER ANY APPLICABLE STATE LAWS AS THEY RELATE TO ANY PREPAYMENT
RESTRICTIONS CONTAINED IN THIS PREPAYMENT SECTION OR OTHERWISE IN THIS NOTE AND
EXPRESSLY ACKNOWLEDGES THAT HOLDER HAS MADE THE LOAN IN RELIANCE UPON SUCH
AGREEMENTS AND WAIVER OF MAKER AND THAT HOLDER WOULD NOT HAVE MADE THE LOAN
WITHOUT SUCH AGREEMENTS AND WAIVER OF MAKER. MAKER ACKNOWLEDGES THAT SPECIFIC
WEIGHT HAS BEEN GIVEN TO THE CONSIDERATION GIVEN FOR SUCH AGREEMENTS, WHICH
CONSIDERATION IS THE GRANTING OF THE LOAN.
/s/ CSR
Borrower's initials
Additional Conditions:
This Note is secured by a Deed to Secure Debt and Security Agreement
(herein referred to as the "Security Deed") and by an Assignment of Leases,
Rents and Profits (herein referred to as the "Assignment") of even date herewith
encumbering certain real property located in Gwinnett County, Georgia and other
property as more particularly described in the Security Deed (hereinafter
collectively referred to as the "Property"). The Security Deed and the
Assignment contain terms and provisions which provide grounds for acceleration
of the indebtedness evidenced by this Note, together with additional remedies in
the event of default hereunder or thereunder. Failure on the part of the Holder
hereof to exercise any right granted herein or in the aforesaid Security Deed or
the Assignment shall not constitute a waiver of such right or preclude the
subsequent exercise and enforcement thereof. This Note, the Security Deed, the
Assignment and all other documents and instruments executed as further evidence
of, as additional security for, or executed in connection with the indebtedness
evidenced by this Note are hereinafter collectively referred to as the "Loan
Documents."
Except as otherwise provided, all parties to this Note, including
endorsers, sureties and guarantors, hereby jointly and severally waive
presentment for payment, demand, protest, notice of protest, notice of demand
and of nonpayment or dishonor and of protest, notice of intent to accelerate the
maturity of this Note, notice of acceleration of maturity of this Note, and any
and all other notices and demands whatsoever, and agree to remain bound hereby
until the principal and interest of this Note are paid in full, notwithstanding
any extensions of time for payment which may be granted by Holder, even though
the period of extension be indefinite, and notwithstanding any inaction by, or
failure to assert any legal rights available to the Holder of this Note.
If the obligations evidenced by this Note, or any part thereof, are
placed in the hands of an attorney for collection, whether by suit or otherwise,
at any time, or from time to time, Maker shall be liable to Holder, in each
instance, for all costs and expenses incurred in connection therewith,
including, without limitation, reasonable attorneys' fees (as hereinafter
defined).
Default:
If default shall be made in the payment of principal and/or interest as
stipulated above or in the payment of any other sums due hereunder or under any
of the other Loan Documents, or should any default be made in the performance of
any of the terms, covenants and conditions contained herein or in any of the
other Loan Documents, then in any or all of such events, at the option of
Holder, the entire outstanding principal balance of this Note, together with all
accrued unpaid interest thereon and all other sums advanced by Holder on behalf
of Maker shall become and be immediately due and payable then or thereafter as
Holder may elect, regardless of the
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<PAGE> 4
Maturity Date hereof. All such amounts shall bear interest after the Maturity
Date, by acceleration or otherwise, at the lesser of either (i) the highest rate
of interest then allowed by the laws of the State of Georgia, or, if
controlling, the laws of the United States, or (ii) the then applicable interest
rate of this Note plus five-hundred (500) basis points (five per cent per
annum).
During the existence of any default, Holder may apply any sums received,
including but not limited to, insurance proceeds or condemnation awards to any
amount then due and owing hereunder or under the terms of any of the other Loan
Documents as Holder may determine. Neither the right nor the exercise of the
right herein granted unto Holder to apply such proceeds as aforesaid shall
preclude Holder from exercising its option to cause the entire indebtedness
evidenced by this Note to become immediately due and payable by reason of
Maker's default under the terms of this Note, or any of the other Loan
Documents.
Notwithstanding any provisions herein to the contrary, Holder's right,
power and privilege to accelerate the maturity of the indebtedness evidenced
hereby shall be conditioned upon, (a) with respect to any Monetary Default (as
hereafter defined), Holder giving Maker written notice of such Monetary Default
and a five (5) day period ("Monetary Cure Period") after the date of such notice
within which to cure such Monetary Default; provided, however, that such
Monetary Cure Period shall be limited to once per loan year for the term of the
Loan; and (b) with respect to any Non-Monetary Default (as hereinafter defined),
Holder giving Maker written notice of such Non-Monetary Default and a thirty
(30) day period after the date of such notice within which to cure such
Non-Monetary Default; provided, however, that if such Non-Monetary Default
cannot reasonably be cured within the 30 day period Maker shall have a
reasonable period of time in which to cure the Non-Monetary Default provided
that Maker commences the cure of such default within the 30 day period and
thereafter diligently pursues the cure to completion. Any notice required
hereunder shall be given as provided in the Security Deed. Holder shall have no
obligation to give Maker notice of any Incurable Default (as hereinafter
defined) prior to exercising its right, power and privilege to accelerate the
maturity of the indebtedness evidenced hereby and to declare same to be
immediately due and payable and exercise all other rights and remedies herein
granted or otherwise available to Holder at law or in equity. As used herein,
the term "Monetary Default" shall mean any default which can be cured by the
payment of money including, but not limited to, the payment of principal and
interest due under this Note and the payment of taxes, assessments and insurance
premiums when due as provided in the Security Deed. As used herein, the term
"Non-Monetary Default" shall mean any default which is not a Monetary Default or
an Incurable Default. As used herein, the term "Incurable Default" shall mean
(i) any voluntary or involuntary sale, assignment, encumbering or transfer in
violation of the covenants of Section 30 the Security Deed or (ii) if Maker or
its general partner should make an assignment for the benefit of creditors,
become insolvent, or file a petition in bankruptcy (including but not limited
to, a petition seeking a rearrangement or reorganization).
Savings Clause; Severability:
Notwithstanding any provisions herein or in the Security Deed to the
contrary, the total liability for payments in the nature of interest including
but not limited to Prepayment Premiums, default interest and late fees shall not
exceed the limits imposed by the laws of the State of Georgia or the United
States of America relating to maximum lawful rate of interest. Holder shall not
be entitled to receive, collect or apply, as interest on the indebtedness
evidenced hereby, any amount in excess of the maximum lawful rate of interest
permitted to be charged by applicable law or regulations, as amended or enacted
from time to time. In the event Holder ever receives, collects or applies, as
interest, any such excess, such amount which would be excessive interest shall
be applied to reduce the unpaid principal balance of the indebtedness evidenced
by this Note. If the unpaid principal balance of such indebtedness is paid in
full, any remaining excess shall be forthwith paid to Maker. If any clauses or
provisions herein contained operate or prospectively operate to invalidate this
Note, then such clauses or provisions only shall be held for naught, as though
not herein contained and the remainder of this Note shall remain operative and
in full force and effect.
Exculpation:
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<PAGE> 5
Except as expressly set forth herein, the liability of Maker with
respect to the payment of principal and interest hereunder shall be
"non-recourse" and, accordingly, Holder's source of satisfaction of said
indebtedness and Maker's other obligations hereunder and under the other Loan
Documents shall be limited to the Property and Holder's receipt of the rents,
issues and profits from the Property. Holder shall not seek to procure payment
out of any other assets of Maker, or any person or entity comprising Maker, nor
to seek judgment (except as hereinafter provided) for any sums which are or may
be payable under this Note or under any of the other Loan Documents, or for any
claim or judgment (except as hereinafter provided) for any deficiency remaining
after foreclosure of the Security Deed. Notwithstanding the above, nothing
herein contained shall be deemed to be a release or impairment of the
indebtedness evidenced by this Note or the security therefor intended by the
other Loan Documents, or be deemed to preclude Holder from exercising its rights
to foreclose, or exercise the power of sale in, the Security Deed or to enforce
any of its other rights or remedies under the Loan Documents.
Notwithstanding the foregoing, it is expressly understood and agreed
that the aforesaid limitation on liability shall in no way affect or apply to
Maker's continued personal liability for:
(1) fraud or misrepresentation made in or in connection with this
Note or any other Loan Documents;
(2) failure to pay taxes prior to delinquency or to pay assessments
prior to delinquency, or to pay charges for labor, materials or
other charges which can create liens on any portion of the
Property;
(3) the misapplication of (i) proceeds of insurance covering any
portion of the Property, or (ii) proceeds of the sale or
condemnation of any portion of the Property or (iii) rentals
received by or on behalf of Maker subsequent to the date on
which Holder makes written demand therefor pursuant to any of
the Loan Documents;
(4) causing or permitting waste to occur on, in or about the
Property, and failure to maintain the Property, excepting
ordinary wear and tear;
(5) loss by fire or casualty to the extent not compensated by
insurance proceeds collected by Holder;
(6) the return to Holder of all unearned advance rentals and
security deposits paid by tenants of the Property and not
refunded to or forfeited by such tenants;
(7) the return to Holder of any and all fees paid to Maker by
tenants of the Property which fees permit tenants to terminate
their leases;
(8) the return of, or reimbursement for, all personalty owned by
Maker taken from the Property by or on behalf of Maker, out of
the ordinary course of business, and not replaced by items of
equal or greater value than the original value of the personalty
so removed;
(9) all court costs and reasonable attorneys' fees actually
incurred which are provided for in this Note or in any other
Loan Document;
(10) (i) the removal of any chemical, material or substance, exposure
to which is prohibited, limited, or regulated by any Federal,
State, County, Regional or Local Authority which may or could
pose a hazard to the health and safety of the occupants of the
Property regardless of the source of origination; (ii) the
restoration of the Property to comply with all governmental
regulations pertaining to hazardous waste found in, on or under
the Property, regardless of the source of origination; and (iii)
any indemnity or other agreement to hold the Holder harmless
from and against any and all losses, liabilities, damages,
injuries, costs and expenses of any and every kind arising under
Paragraph 3 of the Security Deed including, but not limited to,
that certain Environmental Indemnity Agreement from Maker to
Holder
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<PAGE> 6
of even date herewith. Maker shall not be liable hereunder if
such materials were placed on the Property subsequent to the
date of acquisition of the Property by foreclosure of the
Security Deed by Holder or acceptance of a deed in lieu thereof,
or relinquishment of control of the Property pursuant to a
transfer approved in writing by Holder; provided that such
transferee assumes in writing all obligations of Maker
pertaining to Hazardous Materials (as defined in the Security
Deed) pursuant to the Loan Documents. Liability under this
subparagraph shall extend beyond the repayment of this Note and
compliance with the terms of the Security Deed, unless at such
time Maker provides Holder with an environmental assessment
report acceptable to Holder showing the Property to be free of
Hazardous Materials and not in violation of Hazardous Waste Laws
(as defined in the Security Deed). Maker shall bear the burden
of proof in establishing the date on which any such Hazardous
Materials were placed or appeared in, on or under the Property.
(11) (a) any and all costs incurred in order to cause the Property to
comply with the applicable accessibility provisions of The Fair
Housing Act of 1988, as the same may now or hereafter be
amended, and any and all rules and regulations that may now or
hereafter be promulgated in connection with said acts, and (b)
any indemnity or other agreement to hold the Holder harmless
from and against any and all losses, liabilities, damages,
injuries, costs and expenses of any and every kind arising under
Paragraph 3 of the Security Deed regarding accessibility for the
disabled or handicapped or under the Accessibility Indemnity
Agreement from Maker to Holder of even date herewith; provided,
however, Maker shall not be liable for compliance with any
accessibility laws that first become effective, or for any
violation of any accessibility laws resulting from alterations
or improvements to the Property that are performed, subsequent
to Holder's actually taking possession of the Property pursuant
to foreclosure of the Security Deed or acceptance of a deed in
lieu thereof, or subsequent to any transfer of ownership of the
Property that has the prior written approval of Holder; provided
that such transferee assumes in writing all obligations of Maker
with respect to compliance with accessibility laws under the
Security Deed and Accessibility Indemnity Agreement.
(12) Obligation of Maker for the face amount of any Letter of Credit
held by Holder and delivered by Maker in connection with the loan evidenced by
this Note in the event Holder is unable to collect the full amount of said
Letter of Credit for any reason.
The obligations of Maker in subparagraphs (1) through (12) above, except
as provided in subparagraphs (10) and (11), shall survive the repayment and
satisfaction of this Note and compliance with the terms of the Security Deed.
Notwithstanding any provisions herein to the contrary, Maker shall
become personally liable for the entire amount due under this Note (including
all principal, interest and other charges) in the event that Maker (i) violates
the covenants set forth in the Security Deed governing the placing of
subordinate financing on the Property or (ii) violates the covenants set forth
in the Security Deed restricting transfers in the Property or transfers of
ownership interests in Maker.
As used herein, the phrase "reasonable attorneys' fees" shall mean fees
charged by attorneys selected by Holder based upon such attorneys' then
prevailing hourly rates as opposed to any amount or percentage specified by any
statute then in effect in the State of Georgia.
THE PROVISIONS of this Note shall be governed by the laws of the State
of Georgia and the United States and shall be binding upon the Maker, its
successors and assigns and shall inure to the benefit of Holder, its successors
and assigns. Time is of the essence of this contract.
This Note is one of a series of two notes of even date herewith executed
by the undersigned, both being secured by the Security Deed and other security
instruments in favor of the Holder of this Note. The other such note is
designated Real Estate Note A and has been
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<PAGE> 7
executed by the undersigned in favor of Nationwide Life Insurance Company and is
in the original principal sum of Seven Million Two Hundred Fifty Thousand and
No/100 Dollars ($7,250,000.00). Real Estate Notes A and B shall be of equal
dignity and it is expressly stipulated and agreed that a default under the terms
of either of said Notes shall constitute an event of default under both of said
Notes authorizing the holders of said Notes to accelerate the maturity of both
of said Notes and to exercise all rights and remedies granted to holders under
the Notes, the Security Deed and any other security instruments securing the
payment of the Notes. It is further stipulated and agreed that notwithstanding
the prepayment privilege contained in this Note, the undersigned shall have no
right to prepay this Note unless the undersigned also elects to prepay Real
Estate Note A in accordance with the prepayment provisions contained therein.
IN WITNESS WHEREOF, the undersigned has executed this Note under seal as
of the day and year first above written.
Roberts Properties Residential, L.P., a Georgia
limited partnership
By: Roberts Realty Investors, Inc., its sole
General Partner
By: /s/ Charles S. Roberts
-------------------------
Name: Charles S. Roberts
Title: President
(CORPORATE SEAL)
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<PAGE> 1
EXHIBIT 10.3.5
Return to:
Charles A. Brake, Jr., Esq.
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
DEED TO SECURE DEBT AND SECURITY AGREEMENT
THIS DEED TO SECURE DEBT AND SECURITY AGREEMENT (the "Security Deed"),
executed this 17th day of October 1996, by ROBERTS PROPERTIES RESIDENTIAL, L.P.,
a Georgia limited partnership (the "Borrower"), having its principal office at
8010 Roswell Road, Suite 120, Atlanta, Georgia 30350. Said Security Deed is
being given to secure the payment of two notes of even date herewith one of
which is payable to the order of NATIONWIDE LIFE INSURANCE COMPANY, an Ohio
corporation, having its principal office at One Nationwide Plaza, Columbus, Ohio
43215-2220 or at such other place either within or without the State of Ohio, as
Lender may from time to time designate and the other of which is payable to the
order of NATIONWIDE LIFE & ANNUITY INSURANCE COMPANY, an Ohio corporation, whose
address is c/o Nationwide Life Insurance Company, One Nationwide Plaza,
Columbus, Ohio 43215-2220 or at such other place either within or without the
State of Ohio, as Lender may from time to time designate, and any subsequent
holder(s) hereof, (collectively the "Lender").
W I T N E S S E T H
WHEREAS, the Borrower is justly indebted to the Lender in the aggregate
sum of NINE MILLION TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($9,250,000.00), with interest thereon, as set forth in a certain Real Estate
Note A of even date herewith in the sum of Seven MILLION TWO HUNDRED FIFTY
THOUSAND AND NO/100 DOLLARS ($7,250,000.00) payable to Nationwide Life Insurance
Company and a certain Real Estate Note B of even date herewith in the sum of TWO
MILLION AND NO/100 DOLLARS ($2,000,000.00) payable to Nationwide Life & Annuity
Insurance Company (said Real Estate Notes A and Note B are hereinafter
collectively referred to as the "Note"), which Note shall be due and payable on
or before November 15, 2003 ; and
WHEREAS, the Lender, as a condition precedent to the extension of credit
and the making of the loan evidenced by the Note, has required that the Borrower
provide Lender with security for the repayment of the indebtedness evidenced by
the Note as well as for the performance, observance and discharge by the
Borrower of the various covenants, conditions and agreements made by the
Borrower to, with, in favor of and for the benefit of Lender with respect to
said indebtedness and such security;
NOW THEREFORE, in consideration of and in order to secure the repayment
of the indebtedness evidenced and represented by the Note, together with
interest on such indebtedness, as well as the payment of all other sums of money
secured hereby, as hereinafter provided; and to secure the observance,
performance and discharge by the Borrower of all covenants, conditions and
agreements set forth in the Note, this Security Deed and in all other documents
and instruments executed and delivered by the Borrower to and in favor of Lender
for the purpose of further securing the repayment of the indebtedness evidenced
and represented by the Note; and in order to charge the properties, interests
and rights hereinafter described with such payment, observance, performance and
discharge; and in consideration of the sum of one dollar paid by Lender to
Borrower and other good and valuable considerations, the receipt and sufficiency
of which are hereby acknowledged, the Borrower does hereby grant, bargain, sell,
alien, remise, release, convey, assign, transfer, pledge, deliver, set over,
hypothecate, warrant and confirm unto Lender, its successors and assigns
forever, all of Borrower's right, title and interest in and to the following
described properties, rights and interests and all replacements of,
substitutions for, and additions thereto (all of which are hereinafter together
referred to as the "Property"), to wit:
ALL THAT certain piece, parcel or tract of land or real property of
which the Borrower is now seized and in actual or constructive possession,
situate in Gwinnett County, Georgia more particularly described on Exhibit "A"
attached hereto and by this reference made a part hereof (hereinafter referred
to as the "Real Property");
<PAGE> 2
TOGETHER WITH all buildings, structures and other improvements of any
kind, nature or description now or hereafter erected, constructed, placed or
located upon said Real Property (which buildings, structures and other
improvements are hereinafter sometimes together referred to as the
"Improvements"), including, without limitation, any and all additions to,
substitutions for or replacements of such Improvements;
TOGETHER WITH all minerals, royalties, gas rights, water, water rights,
water stock, flowers, shrubs, lawn plants, crops, trees, timber and other
emblements now or hereafter located on, under or above all or any part of the
Real Property;
TOGETHER WITH all and singular, the tenements, hereditaments, strips and
gores, rights-of-way, easements, privileges and other appurtenances now or
hereafter belonging or in any way appertaining to the Real Property, including,
without limitation, all right, title and interest of the Borrower in any
after-acquired right, title, interest, remainder or reversion, in and to the
beds of any ways, streets, avenues, roads, alleys, passages and public places,
open or proposed, in front of, running through, adjoining or adjacent to said
Real Property (hereinafter sometimes together referred to as "Appurtenances");
TOGETHER WITH any and all leases, contracts, rents, royalties, issues,
revenues, profits, proceeds, income and other benefits, including accounts
receivable, of, accruing to or derived from said Real Property, Improvements and
Appurtenances and any business or enterprise presently situated or hereafter
operated thereon and therewith (hereinafter sometimes together referred to as
the "Rents");
TOGETHER WITH, any and all awards or payments, including interest
thereon, and the right to receive the same, as a result of (a) the exercise of
the right of eminent domain, (b) the alteration of the grade of any street, or
(c) any other injury to, taking of, or decrease in the value of, the Property to
the extent of all amounts which may be secured by this Security Deed at the date
of any such award or payment including but not limited to Reasonable Attorneys'
Fees (as hereinafter defined), costs and disbursements incurred by the Lender in
connection with the collection of such award or payment;
AS WELL AS all of the right, title and interest of Borrower in and to
all fixtures, goods, chattels, construction materials, furniture, furnishings,
equipment, machinery, apparatus, appliances, and other items of personal
property, whether tangible or intangible, of any kind, nature or description,
whether now owned or hereafter acquired by the Borrower, including, without
limitation, improvements including furnaces, steam boilers, hot-water boilers,
oil burners, pipes, radiators, air-conditioning and sprinkler systems, gas and
electric fixtures, carpets, rugs, shades, awnings, screens, elevators, motors,
dynamos, cabinets, and all other furnishings, tools, equipment and machinery,
appliances, building supplies, materials, general intangibles, contract rights,
accounts receivable, business records, fittings and fixtures of every kind,
which is, are or shall hereafter be located upon, attached, affixed to or used
or useful, either directly or indirectly, in connection with the complete and
comfortable use, occupancy and operation of said Real Property and Improvements
as an apartment complex, or any other business, enterprise or operation as may
hereafter be conducted upon or with said Real Property, Improvements and
Appurtenances, including, without limitation, any and all licenses, permits or
franchises, used or required in connection with such use, occupancy or
operation, as well as the proceeds thereof or therefrom regardless of form
(hereinafter sometimes together referred to as "Fixtures and Personal Property,"
which term expressly excludes any toxic waste or substances deemed hazardous
under federal, state or local laws). The Borrower hereby expressly grants to
Lender a present security interest in and a lien and encumbrance upon the
Fixtures and Personal Property;
TO HAVE AND HOLD the foregoing Property, and the rights hereby granted
for the use and benefit of the Lender and its successors and assigns in fee
simple forever;
AND the Borrower covenants and warrants with and to the Lender that the
Borrower is indefeasibly seized of the Property and has good right, full power,
and lawful authority to convey and encumber all of the same as aforesaid; that
the Borrower hereby fully warrants the title to the
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<PAGE> 3
Property and will defend the same and the validity and priority of the lien and
encumbrance of this Security Deed against the lawful claims of all persons
whomsoever, subject only to the Permitted Exceptions; and the Borrower further
warrants that the Property is free and clear of all liens and encumbrances of
any kind, nature or description, save and except only (with respect to said Real
Property, Improvements and Appurtenances and Fixtures and Personal Property) for
real property taxes for years subsequent to 1995 and those matters set forth in
Exhibit "B" attached hereto and by this reference made a part hereof
(hereinafter referred to as the "Permitted Exceptions").
PROVIDED ALWAYS, however, that if the Borrower shall pay unto the Lender
the indebtedness evidenced by the Note, and if the Borrower shall duly, promptly
and fully perform, discharge, execute, effect, complete and comply with and
abide by each and every one of the agreements, conditions and covenants of the
Note, this Security Deed and all other documents and instruments executed as
further evidence of or as security for the indebtedness secured hereby, then
this Security Deed and the estates and interests hereby granted and created
shall cease, terminate and be null and void, and shall be discharged of record
at the expense of Borrower, which expense Borrower agrees to pay.
This conveyance is intended (i) to constitute a security agreement as
required under the Uniform Commercial Code of Georgia and (ii) to operate and is
to be construed as a deed passing the title to the Property to the Lender and is
made under those provisions of the existing laws of the State of Georgia
relating to deeds to secure debt, and not as a mortgage, and is given to secure
(a) the debt evidenced by the Note (which is incorporated herein by reference
and to which reference is made for all purposes, and which Borrower acknowledges
evidences an indebtedness arising from a business loan from Lender to Borrower
for the sole purpose of permitting Borrower to carry on its business) in the
aggregate principal face amount of Nine Million Two Hundred Fifty Thousand and
No/100 Dollars ($9,250,000.00), or so much thereof as may have been advanced and
remain outstanding from time to time, with interest at the rate of 7.15% percent
per annum; (b) any and all renewals and extensions of the Note; (c) each and
every covenant, obligation and undertaking of the Borrower in this Security Deed
or in that certain Assignment of Leases, Rents and Profits of even date herewith
from Borrower to Lender; and (d) any and all other indebtedness which may
hereafter be owing by the Borrower to the Lender which is incurred or created by
advances made by the Lender to or on behalf of or for the account of the
Borrower in accordance with the provisions of this Security Deed or otherwise
permitted by the provisions of this Security Deed. Principal and interest shall
be payable in installments the last of which shall, unless the maturity thereof
is accelerated by the holder of the Note or the principal amount of the Note is
prepaid, be due and payable on November 15, 2003.
The Borrower, for the benefit of the Lender, and is successors and
assigns, does hereby expressly covenant and agree:
1. PAYMENT OF PRINCIPAL AND INTEREST. To pay the principal of the
indebtedness evidenced by the Note, together with all interest thereon, in
accordance with the terms of the Note, promptly at the times, at the place and
in the manner that said principal and interest shall become due, and to promptly
and punctually pay all other sums required to be paid by the Borrower pursuant
to the terms of the Note, this Security Deed and all other documents and
instruments executed as further evidence of, as additional security for or in
connection with the indebtedness evidenced by the Note and secured by this
Security Deed (hereinafter together referred to as the "Loan Documents").
2. PERFORMANCE OF OTHER OBLIGATIONS. To perform, comply with and abide
by each and every one of the covenants, agreements and conditions contained and
set forth in the Note, this Security Deed and the other Loan Documents and to
comply with all laws, ordinances, rules, regulations and orders of governmental
authorities now or hereafter affecting the Property or requiring any alterations
or improvements to be made thereon, and perform all of its obligations under any
covenant, condition, restriction or agreement of record affecting the Property
and to insure that at all times the Property constitutes one or more legal lots
capable of being conveyed without violation of any subdivision or platting laws,
ordinances, rules or regulations, or other laws relating to the division or
separation of real property.
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<PAGE> 4
3. PRESERVATION AND MAINTENANCE OF PROPERTY; ACCESSIBILITY; HAZARDOUS
WASTE. To keep all Improvements now existing or hereafter erected on the Real
Property in good order and repair and not to do or permit any waste, impairment
or deterioration thereof or thereon, nor to alter, remove or demolish any of the
Improvements or any Fixtures or Personal Property attached or appertaining
thereto, without the prior written consent of the Lender, nor to initiate, join
in or consent to any change in any private restrictive covenant, zoning
ordinance or other public or private restrictions limiting or defining the uses
which may be made of the Property or any part thereof, nor to do or permit any
other act whereby the Property shall become less valuable, be used for purposes
contrary to applicable law or be used in any manner which will increase the
premium for or result in a termination or cancellation of the insurance
hereinafter required to be kept and maintained on the Property. In furtherance
of, and not by way of limitation upon the foregoing covenant, Borrower shall
effect such repairs as the Lender may reasonably require, and from time to time
make all needful and proper replacements so that said Improvements,
Appurtenances, Fixtures and Personal Property will, at all times, be in good
condition, fit and proper for the respective purposes for which they were
originally erected or installed. Borrower at all times shall maintain the
Property in full compliance with all applicable provisions of all federal, state
or municipal laws, ordinances, rules and regulations currently in existence or
hereafter enacted or rendered governing accessibility for the disabled,
including but not limited to The Architectural Barriers Act of 1988, The
Rehabilitation Act of 1973, The Fair Housing Act of 1988 and The Americans With
Disabilities Act of 1990 (hereinafter, collectively the "Accessibility Laws").
Borrower at all times shall keep the Property and ground water of the Property
free of "Hazardous Materials" (as hereinafter defined). Borrower shall not
permit its tenants or any third party requiring the consent of Borrower to enter
the Property, to use, generate, manufacture, store, release, threaten release,
or dispose of Hazardous Materials in, on or about the Property or the ground
water of the Property in violation of any federal, state or municipal law,
decision, statute, rule, ordinance or regulation currently in evidence or
hereinafter enacted or rendered ("Hazardous Waste Laws"). Borrower shall give
Lender prompt written notice of any claim by any person, entity, or governmental
agency that a significant release or disposal of Hazardous Materials has
occurred on the Property. The Borrower, through its professional engineers and
at its cost, shall promptly and thoroughly investigate suspected Hazardous
Materials contamination of the Property. Borrower shall forthwith remove,
repair, clean up, and/or detoxify any Hazardous Materials from the Property or
the ground water of the Property whether or not such actions are required by
law, and whether or not Borrower was responsible for the existence of the
Hazardous Materials in, on or about the Property or the ground water of the
Property. "Hazardous Materials" shall include but not be limited to substances
defined as "hazardous substances," "hazardous materials," or "toxic substances,"
in the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. Sec. 9601, et. seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. 1801 et. seq.; the Resources Conservation and
Recovery Act, 42 U.S.C. Sec. 6901 et. seq.; the Toxic Substances Control Act, 15
U.S.C. Sec. 2601 et. seq.; the Clean Air Act, 42 U.S.C. Sec. 7401 et. seq.; and
the Clean Water Act, 33 U.S.C. Sec. 1251 et. seq.
Borrower hereby agrees to indemnify Lender and hold Lender harmless from
and against any and all losses, liabilities, damages, injuries, costs, expenses
and claims of any and every kind whatsoever paid, incurred or suffered by or
asserted against Lender for, with respect to, or as a direct or indirect result
of the non-compliance of the Property with the Accessibility Laws and/or the
presence on, under or about the Property, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or release from, the Property of any
Hazardous Materials (including, without limitation, any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising under any
Hazardous Waste Laws, regardless of whether or not caused by, or within the
control of, Borrower).
Lender, and/or its agents, shall have the right and shall be permitted,
but shall not be required, at all reasonable times, to enter upon and inspect
the Property to insure compliance with the foregoing covenants and any and all
other covenants, agreements and conditions set forth in this Security Deed.
Liability under this Paragraph of this Security Deed shall extend beyond
repayment of the Note and compliance with the terms of this Security Deed;
provided, however, Borrower shall have no liability under this Paragraph 3 as to
Hazardous Materials: (a)
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<PAGE> 5
if the Property becomes contaminated subsequent to Lender's acquisition of the
Property by foreclosure, acceptance by Lender of a deed in lieu thereof, or
subsequent to any transfer of ownership of the Property which was approved or
authorized by Lender in writing, provided that such transferee assumes all
obligations of Borrower with respect to Hazardous Materials pursuant to this
Security Deed; or (b) at such time Borrower provides Lender an environmental
assessment report acceptable to Lender showing the Property to be free of
Hazardous Materials and not in violation of Hazardous Waste Laws. The burden of
proof under this Paragraph with regard to establishing the date upon which
Hazardous Material was placed or appeared in, on or under the Property shall be
upon Borrower.
4. PAYMENT OF TAXES, ASSESSMENTS AND OTHER CHARGES. To pay all and
singular such taxes, assessments and public charges as are already levied or
assessed or that may be hereafter levied or assessed upon or against the
Property, when the same shall become due and payable according to law, before
the same become delinquent, and before any interest or penalty shall attach
thereto, and to deliver official receipts evidencing the payment of the same to
the Lender not later than thirty (30) days following the payment of the same.
Borrower shall have the right to contest, in good faith, the proposed assessment
of ad valorem taxes or special assessments by governmental authorities having
jurisdiction of the Property; provided, however, the Borrower shall give written
notice thereof to Lender and Lender may, in its sole discretion, require
Borrower to post a bond or other collateral satisfactory to Lender in connection
with any such action by Borrower; provided further, however, that so long as
there is no default hereunder (which is not cured within any applicable cure
period, if any) Lender agrees not to require Borrower to post a bond or other
collateral if (i) Borrower is appealing ad valorem taxes in the normal course of
Borrower's business and (ii) no action is taken to commence foreclosure
procedures on the Property or any portion thereof and (iii) the collateral
pledged to Lender to secure the loan evidenced by the Note and this Security
Deed is not otherwise jeopardized in Lender's sole opinion.
5. PAYMENT OF LIENS, CHARGES AND ENCUMBRANCES. To immediately pay and
discharge from time to time when the same shall become due all lawful claims and
demands of mechanics, materialmen, laborers and others which, if unpaid, might
result in, or permit the creation of, a lien, charge or encumbrance upon the
Property or any part thereof, or on the rents, issues, income, revenues, profits
and proceeds arising therefrom and, in general, to do or cause to be done
everything necessary so that the lien of this Security Deed shall be fully
preserved at the cost of the Borrower, without expense to the Lender. Borrower
shall have the right to contest, in good faith and in accordance with applicable
laws and procedures, mechanic's and materialmen's liens filed against the
Property; provided, however, that Borrower shall give written notice thereof to
Lender, and Lender may at its sole option require Borrower to post a bond or
other collateral satisfactory to Lender (and acceptable to the title company
insuring the Security Deed) in connection with any such action by Borrower.
6. PAYMENT OF JUNIOR ENCUMBRANCES. To permit no default or delinquency
under any other lien, imposition, charge or encumbrance against the Property,
even though junior and inferior to the lien of this Security Deed; provided,
however, the foregoing shall not be construed to permit any other lien or
encumbrance against the Property.
7. PAYMENT OF MORTGAGE TAXES. To pay any and all taxes which may be
levied or assessed directly or indirectly upon the Note and this Security Deed
(except for income taxes payable by the Lender) or the debt secured hereby,
without regard to any law which may be hereafter enacted imposing payment of the
whole or any part thereof upon the Lender, its successors or assigns. Upon
violation of this agreement to pay such taxes levied or assessed upon the Note
and this Security Deed, or upon the rendering by any court of competent
jurisdiction of a decision that such an agreement by the Borrower is legally
inoperative, or if any court of competent jurisdiction shall render a decision
that the rate of said tax when added to the rate of interest provided for in the
Note exceeds the then maximum rate of interest allowed by law, then, and in any
such event, the debt hereby secured shall, at the option of the Lender, its
successors or assigns, become immediately due and payable, anything contained in
this Security Deed or in the Note secured hereby notwithstanding, without the
imposition of a Prepayment
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<PAGE> 6
Premium (as defined in the Note). The additional amounts which may become due
and payable hereunder shall be part of the debt secured by this Security Deed.
8. HAZARD INSURANCE. To continuously, during the term hereof, keep the
Improvements and the Fixtures and Personal Property now or hereafter existing,
erected, installed and located in or upon the Real Property insured with
extended coverage insurance against loss or damage resulting from fire,
windstorm, flood (but only if any of the Improvements are located in a flood
plain), sinkhole and such other hazards, casualties, contingencies and perils,
including, without limitation, other risks insured against by persons operating
like properties in the locality of the Property, on such forms as may be
required by Lender, covering the Property in the amount of the full replacement
cost thereof (provided that Borrower provides a replacement cost endorsement
satisfactory to Lender; otherwise, the amount of such insurance shall not be
less than the difference between the outstanding balance of the Note and eighty
(80%) percent of the then appraised value of the Land and Improvements as
determined by Lender in its sole discretion), and covering all loss or abatement
of rental or other income without provision for co-insurance in an amount equal
to the scheduled rental income of the Property for a period of twelve (12)
months, or if applicable, business interruption insurance in an amount
sufficient to pay debt service, operating expenses, taxes and insurance for the
Property for twelve (12) months, and covering loss by flood (if the Property
lies in a specified Flood Hazard Area as designated on the Department of Housing
and Urban Development Maps, or other flood prone designation) in an amount equal
to the outstanding principal balance of the indebtedness secured hereby or such
other amount of coverage as approved by Lender. All such insurance shall be
carried with such company or companies as may be acceptable to the Lender, which
company or companies shall have a current rating equivalent to at least A:VIII
as shown in Best's Key Rating Guide, and the original policy or policies and
renewals thereof (or duplicate originals or certified copies thereof), together
with receipts evidencing payment of the premium therefor, shall be deposited
with, held by and are hereby assigned to Lender as additional security for the
indebtedness secured hereby. Each such policy of insurance shall contain a
non-contributing loss payable clause in favor of and in form acceptable to
Lender and shall provide for not less than thirty (30) days' prior written
notice to Lender of intent to modify, cancel or terminate or the expiration of
such policies of insurance. Not less than fifteen (15) days prior to the
expiration dates of each policy required of the Borrower hereunder, Borrower
will deliver to Lender a renewal policy or policies or a certified copy thereof
marked "premium paid" or accompanied by other evidence of payment and renewal
satisfactory to Lender (Lender agrees that a binder for a renewal policy
accompanied by a copy of an invoice for the premium associated therewith (which
may show that the premium can be paid in quarterly installments) shall be
satisfactory evidence of payment and renewal provided that Borrower delivers to
Lender evidence of the payment of such premium on or before the date the premium
(or installments thereof, if applicable) is due); and in the event of
foreclosure of or exercise of the power of sale in this Security Deed, any
purchaser or purchasers of the Property shall succeed to all rights of the
Borrower, including any rights to unearned premiums, in and to all insurance
policies assigned and delivered to Lender pursuant to the provisions of this
Paragraph 8.
In the event of loss by reason of hazards, casualties, contingencies or
perils for which insurance has been required by the Lender hereunder, the
Borrower shall give immediate notice thereof to the Lender, and the Lender is
hereby irrevocably appointed attorney-in-fact coupled with an interest, for the
Borrower to, at Lender's option, make proof of loss if not made promptly by the
Borrower, and each insurance company concerned is hereby notified, authorized
and directed to make payment for such loss directly to the Lender, instead of to
the Borrower and Lender jointly, and Borrower hereby authorizes Lender to adjust
and compromise any losses for which insurance proceeds are payable under any of
the aforesaid insurance policies and, after deducting the costs of collection,
to apply the proceeds of such insurance, at its option, as follows: (a) to the
restoration or repair of the insured Improvements, Fixtures and Personal
Property, provided that, in the opinion and sole discretion of the Lender, such
restoration or repair is reasonably practical and, provided further, that, in
the opinion and sole discretion of the Lender, either: (i) the insurance
proceeds so collected are sufficient to cover the cost of such restoration or
repair of the damage or destruction with respect to which such proceeds were
paid, or (ii) the insurance proceeds so collected are not sufficient alone to
cover the cost of such restoration or repair, but are sufficient therefor when
taken together with funds provided and
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<PAGE> 7
made available by the Borrower from other sources; in which event the Lender
shall make such insurance proceeds available to the Borrower for the purpose of
effecting such restoration or repair; but Lender shall not be obligated to see
to the proper application of such insurance proceeds nor shall the amount of
funds so released or used be deemed to be payment of or on account of the
indebtedness secured hereby, or (b) to the reduction of the outstanding
principal indebtedness secured hereby, notwithstanding the fact that the amount
owing thereon may not then be due and payable or that said indebtedness is
otherwise adequately secured, in which event such proceeds shall be applied at
par against the indebtedness secured hereby and the monthly payment due on
account of such indebtedness shall be adjusted accordingly. None of such actions
taken by the Lender shall be deemed to be or result in a waiver or impairment of
any equity, lien or right of the Lender under and by virtue of this Security
Deed, nor will the application of such insurance proceeds to the reduction of
the indebtedness serve to cure any default in the payment thereof. In the event
of foreclosure of this Security Deed or other transfer of title to the Property
in extinguishment of the indebtedness secured hereby, all right, title and
interest of the Borrower in and to any insurance policies then in force and
insurance proceeds then payable shall pass to the purchaser or grantee.
In case of Borrower's failure to keep the Property so insured, Lender or
its assigns, may, at its option (but shall not be required to) effect such
insurance at Borrower's expense.
Notwithstanding anything set forth in this Paragraph 8 to the contrary,
in the event of loss or damage to the Property by fire or other casualty for
which insurance has been required by Lender and provided by Borrower, and the
amount of such loss or damage does not exceed fifty percent (50%) of the
outstanding principal balance of the Note, the Lender hereby agrees to allow the
proceeds of insurance to be used for restoration of the Property and to release
such insurance proceeds to Borrower as such restoration progresses, provided:
(a) Borrower is not in default under any of the terms,
covenants and conditions of this Security Deed, the
Note or any of the Loan Documents evidencing or
securing the Note;
(b) [intentionally omitted]
(c) The plans and specifications for restoration of the
Property are approved in writing by the Lender;
(d) At all times during such restoration, Borrower has
deposited with Lender funds which, when added to such
insurance proceeds, are sufficient to complete the
restoration of the Property as certified by an
architect approved by Lender in accordance with the
approved plans and specifications and all applicable
building codes and zoning ordinances and regulations,
and further, that the sufficiency of such funds is
certified to Lender by Lender's inspecting
architect/engineer;
(e) Borrower provides payment and performance bonds and
builder's all risk insurance for such restoration in
form and amount acceptable to Lender;
(f) The insurer under such policies of fire or other
casualty insurance does not assert any defense to
payment under such policies against Lender, Borrower or
any tenant of the Property;
(g) The insurance proceeds held by Lender shall be
disbursed no more often than once per month and in not
more than five (5) increments of amounts of not less
than FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00)
each (except the final disbursement of such proceeds
which may be in an amount less than FIFTY THOUSAND AND
NO/100 DOLLARS ($50,000.00). Lender's obligation to
make any such disbursement shall be conditioned upon
Lender's receipt of a written certification from the
Lender's inspecting architect/engineer that all
construction and work for
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<PAGE> 8
which such disbursement is requested has been
completed in accordance with the approved plans and
specifications and all applicable building codes,
zoning ordinances and all other local or federal
governmental regulations and, further, that Borrower
has deposited with Lender sufficient funds to complete
such restoration in accordance with subparagraph (d)
above;
(h) Lender shall have the option, upon the completion of
such restoration of the Property, to apply any surplus
insurance proceeds remaining after the completion of
such restoration, at par, to the reduction of the
indebtedness secured by this Security Deed;
notwithstanding the fact that the amount owing thereon
may not then be due and payable or that said
indebtedness is otherwise adequately secured; and
(i) Lender shall be entitled to require and to impose such
other conditions to the release of such insurance
proceeds for restoration of the Property as would be
customarily or reasonably required and imposed by a
construction lender for a project of similar nature and
cost.
9. LIABILITY INSURANCE. To carry and maintain such comprehensive general
liability insurance as may from time to time be required by Lender, taking into
consideration the type of property insured and the corresponding liability
exposure, on forms, in amounts and with such company or companies as may be
acceptable to Lender. All such comprehensive general liability insurance shall
be carried with a company or companies as may be acceptable to Lender, which
company or companies shall have a current rating equivalent to at least A:VIII
as shown in Best's Key Rating Guide. Such policy or policies of insurance shall
name Lender as an additional insured and shall provide for not less than thirty
(30) days' prior written notice to Lender of modification, cancellation,
termination or expiration of such policy or policies of insurance. Not less than
fifteen (15) days prior to the expiration dates of such policy or policies,
Borrower will deliver to Lender a renewal policy or policies or a certified copy
thereof marked "premium paid" or accompanied by other evidence of payment and
renewal satisfactory to Lender (Lender agrees that a binder for a renewal policy
accompanied by a copy of an invoice for the premium associated therewith (which
may show that the premium can be paid in quarterly installments) shall be
satisfactory evidence of payment and renewal provided that Borrower delivers to
Lender evidence of the payment of such premium on or before the date the premium
(or installments thereof, if applicable) is due). The original policy or
policies and all renewals thereof (or duplicate originals or certified copies
thereof), together with receipts evidencing payment of the premium therefor,
shall be deposited with, held by and are hereby assigned to Lender as additional
security for the indebtedness secured hereby.
10. COMPLIANCE WITH LAWS. To observe, abide by and comply with all
statutes ordinances, laws, orders, requirements or decrees relating to the
Property enacted, promulgated or issued by any federal, state, county or
municipal authority or any agency or subdivision thereof having jurisdiction
over the Borrower or the Property, and to observe and comply with all conditions
and requirements necessary to preserve and extend any and all rights, licenses,
permits (including, but not limited to, zoning variances, special exceptions and
nonconforming uses), privileges, franchises and concessions which are applicable
to the Property or which have been granted to or contracted for by Borrower in
connection with any existing, presently contemplated or future use of the
Property.
11. MAINTENANCE OF PERMITS. To obtain, keep and constantly maintain in
full force and effect during the entire term of this Security Deed, all
certificates, licenses and permits necessary to keep the Property operating as
an apartment complex project, and, except as specifically provided for in this
mortgage, not to assign, transfer or in any manner change such certificates,
licenses or permits without first receiving the written consent of the Lender.
12. OBLIGATIONS OF BORROWER AS LESSOR. To perform every obligation of
the Borrower (as the lessor) and enforce every obligation of the lessee in any
and every lease or other occupancy agreement affecting the Property or any part
thereof (hereinafter referred to as
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<PAGE> 9
the "Occupancy Leases"), and not to modify, alter, waive or cancel any such
Occupancy Leases or any part thereof, nor collect for more than thirty (30) days
in advance any rents that may be collectible under any such Occupancy Leases
and, except as provided for in this Security Deed, not to assign any such
Occupancy Lease or any such rents to any party other than Lender, without the
prior written consent of the Lender. In the event of default under any such
Occupancy Lease by reason of failure of the Borrower to keep or perform one or
more of the covenants, agreements or conditions thereof, the Lender is hereby
authorized and empowered, and may, at its sole option, remedy, remove or cure
any such default, and further, Lender may, at its sole option and in its sole
discretion, but without obligation to do so, pay any sum of money deemed
necessary by it for the performance of said covenants, agreements and
conditions, or for the curing or removal of any such default, and incur all
expenses and obligations which it may consider necessary or reasonable in
connection therewith, and Borrower shall repay on demand all such sums so paid
or advanced by Lender together with interest thereon until paid at the lesser of
either (i) the highest rate then allowed by the laws of the State of Georgia,
or, if controlling, the laws of the United States, or (ii) the then-applicable
interest rate of the Note plus five hundred (500) basis points; all of such
sums, if unpaid, shall be added to and become part of the indebtedness secured
hereby. All such Occupancy Leases hereafter made shall be subject to the
approval of Lender and (a) shall be at competitive market rental rates then
prevailing in the geographic area for apartment complexes comparable to the
Property and (b) at Lender's option shall be superior or subordinate in all
respects to the lien of this Security Deed. Provided, however, that the Lender
shall not require approval in advance of any Occupancy Leases which conform to
the Borrower's Form Lease (as hereinafter defined) as previously approved by
Lender, except as set forth below. Neither the right nor the exercise of the
right herein granted unto Lender to keep or perform any such covenants,
agreements, or conditions as aforesaid shall preclude Lender from exercising its
option to cause the whole indebtedness secured hereby to become immediately, but
subject to the notice and cure period in Paragraph 23, due and payable by reason
of Borrower's default in keeping or performing any such covenants, agreements or
conditions as hereinabove required.
Lender has heretofore approved a form of Occupancy Lease to be used by
Borrower in connection with the Property (hereinafter referred to as the "Form
Lease"). Borrower shall not, without the prior written consent of the Lender,
modify or alter the Form Lease in any material respect. In addition Borrower
shall not, without the prior written consent of Lender, surrender or terminate
(except in the ordinary course of business), either orally or in writing, any
Occupancy Lease now existing or hereafter made for all or part of the Property,
permit an assignment or sublease of any such Occupancy Lease, or request or
consent to the subordination of any Occupancy Lease to any lien subordinate to
this Security Deed. Upon request, the Borrower shall furnish the Lender with
copies of all executed Occupancy Leases of all or any part of the Property now
existing or hereafter made, and Borrower shall assign to the Lender (which
assignment shall be in form and content acceptable to Lender), as additional
security for the Note, all Occupancy Leases now existing or hereafter made of
all or any part of the Property.
13. MAINTENANCE OF PARKING AND ACCESS; PROHIBITION AGAINST ALTERATION.
To construct, keep and constantly maintain, as the case may be, all curbs,
drives, parking areas and the number of parking spaces heretofore approved by
the Lender or heretofore or hereafter required by any governmental body, agency
or authority having jurisdiction over the Borrower or the Property, and not to
alter, erect, build or construct upon any portion of the Property, any building
or structure of any kind whatsoever, the erection, building or construction of
which has not been previously approved by Lender in writing, which approval
shall be at the sole discretion of Lender. To the extent any alterations or
improvements are required to be approved by any tenants of the Property, no such
alterations or improvements shall be made unless and until such consent has been
obtained in writing and a copy thereof furnished to Lender.
14. EXECUTION OF ADDITIONAL DOCUMENTS. To do, execute, acknowledge and
deliver all and every such further acts, deeds, conveyances, mortgages, deeds to
secure debt, assignments, notices of assignments, transfers, assurances and
other instruments, including security agreements and financing statements, as
the Lender shall from time to time require for the purpose of better assuring,
conveying, assigning, transferring and confirming unto the Lender
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<PAGE> 10
the Property and rights hereby encumbered, created, conveyed, assigned or
intended now or hereafter so to be encumbered, created, conveyed or assigned or
which the Borrower may now be or may hereafter become bound to encumber, create,
convey, or assign to the Lender, or for the purpose of carrying out the
intention or facilitating the performance of the terms of this Security Deed, or
for filing, registering or recording this Security Deed, and to pay all filing,
registration or recording fees and all taxes, costs and other expenses,
including Reasonable Attorneys' Fees (as defined in Paragraph 47), incident to
the preparation, execution, acknowledgment, delivery, and recordation of any of
the same.
15. AFTER-ACQUIRED PROPERTY SECURED. It is understood and agreed that
all right, title and interest of the Borrower in and to all extensions,
improvements, betterments, renewals, substitutions and replacements of, and all
additions and appurtenances to, the Property hereinabove described, hereafter
acquired by or released to the Borrower, or constructed, assembled or placed by
the Borrower on the Real Property, and all conversions of the security
constituted thereby, immediately upon such acquisition, release, construction,
assembling, placement or conversion, as the case may be, and in each such case,
without any further mortgage, encumbrance, conveyance, assignment or other act
by the Borrower, shall become subject to the lien and security title of this
Security Deed as fully and completely and with the same effect as though now
owned by the Borrower and specifically described herein, but at any and all
times the Borrower will execute and deliver to the Lender any and all such
further assurances, mortgages, deeds to secure debt, conveyances, or assignments
thereof or security interests therein as the Lender may reasonably require for
the purpose of expressly and specifically subjecting the same to the lien of
this Security Deed.
16. PAYMENTS BY LENDER ON BEHALF OF BORROWER. Should the Borrower fail
to make payment of any taxes, assessments or public charges on or with respect
to the Property before the same shall become delinquent, or shall fail to make
payment of any insurance premiums or other charges, impositions or liens herein
or elsewhere required to be paid by the Borrower, then the Lender, at its sole
option, but without obligation to do so, may make payment or payments of the
same and also may redeem the Property from tax sale without any obligation to
inquire into the validity of such taxes, assessments and tax sales. In the case
of any such payment by the Lender, the Borrower agrees to reimburse the Lender,
upon demand therefor, the amount of such payment and of any fees and expenses
attendant in making the same, together with interest thereon at the lesser of
either (i) the highest rate then allowed by the laws of the State of Georgia, or
if controlling, the laws of the United States, or (ii) the then applicable
interest rate of the Note plus five hundred (500) basis points; and until paid,
such amounts and interest shall be added to and become part of the debt secured
hereby to the same extent that this Security Deed secures the repayment of the
indebtedness evidenced by the Note. In making payments hereby authorized by the
provisions of this Paragraph 16; the Lender may do so whenever, in its sole
judgment and discretion, such advance or advances are necessary or desirable to
protect the full security intended to be afforded by this instrument. Neither
the right nor the exercise of the right herein granted unto the Lender to make
any such payments as aforesaid shall preclude the Lender from exercising its
option to cause the whole indebtedness secured hereby to become immediately due
and payable by reason of the Borrower's default in making such payments as
hereinabove required.
17. FUNDS HELD BY LENDER FOR TAXES, INSURANCE PREMIUMS, ASSESSMENTS AND
OTHER CHARGES. In order to more fully protect the security of this Security
Deed, Borrower shall deposit with the Lender, together with and in addition to
each monthly payment due on account of the indebtedness evidenced by the Note,
an amount equal to one-twelfth (1/12) of the annual total of such taxes,
insurance premiums, assessments and charges (all as estimated by the Lender in
its sole discretion) so that, at least thirty (30) days prior to the due date
thereof, Lender shall be able to pay in full all such taxes, insurance premiums,
assessments and other charges as the same shall become due, and the Lender may
hold without paying interest and commingle with its general funds the sums so
deposited and apply the same to the payment of said taxes, insurance premiums,
assessments or other charges as they become due and payable. If at any time the
funds so held by Lender are insufficient to pay such taxes, insurance premiums,
assessments or other charges as they become due and payable the Borrower shall
immediately, upon notice and demand by Lender, deposit with Lender the amount of
such
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<PAGE> 11
deficiency, and the failure on the part of the Borrower to do so shall entitle
the Lender, at its sole option, to make such payments in accordance with its
rights and pursuant to the conditions elsewhere provided in this Security Deed.
