<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the transition period from ____________ to ___________________
(Commission File No. 001-13183)
ROBERTS REALTY INVESTORS, INC.
(Exact Name of Registrant as Specified 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)
Registrant's telephone number, Including Area Code: (770) 394-6000
Indicate by check [X] whether the registrant: (1) has filed all
reports to be filed by Section 13 of 15(d) of the Securities Exchange Act of
1934 during the preceding 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
------ --------
The number of outstanding shares of the registrant's Common Stock on August 1,
1999 was 4,676,679.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I FINANCIAL INFORMATION............................................... 1
ITEM 1. FINANCIAL STATEMENTS.................................. 1
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS......... 11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK..................................... 22
PART II OTHER INFORMATION.................................................. 22
ITEM 1. LEGAL PROCEEDINGS..................................... 22
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS............. 22
ITEM 4. SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS.............................. 23
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................... 23
</TABLE>
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PART I
ITEM 1. FINANCIAL STATEMENTS.
ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
JUNE 30, DECEMBER 31,
ASSETS 1999 1998
---------- ------------
(UNAUDITED)
<S> <C> <C>
REAL ESTATE ASSETS - At cost:
Land $ 20,732 $ 20,239
Buildings and improvements 94,424 91,407
Furniture, fixtures and equipment 11,299 11,184
--------- ---------
126,455 122,830
Less accumulated depreciation (19,471) (16,914)
--------- ---------
Operating real estate assets 106,984 105,916
Land held for future development 6,065 6,065
Construction in progress and real estate under development 11,599 7,035
--------- ---------
Net real estate assets 124,648 119,016
CASH AND CASH EQUIVALENTS 2,706 4,106
RESTRICTED CASH 396 470
DEFERRED FINANCING COSTS - Net of accumulated amortization of
$349 and $246 at June 30, 1999 and December 31, 1998, respectively 1,057 1,095
OTHER ASSETS - Net 300 403
--------- ---------
$ 129,107 $ 125,090
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Mortgage notes payable $ 79,528 $ 79,973
Construction loan payable 5,432 --
Accounts payable and accrued expenses 2,041 1,187
Dividends and distributions payable 1,131 1,092
Due to affiliates 1,310 398
Security deposits and prepaid rents 383 335
--------- ---------
Total liabilities 89,825 82,985
--------- ---------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST OF UNITHOLDERS IN THE OPERATING PARTNERSHIP 14,534 15,579
--------- ---------
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, 4,789,179
and 4,764,037 shares issued at June 30, 1999 47 47
and December 31, 1998, respectively
Additional paid-in capital 28,122 29,335
Less treasury stock, at cost (103,500 and 19,300 shares at
June 30, 1999 and December 31, 1998, respectively) (771) (145)
Unamortized restricted stock compensation (63) (92)
Accumulated deficit (2,587) (2,619)
--------- ---------
Total shareholders' equity 24,748 26,526
--------- ---------
$ 129,107 $ 125,090
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
1
<PAGE> 4
ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED JUNE 30,
1999 1998
--------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
OPERATING REVENUES:
Rental operations $ 4,547 $ 3,969
Other operating income 309 185
--------- ---------
Total operating revenues 4,856 4,154
--------- ---------
OPERATING EXPENSES:
Personnel 454 412
Utilities 302 281
Repairs, maintenance and landscaping 272 293
Real estate taxes 437 336
Marketing, insurance and other 214 199
General and administrative expenses 512 407
Depreciation of real estate assets 1,326 1,107
--------- ---------
Total operating expenses 3,517 3,035
--------- ---------
INCOME FROM OPERATIONS 1,339 1,119
--------- ---------
OTHER INCOME (EXPENSE):
Interest income 35 118
Interest expense (1,252) (1,071)
Loss on disposal of assets (19) (27)
Amortization of deferred financing costs (64) (33)
Other amortization expense (3) (9)
--------- ---------
Total other expense (1,303) (1,022)
--------- ---------
INCOME BEFORE MINORITY INTEREST AND EXTRAORDINARY ITEM 36 97
MINORITY INTEREST OF UNITHOLDERS IN THE OPERATING PARTNERSHIP (13) (37)
--------- ---------
INCOME BEFORE EXTRAORDINARY ITEM 23 60
EXTRAORDINARY ITEM - Loss on early extinguishment of debt, net of
minority interest of unitholders in the operating partnership 0 (158)
--------- ---------
NET INCOME (LOSS) $ 23 $ (98)
========= =========
INCOME PER COMMON SHARE - BASIC AND DILUTED:
Income before extraordinary item $ 0.00 $ 0.01
Extraordinary item 0.00 (0.03)
--------- ---------
Net income (loss) $ 0.00 $ (0.02)
========= =========
Weighted average common shares - basic 4,692,167 4,607,106
Weighted average common shares - diluted 7,445,954 7,550,609
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 5
ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30,
1999 1998
--------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
OPERATING REVENUES:
Rental operations $ 9,047 $ 7,753
Other operating income 565 341
--------- ---------
Total operating revenues 9,612 8,094
--------- ---------
OPERATING EXPENSES:
Personnel 886 784
Utilities 608 545
Repairs, maintenance and landscaping 569 536
Real estate taxes 859 680
Marketing, insurance and other 407 384
General and administrative expenses 1,020 811
Depreciation of real estate assets 2,643 2,238
--------- ---------
Total operating expenses 6,992 5,978
--------- ---------
INCOME FROM OPERATIONS 2,620 2,116
--------- ---------
OTHER INCOME (EXPENSE):
Interest income 80 250
Interest expense (2,513) (2,057)
Loss on disposal of assets (28) (51)
Amortization of deferred financing costs (102) (66)
Other amortization expense (6) (11)
--------- ---------
Total other expense (2,569) (1,935)
--------- ---------
INCOME BEFORE MINORITY INTEREST, GAIN ON SALE OF
REAL ESTATE ASSET AND EXTRAORDINARY ITEMS 51 181
MINORITY INTEREST OF UNITHOLDERS IN THE OPERATING PARTNERSHIP (19) (81)
--------- ---------
INCOME BEFORE GAIN ON SALE OF REAL ESTATE ASSET
AND EXTRAORDINARY ITEMS 32 100
GAIN ON SALE OF REAL ESTATE ASSET, net of minority interest
of unitholders in the operating partnership 0 918
--------- ---------
INCOME BEFORE EXTRAORDINARY ITEMS 32 1,018
EXTRAORDINARY ITEMS - Loss on early extinguishments of debt, net of
minority interest of unitholders in the operating partnership 0 (93)
--------- ---------
NET INCOME $ 32 $ 925
========= =========
INCOME PER COMMON SHARE - BASIC AND DILUTED:
Income before extraordinary items $ 0.01 $ 0.22
Extraordinary items 0.00 (0.02)
--------- ---------
Net income $ 0.01 $ 0.20
========= =========
Weighted average common shares - basic 4,712,851 4,552,759
Weighted average common shares - diluted 7,469,341 7,554,666
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 6
ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30,
1999 1998
--------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 32 $ 925
Adjustments to reconcile net income to net cash provided by operating activities:
Minority interest of unitholders in the operating partnership 19 81
Gain on sale of real estate assets 0 (918)
Loss on disposal of assets 28 51
Depreciation and amortization 2,751 2,315
Extraordinary items, net of minority interest of unitholders in the
operating partnership 0 93
Amortization of deferred compensation 14 0
Change in assets and liabilities:
(Increase) in restricted cash and cash equivalents (76) (96)
Decrease in other assets 103 42
Increase in accounts payable and accrued expenses relating to operations 1,009 657
Increase in due to affiliates relating to operations 1 4
Increase (decrease) in security deposits and prepaid rent 48 (40)
--------- ---------
Net cash provided by operating activities 3,929 3,114
--------- ---------
INVESTING ACTIVITIES:
Proceeds from sale of real estate assets 0 5,333
Construction of real estate assets (7,523) (19,102)
--------- ---------
Net cash used in investing activities (7,523) (13,769)
--------- ---------
FINANCING ACTIVITIES:
Proceeds from mortgage notes payable 0 16,500
Proceeds from mortgage notes payable held in escrow 150 (1,200)
Payoff of mortgage notes, including prepayment penalty 0 (6,507)
Principal repayments on mortgage notes payable (445) (384)
Payment of loan costs (65) (258)
Proceeds from construction loan 5,432 0
Proceeds from short term loan 0 350
Payoff of short term loan 0 (350)
Repurchase of partnership units (28) (52)
Repurchase of treasury stock (626) 0
Payment of dividends and distributions (2,224) (2,133)
--------- ---------
Net cash provided by financing activities 2,194 5,966
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,400) (4,689)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,106 7,117
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,706 $ 2,428
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 2,857 $ 2,362
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 7
ROBERTS REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. BUSINESS AND ORGANIZATION OF ROBERTS REALTY
Roberts Realty Investors, Inc., 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. Roberts Realty owns and operates multifamily residential
properties as a self-administered, self-managed equity real estate
investment trust, sometimes called a REIT. All of Roberts Realty's
completed apartment homes are located in the Atlanta metropolitan area.