Notwithstanding any default under this Security Deed, Lender agrees to apply any
funds deposited by Borrower and being held by Lender pursuant to this paragraph
for the payment of taxes toward the payment of taxes which are then a lien on
the Property. Thereafter, at its sole option, Lender may apply any funds so held
by it pursuant to this Paragraph 17 toward the payment of the indebtedness
secured hereby, notwithstanding the fact that the amount owing thereon may not
then be due and payable or that said indebtedness is otherwise adequately
secured in such order and manner of application as Lender may elect.
18. CONDEMNATION; EMINENT DOMAIN. All awards and other compensation
heretofore or hereafter made to Borrower and all subsequent owners of the
Property in any taking by eminent domain or recovery for inverse condemnation,
either permanent or temporary, of all or any part of the Property or any
easement or any appurtenance thereto, including severance and consequential
damages and change in grade of any street, are hereby assigned to Lender, and
Borrower hereby irrevocably appoints Lender as its attorney-in-fact, coupled
with an interest, and authorizes, directs and empowers such attorney, at the
option of said attorney, on behalf of Borrower, its successors and assigns, to
adjust or compromise the claim for any such award and alone to collect and
receive the proceeds thereof, to give proper receipts and acquittances therefor
and, after deducting any expenses of collection, at its sole option:
(i) to apply the net proceeds as a credit upon the outstanding
principal balance of the indebtedness secured hereby, as
selected by Lender, notwithstanding the fact that the amount
owing thereon may not then be due and payable or that the
indebtedness is otherwise adequately secured. In the event
Lender applies such awards to the reduction of the outstanding
indebtedness evidenced by the Note, such proceeds shall be
applied at par and the monthly installments due and payable
under the Note shall be adjusted accordingly; however no such
application shall serve to cure an existing default in the
payment of the Note; or
(ii) to hold said proceeds without any allowance of interest and make
the same available for restoration or rebuilding the Property.
In the event that Lender elects to make said proceeds available
to reimburse Borrower for the cost of the restoration or
rebuilding of the buildings or improvements on the Property,
such proceeds shall be made available in the manner and under
the conditions that Lender may require as provided under
Paragraph 8 hereof. If the proceeds are made available by Lender
to reimburse Borrower for the cost of said restoration or
rebuilding, any surplus which may remain out of said award after
payment of such cost of restoration or rebuilding shall be
applied on account of the indebtedness secured hereby at par
notwithstanding the fact that the amount owing thereon may not
then be due and payable or that said indebtedness is otherwise
adequately secured.
Borrower further covenants and agrees to give Lender immediate notice of
the actual or threatened commencement of any proceedings under eminent domain
and to deliver to Lender copies of any and all papers served in connection with
any proceedings. Borrower further covenants and agrees to make, execute and
deliver to Lender, at any time or times, upon request, free, clear and
discharged of any encumbrance of any kind whatsoever, any and all further
assignments and/or other instruments deemed necessary by Lender for the purpose
of validly and sufficiently assigning all such awards and other compensation
heretofore or hereafter made to Lender (including the assignment of any award
from the United States government at any time after the allowance of the claim
therefor, the ascertainment of the amount thereof and the issuance of the
warrant for payment thereof).
It shall be a default hereunder if any part of any of the Improvements
situated on the Property shall be condemned by any governmental authority having
jurisdiction, or if lands constituting a portion of the Property shall be
condemned by any governmental authority having jurisdiction, such that the
Property is in violation of applicable parking, zoning or other ordinances, or
fails to comply with the terms of the Occupancy Leases, and in either of said
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<PAGE> 12
events, Lender shall be entitled to exercise any or all remedies provided or
referenced in this Security Deed.
19. COSTS OF COLLECTION. In the event that the Note secured hereby is
placed in the hands of an attorney for collection, or in the event that the
Lender shall become a party either as plaintiff or as defendant, in any action,
suit, appeal or legal proceeding (including, without limitation, foreclosure,
condemnation, bankruptcy, administrative proceedings or any proceeding wherein
proof of claim is by law required to be filed), hearing, motion or application
before any court or administrative body in relation to the Property or the lien
and security interest granted or created hereby or herein, or for the recovery
or protection of said indebtedness or the Property, or for the foreclosure of
this Security Deed, the Borrower shall save and hold the Lender harmless from
and against any and all costs and expenses incurred by the Lender on account
thereof, including, but not limited to, Reasonable Attorneys' Fees, title
searches and abstract and survey charges, at all trial and appellate levels, and
the Borrower shall repay, on demand, all such costs and expenses, together with
interest thereon until paid at the lesser of either (i) the highest rate then
allowed by the laws of the State of Georgia, or, if controlling, the laws of the
United States, or (ii) the applicable rate of interest of the Note plus five
hundred (500) basis point; all of which sums, if unpaid, shall be added to and
become a part of the indebtedness secured hereby.
20. DEFAULT RATE. If the entire outstanding balance of the Note is due,
whether at maturity, by acceleration or otherwise, the total amount due, whether
principal, interest or money owing for advancements pursuant to the terms of
this Security Deed or any other Loan Document, shall bear interest until paid at
the lesser of (i) the highest rate then allowed by the laws of the State of
Georgia, or, if controlling, the laws of the United States, or (ii) the then
applicable rate of interest of the Note plus five hundred (500) basis points
(five percent per annum); all of which sums shall be added to and become a part
of the indebtedness secured hereby.
21. SAVINGS CLAUSE; SEVERABILITY. Notwithstanding any provisions in the
Note or in this Security Deed to the contrary, the total liability for payments
in the nature of interest including but not limited to Prepayment Premiums,
default interest and late fees shall not exceed the limits imposed by laws of
the State of Georgia or the United States of America relating to maximum
allowable charges of interest. Lender shall not be entitled to receive, collect
or apply, as interest on the indebtedness evidenced by the Note, any amount in
excess of the maximum lawful rate of interest permitted to be charged by
applicable law. In the event Lender ever receives, collects or applies as
interest any such excess, such amount which would be excessive interest shall be
applied to reduce the unpaid principal balance of the indebtedness evidenced by
the note. If the unpaid principal balance of such indebtedness is paid in full
any remaining excess shall be paid forthwith to the Borrower. If any clauses or
provisions herein contained operate or would prospectively operate to invalidate
this Security Deed, then such clauses or provisions only shall be held for
naught, as though not herein contained, and the remainder of this Security Deed
shall remain operative and in full force and effect.
22. BANKRUPTCY, REORGANIZATION OR ASSIGNMENT. It shall be a default
hereunder if the Borrower or any general partner of Borrower shall: (a) consent
to the appointment of a receiver, trustee or liquidator of all or a substantial
part of Borrower's assets, or (b) be adjudicated a bankrupt or insolvent, or
file a voluntary petition in bankruptcy, or admit in writing its inability to
pay its debts as they become due, or (c) make a general assignment for the
benefit of creditors, or (d) file a petition under or take advantage of any
insolvency law, or (e) file an answer admitting the material allegations of a
petition filed against the Borrower or any general partner of Borrower in any
bankruptcy, reorganization or insolvency proceeding or fail to cause the
dismissal of such petition within sixty (60) days after the filing of said
petition, or (f) take action for the purpose of effecting any of the foregoing,
or (g) if any order, judgment or decree shall be entered upon an application of
a creditor of Borrower or any general partner of Borrower by a court of
competent jurisdiction approving a petition seeking appointment of a receiver or
trustee of all or a substantial part of the Borrower's assets or any of
Borrower's general partner's assets and such order, judgment or decree shall
continue unstayed and in effect for a period of sixty (60) days.
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<PAGE> 13
23. TIME IS OF THE ESSENCE; MONETARY AND NON-MONETARY DEFAULTS. It is
understood by Borrower that time is of the essence hereof in connection with all
obligations of Borrower herein, in the Note, the Assignment (as defined in
Paragraph 34) and any of the other Loan Documents.
If default be made in the payment of any installment of the Note,
whether of principal or interest, or in the payment of any other sums of money
referred to herein or in the Note, promptly and fully when the same shall be due
and such Monetary Default (as hereinafter defined) remains uncured after the
Monetary Cure Period (as hereinafter defined), if applicable (if the Monetary
Cure Period is not applicable, no notice or demand from Lender to Borrower shall
be required), or in the event a breach or default be made by the Borrower in any
one of the agreements, conditions and covenants of said Note, this Security
Deed, the Assignment or any Loan Documents evidencing or securing the Note, or
in the event that each and every one of said agreements, conditions and
covenants are not otherwise duly, promptly and fully discharged or performed,
and any such Non-Monetary Default (as hereinafter defined) remains uncured for a
period of thirty (30) days after written notice thereof from the Lender to the
Borrower has been delivered in the manner prescribed in Paragraph 41 hereof
(except that if such Non-Monetary Default cannot reasonably be cured within the
30 day period Borrower shall have a reasonable period of time to cure such
default provided that Borrower commences the cure of such default within the 30
day period and thereafter diligently pursues the cure to completion), Lender at
its sole option may thereupon or thereafter declare the indebtedness evidenced
by the Note, as well as all other monies secured hereby, including, without
limitation, all Prepayment Premiums and late payment charges, to be forthwith
due and payable, whereupon the principal of and the interest accrued on the
indebtedness evidenced by the Note and all other sums secured by this Security
Deed at the option of Lender shall immediately become due and payable as if all
of said sums of money were originally stipulated to be paid on such day, and
thereupon, the Lender may avail itself of all rights and remedies provided by
law and may prosecute a suit at law or in equity as if all monies secured hereby
had matured prior to its institution, anything in this Security Deed or in the
Note to the contrary notwithstanding. Lender shall give Borrower notice in the
manner described in Paragraph 41 hereof of, and a 5 day right-to-cure period
("Monetary Cure Period") to cure, any Monetary Default (as hereinafter defined);
provided, however such Monetary Cure Period shall be limited to once per loan
year for the term of the Note. Lender shall have no obligation to give Borrower
notice of any Incurable Default (as hereinafter defined) prior to exercising its
right, power and privilege to accelerate the maturity of the indebtedness
secured hereby.
As used herein, the term "Monetary Default" shall mean any default which
can be cured by the payment of money such as, but not limited to, the payment of
principal and interest due under the Note, the payment of taxes, assessments and
insurance premiums when due as provided in this Security Deed. As used herein,
the term "Non-Monetary Default" shall mean any default which is not a Monetary
Default or an Incurable Default. As used herein, the term "Incurable Default"
shall mean (i) any voluntary or involuntary sale, assignment, mortgaging,
encumbering or transfer in violation of the covenants contained in Paragraph 30
hereof; or (ii) if Borrower, or its general partner, should make an assignment
for the benefit of creditors, become insolvent, or file a petition in bankruptcy
(including but not limited to, a petition seeking a rearrangement or
reorganization).
If a default shall occur hereunder and is not timely cured as herein
provided, and, as a result thereof, the indebtedness secured hereby is
accelerated and is due and payable in full, the Lender, at its option, may sell
the Property or any part of the Property at public sale or sales before the door
of the courthouse of the County in which the Property or any part of the
Property is situated, to the highest bidder for cash, in order to pay the
indebtedness secured hereby and accrued interest thereon and insurance premiums,
liens, assessments, taxes and charges, including utility charges, if any, with
accrued interest thereon, and all expenses of the sale and of all proceedings in
connection therewith, including Reasonable Attorney's Fees after advertising the
time, place and terms of sale once a week for four (4) weeks immediately
preceding such sale (but without regard to the number of days) in a newspaper in
which Sheriff's sales are advertised in said County. The foregoing
notwithstanding, the Lender may sell, or cause to be sold, any tangible or
intangible personal property, or any part thereof, and which constitute a part
of the
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<PAGE> 14
security hereunder, in the foregoing manner, or as may otherwise be provided by
law. The Lender may bid and purchase at any such sale and, if Lender should be
the successful bidder at such sale, may satisfy the Lender's obligation to
purchase pursuant to the Lender's bid by canceling an equivalent portion of any
indebtedness then outstanding and secured hereby. At any such sale, the Lender
may execute and deliver to the purchaser a conveyance of the Property or any
part of the Property in fee simple with full warranties of title and to this
end, the Borrower hereby constitutes and appoints the Lender the agent and
attorney in fact of the Borrower to make such sale and conveyance, and thereby
to divest the Borrower of all right, title and equity that the Borrower may have
in and to the Property and to vest the same in the purchaser or purchasers at
such sale or sales, and all the acts and doings of said agent and attorney in
fact are hereby ratified and confirmed and any recitals in said conveyance or
conveyances as to facts essential to a valid sale shall be binding on the
Borrower. The aforesaid power of sale and agency hereby granted are coupled with
an interest and are irrevocable by death or otherwise, are granted as cumulative
of the other remedies provided by law for collection of the indebtedness secured
hereby and shall not be exhausted by one exercise thereof but may be exercised
until full payment of all sums secured hereby. Upon any such sale pursuant to
the aforementioned power of sale and agency, the proceeds of said sale shall be
applied first to payment of the indebtedness secured hereby and accrued interest
and late charges thereon, then to said insurance premiums, liens, assessments,
taxes and charges including utility charges with accrued interest thereon and
then to the reasonable expenses of such sale and of all proceedings in
connection therewith, including reasonable attorney's fees, and finally, the
remainder, if any, shall be paid to the party legally entitled to same.
In the event of any such public sale pursuant to the aforesaid power of
sale and agency, the Borrower shall be deemed a tenant holding over and shall
forthwith deliver possession of the Property to the purchaser or purchasers at
such sale or be summarily dispossessed according to provisions of law applicable
to tenants holding over.
The failure or omission on the part of the Lender to exercise the option
for acceleration of maturity and to foreclose or exercise the power of sale in
this Security Deed following any default as aforesaid or to exercise any other
option or remedy granted hereunder to Lender when entitled to do so in any one
or more instances, or the acceptance by Lender of partial payment of the
indebtedness secured hereby, whether before or subsequent to Borrower's defaults
hereunder, shall not constitute a waiver of any such default or the right to
exercise any such option or remedy, but such option or remedy shall remain
continuously in force. Acceleration of maturity, once claimed hereunder by
Lender, at the option of Lender, may be rescinded by written acknowledgment to
that effect by Lender, but the tender and acceptance of partial payments alone
shall not in any way affect or rescind such acceleration of maturity.
In case Lender shall have proceeded to enforce any right, power
or remedy under this Security Deed by foreclosure, entry or otherwise, or in the
event Lender commences advertising of the intended exercise of the sale under
power provided hereunder and such proceeding or advertisement shall have been
withdrawn, discontinued or abandoned for any reason, or shall have been
determined adversely to Lender, then in every such case (i) Borrower and Lender
shall be restored to their former positions and rights, (ii) all rights, powers
and remedies of Lender shall continue as if no such proceeding had been taken,
(iii) each and every Default declared or occurring prior or subsequent to such
withdrawal, discontinuance or abandonment shall be and shall be deemed to be a
continuing Default, and (iv) neither this Security Deed, nor the Note, nor any
other instrument concerned therewith, shall be or shall be deemed to have been
reinstated or otherwise affected by such withdrawal, discontinuance or
abandonment, and Borrower hereby expressly waives the benefit of any statute or
rule of law now provided, or which may hereafter be provided, which would
produce a result contrary to or in conflict with the above.
24. PROTECTION OF LENDER'S SECURITY. At any time after default
hereunder, the Lender is authorized, without notice and in its sole discretion,
to enter upon and take possession of the Property or any part thereof and to
perform any acts which the Lender deems necessary or proper to conserve the
security herein intended to be provided by the Property, to
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<PAGE> 15
operate any business or businesses conducted thereon and to collect and receive
all rents, issues and profits thereof and therefrom, including those past due as
well as those accruing thereafter.
25. APPOINTMENT OF RECEIVER. If, at any time after a default hereunder,
in the sole discretion of the Lender, a receivership may be necessary to protect
the Property or its rents, issues, revenue, profits or proceeds, whether before
or after maturity of the indebtedness secured hereby and whether before or at
the time of or after the institution of suit to collect such indebtedness, or to
enforce this Security Deed, the Lender, as a matter of strict right and
regardless of the value of the Property or the amounts due hereunder or secured
hereby, or of the solvency of any party bound for the payment of such
indebtedness, shall have the right, upon ex parte application and without notice
to anyone, and by any court having jurisdiction, to the appointment of a
receiver to take charge of, manage, preserve, protect and operate the Property,
to collect the rents, issues, revenues, profits, proceeds and income thereof, to
make all necessary and needful repairs, and to pay all taxes, assessments and
charges against the Property and all premiums for insurance thereon, and to do
such other acts as may by such court be authorized and directed, and after
payment of the expenses of the receivership and the management of the Property,
to apply the net proceeds of such receivership in reduction of the indebtedness
secured hereby or in such other manner as the said court shall direct,
notwithstanding the fact that the amount owing thereon may not then be due and
payable or the said indebtedness is otherwise adequately secured. Such
receivership shall, at the option of Lender, continue until full payment of all
sums hereby secured or until title to the Property shall have passed by sale
under this Security Deed. Borrower hereby specifically waives its right to
object to the appointment of a receiver as aforesaid and hereby expressly agrees
that such appointment shall be made as an admitted equity and as a matter of
absolute right to the Lender.
26. RIGHTS AND REMEDIES CUMULATIVE; FORBEARANCE NOT A WAIVER. The rights
and remedies herein provided are cumulative and Lender, as the holder of the
Note and of every other obligation secured hereby, may recover judgment thereon,
issue execution therefor and resort to every other right or remedy available at
law or in equity, without first exhausting any right or remedy available to
Lender and without affecting or impairing the security of any right or remedy
afforded hereby, and no enumeration of special rights or powers by any
provisions hereof shall be construed to limit any grant of general rights or
powers, or to take away or limit any and all rights granted to or vested in
Lender by law, and Borrower further agrees that no delay or omission on the part
of the Lender to exercise any rights or powers accruing to it hereunder shall
impair any such right or power or shall be construed to be a waiver of any such
event of default hereunder or any acquiescence therein; and every right, power
and remedy granted herein or by law to the Lender may be exercised from time to
time as often as may be deemed expedient by the Lender.
27. MODIFICATION NOT AN IMPAIRMENT OF SECURITY. Lender, without notice
and without regard to the consideration, if any, paid therefor, and
notwithstanding the existence at the time of any inferior mortgages, deeds to
secure debt, or other liens thereon, may release any part of the security
described herein or may release any person or entity liable for any indebtedness
secured hereby without in any way affecting the priority of this Security Deed,
to the full extent of the indebtedness remaining unpaid hereunder, upon any part
of the security not expressly released. Lender may, at its option and within its
sole discretion, also agree with any party obligated on said indebtedness, or
having any interest in the security described herein, to extend the time for
payment of any part or all of the indebtedness secured hereby, and such
agreement shall not, in any way, release or impair this Security Deed, but shall
extend the same as against the title of all parties having any interest in said
security, which interest is subject to this Security Deed.
28. PROPERTY MANAGER. The exclusive manager of the Property shall be the
Borrower or such other manager as may be first approved in writing by Lender.
The exclusive leasing agent of the Property, if other than the foregoing party,
shall be first approved in writing by the Lender. The governing management and
leasing contracts shall be subordinate to this Security Deed and satisfactory to
and subject to the written approval of Lender throughout the term of the
indebtedness secured hereby. Upon default in either of these requirements, then
the whole of the indebtedness hereby secured shall, at the election of the
Lender, become
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<PAGE> 16
immediately (subject to the cure period for a Non-Monetary Default) due and
payable, together with any default premium and late payment charges required by
the Note, and the Lender shall be entitled to exercise any or all remedies
provided or referenced in this Security Deed.
29. MODIFICATION NOT A WAIVER. In the event Lender: (a) releases, as
aforesaid any part of the security described herein or any person or entity
liable for any indebtedness secured hereby, or (b) grants an extension of time
for the payment of the Note, or (c) takes other or additional security for the
payment of the Note, or (d) waives or fails to exercise any rights granted
herein, in the Note, or any of the other Loan Documents, any said act or
omission shall not release Borrower, subsequent purchasers of the Property or
any part thereof, or makers, sureties, endorsers or guarantors of the Note, if
any, from any obligation or any covenant of this Security Deed, the Note, or any
of the other Loan Documents, nor preclude Lender from exercising any right,
power or privilege herein granted or intended to be granted in the event of any
other default then made, or any subsequent default.
30. TRANSFER OF PROPERTY OR CONTROLLING INTEREST IN BORROWER;
ASSUMPTION. Except as hereafter provided, without the prior written consent of
the Lender, the sale, transfer, assignment, or conveyance of all or any portion
of the Property, or a transfer, assignment, or conveyance of a "controlling
interest" in Borrower whether voluntarily or by operation of law, without the
prior written consent of Lender, shall constitute a default under the terms of
this Security Deed and entitle the Lender, at its sole option, to accelerate all
sums due on the Note together with any Prepayment Premiums, late payment
charges, or any other amounts secured hereby. As used herein the term
"controlling interest" means, in the case of a partnership, greater than a 50%
interest in the partnership or votes greater than 50% of the votes required to
approve any major decisions (as opposed to day-to-day or ministerial decisions)
of the partnership, and in the case of a corporation, greater than 50% of the
outstanding voting shares of stock of the corporation. (Notwithstanding the
foregoing sentence, a transfer of partnership interests or partnership units in
the ordinary course of business of Borrower as an "up-REIT" real estate
investment trust structure shall be permitted and shall not constitute a
conveyance of a "controlling interest" in Borrower.) Lender, may, however, elect
to waive the option to accelerate granted hereunder if, prior to any such sale,
transfer, assignment or conveyance of the Property, the following conditions
shall be fully satisfied: (a) the Lender acknowledges in writing that, in its
sole discretion, the creditworthiness of the proposed transferee and the ability
and experience of the proposed transferee to operate the Property are
satisfactory to Lender, and (b) Lender and the proposed transferee shall enter
into an agreement in writing that (i) the interest payable on the indebtedness
secured hereby shall be at such rate as Lender shall determine, (ii) the
repayment schedule as set forth in the Note shall be modified by the Lender in
its sole discretion to amortize the then unpaid principal balance secured hereby
over a period determined by Lender in its sole discretion without a change in
the maturity date of the Note, (iii) an assumption fee to be determined by
Lender may be charged by the Lender in its sole discretion, and (iv) the
proposed transferee shall assume in writing all obligations of Borrower under
the Note, this Security Deed and the other Loan Documents. In the event the
ownership of the Property, or any part thereof, shall become vested in a person
or entity other than the Borrower, whether with or without the prior written
consent of the Lender, the Lender may, without notice to the Borrower, deal with
such successor or successors in interest with reference to the Property, this
Security Deed and the Note in the same manner and to the same extent as with the
Borrower without in any way vitiating or discharging the Borrower's liability
hereunder or under the Note. No sale, transfer or conveyance of the Property, no
forbearance on the part of the Lender and no extension of time for the payment
of the debt hereby secured given by the Lender shall operate to release,
discharge, modify, change or affect the original liability of the Borrower,
either in whole or in part, unless expressly set forth in writing executed by
the Lender. Notwithstanding anything contained herein to the contrary, Borrower
hereby waives any right it now has or may hereafter have to require Lender to
prove an impairment of its security as a condition to exercise the Lender's
rights under this Paragraph 30. If a transfer of the Property, or a portion
thereof, or a transfer of a "controlling interest" in Borrower is approved by
Lender: (a) Lender must receive for its review and approval copies of all
transfer documents, (b) the approved transferee must assume in writing all
obligations under the Note, this Security Deed and any other Loan Documents, and
(c) Borrower or the approved transferee must pay all costs
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<PAGE> 17
and expenses in connection with such transfer and assumption, including without
limitation, all fees and expenses incurred by Lender.
Lender acknowledges that Borrower's general partner, Roberts Realty
Investors, Inc. ("RRII"), is a real estate investment trust and that it is
contemplated that Borrower may convey its interest in the Property to RRII.
Therefore, notwithstanding anything contained in this Paragraph 30 to the
contrary, the prior written consent of the Lender shall not be required and
Lender shall not be entitled to accelerate the indebtedness evidenced by the
Note or change the Loan terms upon a transfer so long as (i) the transfer is
made to RRII; (ii) there is no change in the ownership interest of RRII except
for transfers of shares of the real estate investment trust in the ordinary
course of business; and (iii) Lender shall be given prompt notice and
documentation of such transfer, and Borrower shall pay all of Lender's
out-of-pocket expenses associated with such transfer; provided, however, that
Borrower shall notify Lender in writing of any such transfer not less than
thirty (30) days prior to the effective date of such transfer. In addition to
the foregoing, Lender shall permit one (1) bona fide, arm's length transfer of
the Property to any transferee without change in the loan terms; provided,
however, that no such transfer shall be valid or permitted hereunder unless: (i)
Lender receives prior written notice of such proposed transfer, (ii) such
proposed transferee has been approved in writing by the Lender (taking into
account such factors as transferee's creditworthiness, business experience and
managerial capabilities) such approval not to be unreasonably withheld, (iii)
Lender is paid a transfer fee in the amount of one percent (1%) of the then
outstanding principal balance of the Note, (iv) Borrower or the approved
transferee pays all fees and expenses incurred by Lender in connection with such
transfer and assumption, including, without limitation, inspection and
investigation fees and Reasonable Attorneys' Fees (as hereinafter defined), and
(v) there is no existing default hereunder or event which with the passage of
time would constitute a default hereunder. Any transfer of all or any portion of
the Property which does not strictly comply with the terms and conditions of the
foregoing shall be a default hereunder and shall entitle the Lender to exercise
all rights and remedies provided in this Security Deed.
31. FURTHER ENCUMBRANCE PROHIBITED; SUBROGATION. So long as the Note
secured hereby remains unpaid, the Borrower shall neither voluntarily nor
involuntarily permit the Property or any part thereof to become subject to any
secondary or other junior lien, mortgage, security interest or encumbrance of
any kind whatsoever other than taxes for the current year and the Permitted
Exceptions, without the prior written consent of the Lender, and the imposition
of any such secondary lien, mortgage, security interest or encumbrance shall
constitute an event of default hereunder and entitle the Lender, at its sole
option, to declare all sums due on account of the Note to be and become
immediately due and payable. In the event that Lender shall hereafter give its
written consent to the imposition of any such secondary lien, mortgage, security
interest or other encumbrance upon the Property, the Lender, at its sole option,
shall be entitled to accelerate the maturity of the Note and exercise any and
all remedies provided and available to Lender hereunder in the event that the
holder of any such secondary lien or encumbrance shall institute foreclosure or
other proceedings to enforce the same; it being understood and agreed that a
default under any instrument or document evidencing, securing or secured by any
such secondary lien or encumbrance shall be and constitute an event of default
hereunder. In the event all or any portion of the proceeds of the loan secured
hereby are used for the purpose of retiring debt or debts secured by prior liens
on the Property, the Lender shall be subrogated to the rights and lien priority
of the holder of the lien so discharged.
32. CONVEYANCE OF MINERAL RIGHTS PROHIBITED. Borrower agrees that the
making of any oil, gas or mineral lease or the sale or conveyance of any mineral
interest or right to explore for minerals under, through or upon the Property
would impair the value of the Property securing the Note, and that the Borrower
shall have no right, power or authority to lease the Property, or any part
thereof, for oil, gas or other mineral purposes, or to grant, assign or convey
any mineral interest of any nature, or the right to explore for oil, gas and
other minerals, without first obtaining from the Lender express written
permission therefor, which permission shall not be valid until recorded among
the Public Records of Gwinnett County, Georgia. The Borrower further agrees that
if the Borrower shall make, execute or enter into any such lease or attempt to
grant any such mineral rights without such prior written permission of the
Lender, then the Lender shall have the option, without notice, to declare the
same to be a default
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<PAGE> 18
hereunder and to declare the indebtedness hereby secured immediately due and
payable. Whether or not the Lender shall consent to such lease or grant of
mineral rights, the Lender shall receive the entire consideration to be paid for
such lease or grant of mineral rights, with the same to be applied to the
indebtedness hereby secured notwithstanding the fact that the amount owing
thereon may not then be due and payable or the said indebtedness is otherwise
adequately secured; provided, however, that the acceptance of such consideration
shall in no way impair the lien of this Security Deed on the Property.
33. ESTOPPEL CERTIFICATION BY BORROWER. Borrower, upon request therefor
made either personally or by mail, shall certify in writing to Lender (or any
party designated by Lender) in form satisfactory to Lender the amount of
principal and interest then outstanding under the terms of the Note and any
other sums due and owing under this Security Deed or any of the other Loan
Documents and whether any offsets or defenses exist against the mortgage debt.
Such certification shall be made by Borrower within ten (10) days if the request
is made personally, or within twenty (20) days if the request is made by mail.
34. CROSS-DEFAULT. The Note is also secured by the terms, conditions and
provisions of an Assignment of Leases, Rents and Profits (hereinafter referred
to as the "Assignment") recorded among the Public Records of Gwinnett County,
Georgia and, additionally, may be secured by contracts or agreements of guaranty
or other security instruments. The terms, conditions and provisions of each
security instrument shall be considered a part hereof as fully as if set forth
herein verbatim. Any default under this Security Deed or the Note secured hereby
shall constitute an event of default under the Assignment or any of the other
Loan Documents, and any default under the Assignment or other Loan Documents
shall likewise constitute a default hereunder and under the Note.
Notwithstanding the foregoing, the enforcement or attempted enforcement of this
Security Deed or any of the other Loan Documents now or hereafter held by Lender
shall not prejudice or in any manner affect the right of Lender to enforce any
other Loan Document; it being understood and agreed that the Lender shall be
entitled to enforce this Security Deed and any of the other Loan Documents now
or hereafter held by it in such order and manner as Lender, in its sole
discretion, shall determine.
35. EXAMINATION OF BORROWER'S RECORDS. Borrower will maintain complete
and accurate books and records showing in detail the income and expenses of the
Property, and will permit upon no less than two (2) days notice the Lender and
its representatives to examine said books and records and all supporting
vouchers and data during normal business hours and from time to time upon
request by the Lender, in such place as such books and records are customarily
kept, and will furnish to the Lender, within one hundred twenty (120) days after
the close of each calendar year, audited financial statements of each general
partner of Borrower and statements of operations of the Property certified by
the general partner of the Borrower to be true and correct and showing in detail
all income derived from and expenses incurred in connection with the ownership
of the Property. All such statements shall be in form acceptable to Lender and
shall be prepared in accordance with generally accepted accounting principles
and shall include an annual rent schedule. In the event the Borrower fails to
provide such statements to the Lender within the time prescribed above, the
Borrower shall pay the Lender the sum of TWO HUNDRED AND NO/100 DOLLARS
($200.00) for each successive month for which statements are delinquent. In the
event of default hereunder, Lender shall have the right to require that said
financial statements of the Property be audited and certified by a certified
public accountant acceptable to the Lender, all at the sole cost and expense of
the Borrower.
36. ALTERATION, REMOVAL AND CHANGE IN USE OF PROPERTY PROHIBITED.
Borrower covenants and agrees to permit or suffer none of the following
without the prior written consent of the Lender:
(a) Any structural alteration of, or addition to, the
Improvements now or hereafter situated upon the Real Property or the
addition of any new buildings or other structure(s) thereto other than
erection or removal of non-load bearing interior walls; or
(b) The removal, transfer, sale or lease of the Property, except
that the renewal, replacement or substitution of fixtures, equipment,
machinery, apparatus and articles of
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<PAGE> 19
personal property (replacement or substituted items must be of like or
better quality than the removed items in their original condition)
encumbered hereby may be made in the normal course of business; or
(c) The use of any of the Improvements now or hereafter situated
on the Real Property for any purpose other than as an apartment complex
project and related facilities.
37. FUTURE ADVANCES SECURED. This Security Deed shall secure not only
existing indebtedness, but also such future advances, whether such advances are
obligatory or to be made at the option of the Lender. Upon request of Borrower,
and at Lender's option prior to release of this Security Deed, Lender may make
future advances to Borrower. All future advances with interest thereon shall be
secured by this Security Deed to the same extent as if such future advances were
made on the date of the execution of this Security Deed unless the parties shall
agree otherwise in writing, but the total secured indebtedness shall not exceed
at any one time a maximum principal amount equal to double the face amount of
the Note plus interest, and costs of collection including court costs and
Reasonable Attorneys' Fees. Any advances or disbursements made for the benefit
or protection of or the payment of taxes, assessments, levies or insurance upon
the Property, with interest on such disbursements as provided herein, shall be
added to the principal balance of the Note and collected as a part thereof. To
the extent that this Security Deed may secure more than one note, a default in
the payment of any note shall constitute a default in the payment of all such
notes.
38. EFFECT OF SECURITY AGREEMENT. Borrower does hereby grant and this
Security Deed is and shall be deemed to create, grant, give and convey a
mortgage of, a lien and encumbrance upon, and a present security interest in
both real and personal property, including all improvements, goods, chattels,
furniture, furnishings, fixtures, equipment, apparatus, appliances and other
items of tangible or intangible personal property, hereinabove particularly or
generally described and conveyed, whether now or hereafter affixed to, located
upon, necessary for or used or useful, either directly or indirectly, in
connection with the operation of the Property as an apartment complex project,
and this Security Deed shall also serve as a "security agreement" within the
meaning of that term as used in the Uniform Commercial Code as adopted and in
force from time to time in the State of Georgia, and shall be operative and
effective as a security agreement in addition to, and not in substitution for,
any other security agreement executed by the Borrower in connection with the
extension of credit or loan transaction secured hereby. Upon the occurrence of a
default hereunder or Borrower's breach of any other covenants or agreements
between the parties entered into in conjunction herewith, Lender shall have the
remedies (i) as prescribed herein, or (ii) as prescribed by general law, or
(iii) as prescribed by the specific statutory consequences now or hereafter
enacted and specified in said Uniform Commercial Code, all at Lender's sole
election. Borrower and Lender agree that the filing of any such financing
statement or statements in the records normally having to do with personal
property shall not in any way affect the agreement of Borrower and Lender that
everything used in connection with the production of income from the Property or
adapted for use therein or which is described or reflected in this Security
Deed, is, and at all times and for all purposes and in all proceedings, both
legal or equitable, shall be, regarded as part of the real estate conveyed
hereby regardless of whether (i) any such item is physically attached to the
improvements, (ii) serial numbers are used for the better identification of
certain items capable of being thus identified in an exhibit to this Security
Deed or elsewhere, or (iii) any such item is referred to or reflected in any
such financing statement or statements so filed at any time. Similarly, the
mention in any such financing statement or statements of the rights in and to
(i) the proceeds of any fire and hazard insurance policy, or (ii) any award in
eminent domain proceedings for a taking or for loss of value, or (iii)
Borrower's interest as lessor or landlord in any present or future lease or
rights to income growing out of the use and occupancy of the Property, whether
pursuant to lease or otherwise, shall not in any way alter any of the rights of
Lender as determined by this Security Deed or affect the priority of Lender's
security interest granted hereby or by any other recorded document, it being
understood and agreed that such mention in such financing statement or
statements is solely for the protection of Lender in the event any court shall
at any time hold, with respect to the foregoing clauses (i), (ii) or (iii) of
this sentence, that notice of Lender's priority of interest, to be effective
against a particular class of persons, must be filed in the Uniform Commercial
Code records. Borrower warrants that
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<PAGE> 20
(i) Borrower's (that is, "Debtor's") name, identity and residence or principal
place of business are as set forth in Exhibit C attached hereto and made a part
hereof; (ii) Borrower (that is, "Debtor") has been using or operating under said
name and identity without change for the time period set forth in Exhibit C; and
(iii) the location of the collateral is upon the Property. Borrower covenants
and agrees that Borrower will furnish Lender with notice of any change in the
matters addressed by clauses (i) or (iii) of this paragraph within thirty (30)
days of the effective date of any such change and Borrower will promptly execute
any financing statements or other instruments deemed necessary by Lender to
prevent any filed financing statement from becoming misleading or losing its
perfected status. If Borrower fails to promptly execute any such financing
statements or other instruments, Lender may make, execute, record, file,
re-record, and re-file any and all such financing statements or other
instruments for and in the name of Borrower, and Borrower hereby irrevocably
appoints Lender the agent and attorney-in-fact of Borrower so to do. This
appointment of Lender as Borrower's attorney-in-fact is coupled with an interest
and is irrevocable by death or otherwise. The information contained in this
paragraph is provided in order that this Security Deed shall comply with the
requirements of the Uniform Commercial Code, as enacted in the State of Georgia,
for instruments to be filed as financing statements. The names of the "Debtor"
and the "Secured Party," the identity and residence or principal place of
business of "Debtor," the time period for which "Debtor" has been using or
operating under said name and identity without change are as set forth in
Schedule 1 of Exhibit C; the mailing address of the "Secured Party" from which
information concerning the security interest may be obtained, and the mailing
address of "Debtor," are as set forth in Schedule 2 of said Exhibit C; and a
statement indicating the types, or describing the items, of collateral is set
forth hereinabove.
The Borrower agrees to and shall, upon the request of Lender, execute
and deliver to Lender, in form and content satisfactory to Lender, such
financing statements, descriptions of property and such further assurances as
Lender, in its sole discretion, may from time to time consider necessary to
create, perfect, continue and preserve the lien and encumbrances hereof and the
security interest granted herein upon and in such real and personal property and
fixtures described herein, including all buildings, improvements, goods,
chattels, furniture, furnishings, fixtures, equipment, apparatus, appliances and
other items of tangible and intangible personal property herein specifically or
generally described and intended to be the subject of the security interest,
lien and encumbrance hereby created, granted and conveyed. Without the prior
written consent of Lender, Borrower shall not create or suffer to be created,
pursuant to the Uniform Commercial Code, any other security interest in such
real and personal property and fixtures described herein. The Lender, at the
expense of the Borrower, may or shall cause such statements, descriptions and
assurances, as herein provided in this Paragraph 38, and this Security Deed to
be recorded and re-recorded, filed and refiled, at such times and in such places
as may be required or permitted by law to so create, perfect and preserve the
lien and encumbrance hereof upon all of the Property.
39. TERMS OF CONTRACT SURVIVE CLOSING. The terms and provisions of the
application/contract between Lender and Borrower are incorporated herein by
reference, said application/contract being dated January 23, 1996, and any
subsequent amendment thereto (hereinafter referred to as the "Contract"). All
terms and conditions of the Contract not expressly set forth in this Security
Deed, the Note and any other Loan Documents shall survive the closing hereof and
remain in full force and effect. In the event any conflict exists between the
terms, conditions and provisions of the Contract and the Loan Documents, the
terms, conditions and provisions of the Loan Documents shall prevail.
40. SUCCESSORS AND ASSIGNS; TERMINOLOGY. The provisions hereof shall be
binding upon the Borrower and the successors and assigns of the Borrower, and
inure to the benefit of Lender and its successors and assigns. Where more than
one Borrower is named herein, the obligations and liabilities of said Borrower
shall be joint and several. Wherever used in this Security Deed, unless the
context clearly indicates a contrary intent or unless otherwise specifically
provided herein, the word "Borrower" shall mean Borrower and/or any subsequent
owner or owners of the Property, the word "Lender" shall mean Lender or any
subsequent holder or holders of this Security Deed, the word "Note" shall mean
Note(s) secured by this Security
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<PAGE> 21
Deed, and the word "person" shall mean an individual, trustee, trust,
corporation, partnership or unincorporated association.
41. NOTICES. All notices hereunder shall be deemed to have been duly
given if mailed by United States registered or certified mail, with return
receipt requested, postage prepaid, or if deposited with a nationally recognized
overnight courier such as Federal Express, to the parties at the following
addresses (or at such other addresses as shall be given in writing by any party
to the others), and shall be deemed complete upon receipt (which, in the case of
delivery by certified mail, shall be as evidenced by the return receipt, and, in
the case of delivery by a nationally recognized overnight courier, shall be as
evidenced by the confirmation of delivery received by the courier) or refusal to
accept receipt:
To Borrower: Roberts Properties Residential, L.P.
8010 Roswell Road
Suite 120
Atlanta, Georgia 30350
Attn: Charles S. Roberts
To Lender: Nationwide Life & Annuity Insurance
Company
c/o Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, Ohio 43215-2220
Attn: Real Estate Investments
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, Ohio 43215-2220
Attn: Real Estate Investments
42. GOVERNING LAW. This Security Deed is to be governed by and
construed in accordance with the laws of the State of Georgia, and, if
controlling, by the laws of the United States.
43. RIGHTS OF LENDER CUMULATIVE. The rights of the Lender arising under
the clauses and covenants contained in this Security Deed shall be separate,
distinct and cumulative and none of them shall be in exclusion of the others;
and no act of the Lender shall be construed as an election to proceed under any
one provision herein to the exclusion of any other provisions, anything herein
or otherwise to the contrary notwithstanding.
44. MODIFICATIONS. This Security Deed cannot be changed, altered,
amended or modified except by an agreement in writing and in recordable form,
executed by both Borrower and Lender.
45. EXCULPATION. Subject to the last sentence of this Paragraph 45, the
liability of Borrower with respect to the payment of principal and interest
under the Note shall be "non-recourse" and, accordingly, Lender's source of
satisfaction of said indebtedness and Borrower's other obligations hereunder and
under the other Loan Documents shall be limited to the Property and Lender's
receipt of the rents, issues and profits from the Property and Lender shall not
seek to procure payment out of any other assets of Borrower or any person or
entity comprising Borrower, or to seek any judgment (except as hereinafter
provided) for any sums which are or may be payable under the Note, this Security
Deed or any of the other Loan Documents, or for any claim or judgment (except as
hereafter provided) for any deficiency remaining after foreclosure of this
Security Deed. Notwithstanding the above, nothing herein contained shall be
deemed to be a release or impairment of the Note or the security therefor
intended by this Security Deed and the other Loan Documents, or be deemed to
preclude Lender from exercising its rights to foreclose this Security Deed or to
enforce any of its other rights or remedies under the Loan Documents.
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<PAGE> 22
Notwithstanding the foregoing, it is expressly understood and agreed
that the aforesaid limitation on liability shall in no way affect or apply to
the Borrower's continued personal liability for:
(1) fraud or intentional misrepresentation made in or in connection
with the Note or any of the other Loan Documents governing,
securing or pertaining to the payment thereof;
(2) failure to pay taxes prior to delinquency or to pay assessments
prior to delinquency, or to pay charges for labor, materials or
other charges which can create liens on any portion of the
Property;
(3) the misapplication of (i) proceeds of insurance covering any
portion of the Property, or (ii) proceeds of the sale or
condemnation of any portion of the Property, or (iii) rentals
received by or on behalf of Borrower subsequent to the date on
which Lender gives written notice of the commencement of
foreclosure proceedings;
(4) causing or permitting waste to occur on, in or about the
Property, and failure to maintain the Property, excepting
ordinary wear and tear;
(5) loss by fire or casualty to the extent not compensated by
insurance proceeds collected by Lender;
(6) the return to Lender of all unearned advance rentals and
security deposits paid by tenants of the Property and not
refunded to or forfeited by such tenants;
(7) the return to Borrower of any and all fees paid to Borrower by
tenants of the Property which fees permit tenants to terminate
their leases;
(8) the return of, or reimbursement for, all personalty owned by
Borrower taken from the Property by or on behalf of Borrower,
out of the ordinary course of business, and not replaced by
items of equal or greater value than the original value of the
personalty so removed;
(9) all court costs and Reasonable Attorneys' Fees actually
incurred which are provided for in the Note or in any other
Loan Document governing, securing or pertaining to the payment
of the Note; and
(10) (i) the removal of any chemical, material or substance, exposure
to which is prohibited, limited or regulated by any Federal,
State, County, Regional or Local Authority which may or could
pose a hazard to the health and safety of the occupants of the
Property, regardless of the source of origination; and (ii) the
restoration of the Property to comply with all governmental
regulations pertaining to hazardous waste found in, on or under
the Property, regardless of the source of origination; and (iii)
any indemnity or other agreement to hold the Lender harmless
from and against any and all losses, liabilities, damages,
injuries, costs, expenses of any and every kind arising under
Paragraph 3 of this Security Deed or under the Environmental
Indemnity Agreement. Borrower shall not be liable for removal of
any of the foregoing materials from the Property if such
materials were placed on the Property subsequent to the date of
foreclosure of this Security Deed or acceptance of a deed in
lieu thereof, or relinquishment of control of the Property
pursuant to a transfer approved in writing by Lender; provided,
that such transferee assumes in writing all obligations of
Borrower pertaining to Hazardous Materials pursuant to the Loan
Documents. Liability under this subparagraph shall extend beyond
repayment of the Note and compliance with the terms of this
Security Deed unless at such time Borrower provides Lender an
environmental assessment report acceptable to Lender showing the
Property to be free of Hazardous Materials and
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<PAGE> 23
not in violation of Hazardous Waste Laws. Borrower shall bear
the burden of proof in establishing the date on which any such
Hazardous Materials were placed on the Property.
(11) (a) any and all costs incurred in order to cause the Property to
comply with the applicable accessibility provisions of The Fair
Housing Act of 1988, as the same may now or hereafter be
amended, and The Americans With Disabilities Act of 1990, as the
same may now or hereafter be amended, and any and all rules and
regulations that may now or hereafter be promulgated in
connection with said acts, and (b) any indemnity or other
agreement to hold the Lender harmless from and against any and
all losses, liabilities, damages, injuries, costs and expenses
of any and every kind arising under Paragraph 3 of this Security
Deed regarding accessibility for the disabled or handicapped or
under the Accessibility Indemnity Agreement from Borrower to
Lender of even date herewith; provided, however, Borrower shall
not be liable for compliance with any accessibility laws that
first become effective, or for any violation of any
accessibility laws resulting from alterations or improvements to
the Property that are performed, subsequent to Lender's actually
taking possession of the Property pursuant to foreclosure of
this Security Deed or acceptance of a deed in lieu thereof, or
subsequent to any transfer of ownership of the Property that has
the prior written approval of Lender; provided that such
transferee assumes in writing all obligations of Borrower with
respect to compliance with accessibility laws under this
Security Deed and the Accessibility Indemnity Agreement.
(12) Obligation of Borrower for the face amount of any Letter of
Credit held by Lender and delivered by Borrower in connection
with the loan evidenced by the Notes in the event Lender is
unable to collect the full amount of said Letter of Credit for
any reason.
The obligations of Borrower in subparagraphs 1-12 above, except as
provided in subparagraphs 10 and 11, shall survive the repayment and
satisfaction of the Note and compliance with the terms of this Security
Deed.
Notwithstanding any provisions herein to the contrary, Borrower shall
become personally liable for the entire amount due under the Note (including all
principal, interest and other charges) in the event that Borrower (i) violates
the covenants set forth in this Security Deed governing the placing of
subordinate financing on the Property or (ii) violates the covenants set forth
in this Security Deed restricting transfers in the Property or transfers of
ownership interests in Borrower.
46. CAPTIONS. The captions set forth at the beginning of the
various paragraphs of this Security Deed are for convenience only and shall
not be used to interpret or construe the provisions of this Security Deed.
47. REASONABLE ATTORNEYS' FEES. As used herein, the phrase "Reasonable
Attorney's Fees" shall mean fees charged by attorneys selected by Lender based
upon such attorney's then prevailing hourly rates, as opposed to any amount or
percentage specified by any statute then in effect in the State of Georgia.
IN WITNESS WHEREOF, the said Borrower has caused these presents to be
executed under seal by persons duly authorized thereunto as of the day and year
first above written.
Signed, sealed and delivered in the ROBERTS PROPERTIES
presence of: RESIDENTIAL, L.P., a Georgia
limited partnership
/s/ Charles R. Elliott By: Roberts Realty Investors, Inc., its
- ---------------------- sole General Partner
Unofficial Witness
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<PAGE> 24
/s/ Leslie A. Camp
- ------------------
Notary Public By: /s/ Charles S. Roberts
------------------------
Name: Charles S. Roberts
Title: President
(NOTARY SEAL)
My Commission Expires: (Corporate Seal)
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<PAGE> 25
EXHIBIT A
FEE PARCEL
All that tract of land in Land Lots 321 and 326 of the 6th District, City of
Duluth, Gwinnett County, Georgia described as follows:
BEGINNING at a 1/2-inch reinforcing rod found on the northeast right-of-way line
of Pleasant Hill Road (variable right-of-way), said 1/2-inch reinforcing rod
found being 1924.03 feet northwest along the northeast right-of-way line of
Pleasant Hill Road from the mitered intersection of the west right-of-way line
of Peachtree Industrial Boulevard (150 foot right-of-way) and the northeast
right-of-way line of Pleasant Hill Road (said 1/2-inch reinforcing rod found
also being 1973.90 feet northwest along the northeast right-of-way line of
Pleasant Hill Road from the intersection of the northeast right-of-way line of
Pleasant Hill Road and the west right-of-way line of Peachtree Industrial
Boulevard; said 1/2-inch reinforcing rod found also being the southwest corner
of property now or formerly known as Phase One, Plantation Trace Apartments as
per Deed Book 5215, page 151, Gwinnett County, Georgia records); running thence
along the said northeast right-of-way line of Pleasant Hill Road the following
courses and distances: (1) along the arc of a curve to the left (which arc is
subtended by a chord having a bearing and distance of North 61 degrees 48
minutes 40 seconds West 242.78 feet and a radius of 1548.326 feet) 243.03 feet
to a point, and (2) North 66 degrees 47 minutes 46 seconds West 81.46 feet to a
1/2-inch reinforcing rod found; thence, leaving said right-of-way line, North 23
degrees 09 minutes 50 seconds East 205.89 feet to a 1/2-inch reinforcing rod
found; thence North 39 degrees 12 minutes 37 seconds West 76.90 feet to a
1/2-inch reinforcing rod found; thence South 77 degrees 41 minutes 15 seconds
West 89.99 feet to a point; thence South 60 degrees 09 minutes 27 seconds West
45.03 feet to a 1/2-inch reinforcing rod found; thence South 38 degrees 09
minutes 50 seconds West 84.98 feet to a 1/2-inch reinforcing rod found; thence
South 23 degrees 17 minutes 54 seconds West 44.00 feet to a 1/2-inch reinforcing
rod found; thence South 66 degrees 49 minutes 53 seconds East 22.00 feet to a
point; thence South 23 degrees 10 minutes 07 seconds West 27.00 feet to a
1/2-inch reinforcing rod found on the northeast right-of-way line of Pleasant
Hill Road; thence along said right-of-way line the following courses and
distances: (1) North 66 degrees 46 minutes 36 seconds West 248.23 feet to a
point, and (2) North 71 degrees 12 minutes 08 seconds West 314.65 feet to a
point on the top bank of the Chattahoochee River; thence leaving said
right-of-way and running along the top bank of the Chattahoochee River the
following courses and distances: (1) North 17 degrees 49 minutes 59 seconds East
17.09 feet to a point, (2) North 15 degrees 49 minutes 59 seconds East 125.63
feet to a point, (3) North 13 degrees 18 minutes 00 seconds East 151.29 feet to
a point, (4) North 16 degrees 41 minutes 32 seconds East 126.35 feet to a point,
(5) North 19 degrees 38 minutes 59 seconds East 179.27 feet to a point, (6)
North 14 degrees 04 minutes 09 seconds East 135.20 feet to a point, (7) North 07
degrees 56 minutes 24 seconds East 133.23 feet to a point, and (8) North 07
degrees 57 minutes 06 seconds East 173.55 feet to a point; thence, leaving said
top bank of the Chattahoochee River, South 87 degrees 59 minutes 08 seconds East
902.71 feet to 1/2-inch reinforcing rod found; thence South 62 degrees 13
minutes 06 seconds East 244.24 feet to a 1/2-inch reinforcing rod found; thence
South 18 degrees 33 minutes 59 seconds East 189.71 feet to a point; thence South
22 degrees 29 minutes 29 seconds West 137.19 feet to a point; thence South 00
degrees 13 minutes 30 seconds West 129.61 feet to a point; thence South 18
degrees 34 minutes 13 seconds West 348.80 feet to a point; thence South 32
degrees 26 minutes 03 seconds West 216.62 feet to a point; thence South 28
degrees 09 minutes 32 seconds West 370.40 feet to the POINT OF BEGINNING; said
tract containing approximately 31.60012 acres and being shown on that certain
plat of ALTA/ACSM Land Title Survey for Roberts Properties Residential, L.P.,
Nationwide Life Insurance Company, Nationwide Life & Annuity Insurance Company
and Commonwealth Land Title Insurance Company prepared by Watts & Browning -
Engineers, bearing the seal and certification of V.T. Hammond, Georgia
Registered Professional Land Surveyor No. 2554, dated September 9, 1996, last
revised October 14, 1996.
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<PAGE> 26
EASEMENT NO. 1
TOGETHER WITH a non-exclusive right, title and interest in and to the easements
appurtenant to the above described fee tract created by and described in that
certain Reciprocal Easement and Covenant Agreement between Partridge Greene,
Inc. and Roberts Properties River Oaks, L.P., a Georgia limited partnership,
dated August 21, 1991, recorded in Deed Book 6714, page 142, Gwinnett County,
Georgia records, as amended by First Amendment to Reciprocal Easement and
Covenant Agreement between Roberts Properties River Oaks, L.P. and Roberts
Properties, Inc., dated August 15, 1994, filed for record August 17, 1994, and
recorded in Deed Book 10601, page 180, aforesaid records, over, across and
through that certain 0.86088 acre parcel shown on the above described plat of
ALTA/ACSM Land Title Survey for Roberts Properties Residential, L.P., Nationwide
Life Insurance Company, Nationwide Life & Annuity Insurance Company and
Commonwealth Land Title Insurance Company.
EASEMENT NO. 2
TOGETHER WITH a non-exclusive right, title and interest in and to the easement
appurtenant to the above-described fee tract created by and described in that
certain Reciprocal Drainage Easement Agreement dated November 21, 1988, between
David Berkman and Gerald A. Blonder and Partridge Greene, Inc., recorded in Deed
Book 5215, page 141, aforesaid records.
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<PAGE> 27
EXHIBIT B
1. General and special taxes and assessments for the year 1996 and
subsequent years, not yet due and payable.
2. Easement from Mrs. C.W. Summerour to Georgia Power Company, dated
September 9, 1940, filed for record September 19, 1940, and recorded
in Deed Book 69, page 125, Gwinnett County, Georgia records.
3. Easement from Mrs. C.W. Summerour to Georgia Power Company, dated
October 28, 1948, filed for record November 3, 1948, and recorded in
Deed Book 90, page 249, aforesaid records.
4. Easement from Miss Nelle Summerour to Georgia Power Company, dated
March 16, 1956, filed for record March 24, 1956, and recorded in Deed
Book 128, page 165, aforesaid records.
5. Easement from John H. Summerour to Georgia Power Company, dated July
16, 1958, filed for record July 18, 1958, and recorded in Deed Book
142, page 443, aforesaid records.
6. Easement for Right-of-Way from Partridge-Greene, Inc. to Georgia Power
Company, dated March 1, 1984, filed for record March 29, 1984, and
recorded in Deed Book 2750, page 275, aforesaid records.
7. Easement from Partridge-Greene, Inc. to S. Donald Norton Properties,
Inc., dated June 12, 1984, filed for record June 18, 1984, and recorded
in Deed Book 2809, page 434, aforesaid records; as assigned by Easement
from S. Donald Norton Properties, Inc. to Gwinnett County, dated
November 4, 1985, filed for record November 7, 1985, and recorded in
Deed Book 3230, page 53, aforesaid records.
8. Sewer easements dedicated pursuant to plats recorded in Plat Book 37,
page 164, aforesaid records, and Plat Book 40, page 4, aforesaid
records.
9. Easement from The Village Group, Inc. to Gwinnett County, dated
January 23, 1987, filed for record February 17, 1987, and recorded in
Deed Book 4115, page 220, aforesaid records.
10. The following matters disclosed by plat of ALTA/ACSM Land Title Survey
for Roberts Properties Residential, L.P., Nationwide Life Insurance
Company, Nationwide Life & Annuity Insurance Company & Commonwealth
Land Title Insurance Company prepared by Watts & Browning Engineers,
Inc., dated September 9, 1996, last revised October 14, 1996, bearing
the seal and certification of V.T. Hammond, Georgia Registered
Professional Land Surveyor No. 2554:
a) 20-foot sanitary sewer easement crossing the southern portion of
the subject property;
b) 20-foot sanitary sewer easement crossing the western portion of
the subject property;
c) 20-foot sanitary sewer easements crossing the central and
northern portions of the subject property;
d) Easement for construction and maintenance of drainage located
along the southern boundary line of the subject property along
Pleasant Hill Road;
e) Light poles, power poles, power meters, power boxes and guy wires
located throughout the subject property;
f) 50-foot Georgia Power Company easement located in the southern
portion of the subject property along Pleasant Hill Road;
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<PAGE> 28
g) 500-foot Atlanta Regional Commission setback line in the western
portion of the subject property;
h) 20 x 20 foot sign tract located on subject property along
Pleasant Hill Road;
i) Ingress and egress easement located in the southern portion of
subject property;
j) Water vault located in the southern portion of the subject
property along Pleasant Hill Road;
k) Portion of 10-foot drainage easement located along the eastern
boundary line of the subject property;
l) Water valves, water meters and fire hydrants located throughout
the subject property;
m) BellSouth telephone facilities located throughout the subject
property;
n) Cable T.V. facilities located throughout the subject property;
o) Cleanouts located throughout the subject property;
p) Gas meters located throughout the subject property; and
q) Fence encroaches from the subject property over the western
boundary line thereof onto adjacent property.
11. Rights of upper and lower riparian owners in and to the waters of the
Chattahoochee River and creeks or branches flowing thereto, and the
natural flow thereof, free from diminution or pollution (affects only
the Fee Parcel).
12. Restrictions contained in General Warranty Deed from Partridge Greene,
Inc. to Roberts Properties River Oaks, L.P., a Georgia limited
partnership, dated August 21, 1991, filed for record August 26, 1991,
and recorded in Deed Book 6714, page 134, aforesaid records; as
supplemented by Notice of Approval executed by Partridge Greene, Inc.,
dated October 29, 1991, filed for record November 8, 1991, and recorded
in Deed Book 6867, page 94, aforesaid records (affects only the Fee
Parcel).
13. Permanent Drainage Easement from Partridge-Greene, Inc. to Gwinnett
County, dated July 13, 1990, filed for record October 19, 1990, and
recorded in Deed Book 6249, page 253, aforesaid records (affects only
the Fee Parcel and Easement No. 1).
14. Reciprocal Easement and Covenant Agreement between Partridge Greene,
Inc. and Roberts Properties River Oaks, L.P., a Georgia limited
partnership, dated August 21, 1991, filed for record August 26, 1991,
and recorded in Deed Book 6714, page 142, aforesaid records; as amended
by First Amendment to Reciprocal Easement and Covenant Agreement
between Roberts Properties River Oaks, L.P., a Georgia limited
partnership, and Roberts Properties, Inc., dated August 15, 1994, filed
for record August 17, 1994, and recorded in Deed Book 10601, page 180,
aforesaid records (affects only the Fee Parcel and Easement No. 1).
15. Reciprocal Drainage Easement Agreement among David Berkman, Gerald A.
Blonder and Partridge Greene, Inc., dated November 21, 1988, filed for
record November 28, 1988, and recorded in Deed Book 5215, page 141,
aforesaid records (affects only the Fee Parcel and Easement No. 2).
16. Easement from David Berkman and Gerald A. Blonder to Gwinnett County,
dated October 16, 1986, filed for record April 13, 1987, and recorded
in Deed Book 4226, page 296, aforesaid records (affects only Easement
No. 2).
17. Agreement for Grant of Easement and Cable Television Service between
Cable Equities of Colorado, Ltd. d/b/a N.E. Gwinnett Cablevision, and
Roberts Properties River Oaks, L.P., a Georgia limited partnership,
dated June 16, 1992, filed for record July 1, 1992, and recorded in
Deed Book 7587, page 173, aforesaid records.
18. Rights of tenants in possession of individual apartment units, as
tenants only.
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<PAGE> 29
EXHIBIT C
Schedule 1
(Description of "Debtor" and "Secured Party")
A. Debtor:
1. Name and Identity or Corporate Structure: Roberts Properties
Residential, L.P., a Georgia limited partnership.
2. The principal place of business of Debtor in the State of
Georgia is located at 8010 Roswell Road, Suite 120, Atlanta,
Georgia 30350.
3. Debtor has been using or operating without change under the
name and identity indicated in item 1 above for the following
time period: Since July 22, 1994.
B. Secured Party:
Nationwide Life Insurance Company
Nationwide Life & Annuity Life Insurance Company
Schedule 2
(Notice Mailing Address of "Debtor" and "Secured Party")
A. The mailing address of Debtor is:
Roberts Properties Residential, L.P.
8010 Roswell Road
Suite 120
Atlanta, Georgia 30350
B. The mailing address of Secured Party is:
Nationwide Life & Annuity Insurance Company
c/o Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, Ohio 43215-2220
Attn: Real Estate Investments
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, Ohio 43215-2220
Attn: Real Estate Investments
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<PAGE> 30
Return to:
Charles A. Brake, Jr., Esq.
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
ASSIGNMENT OF LEASES, RENTS, AND PROFITS
THIS ASSIGNMENT OF LEASES, RENTS AND PROFITS (hereinafter referred to as
"Assignment") is executed and delivered this 17th day of October, 1996, by
Roberts Properties Residential, L.P., a Georgia limited partnership (hereinafter
referred to as "Assignor"), to and in favor of NATIONWIDE LIFE INSURANCE
COMPANY, an Ohio corporation, its successors or assigns, having its principal
office at One Nationwide Plaza, Columbus, Ohio 43215-2220 Attention: Real Estate
Investments and NATIONWIDE LIFE & ANNUITY INSURANCE COMPANY, an Ohio corporation
whose address is c/o Nationwide Life Insurance Company, One Nationwide Plaza,
Columbus, Ohio 43215-2220, Attention: Real Estate Investments,(hereinafter
collectively referred to as the "Assignee");
W I T N E S S E T H:
WHEREAS, Assignor is the present owner in fee simple of certain real
property located in Gwinnett County, Georgia more particularly described on
Exhibit "A" attached hereto and by this reference made a part hereof
(hereinafter referred to as the "Real Property"); and
WHEREAS, Assignee is the owner and holder of a Deed to Secure Debt and
Security Agreement of even date herewith (hereinafter referred to as the
"Security Deed") encumbering the Real Property and other Property more
specifically described in the Security Deed (all of which property is referred
to herein and in the Security Deed as the "Property"), which Deed secures the
payment of a Real Estate Note A and Real Estate Note B of even date herewith in
the aggregate amount of NINE MILLION TWO HUNDRED FIFTY THOUSAND AND NO/100
DOLLARS ($9,250,000.00) made by Assignor as Maker to and in favor of Assignee as
Holder (hereinafter collectively referred to as the "Note");
WHEREAS, Assignee, as a condition to making the aforesaid loan and to
obtain additional security therefor, has required the execution of this
Assignment by Assignor; and
NOW THEREFORE, in order further to secure the payment of the
indebtedness of Assignor to Assignee evidenced by the Note, and secured by the
Security Deed, and in further consideration of the sum of TEN AND NO/100 DOLLARS
($10.00) in hand paid by Assignee to Assignor, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby sell, assign, transfer and
set over unto Assignee all of the leases (and guarantees thereof), rents,
issues, profits and income of, from or pertaining to the Property, including,
but not limited to any fees that permit the tenant to terminate its lease which
fees are payable to the landlord under the terms and conditions of any of the
Property's leases. This Assignment shall include any and all leases or rental
agreements and guarantees thereof that may now be in effect specifically
including without limitation those leases and guarantees set forth in Exhibit B
attached hereto and by this reference made a part hereof, as well as any future
or additional leases or rental agreements and guarantees thereof, and any
renewals or extensions of the same, that may be entered into by Assignor.
Assignor hereby agrees to execute and deliver such further assignments of said
leases or rental agreements or guarantees thereof as Assignee may from time to
time request.
This Assignment is absolute and effective immediately and without
possession. Notwithstanding the foregoing, Assignor shall have a license to
receive, collect and enjoy the rents, issues, profits and income accruing from
the Property until a default has occurred under the Note, the Security Deed or
any other instrument evidencing or securing the Note. Upon the occurrence of a
default, the license shall cease automatically, without need of notice,
possession, foreclosure or any other act or procedure, and all leases, rents,
issues, profits and income assigned hereby shall thereafter be payable to
Assignee.
PROVIDED, ALWAYS that if the Assignor shall pay unto the Assignee the
indebtedness evidenced by the Note, and if the Assignor shall duly, promptly and
fully perform, discharge,
<PAGE> 31
execute, effect, complete, comply with and abide by each and every one of the
agreements, conditions and covenants of the Note, the Security Deed, this
Assignment and all other instruments executed by Assignor to and in favor of
Assignee as further evidence of or as additional security for the indebtedness
(hereinafter together referred to as the "Loan Documents"), then this Assignment
and the estates and interests hereby granted and created shall terminate.
REPRESENTATIONS AND WARRANTIES OF ASSIGNOR
1. In furtherance of the foregoing assignment, Assignor:
A. Represents and warrants that it is the owner in fee simple of
the Property and has good title to the leases, rents, income, issues and
profits hereby assigned and good right to assign the same, and that,
except for a mortgage loan being paid off concurrently with the
execution hereof, no other person, entity, firm or corporation has any
right, title or interest therein; that Assignor has not previously sold,
assigned, transferred, mortgaged or pledged said rents, issues, profits,
income and leases of the Property; and that payment of any of the same
has not otherwise been anticipated, waived, released, discounted, set
off or otherwise discharged or compromised.
B. Agrees and warrants that, without the prior written consent
of the Assignee, except for matters normally occurring in connection
with the operation of a garden apartment community, the terms of any and
all leases will not be amended, altered, modified or changed in any
manner whatsoever, nor will they be surrendered or canceled, nor will
any proceedings for dispossession or eviction of any lessee under said
leases be instituted by Assignor.
C. Agrees and warrants that no request will be made of any
lessee to pay any rent, and no rent will be accepted by Assignor, for
more than one month in advance of the date such rent becomes due and
payable under the terms of any and all leases, it being agreed between
Assignor and Assignee that rent shall be paid as provided in said leases
and not otherwise. The foregoing shall not prevent Assignor from
charging and collecting security deposits from each tenant leasing space
on the Real Property.
D. Authorizes Assignee, by and through its employees or agents
or a duly appointed receiver, at its option, after the occurrence of a
default under this Assignment, the Note, the Security Deed or any of the
Loan Documents, to enter upon the Property and to collect, in the name
of Assignor, as its lawful attorney, or in its own name as assignee, any
rents, income or profits accrued but unpaid and/or in arrears at the
date of such default, as well as the rents, income or profits thereafter
accruing and becoming payable during the period of the continuation of
the said default or any other default. To this end, Assignor further
agrees that it will cooperate with and facilitate, in all reasonable
ways, Assignee's collection of said rents, income or profits and will,
upon request by Assignee, execute a written notice to each tenant,
occupant or licensee directing said tenant, occupant or licensee to pay
directly to Assignee all income, rents and profits due and payable under
said leases; provided, however, that Assignee may notify said tenant,
occupant or licensee of the effectiveness of this Assignment without
giving notice to Assignor or requesting Assignor to give such notice or
join in such notice.
E. Authorizes Assignee, upon such entry as specified in "D."
above, at its option, to take over and assume the management, operation
and maintenance of the Property and to perform all acts necessary and
proper, and to expend such sums out of the income of the Property as in
Assignee's sole discretion may be reasonable or necessary in connection
therewith, in the same manner and to the same extent as Assignor
theretofore might do. Assignor hereby releases all claims against
Assignee arising out of such management, operation and maintenance.
F. Agrees to execute, upon the request of the Assignee, any and
all other instruments requested by the Assignee to effectuate this
Assignment or to accomplish any
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<PAGE> 32
other purpose deemed by the Assignee to be necessary or appropriate in
connection with, this Assignment.
G. Agrees and acknowledges that nothing in this Assignment shall
be construed to limit or restrict in any way the rights and powers
granted to Assignee in the Note, the Security Deed or any of the other
Loan Documents. The collection and application of the rents, issues and
profits as described herein shall not constitute a waiver of any default
which might at the time of application or thereafter exist under the
Note, the Security Deed or any of the other Loan Documents, and the
exercise by Assignee of the rights herein provided shall not prevent
Assignee's exercise of any rights provided under the Note, the Security
Deed or any of the other Loan Documents.
ASSIGNEE'S RIGHTS FOLLOWING DEFAULT BY ASSIGNOR
2. Assignee may, after the occurrence of a default as hereinabove
provided, from time to time, appoint and dismiss such agents or employees as
shall be necessary or reasonable for the collection of the rents, issues and
profits derived from the Property and for the proper care and operation of the
Property, and Assignor hereby grants to Assignee the authority to give such
agents or employees so appointed full and irrevocable authority on Assignor's
behalf to manage the Property and to do all acts relating to such management,
including, without limitation, the entry into and execution of new leases in the
name of the Assignor or otherwise, the alteration or amendment of existing
leases, the authorization to repair or replace any items necessary in order to
maintain the building or buildings and chattels incidental thereto in good and
tenantable condition, and the effectuation of such alterations or improvements
as in the judgment of the Assignee may be reasonable or necessary to maintain or
increase the income from the Property. Assignee shall have the sole control of
such agents or employees, whose remuneration shall be paid out of the rents,
issues and profits as hereinabove provided, at the rate of compensation accepted
in the community wherein the Property is situated.
APPLICATION BY ASSIGNEE OF NET INCOME FROM THE PROPERTY
3. Assignee shall, after payment of all charges and expenses enumerated
under Paragraph 2 above, and after retaining sufficient sums to meet taxes,
assessments, utilities and insurance coverages in requisite amounts (including
liability, fire and extended coverage), credit the net income received by
Assignee from the Property, by virtue of this Assignment, to any amounts due and
owing to Assignee by Assignor under and pursuant to the terms of the Note and
the Security Deed, but the manner of the application of such net income shall be
determined in the sole discretion of Assignee. Assignee shall make a reasonable
effort to collect rents, income and profits, reserving, however, within its sole
discretion, the right to determine the method of collection and the extent to
which enforcement of the collection of delinquent rents, income and profits
shall be prosecuted. Notwithstanding the foregoing, no such credit shall be
given by Assignee for any sum or sums received from the rents, issues and
profits of the Property until the sums collected are actually received by
Assignee at its principal office as stated above (or at such other place as
Assignee shall designate in writing), and no credit shall be given for any
uncollected rents or other uncollected amounts or bills, nor shall credit be
given for any rents, issues and profits derived from the Property under any
order of court or by operation of law until such amounts are actually received
by Assignee at its principal offices stated above. The net amount of income
received by Assignee hereunder applied by Assignee to the amounts due and owing
by the Assignor shall not serve to cure any default under the Note, the Security
Deed or any of the Loan Documents, nor shall any amounts received by Assignee
hereunder be in full satisfaction of the indebtedness evidenced by the Note
unless such amounts are sufficient to pay such indebtedness in full (including
any prepayment premiums, late payment charges, and advancements) in accordance
with the terms of the Note, the Security Deed and the other Loan Documents.
LIMITATION OF ASSIGNEE'S LIABILITY
4. Assignee shall not be obligated to perform or discharge any
obligation under the leases hereby assigned or under or by reason of this
Assignment, and Assignor hereby agrees to
-3-
<PAGE> 33
indemnify and hold Assignee harmless against any and all liability, loss or
damage which Assignee might incur under the leases or under or by reason of this
Assignment and of and from any and all claims and demands whatsoever which may
be asserted against Assignee by reason of any alleged obligation or undertaking
on Assignee's part to perform or discharge any of the terms of such leases,
except for claims and demands arising by reason of Assignee's gross negligence
or willful misconduct.
REINSTATEMENT AFTER DEFAULT
5. In the event that Assignor shall, with the consent of Assignee,
reinstate the indebtedness evidenced by the Note completely in good standing,
having complied with all the terms, covenants and conditions of the Note,
Security Deed, this Assignment and all of the other Loan Documents, then, in
such event, Assignee shall return possession of the Property to Assignor, and
Assignor shall remain in possession of the Property unless and until another
default occurs under the Note, the Security Deed, this Assignment or any of the
other Loan Documents, at which time Assignee may, at its option, again take
possession of the Property under authority of and pursuant to the terms and
provisions of this Assignment.
TENANT'S NOTIFICATION OF ASSIGNMENT
6. Upon request by Assignee, at any time, Assignor will deliver a
written notice to each of the tenants and lessees of the Property, which notice
shall inform such tenants and lessees of this Assignment and instruct them that
upon receipt of notice by them from Assignee of the existence of a default by
Assignor under the Note, the Security Deed or any of the other Loan Document,
all rent due thereafter shall be paid directly to Assignee.
SATISFACTION OF SECURITY DEED; SATISFACTION OF ASSIGNMENT
7. This Assignment shall remain in full force and effect as long as the
indebtedness evidenced by the Note and secured by the Security Deed remain
unpaid in whole or in part. It is understood and agreed that a complete release
or satisfaction of the aforesaid Security Deed shall operate as a complete
release or satisfaction of all of Assignee's rights and interest hereunder, and
that satisfaction of the Security Deed shall operate to satisfy this Assignment.
EXCULPATION
8. The liability of Assignor with respect to the payment of principal
and interest under the Note shall be "non-recourse" and, accordingly, Assignee's
source of satisfaction of said indebtedness and Assignor's other obligations
hereunder and under the other Loan Documents shall be limited to the Property
and Assignee's receipt of the rents, issues and profits from the Property, and
Assignee shall not seek to procure payment out of any other assets of Assignor
or any person or entity comprising Assignor, nor to seek judgment (except as
hereinafter provided) for any sums which are or may be payable under the Note or
under any of the other Loan Documents, as well as any claim or judgment (except
as hereafter provided) for any deficiency remaining after foreclosure of the
Security Deed. Notwithstanding the above, nothing herein contained shall be
deemed to be a release or impairment of the indebtedness evidenced by the Note
or the security therefor intended by the other Loan Documents or be deemed to
preclude Assignee from exercising its rights to foreclose, or to exercise the
power of sale contained in, the Security Deed or to enforce any of its other
rights or remedies under the Loan Documents.
Notwithstanding the foregoing, it is expressly understood and agreed
that the aforesaid limitation on liability shall in no way affect or apply to
Assignor's continued personal liability for:
(A) fraud or intentional misrepresentation made in or in connection
with the Note or any of the other Loan Documents governing,
securing or pertaining to the payment thereof;
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<PAGE> 34
(B) failure to pay taxes prior to delinquency or to pay assessments
prior to delinquency or to pay charges for labor, materials or
other charges which can create liens on any portion of the
Property;
(C) the misapplication of (i) proceeds of insurance covering any
portion of the Property, or (ii) proceeds of the sale or
condemnation of any portion of the Property, or (iii) rentals
held or received by or on behalf of Assignor subsequent to the
date on which Assignee gives written notice of the commencement
of foreclosure proceedings;
(D) causing or permitting waste to occur on, in or about the
Property, and failure to maintain the Property, excepting
ordinary wear and tear;
(E) loss by fire or casualty to the extent not compensated by
insurance proceeds collected by Assignee;
(F) the return to Assignee of all unearned advance rentals and
security deposits paid by tenants of the Property and not
refunded to or forfeited by such tenants;
(G) the return to Assignor of any and all fees paid to Assignee by
tenants of the Property which fees permit tenants to terminate
their leases;
(H) the return of, or reimbursement for, all personalty owned by
Assignor taken from the Property by or on behalf of Assignor out
of the ordinary course of business, and not replaced by
personalty of equal or greater value than the original value of
the personalty so removed;
(I) all court costs and Reasonable Attorneys' Fees actually incurred
which are provided for in the Note or in any other Loan Document
governing, securing or pertaining to the payment of the Note;
(J) (i) the removal of any chemical, material or substance, exposure
to which is prohibited, limited or regulated by any Federal,
State, County, Regional or Local Authority which may or could
pose a hazard to the health and safety of the occupants of the
Property; and (ii) the restoration of the Property to comply
with all governmental regulations pertaining to hazardous waste
found in, on or under the Property regardless of the source of
origination; and (iii) any indemnity or other agreement to hold
the Assignee harmless from and against any and all losses,
liabilities, damages, injuries, costs, expenses of any and every
kind arising under Paragraph 3 of the Security Deed or under
that certain Environmental Indemnity Agreement from Assignor to
Assignee of even date herewith. Assignor shall not be liable
hereunder if such materials were placed on the Property
subsequent to the date of foreclosure of the Security Deed by
Assignee or acceptance of a deed in lieu thereof, or
relinquishment of control of the Property pursuant to a transfer
approved in writing by Assignee; provided such transferee
assumes in writing all obligations of Maker pertaining to the
Loan Documents. Liability under this subparagraph shall extend
beyond repayment of the Note and compliance with the terms of
the Security Deed, unless at such time Assignor provides
Assignee with an environmental assessment report acceptable to
Assignee showing the Property to be free of Hazardous Materials
and not in violation of Hazardous Waste Laws (as defined in the
Security Deed). Assignor shall bear the burden of proof in
establishing the date on which any such Hazardous Materials were
placed or appeared in, on or under the Property.
(K) (a) any and all costs incurred in order to cause the Property
to comply with the applicable accessibility provisions of The
Fair Housing Act of 1988, as the same may now or hereafter be
amended, and any and all rules and regulations that may now or
hereafter be promulgated in connection with said acts, and (b)
any indemnity or other agreement to hold the Assignee harmless
from and against any
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<PAGE> 35
and all losses, liabilities, damages, injuries, costs and
expenses of any and every kind arising under Paragraph 3 of the
Security Deed regarding accessibility for the disabled or
handicapped or under the Accessibility Indemnity Agreement from
Assignor to Assignee of even date herewith; provided, however,
Assignor shall not be liable for compliance with any
accessibility laws that first become effective, or for any
violation of any accessibility laws resulting from alterations
or improvements to the Property that are performed, subsequent
to Assignee's actually taking possession of the Property
pursuant to foreclosure of the Security Deed or acceptance of a
deed in lieu thereof, or subsequent to any transfer of ownership
of the Property that has the prior written approval of Assignee;
provided that such transferee assumes in writing all obligations
of Assignor with respect to compliance with accessibility laws
under the Security Deed and Accessibility Indemnity Agreement.
(L) Obligations of Assignor for the face amount of any Letter of
Credit held by Assignee and delivered by Assignor in connection
with the loan evidenced by the Note in the event Assignor is
unable to collect the full amount of said Letter of Credit for
any reason. The obligations of Assignor in subparagraphs (A)
through (L) above, except as provided in (J) and (K), shall
survive the repayment and satisfaction of the Note and
compliance with the terms of the Security Deed.
Notwithstanding anything in this Paragraph 8 to the contrary, this Paragraph 8
shall not be applicable, and Assignor shall be fully liable for Assignor's
obligations hereunder, as well as under the Note, the Security Deed and the
other Loan Documents, in the event there is a default by Assignor under Section
30 or Section 31 of the Security Deed.
GOVERNING LAWS
9. This Assignment is executed and delivered as additional Security for
a loan transaction negotiated and consummated in Gwinnett County, Georgia and is
to be construed according to the laws of the State of Georgia, and the laws of
the United States.
REASONABLE ATTORNEYS' FEES
10. As used herein, the phrase "Reasonable Attorneys' Fees" shall mean
fees charged by attorneys selected by Assignee based upon such attorneys
then-prevailing hourly rates as opposed to any amount or percentage specified by
any statute then in effect in the State of Georgia.
SUCCESSORS AND ASSIGNS
11. The provisions of this Agreement shall inure to the benefit of
Assignee and its successors and assigns and shall be binding upon Assignor, its
personal representatives, successors and assigns. The creation of rights and
powers under this Agreement in favor of or available to Assignee shall, in no
way whatsoever, be construed to impose concomitant duties or obligations on
Assignee in favor of Assignor except as expressly set forth herein.
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<PAGE> 36
IN WITNESS WHEREOF, the undersigned has caused this Assignment of
Leases, Rents and Profits to be executed under seal by persons duly authorized
thereunto as of the day and year first above written.
Signed, sealed and delivered in the ROBERTS PROPERTIES RESIDENTIAL, L.P., a
presence of: Georgia limited partnership
/s/ Charles R. Elliott By: Roberts Realty Investors, Inc., its
- ------------------------ sole General Partner
Unofficial Witness
/s/ Leslie A. Camp By: /s/ Charles S. Roberts
- ------------------------ -------------------------
Notary Public Name: Charles S. Roberts
Title: President
(NOTARY SEAL) (Corporate Seal)
My Commission Expires:
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<PAGE> 37
EXHIBIT A
FEE PARCEL
All that tract of land in Land Lots 321 and 326 of the 6th District, City of
Duluth, Gwinnett County, Georgia described as follows:
BEGINNING at a 1/2-inch reinforcing rod found on the northeast right-of-way line
of Pleasant Hill Road (variable right-of-way), said 1/2-inch reinforcing rod
found being 1924.03 feet northwest along the northeast right-of-way line of
Pleasant Hill Road from the mitered intersection of the west right-of-way line
of Peachtree Industrial Boulevard (150 foot right-of-way) and the northeast
right-of-way line of Pleasant Hill Road (said 1/2-inch reinforcing rod found
also being 1973.90 feet northwest along the northeast right-of-way line of
Pleasant Hill Road from the intersection of the northeast right-of-way line of
Pleasant Hill Road and the west right-of-way line of Peachtree Industrial
Boulevard; said 1/2-inch reinforcing rod found also being the southwest corner
of property now or formerly known as Phase One, Plantation Trace Apartments as
per Deed Book 5215, page 151, Gwinnett County, Georgia records); running thence
along the said northeast right-of-way line of Pleasant Hill Road the following
courses and distances: (1) along the arc of a curve to the left (which arc is
subtended by a chord having a bearing and distance of North 61 degrees 48
minutes 40 seconds West 242.78 feet and a radius of 1548.326 feet) 243.03 feet
to a point, and (2) North 66 degrees 47 minutes 46 seconds West 81.46 feet to a
1/2-inch reinforcing rod found; thence, leaving said right-of-way line, North 23
degrees 09 minutes 50 seconds East 205.89 feet to a 1/2-inch reinforcing rod
found; thence North 39 degrees 12 minutes 37 seconds West 76.90 feet to a
1/2-inch reinforcing rod found; thence South 77 degrees 41 minutes 15 seconds
West 89.99 feet to a point; thence South 60 degrees 09 minutes 27 seconds West
45.03 feet to a 1/2-inch reinforcing rod found; thence South 38 degrees 09
minutes 50 seconds West 84.98 feet to a 1/2-inch reinforcing rod found; thence
South 23 degrees 17 minutes 54 seconds West 44.00 feet to a 1/2-inch reinforcing
rod found; thence South 66 degrees 49 minutes 53 seconds East 22.00 feet to a
point; thence South 23 degrees 10 minutes 07 seconds West 27.00 feet to a
1/2-inch reinforcing rod found on the northeast right-of-way line of Pleasant
Hill Road; thence along said right-of-way line the following courses and
distances: (1) North 66 degrees 46 minutes 36 seconds West 248.23 feet to a
point, and (2) North 71 degrees 12 minutes 08 seconds West 314.65 feet to a
point on the top bank of the Chattahoochee River; thence leaving said
right-of-way and running along the top bank of the Chattahoochee River the
following courses and distances: (1) North 17 degrees 49 minutes 59 seconds East
17.09 feet to a point, (2) North 15 degrees 49 minutes 59 seconds East 125.63
feet to a point, (3) North 13 degrees 18 minutes 00 seconds East 151.29 feet to
a point, (4) North 16 degrees 41 minutes 32 seconds East 126.35 feet to a point,
(5) North 19 degrees 38 minutes 59 seconds East 179.27 feet to a point, (6)
North 14 degrees 04 minutes 09 seconds East 135.20 feet to a point, (7) North 07
degrees 56 minutes 24 seconds East 133.23 feet to a point, and (8) North 07
degrees 57 minutes 06 seconds East 173.55 feet to a point; thence, leaving said
top bank of the Chattahoochee River, South 87 degrees 59 minutes 08 seconds East
902.71 feet to 1/2-inch reinforcing rod found; thence South 62 degrees 13
minutes 06 seconds East 244.24 feet to a 1/2-inch reinforcing rod found; thence
South 18 degrees 33 minutes 59 seconds East 189.71 feet to a point; thence South
22 degrees 29 minutes 29 seconds West 137.19 feet to a point; thence South 00
degrees 13 minutes 30 seconds West 129.61 feet to a point; thence South 18
degrees 34 minutes 13 seconds West 348.80 feet to a point; thence South 32
degrees 26 minutes 03 seconds West 216.62 feet to a point; thence South 28
degrees 09 minutes 32 seconds West 370.40 feet to the POINT OF BEGINNING; said
tract containing approximately 31.60012 acres and being shown on that certain
plat of ALTA/ACSM Land Title Survey for Roberts Properties Residential, L.P.,
Nationwide Life Insurance Company, Nationwide Life & Annuity Insurance Company
and Commonwealth Land Title Insurance Company prepared by Watts & Browning -
Engineers, bearing the seal and certification of V.T. Hammond, Georgia
Registered Professional Land Surveyor No. 2554, dated September 9, 1996, last
revised October 14, 1996.
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<PAGE> 38
EASEMENT NO. 1
TOGETHER WITH a non-exclusive right, title and interest in and to the easements
appurtenant to the above described fee tract created by and described in that
certain Reciprocal Easement and Covenant Agreement between Partridge Greene,
Inc. and Roberts Properties River Oaks, L.P., a Georgia limited partnership,
dated August 21, 1991, recorded in Deed Book 6714, page 142, Gwinnett County,
Georgia records, as amended by First Amendment to Reciprocal Easement and
Covenant Agreement between Roberts Properties River Oaks, L.P. and Roberts
Properties, Inc., dated August 15, 1994, filed for record August 17, 1994, and
recorded in Deed Book 10601, page 180, aforesaid records, over, across and
through that certain 0.86088 acre parcel shown on the above described plat of
ALTA/ACSM Land Title Survey for Roberts Properties Residential, L.P., Nationwide
Life Insurance Company, Nationwide Life & Annuity Insurance Company and
Commonwealth Land Title Insurance Company.
EASEMENT NO. 2
TOGETHER WITH a non-exclusive right, title and interest in and to the easement
appurtenant to the above-described fee tract created by and described in that
certain Reciprocal Drainage Easement Agreement dated November 21, 1988, between
David Berkman and Gerald A. Blonder and Partridge Greene, Inc., recorded in Deed
Book 5215, page 141, aforesaid records.
-9-
<PAGE> 1
EXHIBIT 10.5.12
REAL ESTATE NOTE A
$5,670,000.00 Atlanta, Georgia
January 30, 1997
FOR VALUE RECEIVED, THE UNDERSIGNED Roberts Properties Residential,
L.P., a Georgia limited partnership, whose sole general partner is Roberts
Realty Investors, Inc., a Georgia corporation (the "Maker") promises to pay to
the order of NATIONWIDE LIFE INSURANCE COMPANY, an Ohio corporation, its
successors and assigns (the "Holder") the principal sum of FIVE MILLION SIX
HUNDRED SEVENTY THOUSAND AND NO/100 DOLLARS ($5,670,000.00), together with
interest on the principal balance of this Real Estate Note A (the "Note"), from
time to time remaining unpaid, from the date of disbursement by the Holder
hereof at the applicable interest rate hereinafter set forth, together with all
other sums due hereunder or under the terms of the Security Deed (as
hereinafter defined) in lawful money of the United States of America which
shall be legal tender in payment of all debts at the time of payment. Both
principal and interest and all other sums due hereunder shall be payable at the
office of the Holder at One Nationwide Plaza, Columbus, Ohio 43215-2220, Attn:
Real Estate Investment Department, or at such other place either within or
without the State of Ohio, as the Holder hereof may from time to time
designate. Said principal and interest shall be paid over a term, at the
times, and in the manner set forth below, to wit:
Payment Provision:
(i) Interest accrued on the unpaid principal balance of this Note,
from the date of disbursement hereof at the rate of 7.14%
percent per annum, shall be due and payable on February 15,
1997.
(ii) Thereafter, principal and interest on the unpaid principal
balance of this Note at the rate of 7.14% percent per annum
shall be paid in one hundred nineteen (119) consecutive monthly
installments commencing on March 15, 1997 and continuing on the
fifteenth day of each calendar month thereafter, with each such
installment to be in the sum of Thirty Eight Thousand Two
Hundred Fifty Seven and 27/100 Dollars ($38,257.27).
Maturity:
The unpaid principal balance of this Note and all accrued unpaid
interest thereon, if not sooner paid, shall be due and payable in full on
February 15, 2007 (the "Maturity Date").
Application of Payments:
All payments shall be applied first to the payment of accrued unpaid
interest on this Note and the balance, if any, shall be applied to the
reduction of the outstanding principal balance of this Note. Interest due
hereunder shall be calculated on the basis of a 360-day year composed of twelve
(12) thirty (30) day months; provided, in no event shall such calculation cause
the interest rate on this Note to exceed the maximum rate permitted under
applicable law.
Late Payment Charge:
The Holder of this Note may collect a late payment charge, prior to the
acceleration of this Note, in an amount equal to five percent (5%) of the
aggregate monthly installment which is not paid on the due date, for the
purposes of covering the extra expenses involved in handling delinquent
installments. Any full payment of principal and/or interest which is
postmarked by the United States Postal Service on or before the due date shall
not be considered delinquent and a late payment charge shall not be assessed.
<PAGE> 2
Prepayment:
(A) Maker shall have the right to prepay, in full but not in part, the
obligation evidenced by this Note upon giving (i) not less than thirty (30)
days' prior written notice to Holder of Maker's intention to so prepay the
Note, and (ii) payment to Holder of the Prepayment Premium (as hereinafter
defined), if any, then due to Holder as hereinafter provided. As used herein,
the term "Prepayment Premium" shall mean the greater of (x) one percent (1.0%)
of the outstanding principal balance of this Note, or (y) a sum equal to (a)
the present value of the scheduled monthly payments hereunder from the date of
prepayment to the Maturity Date and (b) the present value of the amount of
principal and interest due on the Maturity Date (assuming all scheduled monthly
payments due hereunder prior to the Maturity Date were made when due), minus
(c) the outstanding principal balance hereof as of the date of prepayment. The
present value described in (a) and (b) of the immediately preceding sentence
are to be computed on a monthly basis as of the date of prepayment, discounted
at the yield to maturity of the U.S. Treasury Note or Bond that is closest in
maturity to the Maturity Date as reported in the Wall Street Journal (or if the
Wall Street Journal is no longer published, as reported in such other daily
financial publication of national circulation which shall be designated by
Holder) on the fifth (5th) business day preceding the date of prepayment.
Maker shall be obligated to prepay this Note on the date set forth in the
notice to Holder required hereinabove, after such notice has been delivered to
Holder. Notwithstanding the foregoing or any other provision herein to the
contrary, if the Holder elects to apply insurance proceeds, condemnation awards
or any escrowed amounts, if applicable, to the reduction of the principal
balance of this Note in the manner provided in the Security Deed (as
hereinafter defined), no Prepayment Premium shall be due or payable as a result
of such application, and the monthly installments due and payable hereunder
shall be reduced accordingly.
(B) In the event the Maturity Date of the indebtedness evidenced by this
Note is accelerated by Holder hereof at any time due to a default by Maker in
the terms, covenants or conditions contained in this Note, the Security Deed or
any of the other Loan Document (as hereinafter defined), then a tender of
payment of an amount necessary to satisfy the entire outstanding principal
balance and all accrued unpaid interest of this Note made by Maker, or by
anyone on behalf of Maker, at any time prior to, at, or as a result of, a
foreclosure sale or sale pursuant to power of sale shall constitute a voluntary
prepayment hereunder prior to the contracted Maturity Date of this Note thus
requiring payment to Holder of a Prepayment Premium equal to the applicable
Prepayment Premium as set forth in subparagraph (A) above.
(C) Maker acknowledges that Holder (a) has advanced the amounts
evidenced by this Note with the expectation that such amounts would be
outstanding until the Maturity Date unless prepaid in accordance with the
foregoing prepayment provisions, (b) would not have been willing to advance
such amounts on the terms set forth in this Note for a shorter period of time,
(c) in making the loan evidenced by this Note, is relying on Maker's
creditworthiness and its agreement to pay in strict accordance with the terms
set forth in the Note, and (d) would not make the loan without full and
complete assurance by Maker of its agreement not to prepay all or a part of the
principal of this Note except as expressly permitted herein. Maker
acknowledges that if this Note were to be prepaid prior to the Maturity Date
other than in accordance with the foregoing prepayment provisions, Maker would
not receive the benefit of the bargain agreed to by Maker and Holder. In
addition, Maker has been advised and acknowledges that Holder is relying on the
receipt of payments under this Note to, among other things, match and support
its obligations under contracts entered into by Holder with third parties and
that in the event of a prepayment, Holder could suffer loss and additional
expenses which are extremely difficult and impractical to ascertain. The
Prepayment Premium is a good faith resolution by Maker and Holder of the
damages Holder would suffer, and it is not intended as a penalty.
(D) Notwithstanding anything in this "Prepayment" section of this
Note to the contrary, Maker may prepay in full, but not in part, the obligation
evidenced by this Note at any time during the last ninety (90) days prior to
the Maturity Date without any prepayment premium.
BY INITIALING BELOW, MAKER EXPRESSLY ACKNOWLEDGES THAT PURSUANT TO THE
PROVISIONS OF THIS NOTE, MAKER HAS NO RIGHT TO PREPAY
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<PAGE> 3
THIS NOTE IN WHOLE OR IN PART WITHOUT PAYMENT OF THE PREPAYMENT PREMIUM EXCEPT
AS SET FORTH ABOVE, AND THAT MAKER SHALL BE LIABLE FOR THE PAYMENT OF THE
PREPAYMENT PREMIUM UPON ANY PAYMENT OF THE OUTSTANDING PRINCIPAL OF THIS NOTE
BEFORE ITS DUE DATE, WHETHER VOLUNTARY OR INVOLUNTARY OR AFTER ACCELERATION OF
THE NOTE WHETHER THE ACCELERATION OF THE MATURITY HEREOF IS DUE TO MAKER'S
DEFAULT OR OTHERWISE. FURTHERMORE, BY INITIALING BELOW, MAKER WAIVES ANY
RIGHTS IT MAY HAVE UNDER ANY APPLICABLE STATE LAWS AS THEY RELATE TO ANY
PREPAYMENT RESTRICTIONS CONTAINED IN THIS PREPAYMENT SECTION OR OTHERWISE IN
THIS NOTE AND EXPRESSLY ACKNOWLEDGES THAT HOLDER HAS MADE THE LOAN IN RELIANCE
UPON SUCH AGREEMENTS AND WAIVER OF MAKER AND THAT HOLDER WOULD NOT HAVE MADE
THE LOAN WITHOUT SUCH AGREEMENTS AND WAIVER OF MAKER. MAKER ACKNOWLEDGES THAT
SPECIFIC WEIGHT HAS BEEN GIVEN TO THE CONSIDERATION GIVEN FOR SUCH AGREEMENTS,
WHICH CONSIDERATION IS THE GRANTING OF THE LOAN.
/s/ CSR
-------------------
Borrower's initials
Additional Conditions:
This Note is secured by a Deed to Secure Debt and Security Agreement
(herein referred to as the "Security Deed") and by an Assignment of Leases,
Rents and Profits (herein referred to as the "Assignment") of even date
herewith encumbering certain real property located in Gwinnett County, Georgia
and other property as more particularly described in the Security Deed
(hereinafter collectively referred to as the "Property"). The Security Deed
and the Assignment contain terms and provisions which provide grounds for
acceleration of the indebtedness evidenced by this Note, together with
additional remedies in the event of default hereunder or thereunder. Failure
on the part of the Holder hereof to exercise any right granted herein or in the
aforesaid Security Deed or the Assignment shall not constitute a waiver of such
right or preclude the subsequent exercise and enforcement thereof. This Note,
the Security Deed, the Assignment and all other documents and instruments
executed as further evidence of, as additional security for, or executed in
connection with the indebtedness evidenced by this Note are hereinafter
collectively referred to as the "Loan Documents."
Except as otherwise provided, all parties to this Note, including
endorsers, sureties and guarantors, hereby jointly and severally waive
presentment for payment, demand, protest, notice of protest, notice of demand
and of nonpayment or dishonor and of protest, notice of intent to accelerate
the maturity of this Note, notice of acceleration of maturity of this Note, and
any and all other notices and demands whatsoever, and agree to remain bound
hereby until the principal and interest of this Note are paid in full,
notwithstanding any extensions of time for payment which may be granted by
Holder, even though the period of extension be indefinite, and notwithstanding
any inaction by, or failure to assert any legal rights available to the Holder
of this Note.
If the obligations evidenced by this Note, or any part thereof, are
placed in the hands of an attorney for collection, whether by suit or
otherwise, at any time, or from time to time, Maker shall be liable to Holder,
in each instance, for all costs and expenses incurred in connection therewith,
including, without limitation, reasonable attorneys' fees (as hereinafter
defined).
Default:
If default shall be made in the payment of principal and/or interest as
stipulated above or in the payment of any other sums due hereunder or under any
of the other Loan Documents, or should any default be made in the performance
of any of the terms, covenants and conditions contained herein or in any of the
other Loan Documents, then in any or all of such events, at the option of
Holder, the entire outstanding principal balance of this Note, together with
all accrued unpaid interest thereon and all other sums advanced by Holder on
behalf of Maker shall become and be immediately due and payable then or
thereafter as Holder may elect, regardless of the Maturity Date hereof. All
such amounts shall bear interest after the Maturity Date, by
- 3 -
<PAGE> 4
acceleration or otherwise, at the lesser of either (i) the highest rate of
interest then allowed by the laws of the State of Georgia, or, if controlling,
the laws of the United States, or (ii) the then applicable interest rate of
this Note plus five-hundred (500) basis points (five per cent per annum).
During the existence of any default, Holder may apply any sums received,
including but not limited to, insurance proceeds or condemnation awards to any
amount then due and owing hereunder or under the terms of any of the other Loan
Documents as Holder may determine. Neither the right nor the exercise of the
right herein granted unto Holder to apply such proceeds as aforesaid shall
preclude Holder from exercising its option to cause the entire indebtedness
evidenced by this Note to become immediately due and payable by reason of
Maker's default under the terms of this Note, or any of the other Loan
Documents.
Notwithstanding any provisions herein to the contrary, Holder's right,
power and privilege to accelerate the maturity of the indebtedness evidenced
hereby shall be conditioned upon, (a) with respect to any Monetary Default (as
hereafter defined), Holder giving Maker written notice of such Monetary Default
and a five (5) day period ("Monetary Cure Period") after the date of such
notice within which to cure such Monetary Default; provided, however, that such
Monetary Cure Period shall be limited to once per loan year for the term of the
Loan; and (b) with respect to any Non- Monetary Default (as hereinafter
defined), Holder giving Maker written notice of such Non-Monetary Default and a
thirty (30) day period after the date of such notice within which to cure such
Non-Monetary Default; provided, however, that if such Non-Monetary Default
cannot reasonably be cured within the 30 day period Maker shall have a
reasonable period of time in which to cure the Non-Monetary Default provided
that Maker commences the cure of such default within the 30 day period and
thereafter diligently pursues the cure to completion. Any notice required
hereunder shall be given as provided in the Security Deed. Holder shall have
no obligation to give Maker notice of any Incurable Default (as hereinafter
defined) prior to exercising its right, power and privilege to accelerate the
maturity of the indebtedness evidenced hereby and to declare same to be
immediately due and payable and exercise all other rights and remedies herein
granted or otherwise available to Holder at law or in equity. As used herein,
the term "Monetary Default" shall mean any default which can be cured by the
payment of money including, but not limited to, the payment of principal and
interest due under this Note and the payment of taxes, assessments and
insurance premiums when due as provided in the Security Deed. As used herein,
the term "Non-Monetary Default" shall mean any default which is not a Monetary
Default or an Incurable Default. As used herein, the term "Incurable Default"
shall mean (i) any voluntary or involuntary sale, assignment, encumbering or
transfer in violation of the covenants of Section 30 the Security Deed or (ii)
if Maker or its general partner should make an assignment for the benefit of
creditors, become insolvent, or file a petition in bankruptcy (including but
not limited to, a petition seeking a rearrangement or reorganization).
Savings Clause; Severability:
Notwithstanding any provisions herein or in the Security Deed to the
contrary, the total liability for payments in the nature of interest including
but not limited to Prepayment Premiums, default interest and late fees shall
not exceed the limits imposed by the laws of the State of Georgia or the United
States of America relating to maximum lawful rate of interest. Holder shall
not be entitled to receive, collect or apply, as interest on the indebtedness
evidenced hereby, any amount in excess of the maximum lawful rate of interest
permitted to be charged by applicable law or regulations, as amended or enacted
from time to time. In the event Holder ever receives, collects or applies, as
interest, any such excess, such amount which would be excessive interest shall
be applied to reduce the unpaid principal balance of the indebtedness evidenced
by this Note. If the unpaid principal balance of such indebtedness is paid in
full, any remaining excess shall be forthwith paid to Maker. If any clauses or
provisions herein contained operate or prospectively operate to invalidate this
Note, then such clauses or provisions only shall be held for naught, as though
not herein contained and the remainder of this Note shall remain operative and
in full force and effect.
Exculpation:
- 4 -
<PAGE> 5
Except as expressly set forth herein, the liability of Maker with
respect to the payment of principal and interest hereunder shall be
"non-recourse" and, accordingly, Holder's source of satisfaction of said
indebtedness and Maker's other obligations hereunder and under the other Loan
Documents shall be limited to the Property and Holder's receipt of the rents,
issues and profits from the Property. Holder shall not seek to procure payment
out of any other assets of Maker, or any person or entity comprising Maker, nor
to seek judgment (except as hereinafter provided) for any sums which are or may
be payable under this Note or under any of the other Loan Documents, or for any
claim or judgment (except as hereinafter provided) for any deficiency remaining
after foreclosure of the Security Deed. Notwithstanding the above, nothing
herein contained shall be deemed to be a release or impairment of the
indebtedness evidenced by this Note or the security therefor intended by the
other Loan Documents, or be deemed to preclude Holder from exercising its
rights to foreclose, or exercise the power of sale in, the Security Deed or to
enforce any of its other rights or remedies under the Loan Documents.
Notwithstanding the foregoing, it is expressly understood and agreed
that the aforesaid limitation on liability shall in no way affect or apply to
Maker's continued personal liability for:
(1) fraud or misrepresentation made in or in connection with this
Note or any other Loan Documents;
(2) failure to pay taxes prior to delinquency or to pay assessments
prior to delinquency, or to pay charges for labor, materials or
other charges which can create liens on any portion of the
Property;
(3) the misapplication of (i) proceeds of insurance covering any
portion of the Property, or (ii) proceeds of the sale or
condemnation of any portion of the Property or (iii) rentals
received by or on behalf of Maker subsequent to the date on
which Holder makes written demand therefor pursuant to any of
the Loan Documents;
(4) causing or permitting waste to occur on, in or about the
Property, and failure to maintain the Property, excepting
ordinary wear and tear;
(5) loss by fire or casualty to the extent not compensated by
insurance proceeds collected by Holder;
(6) the return to Holder of all unearned advance rentals and
security deposits paid by tenants of the Property and not
refunded to or forfeited by such tenants;
(7) the return to Holder of any and all fees paid to Maker by
tenants of the Property which fees permit tenants to terminate
their leases;
(8) the return of, or reimbursement for, all personalty owned by
Maker taken from the Property by or on behalf of Maker, out of
the ordinary course of business, and not replaced by items of
equal or greater value than the original value of the personalty
so removed;
(9) all court costs and reasonable attorneys' fees actually incurred
which are provided for in this Note or in any other Loan
Document;
(10) (i) the removal of any chemical, material or substance, exposure
to which is prohibited, limited, or regulated by any Federal,
State, County, Regional or Local Authority which may or could
pose a hazard to the health and safety of the occupants of the
Property regardless of the source of origination; (ii) the
restoration of the Property to comply with all governmental
regulations pertaining to hazardous waste found in, on or under
the Property, regardless of the source of origination; and (iii)
any indemnity or other agreement to hold the Holder harmless
from and against any and all losses, liabilities, damages,
injuries, costs and expenses of any and every kind arising under
Paragraph 3 of the Security
- 5 -
<PAGE> 6
Deed including, but not limited to, that certain Environmental
Indemnity Agreement from Maker to Holder of even date herewith.