Roberts Realty conducts all of its operations and owns all of its
assets in and through Roberts Properties Residential, L.P., a Georgia
limited partnership, sometimes referred to as the operating
partnership. Given that Roberts Realty is the sole general partner of
the operating partnership and had a 63.0% ownership interest in it both
at June 30, 1999 and December 31, 1998, Roberts Realty controls the
operating partnership.
At June 30, 1999, Roberts Realty owned nine completed multifamily
apartment communities totaling 1,778 apartment homes. An additional 118
rental townhomes and 287 apartment homes were under construction and
581 apartment homes were in the development stage.
Roberts Realty elected to be taxed as a REIT under the Internal Revenue
Code of 1986, as amended, beginning with the taxable year ended
December 31, 1994. As a result, Roberts Realty 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 Internal Revenue Code, to its shareholders and
satisfies certain other requirements. Accordingly, the accompanying
consolidated financial statements include no provision for federal and
state income taxes.
2. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the
consolidated accounts of Roberts Realty and the operating partnership.
All significant intercompany accounts and transactions have been
eliminated in consolidation. The financial statements of Roberts Realty
have been adjusted for the minority interest of the unitholders in the
operating partnership.
The minority interests of the unitholders in the operating partnership
on the accompanying balance sheets are 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 of Roberts Realty's common
stock and partnership units outstanding and will change as additional
shares and partnership units are issued. The minority interest of the
unitholders in the earnings or loss of the operating partnership on the
accompanying statements of operations is calculated based on the
weighted average number of partnership units outstanding during the
period, which was 37.0% and 39.0% for the three months ended June 30,
1999 and 1998, respectively, and 36.9% and 39.7% for the six months
ended June 30, 1999 and 1998, respectively. The minority interest of
the unitholders in the operating partnership was $14,534,000 and
$15,579,000 at June 30, 1999 and December 31, 1998, respectively.
Holders of partnership units generally have the right to require the
operating partnership to redeem their partnership units for shares.
Upon submittal of partnership units for redemption, the operating
5
<PAGE> 8
partnership has the option either (a) to pay cash for those partnership
units at their fair market value, based upon the then current trading
price of the shares, or (b) to acquire those partnership units in
exchange for shares, on a one-for-one basis. Roberts Realty has adopted
a policy that it will issue shares in exchange for all partnership
units submitted.
Roberts Realty's management has prepared the accompanying interim
unaudited financial statements in accordance with generally accepted
accounting principles for interim financial information and in
conformity with the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the interim
financial statements reflect all adjustments of a normal and recurring
nature which are necessary to fairly state the interim financial
statements. The results of operations for the interim periods do not
necessarily indicate the results that may be expected for the year
ending December 31, 1999. Certain prior period amounts have been
reclassified to conform to the 1999 presentation. These financial
statements should be read in conjunction with Roberts Realty's audited
financial statements and the notes thereto included in Roberts Realty's
Annual Report on Form 10-K for the year ended December 31, 1998.
3. NOTES PAYABLE
LINE OF CREDIT. Roberts Realty obtained a $2,000,000 revolving
unsecured line of credit in June of 1999 to provide funds for
short-term working capital purposes. This line of credit has a one year
term and bears an interest rate of LIBOR + 150 basis points. At June
30, 1999, no amount was drawn on the line.
MORTGAGE NOTES. Mortgage notes payable were secured by the following
apartment communities at June 30, 1999 and December 31, 1998, as
follows:
<TABLE>
<CAPTION>
FIXED INTEREST PRINCIPAL OUTSTANDING
RATE AS OF
MATURITY 06/30/99 06/30/99 12/31/98
-------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
Bentley Place 08/15/06 7.10% $ 3,976,000 $ 4,000,000
Bradford Creek 06/15/08 7.15 8,317,000 8,359,000
Crestmark 10/01/08 6.57 15,869,000 15,957,000
Highland Park 02/15/03 7.30 7,893,000 7,940,000
Ivey Brook 02/15/07 7.14 6,265,000 6,300,000
Plantation Trace 10/15/08 7.09 11,822,000 11,881,000
Preston Oaks 10/15/02 7.21 8,367,000 8,420,000
River Oaks 11/15/03 7.15 9,000,000 9,052,000
Rosewood Plantation 07/15/08 6.62% 8,019,000 8,064,000
----------- -----------
$79,528,000 $79,973,000
=========== ===========
</TABLE>
Roberts Realty and Roberts Properties, Inc. have a $35,000,000 advised
guidance line with NationsBank N.A. for the purpose of providing
financing for the acquisition or development of multifamily
communities. (Roberts Properties is owned by Charles S. Roberts, the
President, Chief Executive Officer, and Chairman of the Board of
Directors of Roberts Realty.) Financing under the guidance line is
available on a revolving basis and bears interest at LIBOR plus 1.80%
or Prime plus 0%, at the option of the borrower, payable monthly. The
guidance line is not a commitment to lend, and each loan under the
guidance line will be made at NationsBank's discretion in accordance
with normal loan approval procedures. At June 30, 1999, there was no
balance outstanding under the guidance line.