Maker shall not be liable hereunder if such materials were
placed on the Property subsequent to the date of acquisition of
the Property by foreclosure of the Security Deed by Holder or
acceptance of a deed in lieu thereof, or relinquishment of
control of the Property pursuant to a transfer approved in
writing by Holder; provided that such transferee assumes in
writing all obligations of Maker pertaining to Hazardous
Materials (as defined in the Security Deed) pursuant to the Loan
Documents. Liability under this subparagraph shall extend
beyond the repayment of this Note and compliance with the terms
of the Security Deed, unless at such time Maker provides Holder
with an environmental assessment report acceptable to Holder
showing the Property to be free of Hazardous Materials and not
in violation of Hazardous Waste Laws (as defined in the Security
Deed). Maker shall bear the burden of proof in establishing the
date on which any such Hazardous Materials were placed or
appeared in, on or under the Property.
(11) (a) any and all costs incurred in order to cause the Property to
comply with the applicable accessibility provisions of The Fair
Housing Act of 1988, as the same may now or hereafter be
amended, and any and all rules and regulations that may now or
hereafter be promulgated in connection with said acts, and (b)
any indemnity or other agreement to hold the Holder harmless
from and against any and all losses, liabilities, damages,
injuries, costs and expenses of any and every kind arising under
Paragraph 3 of the Security Deed regarding accessibility for the
disabled or handicapped or under the Accessibility Indemnity
Agreement from Maker to Holder of even date herewith; provided,
however, Maker shall not be liable for compliance with any
accessibility laws that first become effective, or for any
violation of any accessibility laws resulting from alterations
or improvements to the Property that are performed, subsequent
to Holder's actually taking possession of the Property pursuant
to foreclosure of the Security Deed or acceptance of a deed in
lieu thereof, or subsequent to any transfer of ownership of the
Property that has the prior written approval of Holder; provided
that such transferee assumes in writing all obligations of Maker
with respect to compliance with accessibility laws under the
Security Deed and Accessibility Indemnity Agreement.
(12) obligations of Maker for the face amount of any letter of
credit held by Holder and delivered by Maker in connection with
the loan evidenced by this Note in the event Holder is unable to
collect the full amount of any such letter of credit for any
reason.
The obligations of Maker in subparagraphs (1) through (12) above, except
as provided in subparagraphs (10) and (11), shall survive the repayment and
satisfaction of this Note and compliance with the terms of the Security Deed.
Notwithstanding any provisions herein to the contrary, Maker shall
become personally liable for the entire amount due under this Note (including
all principal, interest and other charges) in the event that Maker (i) violates
the covenants set forth in the Security Deed governing the placing of
subordinate financing on the Property or (ii) violates the covenants set forth
in the Security Deed restricting transfers in the Property or transfers of
ownership interests in Maker.
Reference is made to that certain Guaranty (the "Guaranty") dated of
even date herewith from Roberts Realty Investors, Inc. in favor of Nationwide
Life Insurance Company and West Coast Life Insurance Company which Guaranty is
being executed and delivered in connection with the loan evidenced by this Note
and Real Estate Note B referenced below in favor of West Coast Life Insurance
Company. Notwithstanding anything in this Note or any other Loan Document to
the contrary, the foregoing provisions of this Exculpation section shall be
inapplicable and of no force and effect until such time as the Guaranty
terminates as provided in paragraph 4.08 of the Guaranty.
- 6 -
<PAGE> 7
Miscellaneous:
As used herein, the phrase "reasonable attorneys' fees" shall mean fees
charged by attorneys selected by Holder based upon such attorneys' then
prevailing hourly rates as opposed to any amount or percentage specified by any
statute then in effect in the State of Georgia.
This Note is one of a series of two notes of even date herewith executed
by the undersigned, both being secured by the Security Deed and other security
instruments in favor of the Holder of this Note. The other such note is
designated Real Estate Note B and has been executed by the undersigned in favor
of West Coast Life Insurance Company and is in the original principal sum of
Seven Hundred Fifty Thousand and No/100 Dollars ($750,000.00). Real Estate
Notes A and B shall be of equal dignity and it is expressly stipulated and
agreed that a default under the terms of either of said Notes shall constitute
an event of default under both of said Notes authorizing the holders of said
Notes to accelerate the maturity of both of said Notes and to exercise all
rights and remedies granted to holders under the Notes, the Security Deed and
any other security instruments securing the payment of the Notes. It is
further stipulated and agreed that notwithstanding the prepayment privilege
contained in this Note, the undersigned shall have no right to prepay this Note
unless the undersigned also elects to prepay Real Estate Note B in accordance
with the prepayment provisions contained therein.
THE PROVISIONS of this Note shall be governed by the laws of the State
of Georgia and the United States and shall be binding upon the Maker, its
successors and assigns and shall inure to the benefit of Holder, its
successors and assigns. Time is of the essence of this contract.
IN WITNESS WHEREOF, the undersigned has executed this Note under seal as of the
day and year first above written.
Roberts Properties Residential, L.P., a
Georgia limited partnership
By: Roberts Realty Investors, Inc.,
its sole General Partner
By: /s/ Charles S. Roberts
------------------------------
Name: Charles S. Roberts
Title: President
(CORPORATE SEAL)
- 7 -
<PAGE> 1
EXHIBIT 10.5.13
REAL ESTATE NOTE B
$750,000.00 Atlanta,Georgia
January 30, 1997
FOR VALUE RECEIVED, THE UNDERSIGNED Roberts Properties Residential,
L.P., a Georgia limited partnership, whose sole general partner is Roberts
Realty Investors, Inc., a Georgia corporation (the "Maker") promises to pay to
the order of WEST COAST LIFE INSURANCE COMPANY, a California corporation, its
successors and assigns (the "Holder") the principal sum of SEVEN HUNDRED FIFTY
THOUSAND AND NO/100 DOLLARS ($750,000.00), together with interest on the
principal balance of this Real Estate Note (the "Note"), from time to time
remaining unpaid, from the date of disbursement by the Holder hereof at the
applicable interest rate hereinafter set forth, together with all other sums
due hereunder or under the terms of the Security Deed (as hereinafter defined)
in lawful money of the United States of America which shall be legal tender in
payment of all debts at the time of payment. Both principal and interest and
all other sums due hereunder shall be payable at the office of the Holder c/o
Nationwide Life Insurance Company, at One Nationwide Plaza, Columbus, Ohio
43215-2220, Attn: Real Estate Investment Department, or at such other place
either within or without the State of Ohio, as the Holder hereof may from time
to time designate. Said principal and interest shall be paid over a term, at
the times, and in the manner set forth below, to wit:
Payment Provision:
(i) Interest accrued on the unpaid principal balance of this Note,
from the date of disbursement hereof at the rate of 7.14%
percent per annum, shall be due and payable on February 15,
1997.
(ii) Thereafter, principal and interest on the unpaid principal
balance of this Note at the rate of 7.14% percent per annum
shall be paid in one hundred nineteen (119) consecutive monthly
installments commencing on March 15, 1997 and continuing on the
fifteenth day of each calendar month thereafter, with each such
installment to be in the sum of Five Thousand Sixty and 48/100
Dollars ($5,060.48).
Maturity:
The unpaid principal balance of this Note and all accrued unpaid
interest thereon, if not sooner paid, shall be due and payable in full on
February 15, 2007 (the "Maturity Date").
Application of Payments:
All payments shall be applied first to the payment of accrued unpaid
interest on this Note and the balance, if any, shall be applied to the
reduction of the outstanding principal balance of this Note. Interest due
hereunder shall be calculated on the basis of a 360-day year composed of twelve
(12) thirty (30) day months; provided, in no event shall such calculation cause
the interest rate on this Note to exceed the maximum rate permitted under
applicable law.
Late Payment Charge:
The Holder of this Note may collect a late payment charge, prior to the
acceleration of this Note, in an amount equal to five percent (5%) of the
aggregate monthly installment which is not paid on the due date, for the
purposes of covering the extra expenses involved in handling delinquent
installments. Any full payment of principal and/or interest which is
postmarked by the United States Postal Service on or before the due date shall
not be considered delinquent and a late payment charge shall not be assessed.
<PAGE> 2
Prepayment:
(A) Maker shall have the right to prepay, in full but not in part, the
obligation evidenced by this Note upon giving (i) not less than thirty (30)
days' prior written notice to Holder of Maker's intention to so prepay the
Note, and (ii) payment to Holder of the Prepayment Premium (as hereinafter
defined), if any, then due to Holder as hereinafter provided. As used herein,
the term "Prepayment Premium" shall mean the greater of (x) one percent (1.0%)
of the outstanding principal balance of this Note, or (y) a sum equal to (a)
the present value of the scheduled monthly payments hereunder from the date of
prepayment to the Maturity Date and (b) the present value of the amount of
principal and interest due on the Maturity Date (assuming all scheduled monthly
payments due hereunder prior to the Maturity Date were made when due), minus
(c) the outstanding principal balance hereof as of the date of prepayment. The
present value described in (a) and (b) of the immediately preceding sentence
are to be computed on a monthly basis as of the date of prepayment, discounted
at the yield to maturity of the U.S. Treasury Note or Bond that is closest in
maturity to the Maturity Date as reported in the Wall Street Journal (or if the
Wall Street Journal is no longer published, as reported in such other daily
financial publication of national circulation which shall be designated by
Holder) on the fifth (5th) business day preceding the date of prepayment.
Maker shall be obligated to prepay this Note on the date set forth in the
notice to Holder required hereinabove, after such notice has been delivered to
Holder. Notwithstanding the foregoing or any other provision herein to the
contrary, if the Holder elects to apply insurance proceeds, condemnation awards
or any escrowed amounts, if applicable, to the reduction of the principal
balance of this Note in the manner provided in the Security Deed (as
hereinafter defined), no Prepayment Premium shall be due or payable as a result
of such application, and the monthly installments due and payable hereunder
shall be reduced accordingly.
(B) In the event the Maturity Date of the indebtedness evidenced by this
Note is accelerated by Holder hereof at any time due to a default by Maker in
the terms, covenants or conditions contained in this Note, the Security Deed or
any of the other Loan Document (as hereinafter defined), then a tender of
payment of an amount necessary to satisfy the entire outstanding principal
balance and all accrued unpaid interest of this Note made by Maker, or by
anyone on behalf of Maker, at any time prior to, at, or as a result of, a
foreclosure sale or sale pursuant to power of sale shall constitute a voluntary
prepayment hereunder prior to the contracted Maturity Date of this Note thus
requiring payment to Holder of a Prepayment Premium equal to the applicable
Prepayment Premium as set forth in subparagraph (A) above.
(C) Maker acknowledges that Holder (a) has advanced the amounts
evidenced by this Note with the expectation that such amounts would be
outstanding until the Maturity Date unless prepaid in accordance with the
foregoing prepayment provisions, (b) would not have been willing to advance
such amounts on the terms set forth in this Note for a shorter period of time,
(c) in making the loan evidenced by this Note, is relying on Maker's
creditworthiness and its agreement to pay in strict accordance with the terms
set forth in the Note, and (d) would not make the loan without full and
complete assurance by Maker of its agreement not to prepay all or a part of the
principal of this Note except as expressly permitted herein. Maker
acknowledges that if this Note were to be prepaid prior to the Maturity Date
other than in accordance with the foregoing prepayment provisions, Maker would
not receive the benefit of the bargain agreed to by Maker and Holder. In
addition, Maker has been advised and acknowledges that Holder is relying on the
receipt of payments under this Note to, among other things, match and support
its obligations under contracts entered into by Holder with third parties and
that in the event of a prepayment, Holder could suffer loss and additional
expenses which are extremely difficult and impractical to ascertain. The
Prepayment Premium is a good faith resolution by Maker and Holder of the
damages Holder would suffer, and it is not intended as a penalty.
(D) Notwithstanding anything in this "Prepayment" section of this
Note to the contrary, Maker may prepay in full, but not in part, the obligation
evidenced by this Note at any time during the last ninety (90) days prior to
the Maturity Date without any prepayment premium.
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<PAGE> 3
BY INITIALING BELOW, MAKER EXPRESSLY ACKNOWLEDGES THAT PURSUANT TO THE
PROVISIONS OF THIS NOTE, MAKER HAS NO RIGHT TO PREPAY THIS NOTE IN WHOLE OR IN
PART WITHOUT PAYMENT OF THE PREPAYMENT PREMIUM EXCEPT AS SET FORTH ABOVE, AND
THAT MAKER SHALL BE LIABLE FOR THE PAYMENT OF THE PREPAYMENT PREMIUM UPON ANY
PAYMENT OF THE OUTSTANDING PRINCIPAL OF THIS NOTE BEFORE ITS DUE DATE, WHETHER
VOLUNTARY OR INVOLUNTARY OR AFTER ACCELERATION OF THE NOTE WHETHER THE
ACCELERATION OF THE MATURITY HEREOF IS DUE TO MAKER'S DEFAULT OR OTHERWISE.
FURTHERMORE, BY INITIALING BELOW, MAKER WAIVES ANY RIGHTS IT MAY HAVE UNDER ANY
APPLICABLE STATE LAWS AS THEY RELATE TO ANY PREPAYMENT RESTRICTIONS CONTAINED
IN THIS PREPAYMENT SECTION OR OTHERWISE IN THIS NOTE AND EXPRESSLY ACKNOWLEDGES
THAT HOLDER HAS MADE THE LOAN IN RELIANCE UPON SUCH AGREEMENTS AND WAIVER OF
MAKER AND THAT HOLDER WOULD NOT HAVE MADE THE LOAN WITHOUT SUCH AGREEMENTS AND
WAIVER OF MAKER. MAKER ACKNOWLEDGES THAT SPECIFIC WEIGHT HAS BEEN GIVEN TO
THE CONSIDERATION GIVEN FOR SUCH AGREEMENTS, WHICH CONSIDERATION IS THE
GRANTING OF THE LOAN.
/s/ CSR
-------------------
Borrower's initials
Additional Conditions:
This Note is secured by a Deed to Secure Debt and Security Agreement
(herein referred to as the "Security Deed") and by an Assignment of Leases,
Rents and Profits (herein referred to as the "Assignment") of even date
herewith encumbering certain real property located in Gwinnett County, Georgia
and other property as more particularly described in the Security Deed
(hereinafter collectively referred to as the "Property"). The Security Deed
and the Assignment contain terms and provisions which provide grounds for
acceleration of the indebtedness evidenced by this Note, together with
additional remedies in the event of default hereunder or thereunder. Failure
on the part of the Holder hereof to exercise any right granted herein or in the
aforesaid Security Deed or the Assignment shall not constitute a waiver of such
right or preclude the subsequent exercise and enforcement thereof. This Note,
the Security Deed, the Assignment and all other documents and instruments
executed as further evidence of, as additional security for, or executed in
connection with the indebtedness evidenced by this Note are hereinafter
collectively referred to as the "Loan Documents."
Except as otherwise provided, all parties to this Note, including
endorsers, sureties and guarantors, hereby jointly and severally waive
presentment for payment, demand, protest, notice of protest, notice of demand
and of nonpayment or dishonor and of protest, notice of intent to accelerate
the maturity of this Note, notice of acceleration of maturity of this Note, and
any and all other notices and demands whatsoever, and agree to remain bound
hereby until the principal and interest of this Note are paid in full,
notwithstanding any extensions of time for payment which may be granted by
Holder, even though the period of extension be indefinite, and notwithstanding
any inaction by, or failure to assert any legal rights available to the Holder
of this Note.
If the obligations evidenced by this Note, or any part thereof, are
placed in the hands of an attorney for collection, whether by suit or
otherwise, at any time, or from time to time, Maker shall be liable to Holder,
in each instance, for all costs and expenses incurred in connection therewith,
including, without limitation, reasonable attorneys' fees (as hereinafter
defined).
Default:
If default shall be made in the payment of principal and/or interest as
stipulated above or in the payment of any other sums due hereunder or under any
of the other Loan Documents, or should any default be made in the performance
of any of the terms, covenants and conditions contained herein or in any of the
other Loan Documents, then in any or all of such events, at the
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<PAGE> 4
option of Holder, the entire outstanding principal balance of this Note,
together with all accrued unpaid interest thereon and all other sums advanced
by Holder on behalf of Maker shall become and be immediately due and payable
then or thereafter as Holder may elect, regardless of the Maturity Date hereof.
All such amounts shall bear interest after the Maturity Date, by acceleration
or otherwise, at the lesser of either (i) the highest rate of interest then
allowed by the laws of the State of Georgia, or, if controlling, the laws of
the United States, or (ii) the then applicable interest rate of this Note plus
five-hundred (500) basis points (five per cent per annum).
During the existence of any default, Holder may apply any sums received,
including but not limited to, insurance proceeds or condemnation awards to any
amount then due and owing hereunder or under the terms of any of the other Loan
Documents as Holder may determine. Neither the right nor the exercise of the
right herein granted unto Holder to apply such proceeds as aforesaid shall
preclude Holder from exercising its option to cause the entire indebtedness
evidenced by this Note to become immediately due and payable by reason of
Maker's default under the terms of this Note, or any of the other Loan
Documents.
Notwithstanding any provisions herein to the contrary, Holder's right,
power and privilege to accelerate the maturity of the indebtedness evidenced
hereby shall be conditioned upon, (a) with respect to any Monetary Default (as
hereafter defined), Holder giving Maker written notice of such Monetary Default
and a five (5) day period ("Monetary Cure Period") after the date of such
notice within which to cure such Monetary Default; provided, however, that such
Monetary Cure Period shall be limited to once per loan year for the term of the
Loan; and (b) with respect to any Non- Monetary Default (as hereinafter
defined), Holder giving Maker written notice of such Non-Monetary Default and a
thirty (30) day period after the date of such notice within which to cure such
Non-Monetary Default; provided, however, that if such Non-Monetary Default
cannot reasonably be cured within the 30 day period Maker shall have a
reasonable period of time in which to cure the Non-Monetary Default provided
that Maker commences the cure of such default within the 30 day period and
thereafter diligently pursues the cure to completion. Any notice required
hereunder shall be given as provided in the Security Deed. Holder shall have
no obligation to give Maker notice of any Incurable Default (as hereinafter
defined) prior to exercising its right, power and privilege to accelerate the
maturity of the indebtedness evidenced hereby and to declare same to be
immediately due and payable and exercise all other rights and remedies herein
granted or otherwise available to Holder at law or in equity. As used herein,
the term "Monetary Default" shall mean any default which can be cured by the
payment of money including, but not limited to, the payment of principal and
interest due under this Note and the payment of taxes, assessments and
insurance premiums when due as provided in the Security Deed. As used herein,
the term "Non-Monetary Default" shall mean any default which is not a Monetary
Default or an Incurable Default. As used herein, the term "Incurable Default"
shall mean (i) any voluntary or involuntary sale, assignment, encumbering or
transfer in violation of the covenants of Section 30 the Security Deed or (ii)
if Maker or its general partner should make an assignment for the benefit of
creditors, become insolvent, or file a petition in bankruptcy (including but
not limited to, a petition seeking a rearrangement or reorganization).
Savings Clause; Severability:
Notwithstanding any provisions herein or in the Security Deed to the
contrary, the total liability for payments in the nature of interest including
but not limited to Prepayment Premiums, default interest and late fees shall
not exceed the limits imposed by the laws of the State of Georgia or the United
States of America relating to maximum lawful rate of interest. Holder shall
not be entitled to receive, collect or apply, as interest on the indebtedness
evidenced hereby, any amount in excess of the maximum lawful rate of interest
permitted to be charged by applicable law or regulations, as amended or enacted
from time to time. In the event Holder ever receives, collects or applies, as
interest, any such excess, such amount which would be excessive interest shall
be applied to reduce the unpaid principal balance of the indebtedness evidenced
by this Note. If the unpaid principal balance of such indebtedness is paid in
full, any remaining excess shall be forthwith paid to Maker. If any clauses or
provisions herein contained operate or prospectively operate to invalidate this
Note, then such clauses or
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<PAGE> 5
provisions only shall be held for naught, as though not herein contained and
the remainder of this Note shall remain operative and in full force and effect.
Exculpation:
Except as expressly set forth herein, the liability of Maker with
respect to the payment of principal and interest hereunder shall be
"non-recourse" and, accordingly, Holder's source of satisfaction of said
indebtedness and Maker's other obligations hereunder and under the other Loan
Documents shall be limited to the Property and Holder's receipt of the rents,
issues and profits from the Property. Holder shall not seek to procure payment
out of any other assets of Maker, or any person or entity comprising Maker, nor
to seek judgment (except as hereinafter provided) for any sums which are or may
be payable under this Note or under any of the other Loan Documents, or for any
claim or judgment (except as hereinafter provided) for any deficiency remaining
after foreclosure of the Security Deed. Notwithstanding the above, nothing
herein contained shall be deemed to be a release or impairment of the
indebtedness evidenced by this Note or the security therefor intended by the
other Loan Documents, or be deemed to preclude Holder from exercising its
rights to foreclose, or exercise the power of sale in, the Security Deed or to
enforce any of its other rights or remedies under the Loan Documents.
Notwithstanding the foregoing, it is expressly understood and agreed
that the aforesaid limitation on liability shall in no way affect or apply to
Maker's continued personal liability for:
(1) fraud or misrepresentation made in or in connection with this
Note or any other Loan Documents;
(2) failure to pay taxes prior to delinquency or to pay assessments
prior to delinquency, or to pay charges for labor, materials or
other charges which can create liens on any portion of the
Property;
(3) the misapplication of (i) proceeds of insurance covering any
portion of the Property, or (ii) proceeds of the sale or
condemnation of any portion of the Property or (iii) rentals
received by or on behalf of Maker subsequent to the date on
which Holder makes written demand therefor pursuant to any of
the Loan Documents;
(4) causing or permitting waste to occur on, in or about the
Property, and failure to maintain the Property, excepting
ordinary wear and tear;
(5) loss by fire or casualty to the extent not compensated by
insurance proceeds collected by Holder;
(6) the return to Holder of all unearned advance rentals and
security deposits paid by tenants of the Property and not
refunded to or forfeited by such tenants;
(7) the return to Holder of any and all fees paid to Maker by
tenants of the Property which fees permit tenants to terminate
their leases;
(8) the return of, or reimbursement for, all personalty owned by
Maker taken from the Property by or on behalf of Maker, out of
the ordinary course of business, and not replaced by items of
equal or greater value than the original value of the personalty
so removed;
(9) all court costs and reasonable attorneys' fees actually incurred
which are provided for in this Note or in any other Loan
Document;
(10) (i) the removal of any chemical, material or substance, exposure
to which is prohibited, limited, or regulated by any Federal,
State, County, Regional or Local Authority which may or could
pose a hazard to the health and safety of the
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<PAGE> 6
occupants of the Property regardless of the source of
origination; (ii) the restoration of the Property to comply with
all governmental regulations pertaining to hazardous waste found
in, on or under the Property, regardless of the source of
origination; and (iii) any indemnity or other agreement to hold
the Holder harmless from and against any and all losses,
liabilities, damages, injuries, costs and expenses of any and
every kind arising under Paragraph 3 of the Security Deed
including, but not limited to, that certain Environmental
Indemnity Agreement from Maker to Holder of even date herewith.
Maker shall not be liable hereunder if such materials were
placed on the Property subsequent to the date of acquisition of
the Property by foreclosure of the Security Deed by Holder or
acceptance of a deed in lieu thereof, or relinquishment of
control of the Property pursuant to a transfer approved in
writing by Holder; provided that such transferee assumes in
writing all obligations of Maker pertaining to Hazardous
Materials (as defined in the Security Deed) pursuant to the Loan
Documents. Liability under this subparagraph shall extend
beyond the repayment of this Note and compliance with the terms
of the Security Deed, unless at such time Maker provides Holder
with an environmental assessment report acceptable to Holder
showing the Property to be free of Hazardous Materials and not
in violation of Hazardous Waste Laws (as defined in the Security
Deed). Maker shall bear the burden of proof in establishing the
date on which any such Hazardous Materials were placed or
appeared in, on or under the Property.
(11) (a) any and all costs incurred in order to cause the Property to
comply with the applicable accessibility provisions of The Fair
Housing Act of 1988, as the same may now or hereafter be
amended, and any and all rules and regulations that may now or
hereafter be promulgated in connection with said acts, and (b)
any indemnity or other agreement to hold the Holder harmless
from and against any and all losses, liabilities, damages,
injuries, costs and expenses of any and every kind arising under
Paragraph 3 of the Security Deed regarding accessibility for the
disabled or handicapped or under the Accessibility Indemnity
Agreement from Maker to Holder of even date herewith; provided,
however, Maker shall not be liable for compliance with any
accessibility laws that first become effective, or for any
violation of any accessibility laws resulting from alterations
or improvements to the Property that are performed, subsequent
to Holder's actually taking possession of the Property pursuant
to foreclosure of the Security Deed or acceptance of a deed in
lieu thereof, or subsequent to any transfer of ownership of the
Property that has the prior written approval of Holder; provided
that such transferee assumes in writing all obligations of Maker
with respect to compliance with accessibility laws under the
Security Deed and Accessibility Indemnity Agreement.
(12) obligation of Maker for the face amount of any letter of credit
held by Holder and delivered by Maker in connection with the
loan evidenced by this Note in the event Holder is unable to
collect the full amount of any such letter of credit for any
reason.
The obligations of Maker in subparagraphs (1) through (12) above, except
as provided in subparagraphs (10) and (11), shall survive the repayment and
satisfaction of this Note and compliance with the terms of the Security Deed.
Notwithstanding any provisions herein to the contrary, Maker shall
become personally liable for the entire amount due under this Note (including
all principal, interest and other charges) in the event that Maker (i) violates
the covenants set forth in the Security Deed governing the placing of
subordinate financing on the Property or (ii) violates the covenants set forth
in the Security Deed restricting transfers in the Property or transfers of
ownership interests in Maker.
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<PAGE> 7
Reference is made to that certain Guaranty (the "Guaranty") dated of
even date herewith from Roberts Realty Investors, Inc. in favor of Nationwide
Life Insurance Company and West Coast Life Insurance Company which Guaranty is
being executed and delivered in connection with the loan evidenced by this Note
and Real Estate Note A referenced below in favor of Nationwide Life Insurance
Company. Notwithstanding anything in this Note or any other Loan Document to
the contrary, the foregoing provisions of this Exculpation section shall be
inapplicable and of no force and effect until such time as the Guaranty
terminates as provided in paragraph 4.08 of the Guaranty.
Miscellaneous:
As used herein, the phrase "reasonable attorneys' fees" shall mean fees
charged by attorneys selected by Holder based upon such attorneys' then
prevailing hourly rates as opposed to any amount or percentage specified by any
statute then in effect in the State of Georgia.
THE PROVISIONS of this Note shall be governed by the laws of the State
of Georgia and the United States and shall be binding upon the Maker, its
successors and assigns and shall inure to the benefit of Holder, its
successors and assigns. Time is of the essence of this contract.
This Note is one of a series of two notes of even date herewith executed
by the undersigned, both being secured by the Security Deed and other security
instruments in favor of the Holder of this Note. The other such note is
designated Real Estate Note A and has been executed by the undersigned in favor
of Nationwide Life Insurance Company and is in the original principal sum of
Five Million Six Hundred Seventy Thousand and No/100 Dollars ($5,670,000.00).
Real Estate Notes A and B shall be of equal dignity and it is expressly
stipulated and agreed that a default under the terms of either of said Notes
shall constitute an event of default under both of said Notes authorizing the
holders of said Notes to accelerate the maturity of both of said Notes and to
exercise all rights and remedies granted to holders under the Notes, the
Security Deed and any other security instruments securing the payment of the
Notes. It is further stipulated and agreed that notwithstanding the prepayment
privilege contained in this Note, the undersigned shall have no right to prepay
this Note unless the undersigned also elects to prepay Real Estate Note A in
accordance with the prepayment provisions contained therein.
IN WITNESS WHEREOF, the undersigned has executed this Note under seal as
of the day and year first above written.
Roberts Properties Residential, L.P., a
Georgia limited partnership
By: Roberts Realty Investors, Inc.,
its sole General Partner
By: /s/ Charles S. Roberts
----------------------
Name: Charles S. Roberts
Title: President
(CORPORATE SEAL)
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<PAGE> 1
EXHIBIT 10.5.14
DEED TO SECURE DEBT AND SECURITY AGREEMENT
THIS DEED TO SECURE DEBT AND SECURITY AGREEMENT (the "Security Deed"),
executed this 30th day of January, 1997, by ROBERTS PROPERTIES RESIDENTIAL,
L.P., a Georgia limited partnership (the "Borrower"), having its principal
office at 8010 Roswell Road, Suite 120, Atlanta, Georgia 30350. Said Security
Deed is being given to secure the payment of two notes of even date herewith
one of which is payable to the order of NATIONWIDE LIFE INSURANCE COMPANY, an
Ohio corporation, having its principal office at One Nationwide Plaza,
Columbus, Ohio 43215-2220 or at such other place either within or without the
State of Ohio, as Lender may from time to time designate and the other of which
is payable to the order of WEST COAST LIFE INSURANCE COMPANY, a California
corporation, whose address is c/o Nationwide Life Insurance Company, One
Nationwide Plaza, Columbus, Ohio 43215-2220 or at such other place either
within or without the State of Ohio, as Lender may from time to time designate,
and any subsequent holder(s) hereof, (collectively the "Lender").
W I T N E S S E T H
WHEREAS, the Borrower is justly indebted to the Lender in the aggregate
sum of SIX MILLION FOUR HUNDRED TWENTY THOUSAND AND NO/100 DOLLARS
($6,420,000.00), with interest thereon, as set forth in a certain Real Estate
Note A of even date herewith in the sum of FIVE MILLION SIX HUNDRED SEVENTY
THOUSAND AND NO/100 DOLLARS ($5,670,000.00) payable to Nationwide Life
Insurance Company and a certain Real Estate Note B of even date herewith in the
sum of SEVEN HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($750,000.00) payable to
West Coast Life Insurance Company (said Real Estate Notes A and Note B are
hereinafter collectively referred to as the "Note"), which Note shall be due
and payable on or before February 15, 2007 ; and
WHEREAS, the Lender, as a condition precedent to the extension of credit
and the making of the loan evidenced by the Note, has required that the
Borrower provide Lender with security for the repayment of the indebtedness
evidenced by the Note as well as for the performance, observance and discharge
by the Borrower of the various covenants, conditions and agreements made by the
Borrower to, with, in favor of and for the benefit of Lender with respect to
said indebtedness and such security;
NOW THEREFORE, in consideration of and in order to secure the repayment
of the indebtedness evidenced and represented by the Note, together with
interest on such indebtedness, as well as the payment of all other sums of
money secured hereby, as hereinafter provided; and to secure the observance,
performance and discharge by the Borrower of all covenants, conditions and
agreements set forth in the Note, this Security Deed and in all other documents
and instruments executed and delivered by the Borrower to and in favor of
Lender for the purpose of further securing the repayment of the indebtedness
evidenced and represented by the Note; and in order to charge the properties,
interests and rights hereinafter described with such payment, observance,
performance and discharge; and in consideration of the sum of one dollar paid
by Lender to Borrower and other good and valuable considerations, the receipt
and sufficiency of which are hereby acknowledged, the Borrower does hereby
grant, bargain, sell, alien, remise, release, convey, assign, transfer, pledge,
deliver, set over, hypothecate, warrant and confirm unto Lender, its successors
and assigns forever, all of Borrower's right, title and interest in and to the
following described properties, rights and interests and all replacements of,
substitutions for, and additions thereto (all of which are hereinafter together
referred to as the "Property"), to wit:
ALL THAT certain piece, parcel or tract of land or real property of
which the Borrower is now seized and in actual or constructive possession,
situate in Gwinnett County, Georgia more particularly described on Exhibit "A"
attached hereto and by this reference made a part hereof (hereinafter referred
to as the "Real Property");
<PAGE> 2
TOGETHER WITH all buildings, structures and other improvements of any
kind, nature or description now or hereafter erected, constructed, placed or
located upon said Real Property (which buildings, structures and other
improvements are hereinafter sometimes together referred to as the
"Improvements"), including, without limitation, any and all additions to,
substitutions for or replacements of such Improvements;
TOGETHER WITH all minerals, royalties, gas rights, water, water rights,
water stock, flowers, shrubs, lawn plants, crops, trees, timber and other
emblements now or hereafter located on, under or above all or any part of the
Real Property;
TOGETHER WITH all and singular, the tenements, hereditaments, strips and
gores, rights-of-way, easements, privileges and other appurtenances now or
hereafter belonging or in any way appertaining to the Real Property, including,
without limitation, all right, title and interest of the Borrower in any
after-acquired right, title, interest, remainder or reversion, in and to the
beds of any ways, streets, avenues, roads, alleys, passages and public places,
open or proposed, in front of, running through, adjoining or adjacent to said
Real Property (hereinafter sometimes together referred to as "Appurtenances");
TOGETHER WITH any and all leases, contracts, rents, royalties, issues,
revenues, profits, proceeds, income and other benefits, including accounts
receivable, of, accruing to or derived from said Real Property, Improvements
and Appurtenances and any business or enterprise presently situated or
hereafter operated thereon and therewith (hereinafter sometimes together
referred to as the "Rents");
TOGETHER WITH, any and all awards or payments, including interest
thereon, and the right to receive the same, as a result of (a) the exercise of
the right of eminent domain, (b) the alteration of the grade of any street, or
(c) any other injury to, taking of, or decrease in the value of, the Property
to the extent of all amounts which may be secured by this Security Deed at the
date of any such award or payment including but not limited to Reasonable
Attorneys' Fees (as hereinafter defined), costs and disbursements incurred by
the Lender in connection with the collection of such award or payment;
AS WELL AS all of the right, title and interest of Borrower in and to
all fixtures, goods, chattels, construction materials, furniture, furnishings,
equipment, machinery, apparatus, appliances, and other items of personal
property, whether tangible or intangible, of any kind, nature or description,
whether now owned or hereafter acquired by the Borrower, including, without
limitation, improvements including furnaces, steam boilers, hot-water boilers,
oil burners, pipes, radiators, air-conditioning and sprinkler systems, gas and
electric fixtures, carpets, rugs, shades, awnings, screens, elevators, motors,
dynamos, cabinets, and all other furnishings, tools, equipment and machinery,
appliances, building supplies, materials, general intangibles, contract rights,
accounts receivable, business records, fittings and fixtures of every kind,
which is, are or shall hereafter be located upon, attached, affixed to or used
or useful, either directly or indirectly, in connection with the complete and
comfortable use, occupancy and operation of said Real Property and Improvements
as an apartment complex, or any other business, enterprise or operation as may
hereafter be conducted upon or with said Real Property, Improvements and
Appurtenances, including, without limitation, any and all licenses, permits or
franchises, used or required in connection with such use, occupancy or
operation, as well as the proceeds thereof or therefrom regardless of form
(hereinafter sometimes together referred to as "Fixtures and Personal
Property," which term expressly excludes any toxic waste or substances deemed
hazardous under federal, state or local laws). The Borrower hereby expressly
grants to Lender a present security interest in and a lien and encumbrance upon
the Fixtures and Personal Property;
TO HAVE AND HOLD the foregoing Property, and the rights hereby granted
for the use and benefit of the Lender and its successors and assigns in fee
simple forever;
AND the Borrower covenants and warrants with and to the Lender that the
Borrower is indefeasibly seized of the Property and has good right, full power,
and lawful authority to convey and encumber all of the same as aforesaid; that
the Borrower hereby fully warrants the title to the Property and will defend
the same and the validity and priority of the lien and encumbrance of this
Security Deed against the lawful claims of all persons whomsoever, subject only
to the Permitted Exceptions; and the Borrower further warrants that the
Property is free and clear of all liens and encumbrances of any kind, nature or
description, save and except only (with respect to said Real Property,
Improvements and
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<PAGE> 3
Appurtenances and Fixtures and Personal Property) for real property taxes for
years subsequent to 1996 and those matters set forth in Exhibit "B" attached
hereto and by this reference made a part hereof (hereinafter referred to as the
"Permitted Exceptions").
PROVIDED ALWAYS, however, that if the Borrower shall pay unto the Lender
the indebtedness evidenced by the Note, and if the Borrower shall duly,
promptly and fully perform, discharge, execute, effect, complete and comply
with and abide by each and every one of the agreements, conditions and
covenants of the Note, this Security Deed and all other documents and
instruments executed as further evidence of or as security for the indebtedness
secured hereby, then this Security Deed and the estates and interests hereby
granted and created shall cease, terminate and be null and void, and shall be
discharged of record at the expense of Borrower, which expense Borrower agrees
to pay.
This conveyance is intended (i) to constitute a security agreement as
required under the Uniform Commercial Code of Georgia and (ii) to operate and
is to be construed as a deed passing the title to the Property to the Lender
and is made under those provisions of the existing laws of the State of Georgia
relating to deeds to secure debt, and not as a mortgage, and is given to secure
(a) the debt evidenced by the Note (which is incorporated herein by reference
and to which reference is made for all purposes, and which Borrower
acknowledges evidences an indebtedness arising from a business loan from Lender
to Borrower for the sole purpose of permitting Borrower to carry on its
business) in the aggregate principal face amount of Six Million Four Hundred
Twenty Thousand and No/100 Dollars ($6,420,000.00), or so much thereof as may
have been advanced and remain outstanding from time to time, with interest at
the rate of 7.14% percent per annum; (b) any and all renewals and extensions of
the Note; (c) each and every covenant, obligation and undertaking of the
Borrower in this Security Deed or in that certain Assignment of Leases, Rents
and Profits of even date herewith from Borrower to Lender; and (d) any and all
other indebtedness which may hereafter be owing by the Borrower to the Lender
which is incurred or created by advances made by the Lender to or on behalf of
or for the account of the Borrower in accordance with the provisions of this
Security Deed or otherwise permitted by the provisions of this Security Deed.
Principal and interest shall be payable in installments the last of which
shall, unless the maturity thereof is accelerated by the holder of the Note or
the principal amount of the Note is prepaid, be due and payable on February 15,
2007.
The Borrower, for the benefit of the Lender, and is successors and
assigns, does hereby expressly covenant and agree:
1. PAYMENT OF PRINCIPAL AND INTEREST. To pay the principal of the
indebtedness evidenced by the Note, together with all interest thereon, in
accordance with the terms of the Note, promptly at the times, at the place and
in the manner that said principal and interest shall become due, and to
promptly and punctually pay all other sums required to be paid by the Borrower
pursuant to the terms of the Note, this Security Deed and all other documents
and instruments executed as further evidence of, as additional security for or
in connection with the indebtedness evidenced by the Note and secured by this
Security Deed (hereinafter together referred to as the "Loan Documents").
2. PERFORMANCE OF OTHER OBLIGATIONS. To perform, comply with and
abide by each and every one of the covenants, agreements and conditions
contained and set forth in the Note, this Security Deed and the other Loan
Documents and to comply with all laws, ordinances, rules, regulations and
orders of governmental authorities now or hereafter affecting the Property or
requiring any alterations or improvements to be made thereon, and perform all
of its obligations under any covenant, condition, restriction or agreement of
record affecting the Property and to insure that at all times the Property
constitutes one or more legal lots capable of being conveyed without violation
of any subdivision or platting laws, ordinances, rules or regulations, or other
laws relating to the division or separation of real property.
3. PRESERVATION AND MAINTENANCE OF PROPERTY; ACCESSIBILITY;
HAZARDOUS WASTE. To keep all Improvements now existing or hereafter erected on
the Real Property in good order and repair and not to do or permit any waste,
impairment or deterioration thereof or thereon, nor to alter, remove or
demolish any of the Improvements or any Fixtures or Personal Property attached
or appertaining thereto, without the prior written consent of the Lender, nor
to initiate, join in or consent to any change in any private restrictive
covenant, zoning ordinance or other public or
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<PAGE> 4
private restrictions limiting or defining the uses which may be made of the
Property or any part thereof, nor to do or permit any other act whereby the
Property shall become less valuable, be used for purposes contrary to
applicable law or be used in any manner which will increase the premium for or
result in a termination or cancellation of the insurance hereinafter required
to be kept and maintained on the Property. In furtherance of, and not by way
of limitation upon the foregoing covenant, Borrower shall effect such repairs
as the Lender may reasonably require, and from time to time make all needful
and proper replacements so that said Improvements, Appurtenances, Fixtures and
Personal Property will, at all times, be in good condition, fit and proper for
the respective purposes for which they were originally erected or installed.
Borrower at all times shall maintain the Property in full compliance with all
applicable provisions of all federal, state or municipal laws, ordinances,
rules and regulations currently in existence or hereafter enacted or rendered
governing accessibility for the disabled, including but not limited to The
Architectural Barriers Act of 1988, The Rehabilitation Act of 1973, The Fair
Housing Act of 1988 and The Americans With Disabilities Act of 1990
(hereinafter, collectively the "Accessibility Laws"). Borrower at all times
shall keep the Property and ground water of the Property free of "Hazardous
Materials" (as hereinafter defined). Borrower shall not permit its tenants or
any third party requiring the consent of Borrower to enter the Property, to
use, generate, manufacture, store, release, threaten release, or dispose of
Hazardous Materials in, on or about the Property or the ground water of the
Property in violation of any federal, state or municipal law, decision,
statute, rule, ordinance or regulation currently in evidence or hereinafter
enacted or rendered ("Hazardous Waste Laws"). Borrower shall give Lender
prompt written notice of any claim by any person, entity, or governmental
agency that a significant release or disposal of Hazardous Materials has
occurred on the Property. The Borrower, through its professional engineers and
at its cost, shall promptly and thoroughly investigate suspected Hazardous
Materials contamination of the Property. Borrower shall forthwith remove,
repair, clean up, and/or detoxify any Hazardous Materials from the Property or
the ground water of the Property whether or not such actions are required by
law, and whether or not Borrower was responsible for the existence of the
Hazardous Materials in, on or about the Property or the ground water of the
Property. "Hazardous Materials" shall include but not be limited to substances
defined as "hazardous substances," "hazardous materials," or "toxic
substances," in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Sec. 9601, et. seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. 1801 et. seq.; the Resources
Conservation and Recovery Act, 42 U.S.C. Sec. 6901 et. seq.; the Toxic
Substances Control Act, 15 U.S.C. Sec. 2601 et. seq.; the Clean Air Act, 42
U.S.C. Sec. 7401 et. seq.; and the Clean Water Act, 33 U.S.C. Sec. 1251 et.
seq.
Borrower hereby agrees to indemnify Lender and hold Lender harmless from
and against any and all losses, liabilities, damages, injuries, costs, expenses
and claims of any and every kind whatsoever paid, incurred or suffered by or
asserted against Lender for, with respect to, or as a direct or indirect result
of the non-compliance of the Property with the Accessibility Laws and/or the
presence on, under or about the Property, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or release from, the Property of any
Hazardous Materials (including, without limitation, any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising under any
Hazardous Waste Laws, regardless of whether or not caused by, or within the
control of, Borrower).
Lender, and/or its agents, shall have the right and shall be permitted,
but shall not be required, at all reasonable times, to enter upon and inspect
the Property to insure compliance with the foregoing covenants and any and all
other covenants, agreements and conditions set forth in this Security Deed.
Liability under this Paragraph of this Security Deed shall extend beyond
repayment of the Note and compliance with the terms of this Security Deed;
provided, however, Borrower shall have no liability under this Paragraph 3 as
to Hazardous Materials: (a) if the Property becomes contaminated subsequent to
Lender's acquisition of the Property by foreclosure, acceptance by Lender of a
deed in lieu thereof, or subsequent to any transfer of ownership of the
Property which was approved or authorized by Lender in writing, provided that
such transferee assumes all obligations of Borrower with respect to Hazardous
Materials pursuant to this Security Deed; or (b) at such time Borrower provides
Lender an environmental assessment report acceptable to Lender showing the
Property to be free of Hazardous Materials and not in violation of Hazardous
Waste Laws. The burden of proof under this Paragraph with regard to
establishing the date upon which Hazardous Material was placed or appeared in,
on or under the Property shall be upon Borrower.
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<PAGE> 5
4. PAYMENT OF TAXES, ASSESSMENTS AND OTHER CHARGES. To pay all and
singular such taxes, assessments and public charges as are already levied or
assessed or that may be hereafter levied or assessed upon or against the
Property, when the same shall become due and payable according to law, before
the same become delinquent, and before any interest or penalty shall attach
thereto, and to deliver official receipts evidencing the payment of the same to
the Lender not later than thirty (30) days following the payment of the same.
Borrower shall have the right to contest, in good faith, the proposed
assessment of ad valorem taxes or special assessments by governmental
authorities having jurisdiction of the Property; provided, however, the
Borrower shall give written notice thereof to Lender and Lender may, in its
sole discretion, require Borrower to post a bond or other collateral
satisfactory to Lender in connection with any such action by Borrower; provided
further, however, that so long as there is no default hereunder (which is not
cured within any applicable cure period, if any) Lender agrees not to require
Borrower to post a bond or other collateral if (i) Borrower is appealing ad
valorem taxes in the normal course of Borrower's business and (ii) no action is
taken to commence foreclosure procedures on the Property or any portion thereof
and (iii) the collateral pledged to Lender to secure the loan evidenced by the
Note and this Security Deed is not otherwise jeopardized in Lender's sole
opinion.
5. PAYMENT OF LIENS, CHARGES AND ENCUMBRANCES. To immediately pay
and discharge from time to time when the same shall become due all lawful
claims and demands of mechanics, materialmen, laborers and others which, if
unpaid, might result in, or permit the creation of, a lien, charge or
encumbrance upon the Property or any part thereof, or on the rents, issues,
income, revenues, profits and proceeds arising therefrom and, in general, to do
or cause to be done everything necessary so that the lien of this Security Deed
shall be fully preserved at the cost of the Borrower, without expense to the
Lender. Borrower shall have the right to contest, in good faith and in
accordance with applicable laws and procedures, mechanic's and materialmen's
liens filed against the Property; provided, however, that Borrower shall give
written notice thereof to Lender, and Lender may at its sole option require
Borrower to post a bond or other collateral satisfactory to Lender (and
acceptable to the title company insuring the Security Deed) in connection with
any such action by Borrower.
6. PAYMENT OF JUNIOR ENCUMBRANCES. To permit no default or
delinquency under any other lien, imposition, charge or encumbrance against the
Property, even though junior and inferior to the lien of this Security Deed;
provided, however, the foregoing shall not be construed to permit any other
lien or encumbrance against the Property.
7. PAYMENT OF MORTGAGE TAXES. To pay any and all taxes which may
be levied or assessed directly or indirectly upon the Note and this Security
Deed (except for income taxes payable by the Lender) or the debt secured
hereby, without regard to any law which may be hereafter enacted imposing
payment of the whole or any part thereof upon the Lender, its successors or
assigns. Upon violation of this agreement to pay such taxes levied or assessed
upon the Note and this Security Deed, or upon the rendering by any court of
competent jurisdiction of a decision that such an agreement by the Borrower is
legally inoperative, or if any court of competent jurisdiction shall render a
decision that the rate of said tax when added to the rate of interest provided
for in the Note exceeds the then maximum rate of interest allowed by law, then,
and in any such event, the debt hereby secured shall, at the option of the
Lender, its successors or assigns, become immediately due and payable, anything
contained in this Security Deed or in the Note secured hereby notwithstanding,
without the imposition of a Prepayment Premium (as defined in the Note). The
additional amounts which may become due and payable hereunder shall be part of
the debt secured by this Security Deed.
8. HAZARD INSURANCE. To continuously, during the term hereof, keep
the Improvements and the Fixtures and Personal Property now or hereafter
existing, erected, installed and located in or upon the Real Property insured
with extended coverage insurance against loss or damage resulting from fire,
windstorm, flood (but only if any of the Improvements are located in a flood
plain), sinkhole and such other hazards, casualties, contingencies and perils,
including, without limitation, other risks insured against by persons operating
like properties in the locality of the Property, on such forms as may be
required by Lender, covering the Property in the amount of the full replacement
cost thereof (provided that Borrower provides a replacement cost endorsement
satisfactory to Lender; otherwise, the amount of such insurance shall not be
less than the difference between the outstanding balance of the Note and eighty
(80%) percent of the then appraised value of the Land and Improvements as
determined
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<PAGE> 6
by Lender in its sole discretion), and covering all loss or abatement of rental
or other income without provision for co-insurance in an amount equal to the
scheduled rental income of the Property for a period of twelve (12) months, or
if applicable, business interruption insurance in an amount sufficient to pay
debt service, operating expenses, taxes and insurance for the Property for
twelve (12) months, and covering loss by flood (if the Property lies in a
specified Flood Hazard Area as designated on the Department of Housing and
Urban Development Maps, or other flood prone designation) in an amount equal to
the outstanding principal balance of the indebtedness secured hereby or such
other amount of coverage as approved by Lender. All such insurance shall be
carried with such company or companies as may be acceptable to the Lender,
which company or companies shall have a current rating equivalent to at least
A:VIII as shown in Best's Key Rating Guide, and the original policy or policies
and renewals thereof (or duplicate originals or certified copies thereof),
together with receipts evidencing payment of the premium therefor, shall be
deposited with, held by and are hereby assigned to Lender as additional
security for the indebtedness secured hereby. Each such policy of insurance
shall contain a non-contributing loss payable clause in favor of and in form
acceptable to Lender and shall provide for not less than thirty (30) days'
prior written notice to Lender of intent to modify, cancel or terminate or the
expiration of such policies of insurance. Not less than fifteen (15) days
prior to the expiration dates of each policy required of the Borrower
hereunder, Borrower will deliver to Lender a renewal policy or policies or a
certified copy thereof marked "premium paid" or accompanied by other evidence
of payment and renewal satisfactory to Lender (Lender agrees that a binder for
a renewal policy accompanied by a copy of an invoice for the premium associated
therewith (which may show that the premium can be paid in quarterly
installments) shall be satisfactory evidence of payment and renewal provided
that Borrower delivers to Lender evidence of the payment of such premium on or
before the date the premium (or installments thereof, if applicable) is due);
and in the event of foreclosure of or exercise of the power of sale in this
Security Deed, any purchaser or purchasers of the Property shall succeed to all
rights of the Borrower, including any rights to unearned premiums, in and to
all insurance policies assigned and delivered to Lender pursuant to the
provisions of this Paragraph 8.
In the event of loss by reason of hazards, casualties, contingencies or
perils for which insurance has been required by the Lender hereunder, the
Borrower shall give immediate notice thereof to the Lender, and the Lender is
hereby irrevocably appointed attorney-in-fact coupled with an interest, for the
Borrower to, at Lender's option, make proof of loss if not made promptly by the
Borrower, and each insurance company concerned is hereby notified, authorized
and directed to make payment for such loss directly to the Lender, instead of
to the Borrower and Lender jointly, and Borrower hereby authorizes Lender to
adjust and compromise any losses for which insurance proceeds are payable under
any of the aforesaid insurance policies and, after deducting the costs of
collection, to apply the proceeds of such insurance, at its option, as follows:
(a) to the restoration or repair of the insured Improvements, Fixtures and
Personal Property, provided that, in the opinion and sole discretion of the
Lender, such restoration or repair is reasonably practical and, provided
further, that, in the opinion and sole discretion of the Lender, either: (i)
the insurance proceeds so collected are sufficient to cover the cost of such
restoration or repair of the damage or destruction with respect to which such
proceeds were paid, or (ii) the insurance proceeds so collected are not
sufficient alone to cover the cost of such restoration or repair, but are
sufficient therefor when taken together with funds provided and made available
by the Borrower from other sources; in which event the Lender shall make such
insurance proceeds available to the Borrower for the purpose of effecting such
restoration or repair; but Lender shall not be obligated to see to the proper
application of such insurance proceeds nor shall the amount of funds so
released or used be deemed to be payment of or on account of the indebtedness
secured hereby, or (b) to the reduction of the outstanding principal
indebtedness secured hereby, notwithstanding the fact that the amount owing
thereon may not then be due and payable or that said indebtedness is otherwise
adequately secured, in which event such proceeds shall be applied at par
against the indebtedness secured hereby and the monthly payment due on account
of such indebtedness shall be adjusted accordingly. None of such actions taken
by the Lender shall be deemed to be or result in a waiver or impairment of any
equity, lien or right of the Lender under and by virtue of this Security Deed,
nor will the application of such insurance proceeds to the reduction of the
indebtedness serve to cure any default in the payment thereof. In the event of
foreclosure of this Security Deed or other transfer of title to the Property in
extinguishment of the indebtedness secured hereby, all right, title and
interest of the Borrower in and to any insurance policies then in force and
insurance proceeds then payable shall pass to the purchaser or grantee.
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<PAGE> 7
In case of Borrower's failure to keep the Property so insured, Lender or
its assigns, may, at its option (but shall not be required to) effect such
insurance at Borrower's expense.
Notwithstanding anything set forth in this Paragraph 8 to the contrary,
in the event of loss or damage to the Property by fire or other casualty for
which insurance has been required by Lender and provided by Borrower, and the
amount of such loss or damage does not exceed fifty percent (50%) of the
outstanding principal balance of the Note, the Lender hereby agrees to allow
the proceeds of insurance to be used for restoration of the Property and to
release such insurance proceeds to Borrower as such restoration progresses,
provided:
(a) Borrower is not in default under any of the terms,
covenants and conditions of this Security Deed, the
Note or any of the Loan Documents evidencing or
securing the Note;
(b) [intentionally omitted]
(c) The plans and specifications for restoration of the
Property are approved in writing by the Lender;
(d) At all times during such restoration, Borrower has
deposited with Lender funds which, when added to such
insurance proceeds, are sufficient to complete the
restoration of the Property as certified by an
architect approved by Lender in accordance with the
approved plans and specifications and all applicable
building codes and zoning ordinances and regulations,
and further, that the sufficiency of such funds is
certified to Lender by Lender's inspecting
architect/engineer;
(e) Borrower provides payment and performance bonds and
builder's all risk insurance for such restoration in
form and amount acceptable to Lender;
(f) The insurer under such policies of fire or other
casualty insurance does not assert any defense to
payment under such policies against Lender, Borrower or
any tenant of the Property;
(g) The insurance proceeds held by Lender shall be
disbursed no more often than once per month and in not
more than five (5) increments of amounts of not less
than FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00)
each (except the final disbursement of such proceeds
which may be in an amount less than FIFTY THOUSAND AND
NO/100 DOLLARS ($50,000.00). Lender's obligation to
make any such disbursement shall be conditioned upon
Lender's receipt of a written certification from the
Lender's inspecting architect/engineer that all
construction and work for which such disbursement is
requested has been completed in accordance with the
approved plans and specifications and all applicable
building codes, zoning ordinances and all other local
or federal governmental regulations and, further, that
Borrower has deposited with Lender sufficient funds to
complete such restoration in accordance with
subparagraph (d) above;
(h) Lender shall have the option, upon the completion of
such restoration of the Property, to apply any surplus
insurance proceeds remaining after the completion of
such restoration, at par, to the reduction of the
indebtedness secured by this Security Deed;
notwithstanding the fact that the amount owing thereon
may not then be due and payable or that said
indebtedness is otherwise adequately secured; and
(i) Lender shall be entitled to require and to impose such
other conditions to the release of such insurance
proceeds for restoration of the Property as would be
customarily or reasonably required and imposed by a
construction lender for a project of similar nature and
cost.
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<PAGE> 8
9. LIABILITY INSURANCE. To carry and maintain such comprehensive
general liability insurance as may from time to time be required by Lender,
taking into consideration the type of property insured and the corresponding
liability exposure, on forms, in amounts and with such company or companies as
may be acceptable to Lender. All such comprehensive general liability
insurance shall be carried with a company or companies as may be acceptable to
Lender, which company or companies shall have a current rating equivalent to at
least A:VIII as shown in Best's Key Rating Guide. Such policy or policies of
insurance shall name Lender as an additional insured and shall provide for not
less than thirty (30) days' prior written notice to Lender of modification,
cancellation, termination or expiration of such policy or policies of
insurance. Not less than fifteen (15) days prior to the expiration dates of
such policy or policies, Borrower will deliver to Lender a renewal policy or
policies or a certified copy thereof marked "premium paid" or accompanied by
other evidence of payment and renewal satisfactory to Lender (Lender agrees
that a binder for a renewal policy accompanied by a copy of an invoice for the
premium associated therewith (which may show that the premium can be paid in
quarterly installments) shall be satisfactory evidence of payment and renewal
provided that Borrower delivers to Lender evidence of the payment of such
premium on or before the date the premium (or installments thereof, if
applicable) is due). The original policy or policies and all renewals thereof
(or duplicate originals or certified copies thereof), together with receipts
evidencing payment of the premium therefor, shall be deposited with, held by
and are hereby assigned to Lender as additional security for the indebtedness
secured hereby.
10. COMPLIANCE WITH LAWS. To observe, abide by and comply with all
statutes ordinances, laws, orders, requirements or decrees relating to the
Property enacted, promulgated or issued by any federal, state, county or
municipal authority or any agency or subdivision thereof having jurisdiction
over the Borrower or the Property, and to observe and comply with all
conditions and requirements necessary to preserve and extend any and all
rights, licenses, permits (including, but not limited to, zoning variances,
special exceptions and nonconforming uses), privileges, franchises and
concessions which are applicable to the Property or which have been granted to
or contracted for by Borrower in connection with any existing, presently
contemplated or future use of the Property.
11. MAINTENANCE OF PERMITS. To obtain, keep and constantly maintain
in full force and effect during the entire term of this Security Deed, all
certificates, licenses and permits necessary to keep the Property operating as
an apartment complex project, and, except as specifically provided for in this
mortgage, not to assign, transfer or in any manner change such certificates,
licenses or permits without first receiving the written consent of the Lender.
12. OBLIGATIONS OF BORROWER AS LESSOR. To perform every obligation
of the Borrower (as the lessor) and enforce every obligation of the lessee in
any and every lease or other occupancy agreement affecting the Property or any
part thereof (hereinafter referred to as the "Occupancy Leases"), and not to
modify, alter, waive or cancel any such Occupancy Leases or any part thereof,
nor collect for more than thirty (30) days in advance any rents that may be
collectible under any such Occupancy Leases and, except as provided for in this
Security Deed, not to assign any such Occupancy Lease or any such rents to any
party other than Lender, without the prior written consent of the Lender. In
the event of default under any such Occupancy Lease by reason of failure of the
Borrower to keep or perform one or more of the covenants, agreements or
conditions thereof, the Lender is hereby authorized and empowered, and may, at
its sole option, remedy, remove or cure any such default, and further, Lender
may, at its sole option and in its sole discretion, but without obligation to
do so, pay any sum of money deemed necessary by it for the performance of said
covenants, agreements and conditions, or for the curing or removal of any such
default, and incur all expenses and obligations which it may consider necessary
or reasonable in connection therewith, and Borrower shall repay on demand all
such sums so paid or advanced by Lender together with interest thereon until
paid at the lesser of either (i) the highest rate then allowed by the laws of
the State of Georgia, or, if controlling, the laws of the United States, or
(ii) the then- applicable interest rate of the Note plus five hundred (500)
basis points; all of such sums, if unpaid, shall be added to and become part of
the indebtedness secured hereby. All such Occupancy Leases hereafter made
shall be subject to the approval of Lender and (a) shall be at competitive
market rental rates then prevailing in the geographic area for apartment
complexes comparable to the Property and (b) at Lender's option shall be
superior or subordinate in all respects to the lien of this Security Deed.
Provided, however, that the Lender shall not require approval in advance of any
Occupancy Leases which conform to the
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<PAGE> 9
Borrower's Form Lease (as hereinafter defined) as previously approved by
Lender, except as set forth below. Neither the right nor the exercise of the
right herein granted unto Lender to keep or perform any such covenants,
agreements, or conditions as aforesaid shall preclude Lender from exercising
its option to cause the whole indebtedness secured hereby to become
immediately, but subject to the notice and cure period in Paragraph 23, due and
payable by reason of Borrower's default in keeping or performing any such
covenants, agreements or conditions as hereinabove required.
Lender has heretofore approved a form of Occupancy Lease to be used by
Borrower in connection with the Property (hereinafter referred to as the "Form
Lease"). Borrower shall not, without the prior written consent of the Lender,
modify or alter the Form Lease in any material respect. In addition Borrower
shall not, without the prior written consent of Lender, surrender or terminate
(except in the ordinary course of business), either orally or in writing, any
Occupancy Lease now existing or hereafter made for all or part of the Property,
permit an assignment or sublease of any such Occupancy Lease, or request or
consent to the subordination of any Occupancy Lease to any lien subordinate to
this Security Deed. Upon request, the Borrower shall furnish the Lender with
copies of all executed Occupancy Leases of all or any part of the Property now
existing or hereafter made, and Borrower shall assign to the Lender (which
assignment shall be in form and content acceptable to Lender), as additional
security for the Note, all Occupancy Leases now existing or hereafter made of
all or any part of the Property.
13. MAINTENANCE OF PARKING AND ACCESS; PROHIBITION AGAINST
ALTERATION. To construct, keep and constantly maintain, as the case may be,
all curbs, drives, parking areas and the number of parking spaces heretofore
approved by the Lender or heretofore or hereafter required by any governmental
body, agency or authority having jurisdiction over the Borrower or the
Property, and not to alter, erect, build or construct upon any portion of the
Property, any building or structure of any kind whatsoever, the erection,
building or construction of which has not been previously approved by Lender in
writing, which approval shall be at the sole discretion of Lender. To the
extent any alterations or improvements are required to be approved by any
tenants of the Property, no such alterations or improvements shall be made
unless and until such consent has been obtained in writing and a copy thereof
furnished to Lender.
14. EXECUTION OF ADDITIONAL DOCUMENTS. To do, execute, acknowledge
and deliver all and every such further acts, deeds, conveyances, mortgages,
deeds to secure debt, assignments, notices of assignments, transfers,
assurances and other instruments, including security agreements and financing
statements, as the Lender shall from time to time require for the purpose of
better assuring, conveying, assigning, transferring and confirming unto the
Lender the Property and rights hereby encumbered, created, conveyed, assigned
or intended now or hereafter so to be encumbered, created, conveyed or assigned
or which the Borrower may now be or may hereafter become bound to encumber,
create, convey, or assign to the Lender, or for the purpose of carrying out the
intention or facilitating the performance of the terms of this Security Deed,
or for filing, registering or recording this Security Deed, and to pay all
filing, registration or recording fees and all taxes, costs and other expenses,
including Reasonable Attorneys' Fees (as defined in Paragraph 47), incident to
the preparation, execution, acknowledgment, delivery, and recordation of any of
the same.
15. AFTER-ACQUIRED PROPERTY SECURED. It is understood and agreed
that all right, title and interest of the Borrower in and to all extensions,
improvements, betterments, renewals, substitutions and replacements of, and all
additions and appurtenances to, the Property hereinabove described, hereafter
acquired by or released to the Borrower, or constructed, assembled or placed by
the Borrower on the Real Property, and all conversions of the security
constituted thereby, immediately upon such acquisition, release, construction,
assembling, placement or conversion, as the case may be, and in each such case,
without any further mortgage, encumbrance, conveyance, assignment or other act
by the Borrower, shall become subject to the lien and security title of this
Security Deed as fully and completely and with the same effect as though now
owned by the Borrower and specifically described herein, but at any and all
times the Borrower will execute and deliver to the Lender any and all such
further assurances, mortgages, deeds to secure debt, conveyances, or
assignments thereof or security interests therein as the Lender may reasonably
require for the purpose of expressly and specifically subjecting the same to
the lien of this Security Deed.
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<PAGE> 10
16. PAYMENTS BY LENDER ON BEHALF OF BORROWER. Should the Borrower
fail to make payment of any taxes, assessments or public charges on or with
respect to the Property before the same shall become delinquent, or shall fail
to make payment of any insurance premiums or other charges, impositions or
liens herein or elsewhere required to be paid by the Borrower, then the Lender,
at its sole option, but without obligation to do so, may make payment or
payments of the same and also may redeem the Property from tax sale without any
obligation to inquire into the validity of such taxes, assessments and tax
sales. In the case of any such payment by the Lender, the Borrower agrees to
reimburse the Lender, upon demand therefor, the amount of such payment and of
any fees and expenses attendant in making the same, together with interest
thereon at the lesser of either (i) the highest rate then allowed by the laws
of the State of Georgia, or if controlling, the laws of the United States, or
(ii) the then applicable interest rate of the Note plus five hundred (500)
basis points; and until paid, such amounts and interest shall be added to and
become part of the debt secured hereby to the same extent that this Security
Deed secures the repayment of the indebtedness evidenced by the Note. In
making payments hereby authorized by the provisions of this Paragraph 16; the
Lender may do so whenever, in its sole judgment and discretion, such advance or
advances are necessary or desirable to protect the full security intended to be
afforded by this instrument. Neither the right nor the exercise of the right
herein granted unto the Lender to make any such payments as aforesaid shall
preclude the Lender from exercising its option to cause the whole indebtedness
secured hereby to become immediately due and payable by reason of the
Borrower's default in making such payments as hereinabove required.
17. FUNDS HELD BY LENDER FOR TAXES, INSURANCE PREMIUMS, ASSESSMENTS
AND OTHER CHARGES. In order to more fully protect the security of this
Security Deed, Borrower shall deposit with the Lender, together with and in
addition to each monthly payment due on account of the indebtedness evidenced
by the Note, an amount equal to one-twelfth (1/12) of the annual total of such
taxes, insurance premiums, assessments and charges (all as estimated by the
Lender in its sole discretion) so that, at least thirty (30) days prior to the
due date thereof, Lender shall be able to pay in full all such taxes, insurance
premiums, assessments and other charges as the same shall become due, and the
Lender may hold without paying interest and commingle with its general funds
the sums so deposited and apply the same to the payment of said taxes,
insurance premiums, assessments or other charges as they become due and
payable. If at any time the funds so held by Lender are insufficient to pay
such taxes, insurance premiums, assessments or other charges as they become due
and payable the Borrower shall immediately, upon notice and demand by Lender,
deposit with Lender the amount of such deficiency, and the failure on the part
of the Borrower to do so shall entitle the Lender, at its sole option, to make
such payments in accordance with its rights and pursuant to the conditions
elsewhere provided in this Security Deed. Notwithstanding any default under
this Security Deed, Lender agrees to apply any funds deposited by Borrower and
being held by Lender pursuant to this paragraph for the payment of taxes toward
the payment of taxes which are then a lien on the Property. Thereafter, at its
sole option, Lender may apply any funds so held by it pursuant to this
Paragraph 17 toward the payment of the indebtedness secured hereby,
notwithstanding the fact that the amount owing thereon may not then be due and
payable or that said indebtedness is otherwise adequately secured in such order
and manner of application as Lender may elect.
18. CONDEMNATION; EMINENT DOMAIN. All awards and other compensation
heretofore or hereafter made to Borrower and all subsequent owners of the
Property in any taking by eminent domain or recovery for inverse condemnation,
either permanent or temporary, of all or any part of the Property or any
easement or any appurtenance thereto, including severance and consequential
damages and change in grade of any street, are hereby assigned to Lender, and
Borrower hereby irrevocably appoints Lender as its attorney-in-fact, coupled
with an interest, and authorizes, directs and empowers such attorney, at the
option of said attorney, on behalf of Borrower, its successors and assigns, to
adjust or compromise the claim for any such award and alone to collect and
receive the proceeds thereof, to give proper receipts and acquittances therefor
and, after deducting any expenses of collection, at its sole option:
(i) to apply the net proceeds as a credit upon the outstanding
principal balance of the indebtedness secured hereby, as
selected by Lender, notwithstanding the fact that the amount
owing thereon may not then be due and payable or that the
indebtedness is otherwise adequately secured. In the event
Lender applies such awards to the reduction of the outstanding
indebtedness evidenced by the Note, such proceeds shall be
applied at par
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<PAGE> 11
and the monthly installments due and payable under the Note
shall be adjusted accordingly; however no such application shall
serve to cure an existing default in the payment of the Note; or
(ii) to hold said proceeds without any allowance of interest and make
the same available for restoration or rebuilding the Property.
In the event that Lender elects to make said proceeds available
to reimburse Borrower for the cost of the restoration or
rebuilding of the buildings or improvements on the Property,
such proceeds shall be made available in the manner and under
the conditions that Lender may require as provided under
Paragraph 8 hereof. If the proceeds are made available by
Lender to reimburse Borrower for the cost of said restoration or
rebuilding, any surplus which may remain out of said award after
payment of such cost of restoration or rebuilding shall be
applied on account of the indebtedness secured hereby at par
notwithstanding the fact that the amount owing thereon may not
then be due and payable or that said indebtedness is otherwise
adequately secured.
Borrower further covenants and agrees to give Lender immediate notice of
the actual or threatened commencement of any proceedings under eminent domain
and to deliver to Lender copies of any and all papers served in connection with
any proceedings. Borrower further covenants and agrees to make, execute and
deliver to Lender, at any time or times, upon request, free, clear and
discharged of any encumbrance of any kind whatsoever, any and all further
assignments and/or other instruments deemed necessary by Lender for the purpose
of validly and sufficiently assigning all such awards and other compensation
heretofore or hereafter made to Lender (including the assignment of any award
from the United States government at any time after the allowance of the claim
therefor, the ascertainment of the amount thereof and the issuance of the
warrant for payment thereof).
It shall be a default hereunder if any part of any of the Improvements
situated on the Property shall be condemned by any governmental authority
having jurisdiction, or if lands constituting a portion of the Property shall
be condemned by any governmental authority having jurisdiction, such that the
Property is in violation of applicable parking, zoning or other ordinances, or
fails to comply with the terms of the Occupancy Leases, and in either of said
events, Lender shall be entitled to exercise any or all remedies provided or
referenced in this Security Deed.
19. COSTS OF COLLECTION. In the event that the Note secured hereby
is placed in the hands of an attorney for collection, or in the event that the
Lender shall become a party either as plaintiff or as defendant, in any action,
suit, appeal or legal proceeding (including, without limitation, foreclosure,
condemnation, bankruptcy, administrative proceedings or any proceeding wherein
proof of claim is by law required to be filed), hearing, motion or application
before any court or administrative body in relation to the Property or the lien
and security interest granted or created hereby or herein, or for the recovery
or protection of said indebtedness or the Property, or for the foreclosure of
this Security Deed, the Borrower shall save and hold the Lender harmless from
and against any and all costs and expenses incurred by the Lender on account
thereof, including, but not limited to, Reasonable Attorneys' Fees, title
searches and abstract and survey charges, at all trial and appellate levels,
and the Borrower shall repay, on demand, all such costs and expenses, together
with interest thereon until paid at the lesser of either (i) the highest rate
then allowed by the laws of the State of Georgia, or, if controlling, the laws
of the United States, or (ii) the applicable rate of interest of the Note plus
five hundred (500) basis point; all of which sums, if unpaid, shall be added to
and become a part of the indebtedness secured hereby.
20. DEFAULT RATE. If the entire outstanding balance of the Note is
due, whether at maturity, by acceleration or otherwise, the total amount due,
whether principal, interest or money owing for advancements pursuant to the
terms of this Security Deed or any other Loan Document, shall bear interest
until paid at the lesser of (i) the highest rate then allowed by the laws of
the State of Georgia, or, if controlling, the laws of the United States, or
(ii) the then applicable rate of interest of the Note plus five hundred (500)
basis points (five percent per annum); all of which sums shall be added to and
become a part of the indebtedness secured hereby.
21. SAVINGS CLAUSE; SEVERABILITY. Notwithstanding any provisions in
the Note or in this Security Deed to the contrary, the total liability for
payments in the nature of interest including but not limited to Prepayment
Premiums, default interest and late fees shall not exceed the limits imposed by
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<PAGE> 12
laws of the State of Georgia or the United States of America relating to
maximum allowable charges of interest. Lender shall not be entitled to
receive, collect or apply, as interest on the indebtedness evidenced by the
Note, any amount in excess of the maximum lawful rate of interest permitted to
be charged by applicable law. In the event Lender ever receives, collects or
applies as interest any such excess, such amount which would be excessive
interest shall be applied to reduce the unpaid principal balance of the
indebtedness evidenced by the note. If the unpaid principal balance of such
indebtedness is paid in full any remaining excess shall be paid forthwith to
the Borrower. If any clauses or provisions herein contained operate or would
prospectively operate to invalidate this Security Deed, then such clauses or
provisions only shall be held for naught, as though not herein contained, and
the remainder of this Security Deed shall remain operative and in full force
and effect.
22. BANKRUPTCY, REORGANIZATION OR ASSIGNMENT. It shall be a default
hereunder if the Borrower or any general partner of Borrower shall: (a)
consent to the appointment of a receiver, trustee or liquidator of all or a
substantial part of Borrower's assets, or (b) be adjudicated a bankrupt or
insolvent, or file a voluntary petition in bankruptcy, or admit in writing its
inability to pay its debts as they become due, or (c) make a general assignment
for the benefit of creditors, or (d) file a petition under or take advantage of
any insolvency law, or (e) file an answer admitting the material allegations of
a petition filed against the Borrower or any general partner of Borrower in any
bankruptcy, reorganization or insolvency proceeding or fail to cause the
dismissal of such petition within sixty (60) days after the filing of said
petition, or (f) take action for the purpose of effecting any of the foregoing,
or (g) if any order, judgment or decree shall be entered upon an application of
a creditor of Borrower or any general partner of Borrower by a court of
competent jurisdiction approving a petition seeking appointment of a receiver
or trustee of all or a substantial part of the Borrower's assets or any of
Borrower's general partner's assets and such order, judgment or decree shall
continue unstayed and in effect for a period of sixty (60) days.
23. TIME IS OF THE ESSENCE; MONETARY AND NON-MONETARY DEFAULTS. It
is understood by Borrower that time is of the essence hereof in connection with
all obligations of Borrower herein, in the Note, the Assignment (as defined in
Paragraph 34) and any of the other Loan Documents.
If default be made in the payment of any installment of the Note,
whether of principal or interest, or in the payment of any other sums of money
referred to herein or in the Note, promptly and fully when the same shall be
due and such Monetary Default (as hereinafter defined) remains uncured after
the Monetary Cure Period (as hereinafter defined), if applicable (if the
Monetary Cure Period is not applicable, no notice or demand from Lender to
Borrower shall be required), or in the event a breach or default be made by the
Borrower in any one of the agreements, conditions and covenants of said Note,
this Security Deed, the Assignment or any Loan Documents evidencing or securing
the Note, or in the event that each and every one of said agreements,
conditions and covenants are not otherwise duly, promptly and fully discharged
or performed, and any such Non-Monetary Default (as hereinafter defined)
remains uncured for a period of thirty (30) days after written notice thereof
from the Lender to the Borrower has been delivered in the manner prescribed in
Paragraph 41 hereof (except that if such Non-Monetary Default cannot reasonably
be cured within the 30 day period Borrower shall have a reasonable period of
time to cure such default provided that Borrower commences the cure of such
default within the 30 day period and thereafter diligently pursues the cure to
completion), Lender at its sole option may thereupon or thereafter declare the
indebtedness evidenced by the Note, as well as all other monies secured hereby,
including, without limitation, all Prepayment Premiums and late payment
charges, to be forthwith due and payable, whereupon the principal of and the
interest accrued on the indebtedness evidenced by the Note and all other sums
secured by this Security Deed at the option of Lender shall immediately become
due and payable as if all of said sums of money were originally stipulated to
be paid on such day, and thereupon, the Lender may avail itself of all rights
and remedies provided by law and may prosecute a suit at law or in equity as if
all monies secured hereby had matured prior to its institution, anything in
this Security Deed or in the Note to the contrary notwithstanding. Lender
shall give Borrower notice in the manner described in Paragraph 41 hereof of,
and a 5 day right-to-cure period ("Monetary Cure Period") to cure, any Monetary
Default (as hereinafter defined); provided, however such Monetary Cure Period
shall be limited to once per loan year for the term of the Note. Lender shall
have no obligation to give Borrower notice of any Incurable Default (as
hereinafter defined) prior to exercising its right, power and privilege to
accelerate the maturity of the indebtedness secured hereby.
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<PAGE> 13
As used herein, the term "Monetary Default" shall mean any default which
can be cured by the payment of money such as, but not limited to, the payment
of principal and interest due under the Note, the payment of taxes, assessments
and insurance premiums when due as provided in this Security Deed. As used
herein, the term "Non-Monetary Default" shall mean any default which is not a
Monetary Default or an Incurable Default. As used herein, the term "Incurable
Default" shall mean (i) any voluntary or involuntary sale, assignment,
mortgaging, encumbering or transfer in violation of the covenants contained in
Paragraph 30 hereof; or (ii) if Borrower, or its general partner, should make
an assignment for the benefit of creditors, become insolvent, or file a
petition in bankruptcy (including but not limited to, a petition seeking a
rearrangement or reorganization).
If a default shall occur hereunder and is not timely cured as herein
provided, and, as a result thereof, the indebtedness secured hereby is
accelerated and is due and payable in full, the Lender, at its option, may sell
the Property or any part of the Property at public sale or sales before the
door of the courthouse of the County in which the Property or any part of the
Property is situated, to the highest bidder for cash, in order to pay the
indebtedness secured hereby and accrued interest thereon and insurance
premiums, liens, assessments, taxes and charges, including utility charges, if
any, with accrued interest thereon, and all expenses of the sale and of all
proceedings in connection therewith, including Reasonable Attorney's Fees after
advertising the time, place and terms of sale once a week for four (4) weeks
immediately preceding such sale (but without regard to the number of days) in a
newspaper in which Sheriff's sales are advertised in said County. The
foregoing notwithstanding, the Lender may sell, or cause to be sold, any
tangible or intangible personal property, or any part thereof, and which
constitute a part of the security hereunder, in the foregoing manner, or as may
otherwise be provided by law. The Lender may bid and purchase at any such sale
and, if Lender should be the successful bidder at such sale, may satisfy the
Lender's obligation to purchase pursuant to the Lender's bid by canceling an
equivalent portion of any indebtedness then outstanding and secured hereby. At
any such sale, the Lender may execute and deliver to the purchaser a conveyance
of the Property or any part of the Property in fee simple with full warranties
of title and to this end, the Borrower hereby constitutes and appoints the
Lender the agent and attorney in fact of the Borrower to make such sale and
conveyance, and thereby to divest the Borrower of all right, title and equity
that the Borrower may have in and to the Property and to vest the same in the
purchaser or purchasers at such sale or sales, and all the acts and doings of
said agent and attorney in fact are hereby ratified and confirmed and any
recitals in said conveyance or conveyances as to facts essential to a valid
sale shall be binding on the Borrower. The aforesaid power of sale and agency
hereby granted are coupled with an interest and are irrevocable by death or
otherwise, are granted as cumulative of the other remedies provided by law for
collection of the indebtedness secured hereby and shall not be exhausted by one
exercise thereof but may be exercised until full payment of all sums secured
hereby. Upon any such sale pursuant to the aforementioned power of sale and
agency, the proceeds of said sale shall be applied first to payment of the
indebtedness secured hereby and accrued interest and late charges thereon, then
to said insurance premiums, liens, assessments, taxes and charges including
utility charges with accrued interest thereon and then to the reasonable
expenses of such sale and of all proceedings in connection therewith, including
reasonable attorney's fees, and finally, the remainder, if any, shall be paid
to the party legally entitled to same.
In the event of any such public sale pursuant to the aforesaid power of
sale and agency, the Borrower shall be deemed a tenant holding over and shall
forthwith deliver possession of the Property to the purchaser or purchasers at
such sale or be summarily dispossessed according to provisions of law
applicable to tenants holding over.
The failure or omission on the part of the Lender to exercise the option
for acceleration of maturity and to foreclose or exercise the power of sale in
this Security Deed following any default as aforesaid or to exercise any other
option or remedy granted hereunder to Lender when entitled to do so in any one
or more instances, or the acceptance by Lender of partial payment of the
indebtedness secured hereby, whether before or subsequent to Borrower's
defaults hereunder, shall not constitute a waiver of any such default or the
right to exercise any such option or remedy, but such option or remedy shall
remain continuously in force. Acceleration of maturity, once claimed hereunder
by Lender, at the option of Lender, may be rescinded by written acknowledgment
to that effect by Lender, but the tender and acceptance of partial payments
alone shall not in any way affect or rescind such acceleration of maturity.
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<PAGE> 14
In case Lender shall have proceeded to enforce any right, power
or remedy under this Security Deed by foreclosure, entry or otherwise, or in
the event Lender commences advertising of the intended exercise of the sale
under power provided hereunder and such proceeding or advertisement shall have
been withdrawn, discontinued or abandoned for any reason, or shall have been
determined adversely to Lender, then in every such case (i) Borrower and Lender
shall be restored to their former positions and rights, (ii) all rights, powers
and remedies of Lender shall continue as if no such proceeding had been taken,
(iii) each and every Default declared or occurring prior or subsequent to such
withdrawal, discontinuance or abandonment shall be and shall be deemed to be a
continuing Default, and (iv) neither this Security Deed, nor the Note, nor any
other instrument concerned therewith, shall be or shall be deemed to have been
reinstated or otherwise affected by such withdrawal, discontinuance or
abandonment, and Borrower hereby expressly waives the benefit of any statute or
rule of law now provided, or which may hereafter be provided, which would
produce a result contrary to or in conflict with the above.
24. PROTECTION OF LENDER'S SECURITY. At any time after default
hereunder, the Lender is authorized, without notice and in its sole discretion,
to enter upon and take possession of the Property or any part thereof and to
perform any acts which the Lender deems necessary or proper to conserve the
security herein intended to be provided by the Property, to operate any
business or businesses conducted thereon and to collect and receive all rents,
issues and profits thereof and therefrom, including those past due as well as
those accruing thereafter.
25. APPOINTMENT OF RECEIVER. If, at any time after a default
hereunder, in the sole discretion of the Lender, a receivership may be
necessary to protect the Property or its rents, issues, revenue, profits or
proceeds, whether before or after maturity of the indebtedness secured hereby
and whether before or at the time of or after the institution of suit to
collect such indebtedness, or to enforce this Security Deed, the Lender, as a
matter of strict right and regardless of the value of the Property or the
amounts due hereunder or secured hereby, or of the solvency of any party bound
for the payment of such indebtedness, shall have the right, upon ex parte
application and without notice to anyone, and by any court having jurisdiction,
to the appointment of a receiver to take charge of, manage, preserve, protect
and operate the Property, to collect the rents, issues, revenues, profits,
proceeds and income thereof, to make all necessary and needful repairs, and to
pay all taxes, assessments and charges against the Property and all premiums
for insurance thereon, and to do such other acts as may by such court be
authorized and directed, and after payment of the expenses of the receivership
and the management of the Property, to apply the net proceeds of such
receivership in reduction of the indebtedness secured hereby or in such other
manner as the said court shall direct, notwithstanding the fact that the amount
owing thereon may not then be due and payable or the said indebtedness is
otherwise adequately secured. Such receivership shall, at the option of
Lender, continue until full payment of all sums hereby secured or until title
to the Property shall have passed by sale under this Security Deed. Borrower
hereby specifically waives its right to object to the appointment of a receiver
as aforesaid and hereby expressly agrees that such appointment shall be made as
an admitted equity and as a matter of absolute right to the Lender.
26. RIGHTS AND REMEDIES CUMULATIVE; FORBEARANCE NOT A WAIVER. The
rights and remedies herein provided are cumulative and Lender, as the holder of
the Note and of every other obligation secured hereby, may recover judgment
thereon, issue execution therefor and resort to every other right or remedy
available at law or in equity, without first exhausting any right or remedy
available to Lender and without affecting or impairing the security of any
right or remedy afforded hereby, and no enumeration of special rights or powers
by any provisions hereof shall be construed to limit any grant of general
rights or powers, or to take away or limit any and all rights granted to or
vested in Lender by law, and Borrower further agrees that no delay or omission
on the part of the Lender to exercise any rights or powers accruing to it
hereunder shall impair any such right or power or shall be construed to be a
waiver of any such event of default hereunder or any acquiescence therein; and
every right, power and remedy granted herein or by law to the Lender may be
exercised from time to time as often as may be deemed expedient by the Lender.
27. MODIFICATION NOT AN IMPAIRMENT OF SECURITY. Lender, without
notice and without regard to the consideration, if any, paid therefor, and
notwithstanding the existence at the time of any inferior mortgages, deeds to
secure debt, or other liens thereon, may release any part of the
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<PAGE> 15
security described herein or may release any person or entity liable for any
indebtedness secured hereby without in any way affecting the priority of this
Security Deed, to the full extent of the indebtedness remaining unpaid
hereunder, upon any part of the security not expressly released. Lender may,
at its option and within its sole discretion, also agree with any party
obligated on said indebtedness, or having any interest in the security
described herein, to extend the time for payment of any part or all of the
indebtedness secured hereby, and such agreement shall not, in any way, release
or impair this Security Deed, but shall extend the same as against the title of
all parties having any interest in said security, which interest is subject to
this Security Deed.
28. PROPERTY MANAGER. The exclusive manager of the Property shall
be the Borrower or such other manager as may be first approved in writing by
Lender. The exclusive leasing agent of the Property, if other than the
foregoing party, shall be first approved in writing by the Lender. The
governing management and leasing contracts shall be subordinate to this
Security Deed and satisfactory to and subject to the written approval of Lender
throughout the term of the indebtedness secured hereby. Upon default in either
of these requirements, then the whole of the indebtedness hereby secured shall,
at the election of the Lender, become immediately (subject to the cure period
for a Non-Monetary Default) due and payable, together with any default premium
and late payment charges required by the Note, and the Lender shall be entitled
to exercise any or all remedies provided or referenced in this Security Deed.
29. MODIFICATION NOT A WAIVER. In the event Lender: (a) releases,
as aforesaid any part of the security described herein or any person or entity
liable for any indebtedness secured hereby, or (b) grants an extension of time
for the payment of the Note, or (c) takes other or additional security for the
payment of the Note, or (d) waives or fails to exercise any rights granted
herein, in the Note, or any of the other Loan Documents, any said act or
omission shall not release Borrower, subsequent purchasers of the Property or
any part thereof, or makers, sureties, endorsers or guarantors of the Note, if
any, from any obligation or any covenant of this Security Deed, the Note, or
any of the other Loan Documents, nor preclude Lender from exercising any right,
power or privilege herein granted or intended to be granted in the event of any
other default then made, or any subsequent default.
30. TRANSFER OF PROPERTY OR CONTROLLING INTEREST IN BORROWER;
ASSUMPTION. Except as hereafter provided, without the prior written consent of
the Lender, the sale, transfer, assignment, or conveyance of all or any portion
of the Property, or a transfer, assignment, or conveyance of a "controlling
interest" in Borrower whether voluntarily or by operation of law, without the
prior written consent of Lender, shall constitute a default under the terms of
this Security Deed and entitle the Lender, at its sole option, to accelerate
all sums due on the Note together with any Prepayment Premiums, late payment
charges, or any other amounts secured hereby. As used herein the term
"controlling interest" means, in the case of a partnership, greater than a 50%
interest in the partnership or votes greater than 50% of the votes required to
approve any major decisions (as opposed to day-to-day or ministerial decisions)
of the partnership, and in the case of a corporation, greater than 50% of the
outstanding voting shares of stock of the corporation. (Notwithstanding the
foregoing sentence, a transfer of partnership interests or partnership units in
the ordinary course of business of Borrower as an "up-REIT" real estate
investment trust structure shall be permitted and shall not constitute a
conveyance of a "controlling interest" in Borrower.) Lender, may, however,
elect to waive the option to accelerate granted hereunder if, prior to any such
sale, transfer, assignment or conveyance of the Property, the following
conditions shall be fully satisfied: (a) the Lender acknowledges in writing
that, in its sole discretion, the creditworthiness of the proposed transferee
and the ability and experience of the proposed transferee to operate the
Property are satisfactory to Lender, and (b) Lender and the proposed transferee
shall enter into an agreement in writing that (i) the interest payable on the
indebtedness secured hereby shall be at such rate as Lender shall determine,
(ii) the repayment schedule as set forth in the Note shall be modified by the
Lender in its sole discretion to amortize the then unpaid principal balance
secured hereby over a period determined by Lender in its sole discretion
without a change in the maturity date of the Note, (iii) an assumption fee to
be determined by Lender may be charged by the Lender in its sole discretion,
and (iv) the proposed transferee shall assume in writing all obligations of
Borrower under the Note, this Security Deed and the other Loan Documents. In
the event the ownership of the Property, or any part thereof, shall become
vested in a person or entity other than the Borrower, whether with or without
the prior written consent of the Lender, the Lender may, without notice to the
Borrower, deal with such successor or successors in interest with reference to
the Property, this Security Deed and the Note in the same manner and to the
same extent as with the Borrower without
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<PAGE> 16
in any way vitiating or discharging the Borrower's liability hereunder or under
the Note. No sale, transfer or conveyance of the Property, no forbearance on
the part of the Lender and no extension of time for the payment of the debt
hereby secured given by the Lender shall operate to release, discharge, modify,
change or affect the original liability of the Borrower, either in whole or in
part, unless expressly set forth in writing executed by the Lender.
Notwithstanding anything contained herein to the contrary, Borrower hereby
waives any right it now has or may hereafter have to require Lender to prove an
impairment of its security as a condition to exercise the Lender's rights under
this Paragraph 30. If a transfer of the Property, or a portion thereof, or a
transfer of a "controlling interest" in Borrower is approved by Lender: (a)
Lender must receive for its review and approval copies of all transfer
documents, (b) the approved transferee must assume in writing all obligations
under the Note, this Security Deed and any other Loan Documents, and (c)
Borrower or the approved transferee must pay all costs and expenses in
connection with such transfer and assumption, including without limitation, all
fees and expenses incurred by Lender.
Lender acknowledges that Borrower's general partner, Roberts Realty
Investors, Inc. ("RRII"), is a real estate investment trust and that it is
contemplated that Borrower may convey its interest in the Property to RRII.
Therefore, notwithstanding anything contained in this Paragraph 30 to the
contrary, the prior written consent of the Lender shall not be required and
Lender shall not be entitled to accelerate the indebtedness evidenced by the
Note or change the Loan terms upon a transfer so long as (i) the transfer is
made to RRII; (ii) there is no change in the ownership interest of RRII except
for transfers of shares of the real estate investment trust in the ordinary
course of business; and (iii) Lender shall be given prompt notice and
documentation of such transfer, and Borrower shall pay all of Lender's out-of-
pocket expenses associated with such transfer; provided, however, that Borrower
shall notify Lender in writing of any such transfer not less than thirty (30)
days prior to the effective date of such transfer. In addition to the
foregoing, Lender shall permit one (1) bona fide, arm's length transfer of the
Property to any transferee without change in the loan terms; provided, however,
that no such transfer shall be valid or permitted hereunder unless: (i) Lender
receives prior written notice of such proposed transfer, (ii) such proposed
transferee has been approved in writing by the Lender (taking into account such
factors as transferee's creditworthiness, business experience and managerial
capabilities) such approval not to be unreasonably withheld, (iii) Lender is
paid a transfer fee in the amount of one percent (1%) of the then outstanding
principal balance of the Note, (iv) Borrower or the approved transferee pays
all fees and expenses incurred by Lender in connection with such transfer and
assumption, including, without limitation, inspection and investigation fees
and Reasonable Attorneys' Fees (as hereinafter defined), and (v) there is no
existing default hereunder or event which with the passage of time would
constitute a default hereunder. Any transfer of all or any portion of the
Property which does not strictly comply with the terms and conditions of the
foregoing shall be a default hereunder and shall entitle the Lender to exercise
all rights and remedies provided in this Security Deed.
31. FURTHER ENCUMBRANCE PROHIBITED; SUBROGATION. So long as the
Note secured hereby remains unpaid, the Borrower shall neither voluntarily nor
involuntarily permit the Property or any part thereof to become subject to any
secondary or other junior lien, mortgage, security interest or encumbrance of
any kind whatsoever other than taxes for the current year and the Permitted
Exceptions, without the prior written consent of the Lender, and the imposition
of any such secondary lien, mortgage, security interest or encumbrance shall
constitute an event of default hereunder and entitle the Lender, at its sole
option, to declare all sums due on account of the Note to be and become
immediately due and payable. In the event that Lender shall hereafter give its
written consent to the imposition of any such secondary lien, mortgage,
security interest or other encumbrance upon the Property, the Lender, at its
sole option, shall be entitled to accelerate the maturity of the Note and
exercise any and all remedies provided and available to Lender hereunder in the
event that the holder of any such secondary lien or encumbrance shall institute
foreclosure or other proceedings to enforce the same; it being understood and
agreed that a default under any instrument or document evidencing, securing or
secured by any such secondary lien or encumbrance shall be and constitute an
event of default hereunder. In the event all or any portion of the proceeds of
the loan secured hereby are used for the purpose of retiring debt or debts
secured by prior liens on the Property, the Lender shall be subrogated to the
rights and lien priority of the holder of the lien so discharged.
32. CONVEYANCE OF MINERAL RIGHTS PROHIBITED. Borrower agrees that
the making of any oil, gas or mineral lease or the sale or conveyance of any
mineral interest or right to
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<PAGE> 17
explore for minerals under, through or upon the Property would impair the value
of the Property securing the Note, and that the Borrower shall have no right,
power or authority to lease the Property, or any part thereof, for oil, gas or
other mineral purposes, or to grant, assign or convey any mineral interest of
any nature, or the right to explore for oil, gas and other minerals, without
first obtaining from the Lender express written permission therefor, which
permission shall not be valid until recorded among the Public Records of
Gwinnett County, Georgia. The Borrower further agrees that if the Borrower
shall make, execute or enter into any such lease or attempt to grant any such
mineral rights without such prior written permission of the Lender, then the
Lender shall have the option, without notice, to declare the same to be a
default hereunder and to declare the indebtedness hereby secured immediately
due and payable. Whether or not the Lender shall consent to such lease or
grant of mineral rights, the Lender shall receive the entire consideration to
be paid for such lease or grant of mineral rights, with the same to be applied
to the indebtedness hereby secured notwithstanding the fact that the amount
owing thereon may not then be due and payable or the said indebtedness is
otherwise adequately secured; provided, however, that the acceptance of such
consideration shall in no way impair the lien of this Security Deed on the
Property.
33. ESTOPPEL CERTIFICATION BY BORROWER. Borrower, upon request
therefor made either personally or by mail, shall certify in writing to Lender
(or any party designated by Lender) in form satisfactory to Lender the amount
of principal and interest then outstanding under the terms of the Note and any
other sums due and owing under this Security Deed or any of the other Loan
Documents and whether any offsets or defenses exist against the mortgage debt.
Such certification shall be made by Borrower within ten (10) days if the
request is made personally, or within twenty (20) days if the request is made
by mail.
34. CROSS-DEFAULT. The Note is also secured by the terms,
conditions and provisions of an Assignment of Leases, Rents and Profits
(hereinafter referred to as the "Assignment") recorded among the Public Records
of Gwinnett County, Georgia and, additionally, may be secured by contracts or
agreements of guaranty or other security instruments. The terms, conditions
and provisions of each security instrument shall be considered a part hereof as
fully as if set forth herein verbatim. Any default under this Security Deed or
the Note secured hereby shall constitute an event of default under the
Assignment or any of the other Loan Documents, and any default under the
Assignment or other Loan Documents shall likewise constitute a default
hereunder and under the Note. Notwithstanding the foregoing, the enforcement
or attempted enforcement of this Security Deed or any of the other Loan
Documents now or hereafter held by Lender shall not prejudice or in any manner
affect the right of Lender to enforce any other Loan Document; it being
understood and agreed that the Lender shall be entitled to enforce this
Security Deed and any of the other Loan Documents now or hereafter held by it
in such order and manner as Lender, in its sole discretion, shall determine.
35. EXAMINATION OF BORROWER'S RECORDS. Borrower will maintain
complete and accurate books and records showing in detail the income and
expenses of the Property, and will permit upon no less than two (2) days notice
the Lender and its representatives to examine said books and records and all
supporting vouchers and data during normal business hours and from time to time
upon request by the Lender, in such place as such books and records are
customarily kept, and will furnish to the Lender, within one hundred twenty
(120) days after the close of each calendar year, audited financial statements
of each general partner of Borrower and statements of operations of the
Property certified by the general partner of the Borrower to be true and
correct and showing in detail all income derived from and expenses incurred in
connection with the ownership of the Property. All such statements shall be in
form acceptable to Lender and shall be prepared in accordance with generally
accepted accounting principles and shall include an annual rent schedule. In
the event the Borrower fails to provide such statements to the Lender within
the time prescribed above, the Borrower shall pay the Lender the sum of TWO
HUNDRED AND NO/100 DOLLARS ($200.00) for each successive month for which
statements are delinquent. In the event of default hereunder, Lender shall
have the right to require that said financial statements of the Property be
audited and certified by a certified public accountant acceptable to the
Lender, all at the sole cost and expense of the Borrower.
36. ALTERATION, REMOVAL AND CHANGE IN USE OF PROPERTY PROHIBITED.
Borrower covenants and agrees to permit or suffer none of the following without
the prior written consent of the Lender:
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<PAGE> 18
(a) Any structural alteration of, or addition to, the
Improvements now or hereafter situated upon the Real Property or the
addition of any new buildings or other structure(s) thereto other than
erection or removal of non-load bearing interior walls; or
(b) The removal, transfer, sale or lease of the Property,
except that the renewal, replacement or substitution of fixtures,
equipment, machinery, apparatus and articles of personal property
(replacement or substituted items must be of like or better quality than
the removed items in their original condition) encumbered hereby may be
made in the normal course of business; or
(c) The use of any of the Improvements now or hereafter
situated on the Real Property for any purpose other than as an apartment
complex project and related facilities.
37. FUTURE ADVANCES SECURED. This Security Deed shall secure not
only existing indebtedness, but also such future advances, whether such
advances are obligatory or to be made at the option of the Lender. Upon
request of Borrower, and at Lender's option prior to release of this Security
Deed, Lender may make future advances to Borrower. All future advances with
interest thereon shall be secured by this Security Deed to the same extent as
if such future advances were made on the date of the execution of this Security
Deed unless the parties shall agree otherwise in writing, but the total secured
indebtedness shall not exceed at any one time a maximum principal amount equal
to double the face amount of the Note plus interest, and costs of collection
including court costs and Reasonable Attorneys' Fees. Any advances or
disbursements made for the benefit or protection of or the payment of taxes,
assessments, levies or insurance upon the Property, with interest on such
disbursements as provided herein, shall be added to the principal balance of
the Note and collected as a part thereof. To the extent that this Security
Deed may secure more than one note, a default in the payment of any note shall
constitute a default in the payment of all such notes.
38. EFFECT OF SECURITY AGREEMENT. Borrower does hereby grant and
this Security Deed is and shall be deemed to create, grant, give and convey a
mortgage of, a lien and encumbrance upon, and a present security interest in
both real and personal property, including all improvements, goods, chattels,
furniture, furnishings, fixtures, equipment, apparatus, appliances and other
items of tangible or intangible personal property, hereinabove particularly or
generally described and conveyed, whether now or hereafter affixed to, located
upon, necessary for or used or useful, either directly or indirectly, in
connection with the operation of the Property as an apartment complex project,
and this Security Deed shall also serve as a "security agreement" within the
meaning of that term as used in the Uniform Commercial Code as adopted and in
force from time to time in the State of Georgia, and shall be operative and
effective as a security agreement in addition to, and not in substitution for,
any other security agreement executed by the Borrower in connection with the
extension of credit or loan transaction secured hereby. Upon the occurrence of
a default hereunder or Borrower's breach of any other covenants or agreements
between the parties entered into in conjunction herewith, Lender shall have the
remedies (i) as prescribed herein, or (ii) as prescribed by general law, or
(iii) as prescribed by the specific statutory consequences now or hereafter
enacted and specified in said Uniform Commercial Code, all at Lender's sole
election. Borrower and Lender agree that the filing of any such financing
statement or statements in the records normally having to do with personal
property shall not in any way affect the agreement of Borrower and Lender that
everything used in connection with the production of income from the Property
or adapted for use therein or which is described or reflected in this Security
Deed, is, and at all times and for all purposes and in all proceedings, both
legal or equitable, shall be, regarded as part of the real estate conveyed
hereby regardless of whether (i) any such item is physically attached to the
improvements, (ii) serial numbers are used for the better identification of
certain items capable of being thus identified in an exhibit to this Security
Deed or elsewhere, or (iii) any such item is referred to or reflected in any
such financing statement or statements so filed at any time. Similarly, the
mention in any such financing statement or statements of the rights in and to
(i) the proceeds of any fire and hazard insurance policy, or (ii) any award in
eminent domain proceedings for a taking or for loss of value, or (iii)
Borrower's interest as lessor or landlord in any present or future lease or
rights to income growing out of the use and occupancy of the Property, whether
pursuant to lease or otherwise, shall not in any way alter any of the rights of
Lender as determined by this Security Deed or affect the priority of Lender's
security interest granted hereby or by any other recorded document, it being
understood and agreed that such mention in such financing statement or
statements is solely for the protection of Lender
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<PAGE> 19
in the event any court shall at any time hold, with respect to the foregoing
clauses (i), (ii) or (iii) of this sentence, that notice of Lender's priority
of interest, to be effective against a particular class of persons, must be
filed in the Uniform Commercial Code records. Borrower warrants that (i)
Borrower's (that is, "Debtor's") name, identity and residence or principal
place of business are as set forth in Exhibit C attached hereto and made a part
hereof; (ii) Borrower (that is, "Debtor") has been using or operating under
said name and identity without change for the time period set forth in Exhibit
C; and (iii) the location of the collateral is upon the Property. Borrower
covenants and agrees that Borrower will furnish Lender with notice of any
change in the matters addressed by clauses (i) or (iii) of this paragraph
within thirty (30) days of the effective date of any such change and Borrower
will promptly execute any financing statements or other instruments deemed
necessary by Lender to prevent any filed financing statement from becoming
misleading or losing its perfected status. If Borrower fails to promptly
execute any such financing statements or other instruments, Lender may make,
execute, record, file, re-record, and re-file any and all such financing
statements or other instruments for and in the name of Borrower, and Borrower
hereby irrevocably appoints Lender the agent and attorney-in-fact of Borrower
so to do. This appointment of Lender as Borrower's attorney-in-fact is coupled
with an interest and is irrevocable by death or otherwise. The information
contained in this paragraph is provided in order that this Security Deed shall
comply with the requirements of the Uniform Commercial Code, as enacted in the
State of Georgia, for instruments to be filed as financing statements. The
names of the "Debtor" and the "Secured Party," the identity and residence or
principal place of business of "Debtor," the time period for which "Debtor" has
been using or operating under said name and identity without change are as set
forth in Schedule 1 of Exhibit C; the mailing address of the "Secured Party"
from which information concerning the security interest may be obtained, and
the mailing address of "Debtor," are as set forth in Schedule 2 of said Exhibit
C; and a statement indicating the types, or describing the items, of collateral
is set forth hereinabove.
The Borrower agrees to and shall, upon the request of Lender, execute
and deliver to Lender, in form and content satisfactory to Lender, such
financing statements, descriptions of property and such further assurances as
Lender, in its sole discretion, may from time to time consider necessary to
create, perfect, continue and preserve the lien and encumbrances hereof and the
security interest granted herein upon and in such real and personal property
and fixtures described herein, including all buildings, improvements, goods,
chattels, furniture, furnishings, fixtures, equipment, apparatus, appliances
and other items of tangible and intangible personal property herein
specifically or generally described and intended to be the subject of the
security interest, lien and encumbrance hereby created, granted and conveyed.
Without the prior written consent of Lender, Borrower shall not create or
suffer to be created, pursuant to the Uniform Commercial Code, any other
security interest in such real and personal property and fixtures described
herein. The Lender, at the expense of the Borrower, may or shall cause such
statements, descriptions and assurances, as herein provided in this Paragraph
38, and this Security Deed to be recorded and re-recorded, filed and refiled,
at such times and in such places as may be required or permitted by law to so
create, perfect and preserve the lien and encumbrance hereof upon all of the
Property.
39. TERMS OF CONTRACT SURVIVE CLOSING. The terms and provisions of
the application/contract between Lender and Borrower are incorporated herein by
reference, said application/contract being dated February 27, 1996, and any
subsequent amendment thereto (hereinafter referred to as the "Contract"). All
terms and conditions of the Contract not expressly set forth in this Security
Deed, the Note and any other Loan Documents shall survive the closing hereof
and remain in full force and effect. In the event any conflict exists between
the terms, conditions and provisions of the Contract and the Loan Documents,
the terms, conditions and provisions of the Loan Documents shall prevail.
40. SUCCESSORS AND ASSIGNS; TERMINOLOGY. The provisions hereof
shall be binding upon the Borrower and the successors and assigns of the
Borrower, and inure to the benefit of Lender and its successors and assigns.
Where more than one Borrower is named herein, the obligations and liabilities
of said Borrower shall be joint and several. Wherever used in this Security
Deed, unless the context clearly indicates a contrary intent or unless
otherwise specifically provided herein, the word "Borrower" shall mean Borrower
and/or any subsequent owner or owners of the Property, the word "Lender" shall
mean Lender or any subsequent holder or holders of this Security Deed, the word
"Note"
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<PAGE> 20
shall mean Note(s) secured by this Security Deed, and the word "person" shall
mean an individual, trustee, trust, corporation, partnership or unincorporated
association.