6
<PAGE> 9
On July 20, 1999, Roberts Realty received a written commitment for a
$9,500,000 loan secured by the first phase of the Addison Place
community (formerly referred to as Abbotts Bridge). The loan commitment
included a 10-year term with a fixed interest rate of 6.95% payable in
monthly installments of $62,885 based on a 30-year amortization
schedule. The loan is scheduled to close in September 1999 after
completion and substantial lease-up of the first phase of the Addison
Place community. The loan is intended to provide permanent financing to
repay the construction indebtedness on this property, as discussed
below.
On April 13, 1999, Roberts Realty executed a $9,500,000 construction
loan to complete phase one of Addison Place. The loan has a 9-month
term and bears an interest rate of LIBOR + 160 basis points. At June
30, 1999, $5,432,000 was outstanding under the construction loan.
Interest capitalized was $140,000 and $148,000 for the three months
ended June 30, 1999 and 1998, respectively, and $276,000 and $342,000
for the six months ended June 30, 1999 and 1998, respectively.
Real estate assets having a combined depreciated cost of approximately
$105,048,000 serve as collateral for the outstanding debt at June 30,
1999.
4. EXTRAORDINARY ITEMS
The 1998 extraordinary items are comprised of (1) the write-off of
unamortized debt premium associated with the January 9, 1998 repayment
of the mortgage note secured by the Windsong community upon sale of the
property, and (2) the write-off of unamortized loan costs and
prepayment fee to the lender for refinancing of the mortgage note
secured by the Rosewood Plantation community on June 23, 1998. These
extraordinary items are net of $53,000, which was allocated to the
minority interest of the unitholders in the operating partnership, and
calculated based on the weighted average number of partnership units
outstanding during the periods presented.
5. COMMITMENTS AND CONTINGENCIES
Roberts Realty and the operating partnership are subject to various
legal proceedings and claims that arise in the ordinary course of
business. While the resolution of these matters cannot be predicted
with certainty, management believes the final outcome of such matters
will not have a material adverse effect on Roberts Realty's financial
position or results of operations.
Roberts Realty enters into contractual commitments in the normal course
of business related to the construction of real estate assets with
Roberts Properties Construction, Inc., an affiliate of Roberts Realty
owned by Mr. Charles S. Roberts, the President, Chief Executive
Officer, and Chairman of the Board. Roberts Construction is currently
constructing the first phase of Addison Place, consisting of 118
townhomes, and completing the construction of the amenities and final
landscaping at the second phase of Plantation Trace. Each of these
projects is being completed pursuant to a cost plus 10% contract. At
June 30, 1999, the remaining commitments totaled $3,026,000 as
summarized in the following table:
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<PAGE> 10
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED
TOTAL REMAINING
CONTRACT AMOUNT CONTRACTUAL
AMOUNT INCURRED COMMITMENT
----------- ----------- -----------
<S> <C> <C> <C>
Plantation Trace - phase II $ 4,858,000 $ 4,852,000 $ 6,000
Addison Place - phase I 9,611,000 6,591,000 3,020,000
----------- ----------- ----------
Total $14,469,000 $11,443,000 $3,026,000
=========== =========== ==========
</TABLE>
6. SHAREHOLDERS' EQUITY
EXCHANGES OF PARTNERSHIP UNITS FOR SHARES. During the three months
ended June 30, 1999 and 1998, a total of 0 and 126,886 partnership
units, respectively, were exchanged for the same number of shares.
During the six months ended June 30, 1999 and 1998, a total of 26,907
and 260,790 partnership units, respectively, were exchanged for the
same number of shares. Each conversion was reflected in the
accompanying consolidated financial statements at book value.
REDEMPTIONS OF PARTNERSHIP UNITS FOR CASH. During the three months
ended June 30, 1999, no partnership units were redeemed. During the six
months ended June 30, 1999, a total of 3,917 partnership units were
redeemed for cash of $28,000. During the three and six months ended
June 30, 1998, a total of 6,055 units were redeemed for cash of
$52,000.