41. NOTICES. All notices hereunder shall be deemed to have been
duly given if mailed by United States registered or certified mail, with return
receipt requested, postage prepaid, or if deposited with a nationally
recognized overnight courier such as Federal Express, to the parties at the
following addresses (or at such other addresses as shall be given in writing by
any party to the others), and shall be deemed complete upon receipt (which, in
the case of delivery by certified mail, shall be as evidenced by the return
receipt, and, in the case of delivery by a nationally recognized overnight
courier, shall be as evidenced by the confirmation of delivery received by the
courier) or refusal to accept receipt:
To Borrower: Roberts Properties Residential, L.P.
8010 Roswell Road
Suite 120
Atlanta, Georgia 30350
Attn: Charles S. Roberts
To Lender: West Coast Life Insurance Company
c/o Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, Ohio 43215-2220
Attn: Real Estate Investments
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, Ohio 43215-2220
Attn: Real Estate Investments
42. GOVERNING LAW. This Security Deed is to be governed by and
construed in accordance with the laws of the State of Georgia, and, if
controlling, by the laws of the United States.
43. RIGHTS OF LENDER CUMULATIVE. The rights of the Lender arising
under the clauses and covenants contained in this Security Deed shall be
separate, distinct and cumulative and none of them shall be in exclusion of the
others; and no act of the Lender shall be construed as an election to proceed
under any one provision herein to the exclusion of any other provisions,
anything herein or otherwise to the contrary notwithstanding.
44. MODIFICATIONS. This Security Deed cannot be changed, altered,
amended or modified except by an agreement in writing and in recordable form,
executed by both Borrower and Lender.
45. EXCULPATION. Subject to the last sentence of this Paragraph 45,
the liability of Borrower with respect to the payment of principal and interest
under the Note shall be "non-recourse" and, accordingly, Lender's source of
satisfaction of said indebtedness and Borrower's other obligations hereunder
and under the other Loan Documents shall be limited to the Property and
Lender's receipt of the rents, issues and profits from the Property and Lender
shall not seek to procure payment out of any other assets of Borrower or any
person or entity comprising Borrower, or to seek any judgment (except as
hereinafter provided) for any sums which are or may be payable under the Note,
this Security Deed or any of the other Loan Documents, or for any claim or
judgment (except as hereafter provided) for any deficiency remaining after
foreclosure of this Security Deed. Notwithstanding the above, nothing herein
contained shall be deemed to be a release or impairment of the Note or the
security therefor intended by this Security Deed and the other Loan Documents,
or be deemed to preclude Lender from exercising its rights to foreclose this
Security Deed or to enforce any of its other rights or remedies under the Loan
Documents.
Notwithstanding the foregoing, it is expressly understood and agreed
that the aforesaid limitation on liability shall in no way affect or apply to
the Borrower's continued personal liability for:
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<PAGE> 21
(1) fraud or intentional misrepresentation made in or in connection
with the Note or any of the other Loan Documents governing,
securing or pertaining to the payment thereof;
(2) failure to pay taxes prior to delinquency or to pay assessments
prior to delinquency, or to pay charges for labor, materials or
other charges which can create liens on any portion of the
Property;
(3) the misapplication of (i) proceeds of insurance covering any
portion of the Property, or (ii) proceeds of the sale or
condemnation of any portion of the Property, or (iii) rentals
received by or on behalf of Borrower subsequent to the date on
which Lender makes written demand therefor pursuant to any of
the Loan Documents;
(4) causing or permitting waste to occur on, in or about the
Property, and failure to maintain the Property, excepting
ordinary wear and tear;
(5) loss by fire or casualty to the extent not compensated by
insurance proceeds collected by Lender;
(6) the return to Lender of all unearned advance rentals and
security deposits paid by tenants of the Property and not
refunded to or forfeited by such tenants;
(7) the return to Borrower of any and all fees paid to Borrower by
tenants of the Property which fees permit tenants to terminate
their leases;
(8) the return of, or reimbursement for, all personalty owned by
Borrower taken from the Property by or on behalf of Borrower,
out of the ordinary course of business, and not replaced by
items of equal or greater value than the original value of the
personalty so removed;
(9) all court costs and Reasonable Attorneys' Fees actually incurred
which are provided for in the Note or in any other Loan Document
governing, securing or pertaining to the payment of the Note;
and
(10) (i) the removal of any chemical, material or substance, exposure
to which is prohibited, limited or regulated by any Federal,
State, County, Regional or Local Authority which may or could
pose a hazard to the health and safety of the occupants of the
Property, regardless of the source of origination; and (ii) the
restoration of the Property to comply with all governmental
regulations pertaining to hazardous waste found in, on or under
the Property, regardless of the source of origination; and (iii)
any indemnity or other agreement to hold the Lender harmless
from and against any and all losses, liabilities, damages,
injuries, costs, expenses of any and every kind arising under
Paragraph 3 of this Security Deed or under the Environmental
Indemnity Agreement. Borrower shall not be liable for removal
of any of the foregoing materials from the Property if such
materials were placed on the Property subsequent to the date of
foreclosure of this Security Deed or acceptance of a deed in
lieu thereof, or relinquishment of control of the Property
pursuant to a transfer approved in writing by Lender; provided,
that such transferee assumes in writing all obligations of
Borrower pertaining to Hazardous Materials pursuant to the Loan
Documents. Liability under this subparagraph shall extend
beyond repayment of the Note and compliance with the terms of
this Security Deed unless at such time Borrower provides Lender
an environmental assessment report acceptable to Lender showing
the Property to be free of Hazardous Materials and not in
violation of Hazardous Waste Laws. Borrower shall bear the
burden of proof in establishing the date on which any such
Hazardous Materials were placed on the Property.
(11) (a) any and all costs incurred in order to cause the Property to
comply with the applicable accessibility provisions of The Fair
Housing Act of 1988, as the same may now or hereafter be
amended, and The Americans With Disabilities Act of 1990, as the
same may now or hereafter be amended, and any and all rules and
regulations that may now or
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<PAGE> 22
hereafter be promulgated in connection with said acts, and (b)
any indemnity or other agreement to hold the Lender harmless
from and against any and all losses, liabilities, damages,
injuries, costs and expenses of any and every kind arising under
Paragraph 3 of this Security Deed regarding accessibility for
the disabled or handicapped or under the Accessibility Indemnity
Agreement from Borrower to Lender of even date herewith;
provided, however, Borrower shall not be liable for compliance
with any accessibility laws that first become effective, or for
any violation of any accessibility laws resulting from
alterations or improvements to the Property that are performed,
subsequent to Lender's actually taking possession of the
Property pursuant to foreclosure of this Security Deed or
acceptance of a deed in lieu thereof, or subsequent to any
transfer of ownership of the Property that has the prior written
approval of Lender; provided that such transferee assumes in
writing all obligations of Borrower with respect to compliance
with accessibility laws under this Security Deed and the
Accessibility Indemnity Agreement.
(12) obligations of Borrower for the face amount of any letter of
credit held by Lender and delivered by Borrower in connection
with the loan evidenced by the Notes in the event
Lender is unable to collect the full amount of any such letter
of credit for any reason.
The obligations of Borrower in subparagraphs 1-12 above, except as
provided in subparagraphs 10 and 11, shall survive the repayment and
satisfaction of the Note and compliance with the terms of this Security
Deed.
Notwithstanding any provisions herein to the contrary, Borrower shall
become personally liable for the entire amount due under the Note (including
all principal, interest and other charges) in the event that Borrower (i)
violates the covenants set forth in this Security Deed governing the placing of
subordinate financing on the Property or (ii) violates the covenants set forth
in this Security Deed restricting transfers in the Property or transfers of
ownership interests in Borrower.
Reference is made to that certain Guaranty (the "Guaranty") dated of
even date herewith from Roberts Realty Investors, Inc. in favor of Nationwide
Life Insurance Company and West Coast Life Insurance Company which Guaranty is
being executed and delivered in connection with the loan evidenced by the Note.
Notwithstanding anything in the Note, this Security Deed or any other Loan
Document to the contrary, the foregoing provisions of this paragraph 45 shall
be inapplicable and of no force and effect until such time as the Guaranty
terminates as provided in paragraph 4.08 of the Guaranty.
46. CAPTIONS. The captions set forth at the beginning of the
various paragraphs of this Security Deed are for convenience only and shall not
be used to interpret or construe the provisions of this Security Deed.
47. REASONABLE ATTORNEYS' FEES. As used herein, the phrase
"Reasonable Attorney's Fees" shall mean fees charged by attorneys selected by
Lender based upon such attorney's then prevailing hourly rates, as opposed to
any amount or percentage specified by any statute then in effect in the State
of Georgia.
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<PAGE> 23
IN WITNESS WHEREOF, the said Borrower has caused these presents to be
executed under seal by persons duly authorized thereunto as of the day and year
first above written.
Signed, sealed and delivered Roberts Properties Residential, L.P., a
in the presence of: Georgia limited partnership
/s/ Charles R. Elliott By: Roberts Realty Investors, Inc.,
- ----------------------
Unofficial Witness its sole General Partner
By: /s/ Charles S. Roberts
----------------------
/s/ Shirley S. Sokolowski Name: Charles S. Roberts
- -------------------------
Notary Public Title: President
My Commission Expires: (CORPORATE SEAL)
(NOTARY SEAL)
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<PAGE> 24
EXHIBIT A
ALL THAT TRACT of land in Land Lots 282, 283, 304 and 305 of the 6th District,
Gwinnett County, Georgia, described as follows:
BEGINNING at a point on the southwest right-of-way line of Holcomb Bridge Road
(right-of-way varies) at the mitered intersection of the southwest right-of-way
line of Holcomb Bridge Road with the southeast right-of-way line of Peachtree
Corners Circle (right-of-way varies); running thence along the southwest
right-of-way line of Holcomb Bridge Road, the following courses and distances:
(1) South 31 degrees 05 minutes 11 seconds East 240.20 feet to a point, (2)
South 18 degrees 44 minutes 55 seconds East 32.76 feet to a point, (3) South 31
degrees 05 minutes 11 seconds East 55.00 feet to a point, (4) along the arc of
a curve to the right (which arc is subtended by a chord having a bearing and
distance of South 26 degrees 57 minutes 03 seconds East 183.65 feet and a
radius of 1276.14 feet) 183.81 feet to a point, (5) South 33 degrees 10 minutes
40 seconds East 36.20 feet to a point, (6) along the arc of a curve to the
right (which arc is subtended by a chord having a bearing and distance of South
17 degrees 07 minutes 18 seconds East 184.04 feet and a radius of 1283.14 feet)
184.20 feet to a point, (7) South 78 degrees 05 minutes 16 seconds West 34.80
feet to a point, (8) along the arc of a curve to the right (which arc is
subtended by a chord having a bearing and distance of South 02 degrees 42
minutes 57 seconds East 13.64 feet and a radius of 1248.14 feet) 13.64 feet to
a point, (9) South 13 degrees 18 minutes 23 seconds East 22.84 feet to a point,
(10) North 76 degrees 41 minutes 29 seconds East 35.86 feet to a point, and
(11) South 40 degrees 59 minutes 25 seconds East 2.98 feet to an iron pin set;
thence, leaving said right-of- way line, South 47 degrees 13 minutes 01 second
West 419.29 feet to a 1/2-inch open top pipe found; thence North 49 degrees 46
minutes 02 seconds West 186.59 feet to a 1/2-inch reinforcing bar found; thence
South 69 degrees 46 minutes 22 seconds West 178.24 feet to a 1/2-inch
reinforcing bar found; thence South 77 degrees 26 minutes 14 seconds West 86.66
feet to a 1/2-inch reinforcing bar found; thence North 16 degrees 25 minutes 02
seconds West 168.42 feet to a 1/2- inch open top pipe found; thence North 73
degrees 33 minutes 26 seconds East 117.01 feet to a 1/2-inch reinforcing bar
found; thence North 21 degrees 15 minutes 52 seconds West 451.21 feet to a
1/2-inch reinforcing bar found on the southeast right-of-way line of Peachtree
Corners Circle (right-of-way varies); running thence along the southeast right-
of-way line of Peachtree Corners Circle the following courses and distances:
(1) along the arc of a curve to the right (which arc is subtended by a chord
having a bearing and distance of North 43 degrees 07 minutes 22 seconds East
357.50 feet and a radius of 2708.52 feet) 357.76 feet to a point, and (2) North
45 degrees 49 minutes 25 seconds East 114.12 feet to a point at the mitered
intersection of the southeast right-of-way line of Peachtree Corners Circle
with the southwest right-of-way line of Holcomb Bridge Road; thence leaving the
southeast right-of-way line of Peachtree Corners Circle, South 82 degrees 08
minutes 54 seconds East 147.31 feet to the POINT OF BEGINNING, said tract
containing approximately 11.7434 acres as shown on plat of As-Built Survey for:
Nationwide Life Insurance Company, West Coast Life Insurance Company,
Commonwealth Land Title Insurance Company and Roberts Properties Residential,
L.P. prepared by David A. Burre Engineers & Surveyors, Inc., bearing the seal
and certification of David A. Burre, Georgia Registered Land Surveyor No. 1965,
dated January 10, 1997, last revised January 29, 1997.
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<PAGE> 25
EXHIBIT B
1. General and special taxes and assessments for the year 1997 and
subsequent years, not yet due and payable.
2. Easement from John H. Sutter to Georgia Power Company, dated July 5,
1945, and recorded in Deed Book 77, page 75, Gwinnett County, Georgia
records.
3. Easement from C.E. Renfroe to Georgia Power Company, dated June 19,
1947, and recorded in Deed Book 87, page 85, aforesaid records.
4. Easement from John H. Sutton to Georgia Power Company, dated June 23,
1947, and recorded in Deed Book 87, page 86, aforesaid records.
5. Right-of-Way Easement from J.D. Kelley to Georgia Power Company, dated
May 28, 1952, and recorded in Deed Book 106, page 310, aforesaid
records.
6. Easement from Duke Enterprises, Inc. to Georgia Power Company, dated
October 7, 1971, and recorded in Deed Book 455, page 195, aforesaid
records.
7. Easement from Lee Investment, Inc. to Georgia Power Company, dated
August 14, 1973, and recorded in Deed Book 714, page 200, aforesaid
records.
8. 10-foot Sewer Easement by Peachtree Corners, Inc. reserved in Warranty
Deed, dated June 15, 1973, and recorded in Deed Book 682, page 36,
aforesaid records.
9. Covenant restricting property to multi-family use contained in Limited
Warranty Deed from Valley Investors, Ltd., a Georgia limited
partnership, to Roberts Properties, Inc., dated August 16, 1994, filed
for record August 17, 1994, and recorded in Deed Book 10604, page 103,
aforesaid records.
10. Easement from Roberts Properties Residential, L.P. to BellSouth
Telecommunications, Inc., dated June 26, 1995, filed for record June
30, 1995, and recorded in Deed Book 11441, page 222, aforesaid
records.
11. Water Metering Device Easement from Roberts Properties Residential,
L.P., a Georgia limited partnership, to Gwinnett County, dated January
28, 1997, recorded or to be recorded in the aforesaid records.
12. Easement from Roberts Properties Residential, L.P., a Georgia limited
partnership, to Georgia Power Company, dated February 26, 1996, filed
for record April 15, 1996, and recorded in Deed Book 12566, page 153,
aforesaid records.
13. Easement from Roberts Properties Residential, L.P. to BellSouth
Telecommunications, Inc., dated September 27, 1996, filed for record
October 17, 1996, and recorded in Deed Book 13336, page 196, aforesaid
records.
14. Rights of tenants in possession of individual apartment units, as
tenants only.
15. The following matters disclosed by plat of As-Built Survey for
Nationwide Life Insurance Company, West Coast Life Insurance Company,
Commonwealth Land Title Insurance Company and Roberts Properties
Residential, L.P., prepared by David A. Burre Engineers & Surveyors,
Inc., dated January 10, 1997, last revised January 29, 1997, bearing
the seal and certification of David A. Burre, Georgia Registered Land
Surveyor No. 1965:
a) 15-foot x 30-foot access easement, water vault and D.D.C.
valve located on subject property along Peachtree Corners
Circle;
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<PAGE> 26
b) water lines, water valves and fire hydrants located throughout
the subject property;
c) light poles located throughout the subject property;
d) proposed 20-foot sanitary sewer easement in southwest corner
of subject property;
e) 15-foot by 30-foot access easement located along Holcomb
Bridge Road, pursuant to Water Metering Device Easement
recorded in Deed Book 12544, page 179, aforesaid records;
f) Southern Bell Company Easement Area No. 1 located on the
subject property along Holcomb Bridge Road;
g) Power pole located on subject property along Holcomb Bridge
Road;
h) Southern Bell boxes and transformer boxes located throughout
subject property;
i) Southern Bell Company Easement Area No. 2 and Easement Area
No. 3 located along the southern boundary line of the subject
property; and
j) creek crossing the southeastern portion of the subject
property.
16. Rights of upper and lower riparian owners in and to the waters of the
creek crossing the subject property, and the natural flow thereof,
free from diminution or pollution.
17. Water Metering Device Easement from Roberts Properties Residential,
L.P., a Georgia limited partnership, to Gwinnett County, dated March
6, 1996, filed for record April 9, 1996, and recorded in Deed Book
12544, page 179, aforesaid records.
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<PAGE> 27
EXHIBIT C
Schedule 1
(Description of "Debtor" and "Secured Party")
A. Debtor:
1. Name and Identity or Corporate Structure: Roberts Properties
Residential, L.P., a Georgia limited partnership.
2. The principal place of business of Debtor in the State of
Georgia is located at 8010 Roswell Road, Suite 120, Atlanta,
Georgia 30350.
3. Debtor has been using or operating without change under the name
and identity indicated in item 1 above for the following time
period: Since July 22, 1994.
B. Secured Party:
Nationwide Life Insurance Company
West Coast Life Insurance Company
Schedule 2
(Notice Mailing Address of "Debtor" and "Secured Party")
A. The mailing address of Debtor is:
Roberts Properties Residential, L.P.
8010 Roswell Road
Suite 120
Atlanta, Georgia 30350
B. The mailing address of Secured Party is:
West Coast Life Insurance Company
c/o Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, Ohio 43215-2220
Attn: Real Estate Investments
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, Ohio 43215-2220
Attn: Real Estate Investments
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<PAGE> 28
Return to:
Charles A. Brake, Jr., Esq.
Alston & Bird
One Atlantic Center
1201 West Peachtree St.
Atlanta, Georgia 30309-3424
ASSIGNMENT OF LEASES, RENTS, AND PROFITS
THIS ASSIGNMENT OF LEASES, RENTS AND PROFITS (hereinafter referred to as
"Assignment") is executed and delivered this 30th day of January, 1997, by
Roberts Properties Residential, L.P., a Georgia limited partnership
(hereinafter referred to as "Assignor"), to and in favor of NATIONWIDE LIFE
INSURANCE COMPANY, an Ohio corporation, its successors or assigns, having its
principal office at One Nationwide Plaza, Columbus, Ohio 43215-2220 Attention:
Real Estate Investments and WEST COAST LIFE INSURANCE COMPANY, a California
corporation whose address is c/o Nationwide Life Insurance Company, One
Nationwide Plaza, Columbus, Ohio 43215-2220, Attention: Real Estate
Investments,(hereinafter collectively referred to as the "Assignee");
W I T N E S S E T H:
WHEREAS, Assignor is the present owner in fee simple of certain real
property located in Gwinnett County, Georgia more particularly described on
Exhibit "A" attached hereto and by this reference made a part hereof
(hereinafter referred to as the "Real Property"); and
WHEREAS, Assignee is the owner and holder of a Deed to Secure Debt and
Security Agreement of even date herewith (hereinafter referred to as the
"Security Deed") encumbering the Real Property and other Property more
specifically described in the Security Deed (all of which property is referred
to herein and in the Security Deed as the "Property"), which Deed secures the
payment of a Real Estate Note A and Real Estate Note B of even date herewith in
the aggregate amount of SIX MILLION FOUR HUNDRED TWENTY THOUSAND AND NO/100
DOLLARS ($6,420,000.00) made by Assignor as Maker to and in favor of Assignee
as Holder (hereinafter collectively referred to as the "Note");
WHEREAS, Assignee, as a condition to making the aforesaid loan and to
obtain additional security therefor, has required the execution of this
Assignment by Assignor; and
NOW THEREFORE, in order further to secure the payment of the
indebtedness of Assignor to Assignee evidenced by the Note, and secured by the
Security Deed, and in further consideration of the sum of TEN AND NO/100
DOLLARS ($10.00) in hand paid by Assignee to Assignor, the receipt and
sufficiency of which are hereby acknowledged, Assignor does hereby sell,
assign, transfer and set over unto Assignee all of the leases (and guarantees
thereof), rents, issues, profits and income of, from or pertaining to the
Property, including, but not limited to any fees that permit the tenant to
terminate its lease which fees are payable to the landlord under the terms and
conditions of any of the Property's leases. This Assignment shall include any
and all leases or rental agreements and guarantees thereof that may now be in
effect specifically including without limitation those leases and guarantees
set forth in Exhibit B attached hereto and by this reference made a part
hereof, as well as any future or additional leases or rental agreements and
guarantees thereof, and any renewals or extensions of the same, that may be
entered into by Assignor. Assignor hereby agrees to execute and deliver such
further assignments of said leases or rental agreements or guarantees thereof
as Assignee may from time to time request.
This Assignment is absolute and effective immediately and without
possession. Notwithstanding the foregoing, Assignor shall have a license to
receive, collect and enjoy the rents, issues, profits and income accruing from
the Property until a default has occurred under the Note, the Security Deed or
any other instrument evidencing or securing the Note. Upon the occurrence of a
default, the license shall cease automatically, without need of notice,
possession, foreclosure or any other act or procedure, and all leases, rents,
issues, profits and income assigned hereby shall thereafter be payable to
Assignee.
PROVIDED, ALWAYS that if the Assignor shall pay unto the Assignee the
indebtedness evidenced by the Note, and if the Assignor shall duly, promptly
and fully perform, discharge, execute, effect, complete, comply with and abide
by each and every one of the agreements, conditions and covenants of the Note,
the Security Deed, this Assignment and all other instruments executed by
Assignor to and in favor of Assignee as further evidence of or as additional
security for the indebtedness
<PAGE> 29
(hereinafter together referred to as the "Loan Documents"), then this
Assignment and the estates and interests hereby granted and created shall
terminate.
REPRESENTATIONS AND WARRANTIES OF ASSIGNOR
1. In furtherance of the foregoing assignment, Assignor:
A. Represents and warrants that it is the owner in fee
simple of the Property and has good title to the leases, rents, income,
issues and profits hereby assigned and good right to assign the same,
and that, no other person, entity, firm or corporation has any right,
title or interest therein; that Assignor has not previously sold,
assigned, transferred, mortgaged or pledged said rents, issues, profits,
income and leases of the Property; and that payment of any of the same
has not otherwise been anticipated, waived, released, discounted, set
off or otherwise discharged or compromised.
B. Agrees and warrants that, without the prior written
consent of the Assignee, except for matters normally occurring in
connection with the operation of a garden apartment community, the terms
of any and all leases will not be amended, altered, modified or changed
in any manner whatsoever, nor will they be surrendered or canceled, nor
will any proceedings for dispossession or eviction of any lessee under
said leases be instituted by Assignor.
C. Agrees and warrants that no request will be made of any
lessee to pay any rent, and no rent will be accepted by Assignor, for
more than one month in advance of the date such rent becomes due and
payable under the terms of any and all leases, it being agreed between
Assignor and Assignee that rent shall be paid as provided in said leases
and not otherwise. The foregoing shall not prevent Assignor from
charging and collecting security deposits from each tenant leasing space
on the Real Property.
D. Authorizes Assignee, by and through its employees or
agents or a duly appointed receiver, at its option, after the occurrence
of a default under this Assignment, the Note, the Security Deed or any
of the Loan Documents, to enter upon the Property and to collect, in the
name of Assignor, as its lawful attorney, or in its own name as
assignee, any rents, income or profits accrued but unpaid and/or in
arrears at the date of such default, as well as the rents, income or
profits thereafter accruing and becoming payable during the period of
the continuation of the said default or any other default. To this end,
Assignor further agrees that it will cooperate with and facilitate, in
all reasonable ways, Assignee's collection of said rents, income or
profits and will, upon request by Assignee, execute a written notice to
each tenant, occupant or licensee directing said tenant, occupant or
licensee to pay directly to Assignee all income, rents and profits due
and payable under said leases; provided, however, that Assignee may
notify said tenant, occupant or licensee of the effectiveness of this
Assignment without giving notice to Assignor or requesting Assignor to
give such notice or join in such notice.
E. Authorizes Assignee, upon such entry as specified in
"D." above, at its option, to take over and assume the management,
operation and maintenance of the Property and to perform all acts
necessary and proper, and to expend such sums out of the income of the
Property as in Assignee's sole discretion may be reasonable or necessary
in connection therewith, in the same manner and to the same extent as
Assignor theretofore might do. Assignor hereby releases all claims
against Assignee arising out of such management, operation and
maintenance.
F. Agrees to execute, upon the request of the Assignee,
any and all other instruments requested by the Assignee to effectuate
this Assignment or to accomplish any other purpose deemed by the
Assignee to be necessary or appropriate in connection with, this
Assignment.
G. Agrees and acknowledges that nothing in this Assignment
shall be construed to limit or restrict in any way the rights and powers
granted to Assignee in the Note, the Security Deed or any of the other
Loan Documents. The collection and application of the rents, issues and
profits as described herein shall not constitute a waiver of any default
which might at the time of application or thereafter exist under the
Note, the Security Deed or any of the other Loan Documents, and the
exercise by Assignee of the rights herein provided shall not prevent
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<PAGE> 30
Assignee's exercise of any rights provided under the Note, the Security
Deed or any of the other Loan Documents.
ASSIGNEE'S RIGHTS FOLLOWING DEFAULT BY ASSIGNOR
2. Assignee may, after the occurrence of a default as hereinabove
provided, from time to time, appoint and dismiss such agents or employees as
shall be necessary or reasonable for the collection of the rents, issues and
profits derived from the Property and for the proper care and operation of the
Property, and Assignor hereby grants to Assignee the authority to give such
agents or employees so appointed full and irrevocable authority on Assignor's
behalf to manage the Property and to do all acts relating to such management,
including, without limitation, the entry into and execution of new leases in
the name of the Assignor or otherwise, the alteration or amendment of existing
leases, the authorization to repair or replace any items necessary in order to
maintain the building or buildings and chattels incidental thereto in good and
tenantable condition, and the effectuation of such alterations or improvements
as in the judgment of the Assignee may be reasonable or necessary to maintain
or increase the income from the Property. Assignee shall have the sole control
of such agents or employees, whose remuneration shall be paid out of the rents,
issues and profits as hereinabove provided, at the rate of compensation
accepted in the community wherein the Property is situated.
APPLICATION BY ASSIGNEE OF NET INCOME FROM THE PROPERTY
3. Assignee shall, after payment of all charges and expenses
enumerated under Paragraph 2 above, and after retaining sufficient sums to meet
taxes, assessments, utilities and insurance coverages in requisite amounts
(including liability, fire and extended coverage), credit the net income
received by Assignee from the Property, by virtue of this Assignment, to any
amounts due and owing to Assignee by Assignor under and pursuant to the terms
of the Note and the Security Deed, but the manner of the application of such
net income shall be determined in the sole discretion of Assignee. Assignee
shall make a reasonable effort to collect rents, income and profits, reserving,
however, within its sole discretion, the right to determine the method of
collection and the extent to which enforcement of the collection of delinquent
rents, income and profits shall be prosecuted. Notwithstanding the foregoing,
no such credit shall be given by Assignee for any sum or sums received from the
rents, issues and profits of the Property until the sums collected are actually
received by Assignee at its principal office as stated above (or at such other
place as Assignee shall designate in writing), and no credit shall be given for
any uncollected rents or other uncollected amounts or bills, nor shall credit
be given for any rents, issues and profits derived from the Property under any
order of court or by operation of law until such amounts are actually received
by Assignee at its principal offices stated above. The net amount of income
received by Assignee hereunder applied by Assignee to the amounts due and owing
by the Assignor shall not serve to cure any default under the Note, the
Security Deed or any of the Loan Documents, nor shall any amounts received by
Assignee hereunder be in full satisfaction of the indebtedness evidenced by the
Note unless such amounts are sufficient to pay such indebtedness in full
(including any prepayment premiums, late payment charges, and advancements) in
accordance with the terms of the Note, the Security Deed and the other Loan
Documents.
LIMITATION OF ASSIGNEE'S LIABILITY
4. Assignee shall not be obligated to perform or discharge any
obligation under the leases hereby assigned or under or by reason of this
Assignment, and Assignor hereby agrees to indemnify and hold Assignee harmless
against any and all liability, loss or damage which Assignee might incur under
the leases or under or by reason of this Assignment and of and from any and all
claims and demands whatsoever which may be asserted against Assignee by reason
of any alleged obligation or undertaking on Assignee's part to perform or
discharge any of the terms of such leases, except for claims and demands
arising by reason of Assignee's gross negligence or willful misconduct.
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<PAGE> 31
REINSTATEMENT AFTER DEFAULT
5. In the event that Assignor shall, with the consent of Assignee,
reinstate the indebtedness evidenced by the Note completely in good standing,
having complied with all the terms, covenants and conditions of the Note,
Security Deed, this Assignment and all of the other Loan Documents, then, in
such event, Assignee shall return possession of the Property to Assignor, and
Assignor shall remain in possession of the Property unless and until another
default occurs under the Note, the Security Deed, this Assignment or any of the
other Loan Documents, at which time Assignee may, at its option, again take
possession of the Property under authority of and pursuant to the terms and
provisions of this Assignment.
TENANT'S NOTIFICATION OF ASSIGNMENT
6. Upon request by Assignee, at any time, Assignor will deliver a
written notice to each of the tenants and lessees of the Property, which notice
shall inform such tenants and lessees of this Assignment and instruct them that
upon receipt of notice by them from Assignee of the existence of a default by
Assignor under the Note, the Security Deed or any of the other Loan Document,
all rent due thereafter shall be paid directly to Assignee.
SATISFACTION OF SECURITY DEED; SATISFACTION OF ASSIGNMENT
7. This Assignment shall remain in full force and effect as long as
the indebtedness evidenced by the Note and secured by the Security Deed remain
unpaid in whole or in part. It is understood and agreed that a complete
release or satisfaction of the aforesaid Security Deed shall operate as a
complete release or satisfaction of all of Assignee's rights and interest
hereunder, and that satisfaction of the Security Deed shall operate to satisfy
this Assignment.
EXCULPATION
8. The liability of Assignor with respect to the payment of
principal and interest under the Note shall be "non-recourse" and, accordingly,
Assignee's source of satisfaction of said indebtedness and Assignor's other
obligations hereunder and under the other Loan Documents shall be limited to
the Property and Assignee's receipt of the rents, issues and profits from the
Property, and Assignee shall not seek to procure payment out of any other
assets of Assignor or any person or entity comprising Assignor, nor to seek
judgment (except as hereinafter provided) for any sums which are or may be
payable under the Note or under any of the other Loan Documents, as well as any
claim or judgment (except as hereafter provided) for any deficiency remaining
after foreclosure of the Security Deed. Notwithstanding the above, nothing
herein contained shall be deemed to be a release or impairment of the
indebtedness evidenced by the Note or the security therefor intended by the
other Loan Documents or be deemed to preclude Assignee from exercising its
rights to foreclose, or to exercise the power of sale contained in, the
Security Deed or to enforce any of its other rights or remedies under the Loan
Documents.
Notwithstanding the foregoing, it is expressly understood and agreed
that the aforesaid limitation on liability shall in no way affect or apply to
Assignor's continued personal liability for:
(A) fraud or intentional misrepresentation made in or in connection
with the Note or any of the other Loan Documents governing,
securing or pertaining to the payment thereof;
(B) failure to pay taxes prior to delinquency or to pay assessments
prior to delinquency or to pay charges for labor, materials or
other charges which can create liens on any portion of the
Property;
(C) the misapplication of (i) proceeds of insurance covering any
portion of the Property, or (ii) proceeds of the sale or
condemnation of any portion of the Property, or (iii) rentals
held or received by or on behalf of Assignor subsequent to the
date on which Assignee makes written demand therefor pursuant to
any of the Loan Documents;
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<PAGE> 32
(D) causing or permitting waste to occur on, in or about the
Property, and failure to maintain the Property, excepting
ordinary wear and tear;
(E) loss by fire or casualty to the extent not compensated by
insurance proceeds collected by Assignee;
(F) the return to Assignee of all unearned advance rentals and
security deposits paid by tenants of the Property and not
refunded to or forfeited by such tenants;
(G) the return to Assignor of any and all fees paid to Assignee by
tenants of the Property which fees permit tenants to terminate
their leases;
(H) the return of, or reimbursement for, all personalty owned by
Assignor taken from the Property by or on behalf of Assignor out
of the ordinary course of business, and not replaced by
personalty of equal or greater value than the original value of
the personalty so removed;
(I) all court costs and Reasonable Attorneys' Fees actually incurred
which are provided for in the Note or in any other Loan Document
governing, securing or pertaining to the payment of the Note;
(J) (i) the removal of any chemical, material or substance, exposure
to which is prohibited, limited or regulated by any Federal,
State, County, Regional or Local Authority which may or could
pose a hazard to the health and safety of the occupants of the
Property; and (ii) the restoration of the Property to comply
with all governmental regulations pertaining to hazardous waste
found in, on or under the Property regardless of the source of
origination; and (iii) any indemnity or other agreement to hold
the Assignee harmless from and against any and all losses,
liabilities, damages, injuries, costs, expenses of any and every
kind arising under Paragraph 3 of the Security Deed or under
that certain Environmental Indemnity Agreement from Assignor to
Assignee of even date herewith. Assignor shall not be liable
hereunder if such materials were placed on the Property
subsequent to the date of foreclosure of the Security Deed by
Assignee or acceptance of a deed in lieu thereof, or
relinquishment of control of the Property pursuant to a transfer
approved in writing by Assignee; provided such transferee
assumes in writing all obligations of Maker pertaining to the
Loan Documents. Liability under this subparagraph shall extend
beyond repayment of the Note and compliance with the terms of
the Security Deed, unless at such time Assignor provides
Assignee with an environmental assessment report acceptable to
Assignee showing the Property to be free of Hazardous Materials
and not in violation of Hazardous Waste Laws (as defined in the
Security Deed). Assignor shall bear the burden of proof in
establishing the date on which any such Hazardous Materials were
placed or appeared in, on or under the Property.
(K) (a) any and all costs incurred in order to cause the Property to
comply with the applicable accessibility provisions of The Fair
Housing Act of 1988, as the same may now or hereafter be
amended, and any and all rules and regulations that may now or
hereafter be promulgated in connection with said acts, and (b)
any indemnity or other agreement to hold the Assignee harmless
from and against any and all losses, liabilities, damages,
injuries, costs and expenses of any and every kind arising under
Paragraph 3 of the Security Deed regarding accessibility for the
disabled or handicapped or under the Accessibility Indemnity
Agreement from Assignor to Assignee of even date herewith;
provided, however, Assignor shall not be liable for compliance
with any accessibility laws that first become effective, or for
any violation of any accessibility laws resulting from
alterations or improvements to the Property that are performed,
subsequent to Assignee's actually taking possession of the
Property pursuant to foreclosure of the Security Deed or
acceptance of a deed in lieu thereof, or subsequent to any
transfer of ownership of the Property that has the prior written
approval of Assignee; provided that such transferee assumes in
writing all obligations of Assignor with respect to compliance
with accessibility laws under the Security Deed and
Accessibility Indemnity Agreement.
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<PAGE> 33
(L) obligations of Assignor for the face amount of any letter of
credit held by Assignee and delivered by Assignor in connection
with the loan evidenced by the Note in the event Assignor is
unable to collect the full amount of any such letter of credit
for any reason.
The obligations of Assignor in subparagraphs (A) through (L) above,
except as provided in (J) and (K), shall survive the repayment and satisfaction
of the Note and compliance with the terms of the Security Deed.
Notwithstanding anything in this Paragraph 8 to the contrary, this Paragraph 8
shall not be applicable, and Assignor shall be fully liable for Assignor's
obligations hereunder, as well as under the Note, the Security Deed and the
other Loan Documents, in the event there is a default by Assignor under Section
30 or Section 31 of the Security Deed.
Reference is made to that certain Guaranty (the "Guaranty") dated of
even date herewith from Roberts Realty Investors, Inc. in favor of Nationwide
Life Insurance Company and West Coast Life Insurance Company which Guaranty is
being executed and delivered in connection with the loan evidenced by the Note.
Notwithstanding anything in the Note or any other Loan Document to the
contrary, the foregoing provisions of this paragraph 8 shall be inapplicable
and of no force and effect until such time as the Guaranty terminates as
provided in paragraph 4.08 of the Guaranty.
GOVERNING LAWS
9. This Assignment is executed and delivered as additional Security for
a loan transaction negotiated and consummated in Gwinnett County, Georgia and
is to be construed according to the laws of the State of Georgia, and the laws
of the United States.
REASONABLE ATTORNEYS' FEES
10. As used herein, the phrase "Reasonable Attorneys' Fees" shall mean
fees charged by attorneys selected by Assignee based upon such attorneys
then-prevailing hourly rates as opposed to any amount or percentage specified
by any statute then in effect in the State of Georgia.
SUCCESSORS AND ASSIGNS
11. The provisions of this Agreement shall inure to the benefit of
Assignee and its successors and assigns and shall be binding upon Assignor, its
personal representatives, successors and assigns. The creation of rights and
powers under this Agreement in favor of or available to Assignee shall, in no
way whatsoever, be construed to impose concomitant duties or obligations on
Assignee in favor of Assignor except as expressly set forth herein.
IN WITNESS WHEREOF, the undersigned has caused this Assignment of
Leases, Rents and Profits to be executed under seal by persons duly authorized
thereunto as of the day and year first above written.
Signed, sealed and delivered ROBERTS PROPERTIES RESIDENTIAL,
in the presence of: L.P., a Georgia limited partnership
/s/ Charles R. Elliott
- ----------------------
Unofficial Witness By: Roberts Realty Investors, Inc.,
its sole General Partner
/s/ Shirley S. Sokolowski By: /s/ Charles S. Roberts
- ------------------------- ----------------------
Notary Public Name: Charles S. Roberts
Title: President
My Commission Expires:
______________________ (Corporate Seal)
(NOTARY SEAL)
- 6 -
<PAGE> 34
EXHIBIT A
ALL THAT TRACT of land in Land Lots 282, 283, 304 and 305 of the 6th District,
Gwinnett County, Georgia, described as follows:
BEGINNING at a point on the southwest right-of-way line of Holcomb Bridge Road
(right-of-way varies) at the mitered intersection of the southwest right-of-way
line of Holcomb Bridge Road with the southeast right-of-way line of Peachtree
Corners Circle (right-of-way varies); running thence along the southwest
right-of-way line of Holcomb Bridge Road, the following courses and distances:
(1) South 31 degrees 05 minutes 11 seconds East 240.20 feet to a point, (2)
South 18 degrees 44 minutes 55 seconds East 32.76 feet to a point, (3) South 31
degrees 05 minutes 11 seconds East 55.00 feet to a point, (4) along the arc of
a curve to the right (which arc is subtended by a chord having a bearing and
distance of South 26 degrees 57 minutes 03 seconds East 183.65 feet and a
radius of 1276.14 feet) 183.81 feet to a point, (5) South 33 degrees 10 minutes
40 seconds East 36.20 feet to a point, (6) along the arc of a curve to the
right (which arc is subtended by a chord having a bearing and distance of South
17 degrees 07 minutes 18 seconds East 184.04 feet and a radius of 1283.14 feet)
184.20 feet to a point, (7) South 78 degrees 05 minutes 16 seconds West 34.80
feet to a point, (8) along the arc of a curve to the right (which arc is
subtended by a chord having a bearing and distance of South 02 degrees 42
minutes 57 seconds East 13.64 feet and a radius of 1248.14 feet) 13.64 feet to
a point, (9) South 13 degrees 18 minutes 23 seconds East 22.84 feet to a point,
(10) North 76 degrees 41 minutes 29 seconds East 35.86 feet to a point, and
(11) South 40 degrees 59 minutes 25 seconds East 2.98 feet to an iron pin set;
thence, leaving said right-of- way line, South 47 degrees 13 minutes 01 second
West 419.29 feet to a 1/2-inch open top pipe found; thence North 49 degrees 46
minutes 02 seconds West 186.59 feet to a 1/2-inch reinforcing bar found; thence
South 69 degrees 46 minutes 22 seconds West 178.24 feet to a 1/2-inch
reinforcing bar found; thence South 77 degrees 26 minutes 14 seconds West 86.66
feet to a 1/2-inch reinforcing bar found; thence North 16 degrees 25 minutes 02
seconds West 168.42 feet to a 1/2- inch open top pipe found; thence North 73
degrees 33 minutes 26 seconds East 117.01 feet to a 1/2-inch reinforcing bar
found; thence North 21 degrees 15 minutes 52 seconds West 451.21 feet to a
1/2-inch reinforcing bar found on the southeast right-of-way line of Peachtree
Corners Circle (right-of-way varies); running thence along the southeast right-
of-way line of Peachtree Corners Circle the following courses and distances:
(1) along the arc of a curve to the right (which arc is subtended by a chord
having a bearing and distance of North 43 degrees 07 minutes 22 seconds East
357.50 feet and a radius of 2708.52 feet) 357.76 feet to a point, and (2) North
45 degrees 49 minutes 25 seconds East 114.12 feet to a point at the mitered
intersection of the southeast right-of-way line of Peachtree Corners Circle
with the southwest right-of-way line of Holcomb Bridge Road; thence leaving the
southeast right-of-way line of Peachtree Corners Circle, South 82 degrees 08
minutes 54 seconds East 147.31 feet to the POINT OF BEGINNING, said tract
containing approximately 11.7434 acres as shown on plat of As-Built Survey for:
Nationwide Life Insurance Company, West Coast Life Insurance Company,
Commonwealth Land Title Insurance Company and Roberts Properties Residential,
L.P. prepared by David A. Burre Engineers & Surveyors, Inc., bearing the seal
and certification of David A. Burre, Georgia Registered Land Surveyor No. 1965,
dated January 10, 1997, last revised January 29, 1997.
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<PAGE> 1
EXHIBIT 10.5.15
AGREEMENT REGARDING LETTER OF CREDIT
THIS AGREEMENT is made this 30th day of January, 1997 by Roberts
Properties Residential, L.P., a Georgia limited partnership ("BORROWER") for
the benefit of Nationwide Life Insurance Company ("NATIONWIDE"), and West Coast
Life Insurance Company ("WEST COAST"; Nationwide and West Coast sometimes being
referred to hereafter collectively as "LENDER")
WHEREAS, Lender has issued its commitment to make a $6,420,000 loan
(the "LOAN") to Borrower to be evidence by a real estate note in the amount of
$5,670,000 in favor of Nationwide and a real estate note in the amount of
$750,000 in favor of West Coast (collectively, the "NOTE");
WHEREAS, the Loan is to be secured by a Deed to Secure Debt and
Security Agreement (the "SECURITY DEED") encumbering certain real property in
Gwinnett County, Georgia;
WHEREAS, in connection with the Loan, Borrower has delivered to
Nationwide that certain Irrevocable Standby letter of Credit No. S11732 (the
"LETTER OF CREDIT") in the amount of $1,140,000.00, issued by First Union
National Bank of Georgia, being dated January 27, 1997 and having an expiration
date of January 30, 1998;
WHEREAS, the purpose of this Agreement is to set forth the terms and
conditions under which the Letter of Credit will be returned to Borrower and
the terms and conditions under which Lender and its successors and assigns
shall be entitled to draw down the proceeds of the Letter of Credit.
AGREEMENT
NOW THEREFORE, in consideration of the Loan, Ten Dollars ($10.00) in
hand paid by Lender to Borrower, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Borrower and Lender hereby acknowledge and agree that the
recitals set forth above are true and correct. The Loan is evidenced by the
Note and secured by, among other things, the Security Deed. The Note, the
Security Deed and any other documents evidencing or securing the indebtedness
evidenced by the Note are hereinafter referred to as the "LOAN DOCUMENTS."
2. Provided there is then no default or event of default under
any of the Loan Documents, or event or circumstance which with the giving of
notice, passage of time, or both, would constitute a default or event of
default under any of the Loan Documents, and provided that Lender has not
previously drawn on the Letter of Credit as provided in paragraph 3 below, upon
written request Lender will release the Letter of Credit and return the same to
Borrower if at such time the "Net Operating Income" (as hereafter defined)
generated by the "Property" (as hereafter defined) is at least equal to one
hundred ten percent (110%) of the annual debt service payments due under the
terms of the Loan Documents for a period of at least three (3) consecutive
calendar months (the "Shortfall Coverage Test"). For purposes of this
paragraph 2, "Net Operating Income" shall mean the "Rents" (as hereafter
defined) minus the "Operating Expenses" (as hereafter defined). For purposes
of this paragraph 2, the following terms shall have the following meanings:
A. "Rents" means the annualized rents and expense reimbursements
(if any) to be received from tenants of the Property pursuant
to leases approved by Lender (unless Lender's approval of any
such leases is not required in accordance with paragraph 12 of
the Security Instrument) where the tenants are actually paying
rent (i.e., any free rent periods must have expired) and such
tenants are actually in occupancy.
<PAGE> 2
B. "Operating Expenses" means the greater of (i) the annualized
expenses of operating and maintaining the Property which shall
include, without limitation, a management fee equal to four
percent (4%) of the annualized Rents, or (ii) $494,632. For
purposes of calculating Operating Expenses, property tax
expenses shall be calculated assuming that all improvements to
be built pursuant to plans and specifications delivered to
Lender in connection with the Loan have been completed and
fully assessed and using the most recent tax rate available
(whether certified or not).
C. "Property" means the land described on Exhibit A to
the Security Deed together with all buildings and improvements
constructed thereon or to be constructed thereon pursuant to
plans and specifications delivered to Lender in connection
with the Loan and together with all appurtenances thereto.
Items to be included in the calculation of Rents and Operating Expenses shall
be as reasonably determined by Lender. At any time that request is made for a
release of the Letter of Credit, Borrower shall deliver to Lender such
information as Lender may request with respect thereto including, without
limitation, (i) a current rent roll certified to be true and correct by
Borrower, (ii) if requested by Lender, true and complete copies of all fully
executed leases which are being used to satisfy the criteria for release, (iii)
unconditional certificates of occupancy for any completed buildings if not
previously delivered, (iv) actual operating statements for the Property
identifying all expenses of operating and maintaining the Property.
3. Lender may draw upon the Letter of Credit (a) if within nine
(9) months from the date hereof Borrower has not delivered to Lender evidence
satisfactory to lender that the Shortfall Coverage Test has been satisfied, (b)
if there is a default or event of default under the Loan Documents which is not
cured within any applicable notice and/or cure period, or (c) if Borrower is in
default of its agreements under paragraph 5 below. The drawing of proceeds
shall not constitute an election of remedies hereunder or under the Loan
Documents, all of which remedies are cumulative and the exercise of any one or
more remedies shall be without prejudice as to the right to exercise any other
remedy available under the Loan Documents, at law or in equity.
4. If Lender draws down the proceeds of the Letter of Credit as
provided in paragraph 3, Lender, shall apply such proceeds in such order as
Lender may determine in its sole discretion (a) to the payment of the costs and
expenses, including compensation to Lender, its agents and counsel for
reasonable expenses actually incurred in connection with such draw, and (b) to
the payment of the indebtedness evidenced by the Note or secured by the
Security Deed (including principal, interest and fees). Any such moneys
applied to the payment of the indebtedness evidence by the Note or secured by
the Security Deed shall be applied at par (i.e., there shall be no prepayment
premium associated therewith), shall be applied against payments due under the
Note or the Security Deed in the inverse order of maturity, and shall not
suspend or otherwise affect payments due under the Note or the Security Deed.
5. Borrower and Applicant agree that upon any sale or transfer of
the Loan by Lender, Lender shall deliver the Letter of Credit to the purchaser
or transferee who shall thereupon become vested with all the powers and rights
given to Lender or if the Letter of Credit is not by its terms freely
assignable to any such purchaser or other transferee, then Borrower shall, upon
demand of Lender, obtain (or cause to be obtained) a replacement or renewal
Letter of Credit in the name of such purchaser or other transferee; provided,
however, the rights of each purchaser or transferee to the Letter of Credit
shall be subject to the provisions of this Agreement. Lender shall not
otherwise assign or transfer the Letter of Credit.
6. This Agreement shall be binding upon and shall inure to the
benefit of Borrower and Lender and their respective heirs, legal
representatives, successors and
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<PAGE> 3
assigns. This Agreement shall be interpreted, construed and enforced according
to the laws of the State of Georgia.
IN WITNESS WHEREOF, the parties have caused this instrument to be
executed under seal by persons duly authorized thereunto, as of the day and
year first above written.
NATIONWIDE:
-----------
NATIONWIDE LIFE INSURANCE COMPANY
By: /s/ Robert H. McNaghten
-----------------------
Name: Robert H. McNaghten
Title: Vice President
WEST COAST:
-----------
WEST COAST LIFE INSURANCE COMPANY
By: /s/ Robert H. McNaghten
------------------------
Name: Robert H. McNaghten
Title: Vice President
BORROWER:
--------
Roberts Properties Residential,
L.P., a Georgia
limited partnership
By: Roberts Realty Investors,
Inc., its sole General
Partner
By: /s/ Charles S. Roberts
-----------------------
Name: Charles S. Roberts
Title: President
[CORPORATE SEAL]
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<PAGE> 1
EXHIBIT 10.5.16
GUARANTY
THIS GUARANTY is made as of the 30th day of January, 1997 by ROBERTS
REALTY INVESTORS, INC., a Georgia corporation ("Guarantor") in favor of
NATIONWIDE LIFE INSURANCE COMPANY ("Nationwide") and WEST COAST LIFE INSURANCE
COMPANY ("West Coast") (Nationwide and West Coast being collectively referred
to herein as "Lender").
ARTICLE I - BACKGROUND AND AGREEMENT
1.01 Background. Lender has agreed to make a loan (the "Loan") in
the aggregate principal amount of $6,420,000 to Roberts Properties Residential,
L.P., a Georgia limited partnership ("Borrower") evidenced by (a) that certain
Real Estate Note "A" (the "Nationwide Note") of even date herewith in favor of
Nationwide in the principal amount of $5,670,000, and (b) that certain Real
Estate Note "B" (the "West Coast Note") of even date herewith in favor of West
Coast in the principal amount of $750,000 (the Nationwide Note and the West
Coast Note being collectively referred to hereafter as the "Note" (the "Note")
secured by, among other things, that certain deed to secure debt and security
agreement (the "Security Instrument") from Borrower to Lender, dated of even
date herewith and to be recorded in the Gwinnett County, Georgia records (the
Note, the Security Instrument, and any and all other documents or instruments
evidencing, securing or otherwise relating to the indebtedness evidenced by the
Note are hereinafter collectively referred to as the "Loan Documents"). Since
Guarantor is the sole general partner of Borrower, the Loan will be of direct
interest and advantage to Guarantor; and a condition to the making of the Loan
is the delivery of this Guaranty to Lender.
1.02 Statement of Agreement. For and in consideration of the sum
of $10.00 and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by Guarantor, and for the purpose of seeking to
induce Lender to extend credit to Borrower, Guarantor does hereby make the
following guarantees to and agreements with Lender.
ARTICLE II - GUARANTEES
2.01 Guaranty of Payment. Guarantor does hereby unconditionally
guarantee to Lender the full and prompt payment of the Note when due, whether
by acceleration or otherwise, with such interest as may accrue thereon and such
prepayment premiums and other charges as may be due in connection therewith,
either before or after maturity thereof.
2.02 Guaranty of Performance. Guarantor does hereby
unconditionally guarantee to Lender the full and prompt payment and performance
of any and all obligations whatsoever of Borrower and all other parties to
Lender under the terms of the Loan Documents, whether such obligations now
exist or arise hereafter.
2.03 Guarantor Obligations. Guarantor does hereby agree that if
the Note is not paid by Borrower in accordance with its terms for any reason
whatsoever, or if any and all sums which are now or may hereafter become due
from Borrower to Lender under the Loan Documents are not paid by Borrower in
accordance with their terms for any reason whatsoever, Guarantor will
immediately make such payments. Guarantor further agrees to pay Lender all
expenses (including, without limitation, reasonable attorneys' fees) paid or
incurred by Lender in endeavoring to collect all or any portion of the
indebtedness evidenced by the Note, to enforce any other obligations guaranteed
hereby, or to enforce this Guaranty.
<PAGE> 2
2.04 Loan Documents. The provisions of this Guaranty shall extend
and be applicable to all renewals, replacements, amendments, extensions,
consolidations and modifications of the Loan Documents, and any and all
references herein to the Loan Documents or any of them shall be deemed to
include any such renewals, replacements, amendments, extensions, consolidations
or modifications thereof.
ARTICLE III - AGREEMENTS AND WARRANTIES
3.01 Consents. Guarantor hereby consents and agrees that Lender
may at any time, and from time to time, without notice to or further consent
from Guarantor, either with or without consideration: release and surrender any
property or other security of any kind or nature whatsoever now or hereafter
held by it or by any person or entity on its behalf or for its account,
securing any indebtedness or liability hereby guaranteed (the "Collateral");
substitute for any Collateral held by or on behalf of Lender other collateral
of like kind, or of any kind; make overadvances or increase the amount of the
Loan; agree to modify the terms of any one or more of the Loan Documents;
extend or renew the Note for any period; grant releases, compromises and
indulgences with respect to any one or more of the Loan Documents and to any
persons or entities now or hereafter liable thereunder or hereunder; release
any other guarantor or endorser of or other person or entity liable upon the
Note or any other of the Loan Documents; or take or fail to take any action of
any type whatsoever. No such action which Lender shall take or fail to take in
connection with the Loan Documents or any Collateral, nor any course of dealing
with Borrower or any other person, shall limit, impair or release Guarantor's
obligations hereunder, affect this Guaranty in any way or afford Guarantor any
recourse against Lender. Nothing contained in this section shall be construed
to require Lender to take or refrain from taking any action referred to herein.
3.02 Subordination. Guarantor hereby subordinates any and all
indebtedness of Borrower now or hereafter owed to Guarantor to all indebtedness
of Borrower to Lender, and agrees with Lender that Guarantor shall not demand
or accept any payment of principal or interest from Borrower, shall not claim
any offset or other reduction of Guarantor's obligations hereunder because of
any such indebtedness and shall not take any action to obtain any of the
Collateral.
3.03 Waiver of Defenses. Guarantor hereby waives and agrees not to
assert or take advantage of any defense based upon: (a) any incapacity, lack of
authority, death or disability of Guarantor or any other person or entity; (b)
any failure of Lender to commence an action against Borrower or any other
person or entity (including, without limitation, other guarantors, if any) , or
to file or enforce a claim against the estate (either in administration,
bankruptcy, or any other proceeding) of Borrower or any other person or entity,
whether or not demand is made upon Lender to file or enforce such claim; (c)
any failure of Lender to give notice of the existence, creation or incurring of
any new or additional indebtedness or other obligation or of any action or
nonaction on the part of any other person or entity, in connection with the
Loan Documents or any obligation hereby guaranteed; (d) any failure on the part
of Lender to ascertain the extent or nature of the Collateral or any insurance
or other rights with respect thereto, or the liability of any party liable for
the Loan Documents or the obligations evidenced or secured thereby, or any
failure on the part of Lender to disclose to Guarantor any facts it may now or
hereafter know regarding Borrower, the Collateral, or such other parties; (e)
any lack of acceptance or notice of acceptance of this Guaranty by Lender; (f)
any lack of presentment, demand, protest, or notice of demand, protest or
nonpayment with respect to any indebtedness or obligations under any of the
Loan Documents; (g) any lack of notice of disposition or of manner of
disposition of any Collateral; (h) any lack of other notices to which Guarantor
might otherwise be entitled; (i) failure to properly record any document or any
other lack of due diligence by Lender in creating or perfecting a security
interest in or collection, protection or realization upon any Collateral or in
obtaining reimbursement or performance from any person or entity now or
hereafter liable for the Loan Documents or any obligation secured thereby; (j)
any invalidity, irregularity or
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<PAGE> 3
unenforceability, in whole or in part, of any one or more of the Loan
Documents; (k) the inaccuracy of any representation or other provision
contained in any Loan Document; (1) any sale or assignment of the Loan
Documents, in whole or in part; (m) any sale or assignment by Borrower of the
Collateral, or any portion thereof , whether or not consented to by Lender; (n)
any lack of commercial reasonableness in dealing with Collateral; (o) any
deficiencies in the Collateral or any deficiency in the ability of Lender to
collect or obtain performance from any persons or entities now or hereafter
liable for the payment or performance of any obligation hereby guaranteed; (p)
an assertion or claim that the automatic stay provided by 11 U.S.C. Section 362
(arising upon the voluntary or involuntary bankruptcy proceeding of Borrower),
or any other stay provided under any other debtor relief law (whether
statutory, common law, case law or otherwise) of any jurisdiction whatsoever,
now or hereafter in effect, which may be or become applicable, shall operate or
be interpreted to stay, interdict, condition, reduce or inhibit the ability of
Lender to enforce any of its rights, whether now or hereafter acquired, which
Lender may have against Guarantor or the Collateral; (q) any modifications of
the Loan Documents or any obligation of Borrower relating to the Loan by
operation of law or by action of any court, whether pursuant to the Bankruptcy
Reform Act of 1978, as amended, or any other debtor relief law (whether
statutory, common law, case law or otherwise) of any jurisdiction whatsoever,
now or hereafter in effect, or otherwise; and (r) any action, occurrence, event
or matter consented to by Guarantor under Section 3.01 hereof, under any other
provision hereof, or otherwise.
3.04 Liability of Guarantor. This is a guaranty of payment and
performance and not of collection. The liability of Guarantor under this
Guaranty shall be direct and immediate and not conditional or contingent upon
the pursuit of any remedies against Borrower or any other person (including,
without limitation, other guarantors, if any), nor against the Collateral.
Guarantor waives any right to require that an action be brought against
Borrower or any other person or to require that resort be had to any Collateral
or to any balance of any deposit account or credit on the books of Lender in
favor of Borrower or any other person. In the event that, on account of the
Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law
(whether statutory, common law, case law or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, which may be or become applicable,
Borrower shall be relieved of or fail to incur any debt, obligation or
liability as provided in the Loan Documents, Guarantor shall nevertheless be
fully liable therefor. In the event of a default under the Loan Documents,
Lender shall have the right to enforce its rights, powers and remedies
(including, without limitation, foreclosure of all or any portion of the
Collateral) thereunder or hereunder, in any order, and all rights, powers and
remedies available to Lender in such event shall be nonexclusive and cumulative
of all other rights, powers and remedies provided thereunder or hereunder or by
law or in equity. If the indebtedness guaranteed hereby is partially paid by
reason of the election of Lender to pursue any of the remedies available to
Lender, or is otherwise partially paid, this Guaranty shall nevertheless remain
in full force and effect, and Guarantor shall remain liable for the entire
remaining unpaid balance of the indebtedness guaranteed hereby, even though any
rights which Guarantor may have against Borrower may be destroyed or diminished
by the exercise of any such remedy. Guarantor covenants and agrees that, upon
the commencement of a voluntary or involuntary bankruptcy proceeding by or
against Borrower, Guarantor shall not seek or cause Borrower or any other
person or entity to seek a supplemental stay or other relief, whether
injunctive or otherwise, pursuant to 11 U.S.C. Section 105 or any other
provision of the Bankruptcy Reform Act of 1978, as amended, or any other debtor
relief law (whether statutory, common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, which may be or become
applicable, to stay, interdict, condition, reduce or inhibit the ability of
Lender to enforce any rights of Lender against Guarantor or the Collateral by
virtue of this Guaranty or otherwise. No exculpatory or similar provision of
the Loan Documents which limits, or relieves Borrower from, any personal or
direct liability of Borrower under the Loan Documents shall limit or relieve
Guarantor from any such liability, it being the intention of the parties hereto
that Guarantor be liable for all obligations of the Borrower under any
provision of the Loan Documents notwithstanding any such exculpatory or similar
provision. The obligations of Guarantor
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<PAGE> 4
and the rights of Lender hereunder are in addition to the obligations of
Guarantor and the rights of Lender under any other guaranty, indemnity or other
agreement given by Guarantor to Lender in connection with the Loan, and
payments made hereunder shall not reduce the liabilities and obligations of
Guarantor under any other such guaranty, indemnity or other agreement.
3.05 [RESERVED].
3.06 Application of Payments. Guarantor hereby authorizes Lender,
without notice to Guarantor, to apply all payments and credits received from
Borrower or from Guarantor for the Loan or realized from any security to the
indebtedness, obligations and undertakings of Borrower in connection with the
Loan (whether or not the same are the subject of this Guaranty) in the manner
set forth in the Loan Documents.
3.07 Financial Statements. Guarantor acknowledges that the Loan
Documents require that Borrower provide or cause to be provided to Lender
certain financial statements of Guarantor. Guarantor hereby agrees to provide
to Lender all such financial statements in such form and at such times as is
required under the provisions of the Loan Documents.
3.08 Warranties. Guarantor warrants and represents (a) that the
execution and delivery of this Guaranty do not violate or constitute a breach
of any agreement to which Guarantor is a party or any applicable laws, and (b)
that there is no litigation, claim, action or proceeding, pending or threatened
against Guarantor which would adversely affect the financial condition of
Guarantor or the ability of Guarantor to fulfill all obligations of Guarantor
hereunder, and (c) that all financial statements heretofore delivered by
Guarantor to Lender are true and correct in all respects as of the date
thereof, and no material change has occurred in the financial condition of
Guarantor since the date thereof.
3.09 Condition of Borrower. Guarantor warrants and represents that
Guarantor is fully aware of the financial condition of Borrower and is
executing and delivering this Guaranty based solely upon Guarantor's own
independent investigation of all matters pertinent hereto, and that Guarantor
is not relying in any manner upon any representation or statement of Lender.
Guarantor warrants, represents and agrees that Guarantor is in a position to
obtain, and Guarantor hereby assumes full responsibility for obtaining, any
additional information concerning the financial condition of Borrower and any
other matter pertinent hereto, and that Guarantor is not relying upon Lender to
furnish, and shall have no right to require Lender to obtain or disclose, any
information with respect to the indebtedness or obligations guaranteed hereby,
the financial condition or character of Borrower or the ability of Borrower to
pay the indebtedness or perform the obligations guaranteed hereby, the
existence of any collateral or security for any or all of such indebtedness or
obligations, the existence or nonexistence of any other guaranties of all or
any part of such indebtedness or obligations, any actions or non-action on the
part of Lender, Borrower or any other person or entity, or any other matter,
fact or occurrence whatsoever. By executing this Guaranty, Guarantor
acknowledges and knowingly accepts the full range of risks encompassed within a
contract of guaranty.
ARTICLE IV - GENERAL CONDITIONS
4.01 Service of Process. Guarantor hereby (a) submits to personal
jurisdiction in the State of Georgia for the enforcement of this Guaranty, and
(b) waives any and all rights under the law of any state to object to
jurisdiction within the State of Georgia for the purposes of litigation to
enforce this Guaranty. Nothing contained herein, however, shall prevent Lender
from bringing any action or exercising any rights against any security or
against Guarantor personally, or against any property of Guarantor, within any
other state. Initiating such proceeding or taking such action in any other
state shall in no event constitute a waiver of the agreement contained herein
that the law of the State of
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<PAGE> 5
Georgia shall govern the rights and obligations of Guarantor and Lender
hereunder or of the submission herein made by Guarantor to personal
jurisdiction within the State of Georgia.
4.02 Waiver of Rights. Guarantor hereby waives and renounces, to
the fullest extent permitted by law, all rights to the benefits of any statute
of limitations and any moratorium, reinstatement, marshalling, forbearance,
valuation, stay, extension, redemption, appraisement, exemption and homestead
now or hereafter provided by the Constitution and laws of the United States of
America and of each state thereof, both as to itself and in and to all of its
property, real and personal, against the enforcement and collection of the
obligations evidenced by this Guaranty.
4.03 Communications. Unless and except as otherwise specifically
provided herein, any and all notices, elections, approvals, consents, demands,
requests and responses thereto ("Communications") permitted or required to be
given under this Guaranty shall be in writing, signed by or on behalf of the
party giving the same, and shall be deemed to have been properly given and
shall be effective upon the earlier of receipt thereof or deposit thereof in
the United States mail, postage prepaid, certified with return receipt
requested, to the other party at the address of such other party set forth
hereinbelow or at such other address within the continental United States as
such other party may designate by notice specifically designated as a notice of
change of address and given in accordance herewith; provided, however, that the
time period in which a response to any communication must be given shall
commence on the date of receipt thereof; and provided further that no notice of
change of address shall be effective with respect to Communications sent prior
to the time of receipt thereof. Receipt of Communications under this Guaranty
shall occur upon actual delivery (whether by mail, telecopy transmission,
messenger, courier service, or otherwise) to any person who is Guarantor or an
officer or general partner of Guarantor at any location where such person may
be found, or to an officer, partner, agent or employee of Guarantor or Lender,
at the address of such party set forth hereinbelow, subject to change as
provided hereinabove. An attempted delivery in accordance with the foregoing,
acceptance of which is refused or rejected, shall be deemed to be and shall
constitute receipt; and an attempted delivery in accordance with the foregoing
by mail, messenger, or courier service (whichever is chosen by the sender)
which is not completed because of changed address of which no notice was
received by the sender in accordance with this provision prior to the sending
of the communication shall also be deemed to be and constitute receipt. Any
Communication, if given to Lender, must be addressed as follows, subject to
change as provided hereinabove:
West Coast Life Insurance Company
c/o Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, Ohio 43215-2220
Attn: Real Estate Investments
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, Ohio 43215-2220
Attn: Real Estate Investments
and, if given to Guarantor, must be addressed as follows, subject to change as
provided hereinabove:
Roberts Realty Investors, Inc.
8010 Roswell Road
Suite 120
Atlanta, Georgia 30350
Attn: Charles S. Roberts
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<PAGE> 6
4.04 Irrevocability and Revival. This Guaranty shall be
irrevocable by Guarantor and, subject to paragraph 4.08 below, shall remain in
effect until all indebtedness guaranteed hereby has been completely repaid,
until Lender has no further obligation to make future advances under any of the
Loan Documents, and until all obligations and undertakings of Borrower under,
by reason of, or pursuant to the Loan Documents have been completely performed,
including obligations which survive repayment of the Loan or realization upon
the Collateral. Unless this Guaranty has terminated in accordance with
paragraph 4.08 below, this Guaranty shall continue to be effective or be
revived and reinstated, as the case may be, in the event that any payment
received by Lender of any of the indebtedness guaranteed hereby is returned or
rescinded by reason of any present or future federal, state or other law or
regulation relating to bankruptcy, insolvency or other relief of debtors or for
any other reason.
4.05 Limit of Validity. If from any circumstances whatsoever
fulfillment of any provisions of this Guaranty, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
presently prescribed by any applicable usury statute or any other applicable
law, with regard to obligations of like character and amount, then ipso facto
the obligation to be fulfilled shall be reduced to the limit of such validity,
so that in no event shall any exaction be possible under this Guaranty that is
in excess of the current limit of such validity, but such obligation shall be
fulfilled to the limit of such validity. The provisions of this section shall
control every other provision of this Guaranty.
4.06 Applicable Law. This Guaranty shall be interpreted, construed
and enforced according to the laws of the State of Georgia.
4.07 Miscellaneous. This Guaranty may not be changed orally, and
no obligation of Guarantor can be released or waived by Lender or any officer
or agent of Lender, except by a writing signed by a duly authorized officer of
Lender. The provisions of this Guaranty shall be binding upon Guarantor and
the heirs, executors, legal representatives, successors, successors-in-title
and assigns of Guarantor and shall inure to the benefit of Lender, the heirs,
executors, legal representatives, successors, successors-in-title and assigns
of Lender. This Guaranty shall in no event be impaired by any change which may
arise by reason of the death of Borrower or Guarantor, if individuals, or by
reason of the dissolution of Borrower or Guarantor, if Borrower or Guarantor is
a corporation or partnership. Guarantor has executed this Guaranty
individually and not as a partner of Borrower or any other guarantor. The
Guaranty is assignable by Lender, and any full or partial assignment hereof by
Lender shall operate to vest in the assignee all rights and powers herein
conferred upon and granted to Lender and so assigned by Lender. Guarantor
expressly waives notice of transfer or assignment of this Guaranty and
acknowledges that the failure by Lender to give any such notice shall not
affect the liabilities of Guarantor hereunder. All personal pronouns used
herein, whether used in the masculine, feminine or neuter gender, shall include
all other genders; and the singular shall include the plural and vice versa.
Titles of articles and sections are for convenience only and in no way define,
limit, amplify or describe the scope or intent of any provisions hereof. If
Guarantor is a partnership, all of the provisions hereof referring to Guarantor
shall be construed to apply to each of the general partners of Guarantor and of
any and all further tiers of general partners in the structure of Guarantor.
This Guaranty contains the entire agreement between Guarantor and Lender
relating to the guarantying of the Loan by Guarantor and supersedes entirely
any and all prior written or oral agreements with respect thereto; and
Guarantor and Lender acknowledge that there are no contemporaneous oral
agreements with respect to the subject matter hereof. The phrase "reasonable
attorneys' fees" as used in this Guaranty shall have the same meaning as
ascribed thereto in the section of the Note entitled "Miscellaneous."
4.08 Termination of Guaranty. Provided there is then no default or
event of default under any of the Loan Documents, or event or circumstance
which with the giving of notice, passage of time, or both, would constitute a
default or event of default under any of the Loan Documents, upon written
request Lender will release this Guaranty and
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<PAGE> 7
this Guaranty shall terminate if at such time the "Net Operating Income" (as
hereafter defined) generated by the "Property" (as hereafter defined) is at
least equal to one hundred and twenty-five percent (125%) of the annual debt
service payments due under the terms of the Loan Documents for a period of at
least three (3) consecutive calendar months. For purposes of this paragraph
4.08, "Net Operating Income" shall mean the "Rents" (as hereafter defined)
minus the "Operating Expenses" (as hereafter defined). For purposes of this
paragraph 4.08, the following terms shall have the following meanings:
A. "Rents" means the annualized rents and expense reimbursements
(if any) to be received from tenants of the Property pursuant to leases
approved by Lender (unless Lender's approval of any of such leases is not
required in accordance with paragraph 12 of the Security Instrument) where the
tenants are actually paying rent (i.e., any free rent periods must have
expired) and such tenants are actually in occupancy.
B. "Operating Expenses" means the greater of (i) the annualized
expenses of operating and maintaining the Property which shall include, without
limitation, a management fee equal to four percent (4%) of the annualized
Rents, or (ii) $494,632. For purposes of calculating Operating Expenses,
property tax expenses shall be calculated assuming that all improvements to be
built pursuant to plans and specifications delivered to Lender in connection
with the Loan have been completed and fully assessed and using the most recent
tax rate available (whether certified or not).
C. "Property" means the land described on Exhibit A to the
Security Instrument together with all buildings and improvements constructed
thereon or to be constructed thereon pursuant to plans and specifications
delivered to Lender in connection with the Loan and together with all
appurtenances thereto.
Items to be included in the calculation of Rents and Operating Expenses shall
be as reasonably determined by Lender. At any time that request is made for a
release of this Guaranty, Guarantor shall deliver, or cause to be delivered, to
Lender such information as Lender may request with respect thereto including,
without limitation, (i) a current rent roll certified to be true and correct by
Borrower, (ii) if requested by Lender, true and complete copies of all fully
executed leases which are being used to satisfy the criteria for release, (iii)
unconditional certificates of occupancy for any completed buildings if not
previously delivered, (iv) actual operating statements for the Property
identifying all expenses of operating and maintaining the Property.
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<PAGE> 8
IN WITNESS WHEREOF, Guarantor has executed this Guaranty under seal as
of the date first above written.
GUARANTOR
Signed, sealed and delivered ROBERTS REALTY INVESTORS,
in the presence of: INC., a Georgia corporation
/s/ Charles R. Elliott
- ----------------------
Witness By: /s/ Charles S. Roberts
-----------------------
Charles S. Roberts,
President
[CORPORATE SEAL]
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<PAGE> 1
EXHIBIT 10.15.7
REAL ESTATE NOTE
$10,100,000.00
April 27, 1994
Atlanta, Georgia
1. PROMISE TO PAY. FOR VALUE RECEIVED, the undersigned, THE CRESTMARK
CLUB, L.P., a Georgia limited partnership (hereinafter referred to as "Maker"),
promises to pay to the order of COMMONWEALTH OF PENNSYLVANIA STATE EMPLOYES'
RETIREMENT BOARD, AN INDEPENDENT ADMINISTRATIVE BOARD OF THE COMMONWEALTH OF
PENNSYLVANIA, TRANSACTING BUSINESS AS THE COMMONWEALTH OF PENNSYLVANIA STATE
EMPLOYES' RETIREMENT SYSTEM (hereinafter referred to as "Payee"; Payee and any
subsequent holder of all or any part interest in this Note being hereinafter
referred to collectively as "Holder"), at the office of First Union Mortgage
Corporation, P.O. Box 18109, Raleigh, North Carolina 27619, or at any such other
place as Holder may designate to Maker in writing from time to time, the
principal sum of TEN MILLION ONE HUNDRED THOUSAND AND NO/100THS DOLLARS
($10,100,000.00), together with interest thereon or on so much thereof as from
time to time shall be outstanding hereunder, at the rates hereinafter set forth,
in lawful money of the United States of America, which at the time of payment
shall be legal tender in payment of all debts and dues, public and private, such
principal and interest to be paid in the manner hereinafter provided.
2. INTEREST RATE. From and after the date hereof (until maturity or the
occurrence of a Default as hereinafter provided), interest on the principal
balance hereof outstanding from time to time shall accrue at the rate of seven
and one-half percent (7.5%) per annum. Interest shall be computed on a simple
interest basis, based upon a year comprised of three-hundred sixty (360) days
and the actual number of days elapsed, except that the amount of the interest
payment due under paragraph 3(a) hereof shall be computed on the basis of a year
comprised of three hundred sixty-five (365) days and the actual number of days
elapsed.
3. MONTHLY INSTALLMENTS. The following payments(hereinafter
collectively referred to as "Monthly Installments" and individually as a
"Monthly Installment") shall be due and payable as follows:
(a) All interest which shall accrue for the period from the date hereof
through and including April 30, 1994, shall be due and payable immediately upon
the execution of this Note.
(b) Monthly installments of principal and accrued interest shall be due
and payable commencing on June 1, 1994, and continuing on the first (1st) day of
each month thereafter through and including April 1, 2001. The amount of each
such monthly installment of principal and interest shall be the sum of
$71,999.63.
(c) When received by Holder, each Monthly Installment shall be applied
first to the payment of any unpaid late charges as hereinafter provided, next to
the payment of all interest then accrued and unpaid, and the balance to the
reduction of the outstanding principal amount of the indebtedness evidenced by
this Note.
<PAGE> 2
4. MATURITY DATE. On May 1, 2001 (hereinafter referred to as the
"Maturity Date"), the entire outstanding principal balance of the indebtedness
hereby evidenced, together with all accrued but unpaid interest thereon and all
other sums due to Holder hereunder or under the Loan Documents hereinafter
defined, shall be due and payable in full.
5. PREPAYMENT.
(a) The indebtedness evidenced by this Note may not be prepaid in whole
or in part except as expressly provided herein.
(b) Prior to May 1, 1997 (hereinafter referred to as the "Prepayment
Date"), the indebtedness evidenced hereby may not be prepaid in whole or in part
without the express written consent and approval of Holder. From and after the
Prepayment Date and through and including the day prior to the first anniversary
of the Prepayment Date, the indebtedness evidenced hereby may be prepaid in full
only and not in part, upon sixty (60) days prior written notice to Holder and
upon the payment of a premium equal to four percent (4%) of the outstanding
principal balance under this Note. From and after the first anniversary of the
Prepayment Date and through and including the day prior to the second
anniversary of the Prepayment Date, the indebtedness evidenced by this Note may
be prepaid in full only and not in part, upon sixty (60) days prior written
notice to Holder and upon payment of a premium equal to three percent (3%) of
the outstanding principal balance under this Note. From and after the second
anniversary of the Prepayment Date and through and including the day prior to
the third anniversary of the Prepayment Date, the indebtedness evidenced by this
Note may be prepaid in full only and not in part, upon sixty (60) days prior
written notice to Holder and upon payment of a premium equal to two percent (2%)
of the outstanding principal balance under this Note. From and after the third
anniversary of the Prepayment Date and for the remaining term of this Note, the
indebtedness evidenced by this Note may be prepaid in full only and not in part,
upon sixty (60) days prior written notice to Holder and upon payment of a
premium equal to one percent (1%) of the outstanding principal balance under
this Note, provided that no premium shall be required if the indebtedness hereby
evidenced is paid in full during the period of ninety (90) days prior to the
Maturity Date.
(c) It is specifically understood and agreed that, in the event of the
acceleration of the maturity of this Note following a Default (as hereinafter
defined) under this Note or under any of the Loan Documents (as hereinafter
defined), a tender of payment of the unpaid principal and accrued interest then
outstanding hereunder, made at any time prior to the consummation of a sale
under the power of sale contained in the Security Deed (as hereinafter defined)
shall be deemed a prepayment and, accordingly, said tender must include a
premium equal to a percentage of the principal amount tendered. If said tender
is made prior to the Prepayment Date, said tender must include a premium equal
to six percent (6%) of the principal amount tendered; and if said tender is made
on or after the Prepayment Date, said tender must include a premium equal to the
applicable percentage of the amount tendered, as hereinabove set forth. It is
further understood and agreed that Holder shall not be obligated to accept said
tender, and said tender shall for all purposes be deemed ineffectual and
deficient, unless said tender shall include the premium hereinabove required, in
addition to all other amounts due hereunder
6. LATE CHARGE. A late charge shall be due and payable in the amount of
four percent(4%) of the amount of any Monthly Installment not paid within five
(5) days of the date on which such
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<PAGE> 3
Monthly Installment was due. Holder shall have no obligation to accept any
delinquent Monthly Installment without the accompanying late charge, and the
acceptance by Holder of such delinquent Monthly Installment without the
accompanying late charge shall not constitute a waiver by Holder of the right to
enforce and collect such late charge. Maker acknowledges and agrees that the
late charge herein provided is not a charge in the nature of interest imposed
for the use of money advanced under this Note; rather, the late charge is
imposed to compensate Holder for the expense, inconvenience and economic
frustration experienced by Holder as a result of Makers failure to make timely
payments due hereunder, and is a reasonable forecast and estimate of Holder's
actual damages and loss on account of such delinquent Monthly Installments.
7. DEFAULT ACCELERATION. As used herein, the term Default" shall mean
the occurrence of any of the following events or conditions: (a) the failure to
pay when due any Monthly Installment, or (b) the occurrence of a "Default" under
and as defined in any of the Loan Documents (as that term is hereafter defined).
Upon the occurrence of any Default, the outstanding principal balance of the
indebtedness evidenced hereby, and any other sums advanced hereunder or under
the Loan Documents, together with all accrued and unpaid interest thereon and
all unpaid late charges and the applicable prepayment premium shall, at the
option of Holder and without notice to Maker, at once become due and payable and
may be collected forthwith, regardless of the stipulated date of maturity.
Interest (hereinafter referred to as "Default Interest") shall accrue on the
outstanding principal balance of this Note from maturity, or sooner following
the occurrence of a Default and for so long as such Default continues,
regardless of whether or not there has been an acceleration of the indebtedness
evidenced hereby, at the rate of eleven and one-half percent (11.50%) per
annum. All such Default Interest shall be paid at the time of and as a condition
precedent to the curing of any Default. Time is of the essence of this Note. In
the event this Note, or any part thereof, is collected by or through an
attorney-at-law, Maker agrees to pay all costs of collection including, but not
limited to, actual attorney's fees incurred, based upon the attorney's normal
hourly rate and the number of hours worked, and not the statutory attorney's
fees specified in O.C.G.A. Section 13-1-11.
8. WAIVERS.
(a) Presentment for payment, demand, protest and notice of demand,
protest and non-payment and all other notices, except for any notices required
to be given hereunder or under any of the Loan Documents, are hereby waived by
Maker. No failure to accelerate the debt evidenced hereby by reason of a Default
hereunder, acceptance of a past due installment, or indulgences granted from
time to time shall be construed (i) as a novation of this Note or as a
reinstatement of the indebtedness evidenced hereby or as a waiver of such right
of acceleration or of the right of Holder thereafter to insist upon strict
compliance with the terms of this Note, or (ii) to prevent the exercise of such
right of acceleration or any other right granted hereunder or by the laws of the
State of Georgia; and Maker hereby expressly waives the benefit of any statute
or rule of law or equity now provided, or which may hereafter be provided, which
would produce a result contrary to or in conflict with the foregoing. No
extension of the time for the payment of this Note or any installment due
hereunder, made by agreement with any person now or hereafter liable for the
payment of this Note, shall operate to release, discharge, modify, change or
affect the original liability of Maker under this Note, either in whole or in
part, unless Holder agrees otherwise in writing. This Note may not be changed
orally, but only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification or discharge is sought.
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<PAGE> 4
(b) Maker hereby waives and renounces for itself, its heirs, successors
and assigns, all rights to the benefit of any statute of limitations and any
moratorium, reinstatement, marshalling, forbearance, valuation, stay, extension,
redemption, appraisement, exemption and homestead now provided or which may
hereafter be provided by the Constitution and laws of the United States of
America and of any state thereof, both as to itself and in and to all of its
property, real and personal, against the enforcement and collection of the
obligations evidenced by this Note. Maker hereby transfers, conveys and assigns
to Holder a sufficient amount of such homestead or exemption as may be set apart
in bankruptcy, to pay this Note in full, with all costs of collection, and does
hereby direct any trustee in bankruptcy having possession of such homestead or
exemption to deliver to Holder a sufficient amount of property or money set
apart as exempt to pay the indebtedness evidenced hereby, or any renewal
thereof, and does hereby appoint Holder the attorney-in-fact for Maker to claim
any and all homestead exemptions allowed by law.
9. LOAN DOCUMENTS. The indebtedness evidenced by this Note and the
obligations created hereby are secured by that certain Deed to Secure Debt and
Security Agreement (herein referred to as the "Security Deed") and that certain
Assignment of Occupancy Agreements and Rents (hereinafter referred to as the
"Assignment"), both of even date herewith by and between Maker and Payee (the
Security Deed and the Assignment, together with all other documents evidencing
or securing or in any way relating to the indebtedness evidenced hereby, herein
referred to collectively as the "Loan Documents").
10. GOVERNING LAW. This Note is intended as a contract under and shall
be governed by and construed and enforceable in accordance with the substantive,
and not the conflicts, laws of the State of Georgia.
11. STATUS OF PAYEE. Payee hereby reserves all immunities, defenses,
rights or actions arising out of its status as a sovereign state or from the
Eleventh Amendment to the United States Constitution. No waiver of any such
immunities, defenses, rights or actions is to be implied by any provision
hereof. Maker hereby consents to the jurisdiction of any of the courts of the
Commonwealth of Pennsylvania and of any federal courts located therein and
agrees that Holder may bring suit against Maker in any of such courts. Maker
also hereby waives the right to bring any counterclaims against Payee (but
specifically reserves the right to bring any defenses and affirmative defenses
against Payee) in any suit or action in any court of law or equity in which
Payee and Maker are adverse parties.
12. DEFINITIONS. As used herein, the terms "Maker" and "Holder" shall
be deemed to include their respective heirs, successors, legal representatives
and assigns, whether by voluntary action of the parties or by operation of law.
In the event that more than one person, firm or entity is a Maker hereunder,
then all references to "Maker" shall be deemed to refer equally to each of said
persons, firms or entities, all of whom shall be jointly and severally liable
for all of the obligations of Maker hereunder.
13. LEGAL LIMITATIONS. It is the express intent hereof that Maker not
pay and Holder not receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may be legally paid by Maker under applicable
law. In no event, whether by reason of demand for payment or acceleration of
the maturity of this Note or otherwise, shall the interest contracted for,
charged or
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<PAGE> 5
received by Holder hereunder or otherwise exceed the maximum amount
permissible under applicable law. If, from any circumstance whatsoever,
interest would otherwise be payable to Holder in excess of the maximum lawful
amount permitted under applicable law, the interest payable to Holder shall be
reduced automatically to the maximum amount permitted under applicable law. If
Holder shall ever receive anything of value deemed interest under applicable
law which, absent the provisions of this paragraph, would be in excess of the
maximum lawful amounts, an amount equal to any amount which would have been
excessive interest shall be applied to the reduction of the principal balance
owing on this Note in the inverse order of its maturity and not to the payment
of interest, or if such amount which would have been excessive interest exceeds
the unpaid principal balance of the Note, such excess shall be refunded to
Maker. All interest paid or agreed to be paid to Holder shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full stated term (including any renewal or extension) of this
Note (without interest on such interest), so that the amount interest on
account of such indebtedness does not exceed the maximum amount permitted by
applicable law. The provisions of this paragraph shall control all existing and
future agreements between Maker and Holder.
14. LIMITED LIABILITY OF MAKER. Except as hereinafter set forth,
Holder, by its acceptance of this Note, and Maker hereby agree that (a) the
liability of Maker for the indebtedness evidenced by this Note, and the
collection of said indebtedness, shall be limited to and enforced solely
against the Premises (as that term is defined in the Security Deed), the rights
assigned and transferred pursuant to the Assignment, and all rights, claims and
interest now or hereafter assigned, pledged or transferred to Holder under any
of the Loan Documents, to secure the indebtedness evidenced hereby; (b) Holder
shall not and may not seek any judgment against Maker or any general partner of
Maker in any action to foreclose, to exercise the power of sale, to confirm any
foreclosure or sale under power of sale, or to exercise any other rights or
powers under or by reason of the Security Deed or any of the Loan Documents;
(c) Holder shall not and may not seek any deficiency judgment on this Note
with respect to the indebtedness evidenced hereby except as part of judicial
proceedings to foreclose the Security Deed or to foreclose pursuant to any of
the Loan Documents, and the collection and enforcement of any such judgment
shall be limited to the Premises; and (d) in the event any suit is brought on
this Note, or concerning any indebtedness evidenced by this Note as part of
judicial proceedings to foreclose the Security Deed or any other Loan Document,
or to confirm any foreclosure or sale pursuant to the power of sale thereunder,
any judgment obtained in such suit for such indebtedness will constitute a lien
on and can be enforced only against the collateral assigned, pledged or
transferred to Holder to secure the indebtedness evidenced by this Note, and
not against any other assets of Maker or any general partner of Maker. The
foregoing provisions of this Section 14 notwithstanding, it is expressly
understood and agreed that the aforesaid limitation on liability shall in no
way affect or apply to the following: (1) Maker's and Maker's general partner's
continued personal liability for the payment to Holder of (i) any rentals of
and from the Premises (or any portion thereof) collected by Maker or its
partners after a Default and during the continuation of such Default, (ii)
security deposits, condemnation awards or insurance proceeds of and from the
Premises (or any portion thereof) which Maker or its partners receive and to
which Holder is entitled pursuant to the terms of the Loan Documents, and (iii)
any loss, damage, cost or expense incurred by Holder as a result of or arising
from any material misrepresentation made by Maker to Payee or Payee's agent or
any fraudulent act or omission by Maker in connection with the application for
or the consummation of the financing evidenced by this Note, or in connection
with any matter arising from and after the execution and delivery of this Note
and the Loan Documents and
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<PAGE> 6
related in any way to the indebtedness hereby evidenced; (2) the obligations and
undertakings of any person who hereafter executes and delivers to Holder any
instrument guaranteeing the payment or performance of any portion of the
indebtedness evidenced hereby or of any of the covenants and agreements
contained in the Loan Documents; and (3) the covenants and agreements of Maker
contained in Paragraph 1.16 of the Security Deed and in that certain Hazardous
Materials Certificate and Indemnity Agreement of even date herewith made by
Maker to and in favor of Payee.
15. TITLES. The titles of sections or paragraphs herein are used for
the convenience of the parties only and neither amplify, modify or alter in any
way the provisions of this instrument.
16. RELATIONSHIP OF PARTIES. The relationship between Maker and Holder
at all times will be that of debtor and creditor only. Under no circumstance
will such relationship be construed as creating a partnership or joint venture,
regardless of whether any portion of interest due hereunder may be measured by
some standard other than an annual percentage of principal.
IN WITNESS WHEREOF, Maker, acting by and through its duly authorized
sole general partner, has executed this Note under seal on the date first above
written.
THE CRESTMARK CLUB, L.P.
By:/s/ Charles S. Roberts (Seal)
----------------------------
Charles S. Roberts, as
sole general partner
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<PAGE> 7
REAL ESTATE NOTE
$10,100,000.00 April 27, 1994
Atlanta, Georgia
1. PROMISE TO PAY. FOR VALUE RECEIVED, the undersigned, THE CRESTMARK
CLUB, L.P., A Georgia limited partnership (hereinafter referred to as "MAKER"),
promises to pay to the order of COMMONWEALTH OF PENNSYLVANIA STATE EMPLOYES'
RETIREMENT BOARD, AN INDEPENDENT ADMINISTRATIVE BOARD OF THE COMMONWEALTH OF
PENNSYLVANIA, TRANSACTING BUSINESS AS THE COMMONWEALTH OF PENNSYLVANIA STATE
EMPLOYES' RETIREMENT SYSTEM (hereinafter referred to as "Payee"; Payee and any
subsequent holder of all or any part interest in this Note being hereinafter
referred to collectively AS "Holder"), at the office of First Union Mortgage
Corporation, P.O. Box 18109, Raleigh, North Carolina 27619, or at any such other
place AS Holder may designate to Maker in writing from time to time, the
principal sum of TEN MILLION ONE HUNDRED THOUSAND AND NO/100THS DOLLARS
($10,100,000.00). Together with interest thereon or on so much thereof as from
time to time shall be outstanding hereunder, at the rates hereinafter set forth,
in lawful money of the United States of America, which at the time of payment
shall be legal tender in payment of all debts and dues, public and private, such
principal and interest to be paid in the manner. hereinafter provided.
2. INTEREST RATE. From and after the date hereof (until maturity or the
occurrence of a Default as hereinafter provided), interest on the principal
balance hereof outstanding from time to time shall accrue at the rate of seven
and one-half percent 7.5%) per Annum. Interest shall be computed on a simple
interest basis, based upon a year comprised of three-hundred sixty (360) days
and the actual number of days elapsed, except that the amount of the interest
payment due under paragraph 3(a) hereof shall be computed on the basis of A year
comprised of three hundred sixty-five (365) days and the actual number of days
elapsed.
3. MONTHLY INSTALLMENTS. The following payments (hereinafter
collectively referred to as "Monthly Installments" and individually as a
"Monthly Installment") shall be due and payable as follows:
(a) All interest which shall accrue for the period from the date hereof
through and including April 30, 1994, shall be due and payable immediately upon
the execution of this Note.
(b) Monthly installments of principal and accrued interest shall be due
and payable commencing on June 1, 1994, and continuing on the first (1st) day of
each month thereafter through and including April 1, 2001. The amount of each
such monthly installment of principal and interest shall be the sum of
$71,999.63.
(c) When received by holder, each Monthly Installment shall be applied
first to the payment of any unpaid late charges as hereinafter provided, next to
the payment of all interest then accrued and unpaid, and the balance to the
reduction of the outstanding principal amount of the indebtedness evidenced by
this Note.
<PAGE> 8
4. MATURITY DATE. On May 1, 2001 (hereinafter referred to as the
"Maturity Date"), the entire outstanding principal balance of the indebtedness
hereby evidenced, together with all accrued but unpaid interest thereon and all
other sums due to Holder hereunder or under the Loan Documents hereinafter
defined, shall be due and payable in full.
5. PREPAYMENT.
(a) The indebtedness evidenced by this Note may not be prepaid in whole
or in part except as expressly provided herein.
(b) Prior to May 1, 1997 (hereinafter referred to as the "Prepayment
Date"), the indebtedness evidenced hereby may not be prepaid in whole or in part
without the express written consent and approval of Holder. From and after the
Prepayment Date and through and including the day prior to the first anniversary
of the Prepayment Date, the indebtedness evidenced hereby may be prepaid in full
only and not in part, upon sixty (60) days prior written notice to Holder and
upon the payment of a premium equal to four percent (4%) of the outstanding
principal balance under this Note. From and after the first anniversary of the
Prepayment Date and through and including the day prior to the second
anniversary of the Prepayment Date, the indebtedness evidenced by this Note may
be prepaid in full only and not in part, upon sixty (60) days prior written
notice to Holder and upon payment of a premium equal to three percent (3%) of
the outstanding principal balance under this Note. From and after the second
anniversary of the Prepayment Date and through and including the day prior to
the third anniversary of the Prepayment Date, the indebtedness evidenced by this
Note may be prepaid in full only and not in part, upon sixty (60) days prior
written notice to Holder and upon payment of a premium equal to two percent (2%)
of the outstanding principal balance under this Note. From and after the third
anniversary of the Prepayment Date and for the remaining term of this Note., the
indebtedness evidenced by this Note may be prepaid in full only and not in part,
upon sixty (60) days prior written notice to Holder and upon payment of a
premium equal to one percent (1%) of the outstanding principal balance under
this Note, provided that no premium shall be required if the indebtedness hereby
evidenced is paid in full during the period of ninety (90) days prior to the
Maturity Date.
(c) It is specifically understood and agreed that, in the event of the
acceleration of the maturity of this Note following a Default (as hereinafter
defined) under this Note or under any of the Loan Documents (as hereinafter
defined), a tender of payment of the unpaid principal and accrued interest then
outstanding hereunder, made at any time prior to the consummation of a sale
under the power of sale contained in the Security Deed (as hereinafter defined)
shall be deemed a prepayment and, accordingly, said tender must include a
premium equal to a percentage of the principal amount tendered. If said tender
is made prior to the Prepayment Date, said tender must include a premium equal
to six percent (6%) of the principal amount tendered; and if said tender is made
on or after the Prepayment Date, said tender must include a premium equal to the
applicable percentage of the amount tendered, as hereinabove set forth. It is
further understood and agreed that Holder shall not be obligated to accept said
tender, and said tender shall for all purposes be deemed ineffectual and
deficient, unless said tender shall include the premium hereinabove required, in
addition to all other amounts due hereunder.
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<PAGE> 9
6. LATE CHARGE. A late charge shall be due and payable in the amount of
four percent (4%) of the amount of any Monthly Installment not paid within five
(5) days of the date on which such Monthly Installment was due. Holder shall
have no obligation to accept any delinquent Monthly Installment without the
accompanying late charge, and the acceptance by Holder of such delinquent
Monthly Installment without the accompanying late charge shall not constitute a
waiver by Holder of the right to enforce and collect such late charge. Maker
acknowledges and agrees that the late charge herein provided is not a charge in
the nature of interest imposed for the use of money advanced under this Note;
rather, the late charge is imposed to compensate Holder for the expense,
inconvenience and economic frustration experienced by Holder as a result of
Maker's failure to make timely payments due hereunder, and is a reasonable
forecast and estimate of Holder's actual damages and loss on account of such
delinquent Monthly Installments.
7. DEFAULT AND ACCELERATION. As used herein, the term "Default" shall
mean the occurrence of any of the following events or conditions: (a) the
failure to pay when due any Monthly Installment, or (b) the occurrence of a
"Default" under and as defined in any of the Loan Documents (as that term is
hereafter defined). Upon the occurrence of any Default, the outstanding
principal balance of the indebtedness evidenced hereby, and any other sums
advanced hereunder or under the Loan Documents, together with all accrued and
unpaid interest thereon and all unpaid late charges and the applicable
prepayment premium shall, at the option of Holder and without notice to Maker,
at once become due and payable and may be collected forthwith, regardless of the
stipulated date of maturity. Interest (hereinafter referred to as "Default
Interest") shall accrue on the outstanding principal balance of this Note from
maturity, or sooner following the occurrence of a Default and for so long as
such Default continues, regardless of whether or not there has been an
acceleration of the indebtedness evidenced hereby, at the rate of eleven and
one-half percent (11.50%) per annum. All such Default Interest shall be paid at
the time of and as a condition precedent to the curing of any Default. Time is
of the essence of this Note. In the event this Note, or any part thereof, is
collected by or through an attorney-at-law, Maker agrees to pay all costs of
collection including, but not limited to, actual attorney's fees incurred, based
upon the attorney's normal hourly rate and the number of hours worked, and not
the statutory attorney's fees specified in O.C.G.A. Section 13-1-11.
8. WAIVERS.
(a) Presentment for payment, demand, protest and notice of demand,
protest and non-payment and all other notices, except for any notices required
to be given hereunder or under any of the Loan Documents, are hereby waived by
Maker. No failure to accelerate the debt evidenced hereby by reason of a Default
hereunder, acceptance of a past due installment, or indulgences granted from
time to time shall be construed (i) as a novation of this Note or as a
reinstatement of the indebtedness evidenced hereby or as a waiver of such right
of acceleration or of the right of Holder thereafter to insist upon strict
compliance with the terms of this Note, or (ii) to prevent the exercise of such
right of acceleration or any other right granted hereunder or by the laws of the
State of Georgia; and Maker hereby expressly waives the benefit of any statute
or rule of law or equity now provided, or which may hereafter be provided, which
would produce a result contrary to or in conflict with the foregoing. No
extension of the time for the payment of this Note or any installment due
hereunder, made by agreement with any person now or hereafter liable for the
payment of this Note, shall operate to release, discharge, modify, change or
affect the original liability of Maker under this Note, either in whole or in
part, unless Holder agrees otherwise
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<PAGE> 10
in writing. This Note may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
(b) Maker hereby waives and renounces for itself, its heirs, successors
and assigns, all rights to the benefit of any statute of limitations and any
moratorium, reinstatement, marshalling, forbearance, valuation, stay, extension
redemption, appraisement, exemption and homestead now provided, or which may
hereafter be provided by the Constitution and laws of the United States of
America and of any state thereof, both as to itself and in and to all of its
property, real and personal, against the enforcement and collection of the
obligations evidenced by this Note. Maker hereby transfers, conveys and assigns
to Holder a sufficient amount of such homestead or exemption as may be set
apart in bankruptcy, to pay this Note in full, with all costs of collection,
and does hereby direct any trustee in bankruptcy having possession of such
homestead or exemption to deliver to Holder a sufficient amount of property or
money set apart as exempt to pay the indebtedness evidenced hereby, or any
renewal thereof, and does hereby appoint Holder the attorney-in-fact for Maker
to claim any and all homestead exemptions allowed by law.
9. LOAN DOCUMENTS. The indebtedness evidenced by this Note and the
obligations created hereby are secured by that certain Deed to Secure Debt and
Security Agreement (herein referred to as the "Security Deed") and that certain
Assignment of Occupancy Agreements and Rents (hereinafter referred to as the
"Assignment"), both of even date herewith by and between Maker and Payee (the
Security Deed and the Assignment, together with all other documents evidencing
or securing or in any way relating to the indebtedness evidenced hereby, herein
referred to collectively as the "Loan Documents").
10. GOVERNING LAW. This Note is intended as a contract under and shall
be governed by and construed and enforceable in accordance with the substantive,
and not the conflicts, laws of the State of Georgia.
11. STATUS OF PAYER. Payee hereby reserves all immunities, defenses,
rights or actions arising out of its status as a sovereign state or from the
Eleventh Amendment to the United States Constitution. No waiver of any such
immunities, defenses, rights or actions is to be implied by any provision
hereof. Maker hereby consents to the jurisdiction of any of the courts of the
Commonwealth of Pennsylvania and of any federal courts located therein and
agrees that Holder may bring suit against Maker in any of such courts. Maker
also hereby waives the right to bring any counterclaims against Payee (but
specifically reserves the right to bring any defenses and affirmative defenses
against Payee) in any suit or action in any court of law or equity in which
Payee and Maker are adverse parties.
12. DEFINITIONS. As used here, the terms "Maker" and "Holder" shall be
deemed to include their respective heirs, successors, legal representatives and
assigns, whether by voluntary action of the parties or by operation of law. In
the event that more than one person, firm or entity is a Maker hereunder, then
all references to "Maker" shall be deemed to refer equally to each of said
persons, firms, or entities, all of whom shall be jointly and severally liable
for all of the obligations of Maker hereunder.
13. LEGAL LIMITATIONS. It is the express intent hereof that Maker not
pay and Holder not receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may be legally
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<PAGE> 11
paid by Maker under applicable law. In no event, whether by reason of demand for
payment or acceleration of the maturity of this Note or otherwise, shall the
interest contracted for, charged or received by Holder hereunder or otherwise
exceed the maximum amount permissible under applicable law. If, from any
circumstance whatsoever, interest would otherwise be payable to Holder in excess
of the maximum lawful amount permitted under applicable law, the interest
payable to Holder shall be reduced automatically to the maximum amount permitted
under applicable law. If Holder shall ever receive anything of value deemed
interest under applicable law which, absent the provisions of this paragraph.,
would be in excess of the maximum lawful amount an amount equal to any amount
which would have been excessive interest shall be applied to the reduction of
the principal balance owing on this Note in the inverse order of its maturity
and not to the payment of interest, or if such amount which would have been
excessive interest exceeds the unpaid principal balance of the Note, such excess
shall be refunded to Maker. All interest paid or agreed to be paid to Holder
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full stated term (including any renewal or
extension) of this Note (without interest on such interest), so that the amount
of interest on account of such indebtedness does not exceed the maximum amount
permitted by applicable law. The provisions of this paragraph shall control all
existing and future agreements between Maker and Holder.
14. LIMITED LIABILITY OF MAKER. Except as hereinafter set forth,
Holder, by its acceptance of this Note, and Maker hereby agree that (a) the
liability of Maker for the indebtedness evidenced by this Note, and the
collection of said indebtedness, shall be limited to and enforced solely against
the Premises (as that term is defined in the Security Deed), the rights assigned
and transferred pursuant to the Assignment, and all rights, claim and interest
now or hereafter assigned, pledged or transferred to Holder under any of the
Loan Documents, to secure the indebtedness evidenced hereby; (b) Holder shall
not and may not seek any judgment against Maker or any general partner of Maker
in any action to foreclose, to exercise the power of sale, to confirm any
foreclosure or sale under power of sale, or to exercise any other rights or
powers under or by reason of the Security Deed or any of the Loan Documents;
(c) Holder shall not and may not seek any deficiency judgment on this Note with
respect to the indebtedness evidenced hereby except as part of judicial
proceedings to foreclose the Security Deed or to foreclose pursuant to any of
the Loan Documents, and the collection and enforcement of any such judgment
shall be limited to the Premises; and (d) in the event any suit is brought on
this Note, or concerning any indebtedness evidenced by this Note as part of
judicial proceedings to foreclose the Security Deed or any other Loan Document,
or to confirm any foreclosure or sale pursuant to the power of sale thereunder,
any judgment obtained in such suit for such indebtedness will constitute a lien
on and can be enforced only against the collateral assigned, pledged or
transferred to Holder to secure the indebtedness evidenced by this Note, and not
against any other assets of Maker or any general partner of Maker. The foregoing
provisions of this Section 14 notwithstanding, it is expressly understood and
agreed that the aforesaid limitation on liability shall in no way affect or
apply to the following: (1) Maker's and Maker's general partners continued
personal liability for the payment to Holder of (i) any rentals of and from the
Premises (or any portion thereof) collected by Maker or its partners after a
Default and during the continuation of such Default, (ii) security deposits,
condemnation awards or insurance proceeds of and from the Premises (or any
portion thereof) which Maker or its partners receive and to which Holder is
entitled pursuant to the terms of the Loan Documents, and (iii) any loss,
damage, cost or expense incurred by Holder as a result of or arising from any
material misrepresentation made by Maker to Payee or Payee's agent or any
fraudulent act or omission by Maker in connection with the
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<PAGE> 12
application for or the consummation of the financing evidenced by this Note or
in connection with any matter arising from and after the execution and delivery
of this Note and the Loan Documents and related in any way to the indebtedness
hereby evidenced; (2) the obligations and undertakings of any person who
hereafter executes and delivers to Holder any instrument guaranteeing the
payment or performance of any portion of the indebtedness evidenced hereby or of
any of the covenants and Agreements contained in the Loan Documents; and (3) the
covenants and agreements of Maker contained in Paragraph 1.16 of the Security
Deed and in that certain Hazardous Materials Certificate and Indemnity Agreement
of even date herewith made by Maker to and in favor of Payee.
15. TITLES. The titles of sections or paragraphs herein are used for
the convenience of the parties only and neither amplify, modify or alter in any
way the provisions of this instrument.