TREASURY STOCK REPURCHASES. During the three months ended June 30,
1999, Roberts Realty repurchased 10,100 shares at a total cost of
$76,000. During the six months ended June 30, 1999, Roberts Realty
repurchased 84,200 shares at a total cost of $626,000. No shares were
repurchased during the three or six months ended June 30, 1998.
DIVIDENDS. On May 18, 1999, Roberts Realty's Board of Directors
declared a quarterly distribution in the amount of $0.15 per common
share and partnership unit payable on July 15, 1999 to shareholders and
unitholders of record on June 30, 1999. The second quarter 1998
dividend was $0.145 and was paid to shareholders and unitholders of
record as of June 30, 1998.
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<PAGE> 11
EARNINGS PER SHARE. Reconciliations of income available to common
shareholders and weighted average shares and partnership units used in
Roberts Realty's basic and diluted earnings per share computations are
detailed below (dollars in thousands).
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
6/30/99 6/30/98 6/30/99 6/30/98
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income (loss) before extraordinary item $ 23 $ 60 $ 32 $ 1,018
Minority interest in income (loss) before
extraordinary item of the
operating partnership 13 37 19 707
----------- ---------- ---------- ----------
Income (loss) before extraordinary item - diluted $ 36 $ 97 $ 51 $ 1,725
=========== ========== ========== ==========
Net income (loss) - basic $ 23 $ (98) $ 32 $ 925
Minority interest in net income (loss) of the
operating partnership 13 (61) 19 654
----------- ---------- ---------- ----------
Net income (loss) - diluted $ 36 $ (159) $ 51 $ 1,579
=========== ========== ========== ==========
Weighted average shares - basic 4,692,167 4,607,106 4,712,851 4,552,759
Dilutive securities - weighted average partnership units 2,753,787 2,943,503 2,756,490 3,001,907
----------- ---------- ---------- ----------
Weighted average shares - diluted 7,445,954 7,550,609 7,469,341 7,554,666
=========== ========== ========== ==========
</TABLE>
7. ACQUISITIONS AND DISPOSITIONS
On January 9, 1998, Roberts Realty completed the sale of the Windsong
community for $9,750,000 in cash resulting in a gain, net of minority
interest, of $918,000 on the sale of real estate assets and an
extraordinary gain, net of minority interest, of $68,000 on the buyer's
assumption of related mortgage indebtedness. Net sales proceeds were
$5,194,000 after deduction for loan repayment of $3,959,000 and closing
costs and prorations totaling $597,000. Roberts Realty reinvested the
net sales proceeds in a replacement property in connection with a
Section 1031 tax-deferred exchange. The purchaser was unaffiliated with
Roberts Realty and the transaction was negotiated at arms-length.
On June 22, 1998, Roberts Realty purchased approximately 23.8 acres of
undeveloped land in the Ballantyne area of Charlotte, North Carolina
for $3,540,000 from a local Charlotte investment group. Roberts Realty
intends to construct a 332-unit multifamily apartment community on the
property, which is anticipated to begin in the third quarter of 1999.
As part of the closing costs, the operating partnership paid Roberts
Properties an acquisition fee of $166,000 for finding the property,
negotiating the sales contract, conducting due diligence and closing
the transaction. In addition, the operating partnership will pay
Roberts Properties a fee of $1,660,000, or $5,000 per unit, for
designing, developing, and overseeing construction of the Ballantyne
project for a period of eighteen months. Through June 30, 1999, Roberts
Realty has paid $646,000 of the $1,660,000 in fees to Roberts
Properties. The independent members of Roberts Realty's Board of
Directors approved the foregoing arrangements with Roberts Properties.
On June 24, 1998, Roberts Realty purchased approximately 49.1 acres of
undeveloped land located in north Fulton County, Georgia for $5,294,000
from Roberts Properties. Roberts Realty intends to construct a 405-unit
multifamily apartment community on the property. Construction of the
118-unit first phase began in the third quarter of 1998, and Roberts
Realty anticipates that construction on the
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<PAGE> 12
287-unit second phase will begin in the third quarter of 1999. As part
of the closing costs, the operating partnership paid Roberts Properties
an acquisition fee of $250,000 for finding the property, negotiating
the sales contract, conducting due diligence and closing the
transaction. In addition, the operating partnership will pay Roberts
Properties a fee of $2,025,000, or $5,000 per unit, for designing,
developing, and overseeing construction of the Addison Place project
for a period of eighteen months. Through June 30, 1999, Roberts Realty
has paid $675,000 of the $2,025,000 in fees to Roberts Properties. The
independent members of Roberts Realty's Board of Directors approved the
foregoing arrangements with Roberts Properties after reviewing two
independent appraisals. Roberts Properties acquired the property for
$4,343,000 on March 6, 1997.
On June 25, 1998, Roberts Realty purchased approximately 35.3 acres of
undeveloped land located in Gwinnett County, Georgia for $2,525,000
from Roberts Properties Old Norcross, Ltd. (Mr. Roberts, who is the
general partner of Roberts Properties Old Norcross, Ltd., received none
of the sale proceeds as general partner or otherwise.) Roberts Realty
intends to construct a 249-unit multifamily apartment community on the
property, which is anticipated to begin in the fourth quarter of 1999.
As part of the closing costs, the operating partnership paid Roberts
Properties an acquisition fee of $119,250 for finding the property,
negotiating the sales contract, conducting due diligence and closing
the transaction. In addition, the operating partnership will pay
Roberts Properties a fee of $1,245,000, or $5,000 per unit, for
designing, developing, and overseeing construction of the Old Norcross
project for a period of eighteen months. Through June 30, 1999, Roberts
Realty has paid $0 of the $1,245,000 in fees to Roberts Properties. The
independent members of Roberts Realty's Board of Directors approved the
foregoing arrangements with Roberts Properties after reviewing two
independent appraisals.
On June 8, 1999, Roberts Realty announced that it had entered into a
contract to sell its Bentley Place apartments. Net cash proceeds from
the sale are expected to be approximately $3.7 million, which Roberts
Realty expects to reinvest in its development and construction program
of 986 new apartment homes. Roberts Realty expects to close the sale of
Bentley Place during the third quarter of 1999. The closing of this
transaction will be subject to customary closing conditions. There can
be no assurance that the Bentley Place transaction will close as
contemplated, that the required conditions to closing will be met, or
that the agreement will not be amended or terminated.
10
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements relate to future economic performance,
plans and objectives of management for future operations and projections of
revenues and other financial items that are based on the beliefs of our
management, as well as assumptions made by, and information currently available
to, our management. The words expect, estimate, anticipate, believe and similar
expressions identify forward-looking statements. Those statements involve risks,
uncertainties and assumptions, including industry and economic conditions,
competition and other factors discussed in this and our other filings with the
SEC, including the "Risk Factors" section of the prospectus included in our
registration statement on Form S-3, registration number 333-31117, as declared
effective by the SEC on December 8, 1997. If one or more of these risks or
uncertainties materialize or underlying assumptions prove incorrect, actual
outcomes may vary materially from those indicated. See "Disclosure Regarding
Forward-Looking Statements" at the end of this Item for a description of some of
the important factors that may affect actual outcomes.
OVERVIEW
We own multifamily residential properties as a self-administered and
self-managed equity real estate investment trust. At June 30, 1999, we owned
nine completed and stabilized multifamily apartment communities consisting of
1,778 apartment homes. As part of our business plan and growth strategy, we
sold our 232-unit Windsong community in January 1998. We based our decision to
sell Windsong on its age and location in a market that is not included in our
long-term growth strategy. In July 1998, we sold our two small retail centers
because we decided to exit all businesses not related to the long-term
ownership of high quality apartment homes. In June 1998, we used the equity
from our property sales to purchase three separate parcels of land for $11.3
million on which we intend to develop and build three new multifamily
communities totaling 986 apartment homes. This development pipeline will
increase the size of our portfolio 55% from 1,778 to 2,764 apartment homes. One
of the three new communities under development is located in Charlotte and is
the first step in our diversification strategy. The other two communities are
located in north Atlanta. Of our 986 new apartment homes to be built, 118
rental townhomes and 287 apartment homes are under construction, 332 apartment
homes are expected to be under construction during the third quarter of 1999,
and 249 apartment homes are expected to be under construction during the fourth
quarter of 1999.
RESULTS OF OPERATIONS
Comparison of Three Months Ended June 30, 1999 to Three Months Ended
June 30, 1998
For the three months ended June 30, 1999, we recorded net income of
$23,000 or $0.00 per share, compared to a net loss of $98,000 or $0.02 per share
for the three months ended June 30, 1998. The change in operating results is due
to the following:
(1) the completion of the initial lease-up phases at Bradford
Creek in August 1998, and the second phases of Preston Oaks in
July 1998 and Plantation Trace in November 1998 - for
convenience we refer to these communities as the "Lease-Up
Communities";
offset by
(2) the sale of two retail centers in the third quarter of 1998.