16. RELATIONSHIP OF PARTIES. The relationship between Maker and Holder
at all times Will be that of debtor and creditor only. Under no circumstance
will such relationship be construed as creating a partnership or joint venture,
regardless of whether any portion of interest due hereunder may be measured by
some standard other than an annual percentage of principal.
17. REPLACEMENT NOTE. This Real Estate Note is given in replacement of
that certain Real Estate Note dated April 27, 1994 executed by the crestmark
Club, L.P. in favor of Commonwealth of Pennsylvania State Employes' Retirement
Board, in the original principal amount of $10,100,000.00 (the "Original
Note"), the original of which Original Note has been lost or misplaced. The
Original Note was modified and amended, and this Note has been modified and
amended, by that certain Note Modification Agreement dated June 22, 1994 between
The Crestmark Club, L.P. and Commonwealth of Pennsylvania State Employes'
Retirement Board.
IN WITNESS WHEREOF, Maker, acting by and through its duly authorized
sole general partner, has executed this Note under seal on the date first above
written.
THE CRESTMARK CLUB, L.P.
By: /s/ Charles S. Roberts (Seal)
-----------------------------
Charles S. Roberts, as
sole general partner
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<PAGE> 13
NOTE MODIFICATION AGREEMENT
This Agreement, made and entered into this the 22 day of June, 1994, by
and between THE CRESTMARK CLUB, L.P., a Georgia limited partnership
("Borrower"), and COMMONWEALTH OF PENNSYLVANIA STATE EMPLOYEES' RETIREMENT
BOARD, an independent administrative board of the Commonwealth of Pennsylvania,
transacting business as the Commonwealth of Pennsylvania State Employes'
Retirement System "Lender").
W I T N E S S E T H:
WHEREAS, Borrower executed and delivered to Lender that certain Real
Estate Note dated April 27, 1994, in the principal amount of $10,100,000 (the
"Note"); and
WHEREAS, Borrower and Lender have agreed to modify and amend the Note
to correct a mutual mistake;
NOW, THEREFORE, for and in consideration of the above premises and
other good and valuable consideration, the receipt and sufficiency whereof
hereby are acknowledged, Borrower and Lender do hereby agree that the Note shall
be and is hereby modified and amended as follows: By deleting the words "the
actual number of days elapsed", appearing in the fourth and fifth lines of
Section 2 of the Note; and by substituting in lieu thereof the following words:
"twelve thirty-day months".
Except as hereby modified and amended, the Note shall remain in full
force and effect as originally executed and delivered; the Note, as hereby
modified and amended, being hereby ratified and reaffirmed.
This Agreement shall be governed by and construed in according with the
laws of the State of Georgia, and shall be binding upon and inure to the benefit
of the parties hereto and their respective successors, assigns and legal
representatives.
IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement
under seal, the day and year first above Written.
<PAGE> 14
BORROWER: LENDER:
THE CRESTMARK CLUB, L.P. COMMONWEALTH OF PENNSYLVANIA
STATE EMPLOYES' RETIREMENT SYSTEM
By: /s/ Charles S. Roberts (Seal) By: Legg Mason Real Estate Advisors, Inc.
--------------------------
Charles S. Roberts, as sole
general partner
By: /s/ Concetta A. Fonte
-------------------------------------
Title: Assistant Vice President
<PAGE> 15
STATE OF GEORGIA
COUNTY OF FULTON
ASSIGNMENT OF OCCUPANCY AGREEMENTS AND RENT
THIS ASSIGNMENT, made and entered into this 27th day of April, 1994, by
and between THE CRESTMARK CLUB, L.P., a Georgia limited partnership (hereinafter
referred to as "Borrower"), and COMMONWEALTH OF PENNSYLVANIA STATE EMPLOYES'
RETIREMENT BOARD, AN INDEPENDENT ADMINISTRATIVE BOARD OF THE COMMONWEALTH OF
PENNSYLVANIA, TRANSACTING BUSINESS AS THE COMMONWEALTH OF PENNSYLVANIA STATE
EMPLOYES' RETIREMENT SYSTEM (hereinafter referred to as "Lender");
W I T N E S S E T H:
THAT FOR AND IN CONSIDERATION of the sum of Ten and No/100 Dollars
($10.00) and other good and valuable considerations, the receipt and sufficiency
whereof are hereby acknowledged, and in order to secure the indebtedness and
other obligations of Borrower hereinafter set forth, Borrower does hereby grant,
transfer and assign to Lender, its successors, successors-in-title and assigns,
all of Borrower's right, title and interest in, to and under all of those
occupancy agreements now existing and hereafter made, including any and all
extensions, renewals and modifications thereof, and all security deposits and
other refundable and non-refundable deposits paid by the tenants thereunder
(said occupancy agreements are hereinafter referred to collectively as the
"Leases", and the tenants and lessees thereunder are hereinafter referred to
collectively as "Tenants" or individually as "Tenant" as the context requires),
which Leases cover or shall cover portions of certain real property described in
Exhibit "A" attached hereto and by this reference made a part hereof and/or the
improvements thereon (said real property and improvements hereinafter
collectively referred to as the "Premises"); together with all of Borrower's
right, title and interest in and to all rents, issues and profits from the
Leases and from the Premises.
TO HAVE AND TO HOLD unto Lender, its successors and assigns, forever,
subject to and upon the terms and conditions set forth herein.
This Assignment is made for the purpose of securing (a) the full and
prompt payment when due, whether by acceleration or otherwise, with such
interest as may accrue thereon, either before or after maturity thereof, of that
certain Real Estate Note dated of even date herewith, made by Borrower to the
order of Lender in the principal face amount of TEN MILLION ONE HUNDRED THOUSAND
AND NO/100THS DOLLARS ($10,100,000) (hereinafter referred to as the "Note"),
together with any renewals, modifications, consolidations and extensions thereof
and amendments thereto and all advances of principal thereunder, (b) the full
amount and prompt payment and performance of any and all obligations of Borrower
to Lender under the terms of the Deed to Secure Debt and Security Agreement from
Borrower to Lender, dated of even date herewith and securing the indebtedness
evidenced by the Note (hereinafter referred to as the "Security Instrument"),
and (c) the full and prompt payment and performance of any and all other
obligations of Borrower to Lender under
<PAGE> 16
any other instruments now or hereafter evidencing, securing, or otherwise
relating to the indebtedness evidenced by the Note (the Note, Security
Instrument and said other instruments are hereinafter referred to collectively
as the "Loan Documents," and said indebtedness is hereinafter referred to as the
"Indebtedness").
ARTICLE I
WARRANTIES AND COVENANTS
1.01 Warranties of Borrower. Borrower hereby warrants and represents as follows:
(a) Borrower is the sole holder of the landlord's interest under the Leases, is
entitled to receive the rents, issues and profits from the Leases and from the
Premises, and has good right to sell, assign, transfer and set over the same and
to grant to and confer upon Lender the rights, interests, powers, and
authorities herein granted and conferred;
(b) Borrower has made no assignment other than this Assignment (and any prior
assignment being discharged concurrently with the execution and delivery of this
Assignment) of any of the rights of Borrower under any of the Leases or with
respect to any of said rents, issues or profits;
(c) Borrower has neither done any act nor omitted to do any act with respect to
any of the Leases which might prevent Lender from, or limit Lender in, acting
under any of the provisions of this Assignment;
(d) All Leases provide for rental to be paid monthly, in advance, and Borrower
has not accepted payment of rental under any of the Leases for more than one
(1) month in advance of the due date thereof;
(e) To the best of Borrower's knowledge, there exists no default or event of
default or any state of facts which would, with the passage of time or the
giving of notice, or both, constitute a default or event of default on the part
of Borrower or by any Tenant under any of the Leases;
(f) Neither the execution and delivery of this Assignment or any of the Leases,
the performance of each and every covenant of Borrower under this Assignment and
the Leases, nor the meeting of each and every condition contained in this
Assignment, conflicts with, or constitutes a breach or default under any
agreement, indenture or other instrument to which Borrower is a party, or any
law, ordinance, administrative regulation or court decree which is applicable,
to Borrower;
(g) No action has been brought or, so far as is known to Borrower, is
threatened, which would interfere in any way with the right of Borrower to
execute this Assignment and perform all of Borrower's obligations contained in
this Assignment and in the Leases;
(h) The Leases are valid, enforceable and in full force and effect; and
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<PAGE> 17
(i) All security deposits and other deposits (whether refundable or
non-refundable pursuant to the terms of the Leases) which have been paid under
the Leases as of the date of this Assignment are being held by Borrower or have
been received and applied for the uses and purposes designated in the Leases.
1.02 Covenants of Borrower. Borrower hereby covenants and agrees as follows:
(a) Except for matters normally occurring in connection with the operation of an
all-suites residential facility, Borrower shall (i) fulfill, perform and observe
each and every condition and covenant of landlord or lessor contained in each of
the Leases; (ii) give prompt notice to Lender of any claim of default under any
of the Leases, whether given by the Tenant to Borrower, or given by Borrower to
the Tenant, together with a complete copy of any such notice; (iii) at no cost
or expense to Lender, enforce, short of termination, the performance and
observance of each and every covenant and condition of each of the Leases, to be
performed or observed by the Tenant thereunder; and (iv) appear in and defend
any action arising out of, or in any manner connected with, any of the Leases,
or the obligations or liabilities of Borrower as the landlord thereunder, or of
the Tenant or any guarantor thereunder;
(b) Except for matters normally occurring in connection with the operation of an
all-suites residential facility, Borrower shall not, without the prior written
consent of Lender, (i) modify any of the Leases; (ii) terminate the term or
accept the surrender of any of the Leases; (iii) waive or release the Tenant
from the performance or observance by the Tenant of any obligation or condition
of any of the Leases to which Borrower, as landlord, has the right to consent
under the terms of such Leases; (iv) permit the prepayment of any rents under
any of the Leases for more than one (1) month prior to the accrual thereof; (v)
give any consent to any assignment or sublease by the Tenant under any of the
Leases; or (vi) assign its interest in, to or under the Leases or the rents,
issues and profits from the Leases and from the Premises to any person or entity
other than Lender;
(c) Borrower shall not, without the prior written consent of Lender, enter into
any Lease unless the form of the proposed Lease has been approved in writing by
Lender;
(d) Borrower shall protect, indemnify and save harmless Lender from and against
all liabilities, obligations, claims, damages, penalties, causes of action,
costs and expenses (including, without limitation, attorneys' fees and expenses)
imposed upon or incurred by Lender by reason of this Assignment and any claim or
demand whatsoever which may be asserted against Lender by reason of any alleged
obligation or undertaking to be performed or discharged by Lender under this
Assignment. In the event Lender incurs any liability, loss or damage by reason
of this Assignment, or in the defense of any claim or demand arising out of or
in connection with this Assignment, the amount of such liability, loss or damage
shall be added to the Indebtedness, shall bear interest at the rate of Default
Interest specified in the Note from the date incurred until paid and shall be
payable on demand.
(e) Borrower shall authorize and direct, and does hereby authorize and direct
each and every present and future Tenant of the whole or any part of the
Premises to pay all rental to Lender upon receipt of written demand from Lender
to so pay the same.
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<PAGE> 18
(f) The warranties and representations of Borrower made in Paragraph 1.01 hereof
and the covenants and agreements of Borrower made in this Paragraph apply to
each Lease in effect as of the time of execution of this Assignment, and shall
apply to each Lease hereafter made at the time each such future Lease becomes
effective.
(g) Borrower shall not enter into any contract or agreement for the management
of the Premises or any portion thereof without the prior written consent and
approval of Lender first having been obtained; provided that, subject to and in
accordance with the provisions of paragraph 1.06(a) of the Security Instrument,
Lender shall not withhold its consent to the management of the Premises by
Roberts Properties Management, Inc., so long as Charles S. Roberts remains the
principal stockholder (directly or indirectly) and primarily responsible for the
day-to-day management of Roberts Properties Management, Inc.
(h) At the request of Lender, which request Lender may make only upon the
occurrence of a Default under this Assignment or under any of the Loan
Documents, Borrower immediately shall deliver to Lender all security deposits
and other deposits (whether refundable or non-refundable) paid by Tenants under
the Leases; and Lender shall hold such deposits in a custodial account
controlled by Lender, subject to the terms and conditions of the Leases.
1.03 Covenants of Lender. Lender, by its acceptance of this Assignment, hereby
covenants and agrees with Borrower as follows:
(a) Although this Assignment constitutes a present and current assignment of all
rents, issues and profits from the Premises, so long as there shall exist no
Default, Lender shall not demand that such rents, issues and profits be paid
directly to Lender, and Borrower shall have the right to collect, but no more
than one (1) month prior to accrual, all such rents, issues and profits from the
Premises (including, but not by way of limitation, all rental payments under the
Leases); and
(b) Upon the payment in full of the Indebtedness, as evidenced by the recording
or filing of an instrument of satisfaction or full release of the Security
Instrument without the recording of another security instrument in favor of
Lender affecting the Premises, this Assignment shall be terminated and released
of record by Lender and shall thereupon be of no further force or effect.
ARTICLE II
DEFAULT
2.01 Default The term, "Default," wherever used in this Assignment, shall mean
any one or more of the following events:
(a) The occurrence of any "Default" under any of the Loan Documents;
(b) The failure by Borrower duly and fully to comply with any covenant,
condition or agreement of this Assignment, and such failure is not cured within
thirty (30) days after notice thereof to Borrower
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<PAGE> 19
if such failure concerns any term, covenant, condition or agreement of
this Assignment other than (i) the payment of the Indebtedness or any portion
thereof, or (ii) the payment of any other sums due under this Assignment; it
being understood and agreed that Lender shall not be required to give any
notice, or to grant any cure period, in the event of or with respect to
Borrower's failure to make any payment due under the Note or to pay the
Indebtedness or any portion thereof or to pay any sums due under this
Assignment; or
(c) The breach of any warranty by Borrower contained in this Assignment, and
such failure is not cured within thirty (30) days after notice thereof to
Borrower.
2.02 Remedies. Upon the occurrence of any Default, Lender may at its option,
with or without notice or demand of any kind, exercise any or all of the
following remedies:
(a) Declare any part or all of the Indebtedness to be due and payable, whereupon
the same shall become immediately due and payable;
(b) Perform any and all obligations of Borrower under any or all of the Leases
or this Assignment and exercise any and all rights of Borrower herein or therein
as fully as Borrower himself could do, including, without limitation of the
generality of the foregoing: enforcing, modifying, extending or terminating any
or all of the Leases; collecting, modifying, compromising, waiving or increasing
any or all the rents payable thereunder; and obtaining new tenants and entering
into new leases on the Premises on any terms and conditions deemed desirable by
Lender; and, to the extent Lender shall incur any costs in connection with the
performance of any such obligations of Borrower, including costs of litigation,
then all such costs shall become a part of the Indebtedness, shall bear interest
from the incurring thereof at the rate of Default Interest specified in the
Note, and shall be due and payable on demand;
(c) In Borrower's or Lender's name, institute any legal or equitable action
which Lender in its sole discretion deems desirable to collect and receive any
or all of the rents, issues and profits assigned herein;
(d) Collect the rents, issues and profits and any other sums due under the
Leases and with respect to the Premises, and apply the same in such order as
Lender in its sole discretion may elect against (i) all costs and expenses,
including reasonable attorneys' fees, incurred in connection with the operation
of the Premises, the performance of Borrower's obligations under the Leases and
collection of the rents thereunder; (ii) all the costs and expenses, including
reasonable attorneys' fees, incurred in the collection of any or all of the
Indebtedness, including all costs, expenses and attorneys' fees incurred in
seeking to realize on or to protect or preserve Lender's interest in any other
collateral securing any or all of the Indebtedness; and (iii) any or all unpaid
principal and interest on the Indebtedness.
Lender shall have the full right to exercise any or all of the foregoing
remedies without regard to the adequacy of security for any or all of the
Indebtedness, and with or without the commencement of any legal or equitable
action or the appointment of any receiver or trustee, and shall have full right
to enter upon, take possession of, use and operate all or any portion of the
Premises which Lender in its sole discretion deems desirable to effectuate any
or all of the foregoing remedies.
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<PAGE> 20
ARTICLE III
GENERAL PROVISIONS
3.01 Successors and Assigns. This Assignment shall inure to the benefit of and
be binding upon Borrower and Lender and their respective heirs, executors, legal
representatives, successors and assigns. Whenever a reference is made in this
Assignment to "Borrower" or "Lender", such reference shall be deemed to include
a reference to the heirs, executors, legal representatives, successors and
assigns of Borrower or Lender.
3.02 Terminology. All personal pronouns used in this Assignment, whether used in
the masculine, feminine or neuter gender, shall include all other genders, and
the singular shall include the plural, and vice versa. Titles of articles are
for convenience only and neither limit nor amplify the provisions of this
Assignment.
3.03 Severability. If any provision of this Assignment or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Assignment and the application of such provisions
to other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
3.04 Applicable Law. This Assignment shall be governed by and construed and
enforced in accordance with the substantive, and not the conflicts, laws of the
State in which the Premises is situated.
3.05 No Third Party Beneficiaries. This Assignment is made solely for the
benefit of Lender and its assigns. No Tenant under any of the Leases nor any
other person shall have standing to bring any action against Lender as the
result of this Assignment, or to assume that Lender will exercise any remedies
provided herein, and no person other than Lender shall under any circumstances
be deemed to be la beneficiary of any provision of this Assignment.
3.06 No Oral Modifications. Neither this Assignment nor any provisions hereof
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
3.07 Cumulative Remedies. The remedies herein provided shall be in addition to
and not in substitution for the rights and remedies vested in Lender in or by
any of the Loan Documents or in law or equity, all of which rights and remedies
are specifically reserved by Lender. The remedies herein provided or otherwise
available to Lender shall be cumulative and may be exercised concurrently. The
failure to exercise any of the remedies herein provided shall not constitute a
waiver thereof, nor shall use of any of the remedies herein provided prevent the
subsequent or concurrent resort to any other remedy or remedies. It is intended
that this clause shall be broadly construed so that all remedies herein provided
or otherwise available to Lender shall continue to be each and all available to
Lender until the Indebtedness shall have been paid in full.
-6-
<PAGE> 21
3.08 Cross-Default. A Default by Borrower under this Assignment shall constitute
a Default under the other Loan Documents.
3.09 Counterparts. This Assignment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties or signatories hereto may execute this
Assignment by signing any such counterpart.
3.10 Further Assurance. At any time and from time to time, upon request by
Lender, Borrower will make, execute and deliver, or cause to be made, executed
and delivered, to Lender and, where appropriate, cause to be recorded and/or
refiled at such time and in such offices and places as shall be deemed desirable
by Lender, any and all such other and further assignments, deeds to secure debt,
mortgages, deeds of trust, security agreements, financing statements,
continuation statements, instruments of further assurance, certificates and
other documents as may, in the opinion of Lender, be necessary or desirable in
order to effectuate, complete or perfect, or to continue and preserve (a) the
obligations of Borrower under this Assignment and (b) the security interest
created by this Assignment as a first and prior security interest upon the
Leases and the rents, issues and profits from the Premises. Upon any failure by
Borrower so to do, Lender may make, execute, record, file, rerecord and/or
refile any and all such assignments, deeds to secure debt, mortgages, deeds of
trust, security agreements, financing statements, continuation statements,
instruments, certificates, and documents for and in the name of Borrower, and
Borrower hereby irrevocably appoints Lender the agent and attorney-in-fact of
Borrower so to do.
3.11 Notices. Any and all notices, elections or demands permitted or required to
be made under this Assignment shall be in writing, signed by the party giving
such notice, election or demand and shall be delivered personally, or sent by
overnight courier service by a company regularly engaged in the business of
delivering business packages (such as Federal Express), or sent by registered or
certified United States mail, postage prepaid, to the other party at the address
set forth below, or at such other address within the continental United States
of America as may have theretofore been designated in writing. The effective
date of such notice, election or demand, and the date on which any time to
respond or to take any action required or permitted hereunder shall commence,
shall be the date of personal delivery or, if sent by overnight courier then the
date of delivery as evidenced by the courier's receipt, or, if mailed, then the
date of receipt as evidenced by the postal receipt card. For the purposes of
this Assignment:
The Address of Lender is:
Pennsylvania State Employes' Retirement System
c/o Legg Mason Real Estate Services
1735 Market Street
12th Floor
Philadelphia, Pennsylvania 19103
Attention: Douglas Callantine, Executive
Vice President
-7-
<PAGE> 22
with copies to:
Pennsylvania State Employes' Retirement System
30 North Third St.
Harrisburg, PA 17101
Attn: Jeffrey B. Clay, Chief Counsel
and
First Union Mortgage Corporation
P.O. Box 18109
Raleigh, North Carolina 27619
The Address of Borrower is:
The Crestmark Club, L.P.
c/o Roberts Properties, Inc.
8010 Roswell Rd.
Suite 120
Atlanta, Ga. 30350
Attn: Charles S. Roberts
with a copy to:
Sanford H. Zatcoff, Esq.
Holt, Ney, Zatcoff & Wasserman
100 Galleria Parkway, Suite 600
Atlanta, Ga. 30339
3.12 Modifications, etc. Borrower hereby consents and agrees that Lender may at
any time, and from time to time, without notice to or further consent from
Borrower, either with or without consideration, surrender any property or other
security of any kind or nature whatsoever held by it or by any person, firm or
corporation on its behalf or for its account, securing the Indebtedness;
substitute for any collateral so held by it, other collateral of like kind, or
of any kind; agree to modification of the terms of the Note or the Loan
Documents; extend or renew the Note or any of the Loan Documents for any period;
grant releases, compromises and indulgences with respect to the Note or the Loan
Documents to any persons or entities now or hereafter liable thereunder or
hereunder; release any guarantor or endorser of the Note, the Security
Instrument, or any other Loan Document; or take or fail to take any action of
any type whatsoever, and no such action which Lender shall take or fail to take
in connection with the Loan Documents, or any of them, or any security for the
payment of the Indebtedness or for the performance of any obligations or
undertakings of Borrower, nor any course of dealing with Borrower or any other
person, shall release Borrower's obligations hereunder, affect this Assignment
in any way or afford Borrower any recourse against Lender. The provisions of
this Assignment shall extend and be applicable to all renewals, amendments,
extensions, consolidations and modifications of the Loan Documents and the
Leases,
-8-
<PAGE> 23
and any and all references herein to the Loan Documents or the Leases shall be
deemed to include any such renewals, amendments, extension, consolidation or
modifications thereof
3.13 Limited Liability of Borrower. The liability of Borrower and of the general
partner of Borrower for the payment of the Indebtedness and the performance of
the covenants and conditions of the Loan Documents, is limited in accordance
with the provisions of Section 14 of the Note and Further Stipulation no.2 of
Schedule 3, Exhibit "C" of the Security Instrument.
3.14 Status of Lender hereby reserves all immunities, defenses, rights or
actions arising out of its status as a sovereign state or from the Eleventh
Amendment to the United States Constitution. No waiver of any such immunities,
defenses, rights or actions is to be implied by any provision hereof. Borrower
hereby consents to the jurisdiction of any of the courts of the Commonwealth of
Pennsylvania and of any federal courts located therein and agrees that Lender
may bring suit against Borrower in any of such courts. Borrower also hereby
waives the right to bring any counterclaims against Lender (but specifically
reserves the right to bring any defenses and affirmative defenses against
Lender) in any suit or action in any court of law or equity in which Lender and
Borrower are adverse parties.
3.15 Attorney's Fees, Wherever reference in this Assignment is made to the
payment by Borrower of the fees of Lender's attorneys, such fees shall be
limited to the actual attorney's fees incurred, based upon the attorney's normal
hourly rate and the number of hours worked, and not the statutory attorney's
fees specified in O.C.G.A. Section 13-1-11.
IN WITNESS WHEREOF, Borrower, acting by and through its duly authorized general
partner, has executed this Assignment under seal, the date and year first above
written.
BORROWER:
Signed, sealed and delivered in the
presence of:
THE CRESTMARK CLUB, L.P.
/s/ Sheryl Williams
- ------------------------------------
Witness By:/s/ Charles S. Roberts (SEAL)
-------------------------------
Charles S. Roberts, as sole
/s/ Michelle M. Ellingson general partner
- ------------------------------------
Notary Public
NOTARY PUBLIC, GWINNETT COUNTY, GEORGIA
MY COMMISSION EXPIRES MARCH 1, 1997
My commission expires:_________
[AFFIX NOTARY SEAL OR STAMP]
(SEAL)
-9-
<PAGE> 24
EXHIBIT A
TRACT ONE:
ALL THAT TRACT of land in Land Lots 520 and 521 of the 18th District, 2nd
Section, Douglas County, Georgia, described as follows:
BEGINNING at a point on the land lot line common to Land Lots 520 and 521 of the
18th District, 2nd Section, Douglas County, Georgia, which point is located
South 01 degree 31 minutes 17 seconds West 267.34 feet along said common land
lot line from a 1/2 inch reinforcing rod found at the intersection of said
common land lot line with the south right-of-way line of Skyview Road (110 foot
right-of-way); thence, continuing along said common land lot line, South 01
degree 31 minutes 17 seconds West 299.99 feet to a point; thence leaving said
common land lot line, South 42 degrees 30 minutes 56 seconds East 136.20 feet to
a point; thence South 52 degrees 15 minutes 24 seconds West 201.33 feet to a
point on the northeast right-of-way line of Crestmark Boulevard (formerly named
Blairs Way) (60 foot right-of-way); thence, along the northeast right-of-way
line of Crestmark Boulevard, the following courses and distances: (1) along the
arc of a curve to the left (which arc is subtended by a chord having a bearing
and distance of North 42 degrees 16 minutes 22 seconds West 53.78 feet and a
radius of 194.000 feet) 53.95 feet to a point and (2) North 50 degrees 14
minutes 22 seconds West 297.05 feet to a point; thence North 88, degrees 56
minutes 20 seconds West 7.96 feet to a point on the northeast right-of-way line
of said Crestmark Boulevard (an apparent 50 foot right-of-way); thence, along
the northeast, east and southeast right-of-way line of Crestmark Boulevard, the
following courses and distances: (1) North 49 degrees 23 minutes 14 seconds West
48.56 feet to a point, (2) along the arc of a curve to the right (which arc is
subtended by a chord having a bearing and distance of North, 27 degrees 07
minutes 28 seconds West 84.29 feet and a radius of 110.98 feet) 86.46 feet to a
point (3) along the arc of a curve to the right (which arc is subtended by a
chord having a bearing and distance of North 06 degrees 07 minutes 45 seconds
East 108. 1 5 feet and a radius of 285.07 feet) 108.81 feet to a point and (4)
North 17 degrees 03 minutes 51 seconds East 93.75 feet to a 1/2-inch reinforcing
rod found; thence, leaving said right-of-way line, South 88 degrees 28 minutes
43 seconds East 383.96 feet to the POINT OF BEGINNING, said tract containing
approximately 3.924 acres and designated "Tract One" as shown on that certain
plat of ALTA/ACSM Survey for. The Crestmark Club, L.P., The Commonwealth of
Pennsylvania State Employee's Retirement System & Chicago Title Insur. Co.,
prepared by Watts & Browning Engineers, Inc., bearing the seal and certification
of G.M. Gillespie, Georgia Registered Professional Land Surveyor No. 2121, dated
October 15, 1990, last revised April 12, 1994.
TRACT TWO:
ALL THAT TRACT of land in Land Lot 521 of the 18th District, 2nd Section,
Douglas County, Georgia, described as follows:
<PAGE> 25
BEGINNING at an iron pin placed at the intersection of the west right-of-way
line of Crestmark Boulevard (formerly named Blairs Way) (60 foot right-of-way)
with the land lot line common to Land Lots 521 and 580 of the 18th District, 2nd
Section, Douglas County, Georgia; thence, running along said common land lot
line, North 89 degrees 01 minute 47 seconds West 1257.30 feet to an iron pin
placed at the land lot comer common to Land Lots 521, 522, 579 and 580, 18th
District, 2nd Section, Douglas County, Georgia; thence, along the land lot line
common to said Land Lots 521 and 522, North 01 degree 19 minutes 58 seconds East
711.97 feet to a 1-inch open top iron pin found in a rock pile; thence, leaving
said common land lot line, South 88 degrees 56 minutes 20 seconds East 919.01
feet to a point on the southwest right-of-way line of said Crestmark Boulevard;
thence, along the southwest and west right-of-way line of Crestmark Boulevard,
the following courses and distances: (1) South 50 degrees 14 minutes 22 seconds
East 371.94 feet to a point, (2) along the arc of a curve to the right (which
arc is subtended by a chord having a bearing and distance of South 24 degrees 09
minutes 31 seconds East 117.82 feet and a radius of 134.00 feet) 121.99 feet to
a point, and (3) South 01 degree 55 minutes 20 seconds West 370.87 feet to the
POINT OF BEGINNING, said tract containing approximately 19.481 acres and
designated "Tract Two" on that certain plat of ALTA/ACSM Survey for The
Crestmark Club, L.P., The Commonwealth of Pennsylvania State Employee's
Retirement System & Chicago Title Insur. Co., prepared by Watts & Browning
Engineers, Inc., bearing the seal and certification of G.M. Gillespie, Georgia
Registered Professional Land Surveyor No. 2121, dated October 15, 1990, last
revised April 12, 1994.
TOGETHER WITH a non-exclusive right, title and interest in and to the easements
appurtenant to all or portions of the above described tracts, described in and
created by (i) Agreement Regarding Easements, Covenants and Restrictions dated
December 29, 1986, between Wallace Enterprises, Inc. and Roberts Properties-
Thornton Road, Ltd., recorded in Deed Book 542, page 83, Douglas County, Georgia
records, rerecorded in Deed Book 548, page 508, aforesaid records, (ii)
Reciprocal Easement Agreement dated May 23, 1988 among Roberts
Properties-Thornton Road, Ltd., McDonald's Corporation and Westpark Owners
Association, Inc., recorded in Deed Book 604, page 783, aforesaid records, (iii)
Reciprocal Easement Agreement dated February 9, 1989, between Roberts
Properties-Thornton Road, Ltd. and Ortenzi-Doering-Bull L.P., recorded in Deed
Book 635, page 808, aforesaid records, (iv) Sign Easement Agreement dated June
1, 1989, among Roberts Properties Thornton Road, L.P., Chick-Fil-A, Inc. and
Westpark Owners Association, Inc., recorded in Deed Book 646, page 788,
aforesaid records, as amended by that certain First Amendment to Sign Easement
Agreement dated December 30, 1992 among The Crestmark Club, L.P., Chick-Fil-A,
Inc. and Westpark Owners Association, Inc., recorded in Deed Book 802, page 479,
aforesaid records, and (v) Reciprocal Easement Agreement among The Crestmark
Club, L.P., Crestmark Owners Association, Inc. and Goodrich Enterprises, Inc.,
dated May 28, 1993, recorded in Deed Book 816, page 399, aforesaid records.
RECORDED 5-20 1994
JANE C. WILLIAMS, CLERK
SUPERIOR COURT, DOUGLAS CO
<PAGE> 26
RETURN TO: Ramona Masters
Holt, Ney, Zatcoff & Wasserman
100 Galleria Parkway, Suite 600
Atlanta, GA 30339
Prepared by and return to
James A. Rosenstein, Esquire
Wolf, Block, Schorr and Solis-Cohen
Twelfth Floor, Packard Building
S.E. Corner 15th & Chestnut Streets
Philadelphia, PA 19102-2678
FHLMC Loan Number ______________________
[CRESTMARK I]
ASSIGNMENT OF ASSIGNMENT OF OCCUPANCY AGREEMENTS AND RENTS
THIS ASSIGNMENT, made this 23rd day of August, 1995, by The
Commonwealth of Pennsylvania State Employes' Retirement Board, an independent
administrative board of The Commonwealth of Pennsylvania, transacting business
as The Commonwealth of Pennsylvania State Employes' Retirement System, with
business offices at Thirty N. Third Street, Harrisburg, Pennsylvania 17101
("Assignor"), to Legg Mason Real Estate Services South, Inc., a Florida
corporation, with business offices at 15280 NW 79th Court, Suite 101, Miami
Lakes, Florida 33016-5852, ("Assignee").
W I T N E S S E T H:
In consideration of the sum of Ten Dollars ($10.00) in hand paid and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by Assignor, and intending to be legally bound hereby,
Assignor agrees as follows:
1. By these presents and by delivery to Assignee of the documents
enumerated hereinafter, Assignor, for itself and its legal representatives,
successors and assigns, hereby conveys, transfers and assigns to Assignee:
All of Assignor's right, title, interest and privilege which Assignor
has or may have in a certain assignment of occupancy agreements and rents (the
"Assignment of Occupancy Agreements and Rents") made by The Crestmark Club,
L.P., a Georgia limited partnership ("Borrower") in favor of Assignor dated
April 27, 1994, and recorded in the Office for the Superior Court Clerk in and
for Douglas County, Georgia, on May 4, 1994, in Deed Book 879, page 478, which
Assignment of Occupancy Agreements and Rents collaterally assigns to Assignor
the rents and leases more particularly described in the Assignment of Occupancy
Agreements and Rents as collateral security for payment
<PAGE> 27
of the sum of Ten Million, One Hundred Thousand and no/100ths Dollars
($10,100,000.00), with interest thereon, also secured by a deed to secure debt
and security agreement dated April 27, 1994 and an amendment to the deed to
secure debt and security agreement, dated August 1, 1994, on certain premises
located in the County of Douglas, State of Georgia (collectively, the
"Mortgage").
This Assignment is made simultaneously and together with the
endorsement by Assignor in favor of Assignee of the real estate note and the
replacement real estate note as described in the Mortgage and as modified by the
Note Modification Agreement dated June 22, 1994 (collectively, the "Note") and
all monies and interest due or to become due thereon, and the assignment of the
Mortgage by Assignor to Assignee by separate instrument.
2. Assignor, for itself and its legal representatives, successors and
assigns, further represents and warrants to Assignee that: (a) Assignor has full
and complete right, authority and power to assign all of Assignor's right,
title, interest and privilege which Assignor has or may have in the Assignment
of Operating Agreements and Rents, and to deliver such instrument to Assignee,
and (b) no other assignment, pledge, encumbrance or modification of any of
Assignor's right, title, interest or privilege in the Assignment of Operating
Agreements and Rents has been made by Assignor.
3. In the event of a breach of any or all of the covenants or
warranties set forth in Section 2 hereof, Assignor, for itself and its legal
representatives, successors and assigns, agrees to indemnify Assignee and hold
it harmless from and against any and all claims, damages, liability, costs and
expenses (including, but not limited to, reasonable attorney's fees and
disbursements) arising because or out of, in connection with, or in any manner
related to, such breach.
4. Except as otherwise expressly set forth in Sections 2 and 3 hereof,
this Assignment is made without recourse in any event whatsoever to Assignor.
5. This Assignment and the warranties and representations contained
herein shall be binding upon Assignor and shall inure to the benefit of
Assignee, and their respective successors and assigns.
6. This Assignment shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania and the decisions of the
Pennsylvania courts. The parties hereby consent to the exclusive jurisdiction of
any Pennsylvania or
-2-
<PAGE> 28
federal court situate in Dauphin County or Philadelphia County, Pennsylvania.
IN WITNESS WHEREOF, Assignor has caused this Assignment to be executed
by its duly authorized officers and its corporate seal to be affixed hereto the
day and year first above written.
Signed, sealed and delivered The Commonwealth of
in the presence of: Pennsylvania State Employee's
Retirement System
/s/ /s/ Mary J. Smith By: /s/ Joe Brosius
- ------------------------------------ ------------------------------------
Witness Witness [Title] EXECUTIVE DIRECTOR
/s/ Darlene K. Thumma Attest: /s/ [illegible]
- ------------------------------------ --------------------------------
Notary Public [Title] COUNSEL IN CHARGE
My Commission Expires: _________ (Corporate Seal)
[Notary Seal]
RECORDED 9-29 1995
JANE C. WILLIAMS, CLERK
SUPERIOR COURT, DOUGLAS CO
-3-
<PAGE> 29
RETURN TO: Ramona Masters
Holt, Ney, Zatcoff & Wasserman
100 Galleria Parkway, Suite 600
Atlanta, GA 30339
/s/ James A. Rosenstein
Prepared by and return to
James A. Rosenstein, Esquire
Wolf, Block, Schorr and Solis-Cohen
Twelfth Floor, Packard Building
S.E. Corner 15th & Chestnut Streets
Philadelphia, PA 19102-2678
FHLMC Loan Number __________________________
[CRESTMARK II]
ASSIGNMENT OF ASSIGNMENT OF OCCUPANCY AGREEMENTS AND RENTS
THIS ASSIGNMENT, made this 24 day of August, 1995, by Legg Mason Real
Estate Services South, Inc., a Florida corporation, with business offices at
15280 NW 79th Court, Suite 101, Miami Lakes, Florida 33016-5852, ("Assignor"),
to Federal Home Loan Mortgage Corporation, a corporation organized and existing
under the laws of the United States, with business offices at 8200 Jones Branch
Drive, McLean, Virginia 22102 ("Assignee").
W I T N E S S E T H:
In consideration of the sum of Ten Dollars ($10.00) in hand paid and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by Assignor, and intending to be legally bound hereby,
Assignor agrees as follows:
1. By these presents and by delivery to Assignee of the documents
enumerated hereinafter, Assignor, for itself and its legal representatives,
successors and assigns, hereby conveys, transfers and assigns to Assignee:
All of Assignor's right, title, interest and privilege which
Assignor has or may have in a certain assignment of occupancy agreements and
rents (the "Assignment of Occupancy Agreements and Rents") made by The Crestmark
Club, L.P., a Georgia limited partnership ("Borrower") in favor of The
Commonwealth of Pennsylvania State Employes' Retirement Board, an independent
administrative board of the Commonwealth of Pennsylvania, transacting business
as The Commonwealth of Pennsylvania State Employes' Retirement System ("SERS",
dated April 27, 1994, and recorded in the Office for the Superior Court' Clerk
in and for Douglas County, Georgia, on May 4, 1994, in Deed Book-879, page 478,
which Assignment of Occupancy Agreements and Rents was assigned by SERS to
Assignor by An assignment dated
<PAGE> 30
August 23, 1995, and intended to be recorded in the aforesaid Office immediately
prior to the recordation hereof and which Assignment of Operating Agreements and
Rents collaterally assigns to SERS the rents and leases more particularly
described in the Assignment of Occupancy Agreements and Rents as collateral
security for payment of the sum of Ten Million, One Hundred Thousand and
no/100ths Dollars ($10,100,000.00), with interest thereon, also secured by a
deed to secure debt and security agreement dated April 27, 1994, and an
amendment to the deed to secure debt and security agreement dated August 1,
1994, on certain premises located in the County of Douglas, State of Georgia
(collectively., the "Mortgage").
This Assignment is made simultaneously and together with the
endorsement by Assignor in favor of Assignee of the real estate note described
in the Mortgage and the replacement real estate note as described in the
Mortgage and as modified by the Note Modification Agreement dated June 22, 1994,
(collectively, the "Note") and all monies and interest due or to become due
thereon, and the assignment of the Mortgage by Assignor to Assignee by separate
instrument.
2. Assignor, for itself and its legal representatives, successors and
assigns, further represents and warrants to Assignee that: (a) Assignor has full
and complete right, authority and power to assign all of Assignor's right,
title, interest and privilege which Assignor has or may have in the Assignment
of Operating Agreements and Rents, and to deliver such instrument to Assignee,
and (b) no other assignment, pledge, encumbrance or modification of any of
Assignor's right, title, interest or privilege in the Assignment of Operating
Agreements and Rents has been made by Assignor.
3. In the event of a breach of any or all of the covenants or
warranties set forth in Section 2 hereof, Assignor, for itself and its legal
representatives, successors and assigns, agrees to indemnify Assignee and hold
it harmless from and against any and all claims, damages, liability, costs and
expenses (including, but not limited to, reasonable attorney's fees and
disbursements) arising because or out of, in connection with, or in any manner
related to, such breach.
4. Except as otherwise expressly set forth in Sections 2 And 3 hereof,
this Assignment is made without recourse in any event whatsoever to Assignor.
5. This Assignment and the warranties and representations contained
herein shall be binding upon Assignor, and shall inure to the benefit of
Assignee, and their respective successors and assigns.
-2-
<PAGE> 31
6. This Assignment shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania and the decisions of the
Pennsylvania courts. The parties hereby consent to the exclusive jurisdiction of
any Pennsylvania or federal court situate in Dauphin County or Philadelphia
County, Pennsylvania.
IN WITNESS WHEREOF, Assignor has caused this Assignment to be executed
by its duly authorized officers and its corporate seal to be affixed hereto the
day and year first above written.
Signed, sealed and delivered Legg Mason Real Estate
in the presence of: Services South, Inc.
/s/ Lisa Baccase By: /s/ [illegible]
- ------------------------------------ ------------------------------------
Witness [Title] PRESIDENT
/s/ Irene Schaffer Attest: /s/ [illegible]
- ------------------------------------ --------------------------------
Notary Public [Title] SECRETARY
My Commission Expires: 3-21-96 (Corporate Seal)
[Notary Seal]
RECORDED 9-29 1995
JANE C. WILLIAMS, CLERK
SUPERIOR COURT, DOUGLAS CO
-3-
<PAGE> 32
RETURN TO: Holt, Ney, Zatcoff & Wasserman
100 Galleria Parkway
Suite 600
Atlanta, GA 30339
Attn: Ramona Masters
/s/ James A. Rosenstein
------------------------------------------------------
Prepared by James A. Rosenstein, Esquire
Wolf, Block, Schorr and Solis-Cohen
Twelfth Floor, Packard Building
S.E. Corner 15th & Chestnut Streets
Philadelphia, PA 19102-2678
FHLMC Loan Number 9506056101
[CRESTMARK II]
AMENDMENT TO ASSIGNMENT OF ASSIGNMENT
OF OCCUPANCY AGREEMENTS AND RENTS
THIS AMENDMENT TO ASSIGNMENT OF ASSIGNMENT OF OCCUPANCY AGREEMENTS AND
RENTS, made this 1st day of September, 1995, by and between Legg Mason Real
Estate Services South, Inc., a Florida corporation, with business offices at
15280 NW 79th Court, Suite 101, Miami Lakes, Florida 33016-5852 ("Assignor") and
Federal Home Loan Mortgage Corporation, a corporation organized and existing
under the laws of the United States, with business offices at 8200 Jones Branch
Drive, McLean, Virginia 22102 ("Assignee").
BACKGROUND
By a certain Assignment of Assignment of Occupancy Agreements and
Rents, dated August 24, 1995, and recorded in the Office or the Superior Court
Clerk in and for Douglas County, Georgia, on August 29, 1995, in Deed Book 955,
page 768 (the "Assignment") Assignee acquired all of Assignor's right, title,
interest and privilege which Assignor had or may have had in a certain
assignment of occupancy agreements and rents (the "Assignment of Occupancy
Agreements and Rents") made by The Crestmark Club, L.P., a Georgia limited
partnership in favor of The Commonwealth of Pennsylvania State Employes'
Retirement Board, an independent administrative board of the Commonwealth of
Pennsylvania, transacting business as The Commonwealth of Pennsylvania State
Employes' Retirement System ("SERS"), dated April 27, 1994, and recorded in
the aforesaid Office, on May 4, 1994, in Deed Book 879, page 478, which
Assignment of Occupancy Agreements and Rents was assigned by SERS to Assignor by
an assignment dated August 23, 1995, and recorded in the aforesaid office in
Deed Book 955, page 762, and which Assignment of Operating Agreements and
Rents collaterally assigns to SERS the rents and leases more particularly
described in the Assignment of Occupancy Agreements and Rents as collateral
security for payment of the sum of Ten Million, One Hundred Thousand and
no/100ths Dollars ($10,100,000.00), with interest thereon, also secured by
<PAGE> 33
a deed to secure debt and security agreement dated April 27, 1994, and an
amendment to the deed to secure debt and security agreement dated August 1,
1994, on certain premises located in the County of Douglas, State of Georgia.
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00) in
hand paid and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by Assignor, and intending to be legally bound
hereby, Assignor and Assignee agree as follows:
1. Paragraph 4 of the Assignment shall be deleted in its entirety and
the following paragraph 4 shall be inserted in its place:
"4. Except as otherwise expressly set forth in
Sections 2 and 3 hereof, and except as expressly set forth in
the Purchase and Servicing Agreement between Legg Mason Real
Estate Services South, Inc. and the Federal Home Loan Mortgage
Corporation, dated August 22, 1995, this Assignment is made
without recourse in any event whatsoever to Assignor."
2. The Assignment, as amended by Section 1 hereof, shall continue in
full force and effect.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment
to be executed by their duly authorized officers and their corporate seal to be
affixed hereto the day and year first above written.
Signed, sealed and delivered LEGG MASON REAL ESTATE
in the presence of: SERVICES SOUTH, INC.
/s/ Emily S. Storch BY: /s/ [illegible]
- ------------------------------------ ------------------------------------
Witness Title: PRESIDENT
/s/ Maureen P. McAleer Attest: /s/ Lauraine Cattier
- ------------------------------------ --------------------------------
Notary Public Title: Asst. Vice President
My Commission Expires: 3/31/97 (Corporate Seal)
[Notary Seal]
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 34
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
Signed, sealed and delivered FEDERAL HOME LOAN
in the presence of: MORTGAGE CORPORATION
/s/ Mary C. Dalton By: /s/ Charles Olsen
- ------------------------------------ ------------------------------------
Witness Title: CHARLES J. OLSEN - VICE PRES.
/s/ Kathleen M. Sullivan Attest: /s/ [illegible]
- ------------------------------------ --------------------------------
Notary Pubic Title: /s/ ASST. TREAS.
My Commission Expires: 1/31/98 (Corporate Seal)
[Notary Seal]
RECORDED 10-30 1995
JANE C. WILLIAMS, CLERK
SUPERIOR COURT, DOUGLAS CO
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<PAGE> 1
EXHIBIT 10.15.7.1
After recording return to:
Sanford H. Zatcoff, Esq.
Holt, Ney, Zatcoff & Wasserman
100 Galleria Parkway, Suite 600
Atlanta, Georgia 30339
FIRST AMENDMENT TO DEED TO SECURE DEBT
AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO DEED TO SECURE DEBT AND SECURITY AGREEMENT
(hereinafter referred to as the "Amendment") is made and entered into this 1st
day of August, 1994, by and between THE CRESTMARK CLUB, L.P., a Georgia limited
partnership, party of the first part, as grantor (hereinafter referred to as
"Borrower"), and COMMONWEALTH OF PENNSYLVANIA STATE EMPLOYES' RETIREMENT BOARD,
AN INDEPENDENT ADMINISTRATIVE BOARD OF THE COMMONWEALTH OF PENNSYLVANIA,
TRANSACTING BUSINESS AS THE COMMONWEALTH OF PENNSYLVANIA STATE EMPLOYES'
RETIREMENT SYSTEM, party of the second part, as grantee (hereinafter referred to
as "Lender").
W I T N E S S E T H T H A T:
WHEREAS, Borrower executed in favor of Lender that certain Deed to
Secure Debt and Security Agreement dated April 27, 1994, recorded in Deed Book
879, page 444, et seq., Douglas County, Georgia records (hereinafter referred to
as the "Security Deed"); and
WHEREAS, Borrower and Lender are mutually desirous of entering into
this Amendment to amend certain terms and provisions of the Security Deed, only
as hereinafter specifically set forth;
NOW, THEREFORE., for and in consideration of the premises, Ten Dollars
($1 0.00) in hand paid by Borrower to Lender, and other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged by the parties hereto, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. The foregoing recital of facts is hereby incorporated herein to the
same extent as if hereinafter fully set forth.
2. The Security Deed is hereby amended by deleting the penultimate
paragraph of paragraph 4 of Schedule 3 (Further Stipulations) of Exhibit C to
the Security Deed, and by substituting in lieu thereof the following:
"In the event that the Proposed Transferee is a real estate
investment trust organized by Charles S. Roberts ("REIT"),
then, in addition to the Transfer Conditions, the following
conditions must also be satisfied (the "REIT Transfer
Conditions"): (t) the loan-to-value ratio of the REIT must not
exceed 75%; and (u) Charles S. Roberts ("Roberts") at all
times must own stock in the REIT with an aggregate economic
interest of not less than $500,000; and (v) Roberts at all
times
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personally guarantee the payment of the Note and the
performance of the Borrower of its covenants under this Deed,
pursuant to an instrument of guaranty satisfactory to Lender,
and such guaranty shall remain in effect until Lender has
determined, based on information furnished to Lender in form
and detail satisfactory to Lender, that the next three (3)
apartment communities acquired by or transferred to the REIT,
following the acquisition by the REIT of the Premises, have
achieved a 90% leasing and occupancy level, whereupon the
guaranty will be released; and (x) a management firm owned or
controlled by Roberts, which is satisfactory to Lender, must
at all times manage and lease the Premises; and (y) Borrower
shall pay all costs and expenses incurred by Lender and
associated with the transfer of the Premises to the REIT,
including without limitation, attorney's fees of Lender's
special counsel; and (z) in the event that the transfer to the
REIT occurs after December 31, 1994, then Borrower shall pay
to Lender the non-refundable fee in the amount of one percent
(1%) of the then outstanding principal balance of the Note
as referred to in paragraph 4(h) above; but, in the event the
transfer to the REIT occurs before January 1, 1995, the
non-refundable one percent (1%) fee specified in paragraph 4
(h) above will not be due and payable. In the event that any
of the REIT Transfer Conditions are not met or, having been
met, are breached or cease being met at any time after the
transfer of the Premises to the REIT occurs, then such breach
or failure of compliance shall, at Lender's option, be and
constitute a Default under this Deed."
3. Except as herein specifically amended, the Security Deed shall
remain in full force and effect and unamended. This Amendment shall be governed
by, construed and interpreted pursuant to the laws of the State of Georgia. This
Amendment shall be binding upon and shall inure to the benefit of Borrower and
Lender and their successors and assigns, subject to the restrictions on transfer
of the Premises (as defined in the Security Deed) contained in the Security
Deed. This Amendment shall not constitute a novation as respects the Security
Deed.
IN WITNESS WHEREOF, Borrower and Lender have caused this Amendment to
be duly executed, sealed and delivered the day and year first above written.
BORROWER:
Signed, sealed and delivered THE CRESTMARK CLUB, L.P.
in the presence of:
/s/ Brian Sullivan By: /s/ Charles S. Roberts (SEAL)
- ------------------------------------ -------------------------------
Witness Charles S. Roberts, its sole
general partner
/s/ Michelle M. Ellingson
- ------------------------------------
Notary Public
My Commission expires: Notary Public, Gwinnett County, Georgia
My Commission Expires March 1, 1997
[Affixed notary seal or stamp]
(Signatures continued on next page)
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LENDER:
Signed, sealed and delivered COMMONWEALTH OF PENNSYLVANIA
in the presence of: STATE EMPLOYES' RETIREMENT BOARD,
/s/ Joseph A. [illegible]
- ------------------------------------
Witness By: Latimer & Buck Financial Services.,
Inc., its agent, which is also
known as Legg Mason Real Estate
Advisors
/s/ Sylvia Kauffman
- ------------------------------------
Notary Public
By: /s/ Concetta A. Fonte
-------------------------------------
Concetta A. Fonte, Assistant Vice
President
My Commission expires:
[Affixed notary seal or stamp] (CORPORATE SEAL)
RECORDED 9-12 1994
JANE C. WILLIAMS, CLERK
SUPERIOR COURT, DOUGLAS CO
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EXHIBIT 21
SUBSIDIARIES OF THE SMALL BUSINESS ISSUER
The only subsidiary of Robert Realty Investors, Inc. (the "Company")
is Roberts Properties Residential, L.P., a Georgia limited partnership (the
"Operating Partnership"), of which the Company is the sole general partner and
in which the Company owns a 60.2% ownership interest. The Operating
Partnership does business under its legal name, although its various
multifamily apartment communities are generally known by the names identified
in the body of this annual report on Form-10KSB.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,694,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,694,000
<PP&E> 121,037,000
<DEPRECIATION> (8,915,000)
<TOTAL-ASSETS> 116,815,000
<CURRENT-LIABILITIES> 4,925,000
<BONDS> 63,342,000
0
0
<COMMON> 42,000
<OTHER-SE> 48,506,000
<TOTAL-LIABILITY-AND-EQUITY> 116,815,000
<SALES> 0
<TOTAL-REVENUES> 15,197,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,751,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,724,000
<INCOME-PRETAX> (81,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (81,000)
<DISCONTINUED> 0
<EXTRAORDINARY> (99,000)
<CHANGES> 0
<NET-INCOME> (180,000)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