11
<PAGE> 14
Our operating performance for all apartment communities is summarized in the
following table:
<TABLE>
<CAPTION>
PERCENTAGE THREE MONTHS ENDED JUNE 30,
CHANGE FROM ----------------------------------
1998 TO 1999 1999 1998
------------ ---- ----
<S> <C> <C> <C>
Total operating revenues 16.9% $ 4,856,000 $ 4,154,000
Property operating expenses (1) 10.4% $ 1,679,000 $ 1,521,000
Net operating income (2) 20.7% $ 3,177,000 $ 2,633,000
General and administrative expenses 25.8% $ 512,000 $ 407,000
Depreciation of real estate assets 19.8% $ 1,326,000 $ 1,107,000
Average stabilized occupancy (3) 0.1% 95.3% 95.2%
Operating expense ratio (4) (2.0%) 34.6% 36.6%
</TABLE>
- ---------------------------
(1) Property operating expenses include personnel, utilities, real estate
taxes, insurance, maintenance, landscaping, marketing, and property
administration expenses.
(2) Net operating income is equal to total operating revenues minus
property operating expenses.
(3) Represents the average physical occupancy of our stabilized properties
calculated by dividing the total number of vacant days by the total
possible number of vacant days for each period and subtracting the
resulting number from 100%. The calculation includes the second phase
of Preston Oaks beginning August 1, 1998, Bradford Creek beginning
September 1, 1998, and the second phase of Plantation Trace beginning
December 1, 1998, which are the dates each community achieved
stabilized occupancy.
(4) Represents the total of property operating expenses divided by property
operating revenues expressed as a percentage.
Our same-property operating performance was highlighted by a 4.9%
increase in operating revenues, a 7.2% increase in net operating income, and a
0.3% increase in average occupancy from 95.2% to 95.5%. Our property management
team focused on implementing rent increases, achieving high occupancy levels,
and providing quality customer service to residents, which contributed to our
lease renewal rate of 54.1% during the second quarter of 1999. Eight of our
communities were fully stabilized during both the three-month periods ended June
30, 1999 and 1998: Bentley Place, Crestmark, Highland Park, Ivey Brook, River
Oaks, Rosewood Plantation, and the first phases of Plantation Trace, and Preston
Oaks. Same-property operating results for these communities are summarized in
the following table:
<TABLE>
<CAPTION>
PERCENTAGE THREE MONTHS ENDED JUNE 30,
CHANGE FROM ---------------------------------
1998 TO 1999 1999 1998
------------ ---- ----
<S> <C> <C> <C>
Rental income 2.5% $ 3,857,000 $ 3,763,000
Total operating revenues 4.9% $ 4,112,000 $ 3,919,000
Property operating expenses (1) 0.7% $ 1,388,000 $ 1,379,000
Net operating income (2) 7.2% $ 2,724,000 $ 2,540,000
Average stabilized occupancy (3) 0.3% 95.5% 95.2%
Operating expense ratio (4) (1.4%) 33.8% 35.2%
Average monthly rent per apartment home 2.5% $ 901 $ 879
Lease renewal percentage (5) (5.0%) 54.1% 59.1%
</TABLE>
- -----------------------------------
(footnotes begin on following page)
12
<PAGE> 15
(1) Property operating expenses include personnel, utilities, real estate
taxes, insurance, maintenance, landscaping, marketing, and property
administration expenses.
(2) Net operating income is equal to total operating revenues minus
property operating expenses.
(3) Represents the average physical occupancy of the stabilized properties
calculated by dividing the total number of vacant days by the total
possible number of vacant days for each period and subtracting the
resulting number from 100%.
(4) Represents the total of property operating expenses divided by property
operating revenues expressed as a percentage.
(5) Represents the number of leases renewed divided by the number of leases
expired during the period presented, expressed as a percentage.
The following discussion compares our statements of operations for the
three months ended June 30, 1999 and 1998.
Total operating revenues increased $702,000 or 16.9% from $4,154,000
for the three months ended June 30, 1998 to $4,856,000 for the three months
ended June 30, 1999. The increase in operating revenues is due to the following:
(1) a $589,000 increase in revenue from the Lease-Up Communities;
(2) a $109,000 increase in same-property revenue, which is due to
an increase in occupancy from 95.2% to 95.5% along with a 2.5%
increase in the average monthly rent per apartment home from
$879 to $901 per month; and
(3) $84,000 in water sub-metering revenue;
offset by
(4) a decrease in revenue of approximately $80,000 due to the
sales of our two retail centers, and decreased miscellaneous
revenue.
Property operating expenses, excluding depreciation and general and
administrative expenses, increased $158,000 or 10.4% from $1,521,000 for the
three months ended June 30, 1998 to $1,679,000 for the three months ended June
30, 1999. The increase in operating expenses is due to the following:
(1) a $149,000 increase in expenses from the Lease-Up Communities;
and
(2) a $9,000 increase in same-property expenses. Higher personnel
costs ($29,000) and property taxes ($34,000), offset by lower
maintenance costs ($50,000) account for most of the $9,000
increase in same-property expenses. These changes are due to
the hiring of additional staff for our property management
team, reassessments of our properties by county governments,
and a settlement with Gwinnett County ($34,000) for
reimbursement of expenses for debris removal after the April
9, 1998 windstorms.
General and administrative expenses increased $105,000 or 25.8% from
$407,000 for the three months ended June 30, 1998 to $512,000 for the three
months ended June 30, 1999. These expenses include legal, accounting and tax
fees, marketing and printing fees, salaries, director fees and other costs. The
increase is due primarily to higher personnel and associated costs, rent, and
legal and marketing costs. General and administrative expenses as a percentage
of operating revenues increased from 9.8% for the three months ended June 30,
1998 to 10.5% for the three months ended June 30, 1999. We expect that as we
continue to grow, those expenses will begin to decline as a percentage of
operating revenues, even though general and administrative expenses will
increase in absolute terms.
13
<PAGE> 16
Depreciation expense increased $219,000 or 19.8% from $1,107,000 for
the three months ended June 30, 1998 to $1,326,000 for the three months ended
June 30, 1999. The increase is due to the depreciation expense from the Lease-Up
Communities, offset by a decrease due to the sales of our two retail centers. We
record depreciation expense as apartment homes are completed and available for
occupancy.
Interest expense increased $181,000 or 16.9% from $1,071,000 for the
three months ended June 30, 1998 to $1,252,000 for the three months ended June
30, 1999. The increase is due primarily to the financing of Bradford Creek in
June 1998, the refinancing of the mortgage loan secured by Rosewood Plantation
in June 1998 for a higher loan amount, the refinancing of the mortgage loans
secured by Crestmark in September 1998 for a higher loan amount, and the
refinancing of the mortgage loan secured by Plantation Trace in September 1998
for a higher loan amount.
Comparison of Six Months Ended June 30, 1999 to Six Months Ended June
30, 1998
For the six months ended June 30, 1999, we recorded net income of
$32,000 or $0.01 per share, compared to net income of $925,000 or $0.20 per
share for the six months ended June 30, 1998. The change in operating results is
due to the following:
(1) the sale of Windsong in the first quarter of 1998, which
resulted in a gain, net of minority interest, of $918,000; and
(2) the sale of two retail centers in the third quarter of 1998;
offset by
(3) the completion of the initial lease-up phases at Bradford
Creek in August 1998, and the second phases of Preston Oaks in
July 1998 and Plantation Trace in November 1998;
(4) an increase in average stabilized occupancy from 94.6% to
95.3%.
Our operating performance for all apartment communities is summarized in the
following table:
<TABLE>
<CAPTION>
PERCENTAGE SIX MONTHS ENDED JUNE 30,
CHANGE FROM ---------------------------------
1998 TO 1999 1999 1998
------------ ---- ----
<S> <C> <C> <C>
Total operating revenues 18.8% $ 9,612,000 $ 8,094,000
Property operating expenses (1) 13.7% $ 3,329,000 $ 2,929,000
Net operating income (2) 21.6% $ 6,283,000 $ 5,165,000
General and administrative expenses 25.8% $ 1,020,000 $ 811,000
Depreciation of real estate assets 18.1% $ 2,643,000 $ 2,238,000
Average stabilized occupancy (3) 0.7% 95.3% 94.6%
Operating expense ratio (4) (1.6%) 34.6% 36.2%
</TABLE>
- ------------------------
(1) Property operating expenses include personnel, utilities, real estate
taxes, insurance, maintenance, landscaping, marketing, and property
administration expenses.
(2) Net operating income is equal to total operating revenues minus
property operating expenses.
(3) Represents the average physical occupancy of our stabilized properties
calculated by dividing the total number of vacant days by the total
possible number of vacant days for each period and subtracting the
resulting number from 100%. The calculation includes the second phase
of Preston Oaks beginning August 1, 1998, Bradford Creek beginning
September 1, 1998, and the second phase of Plantation
14
<PAGE> 17
Trace beginning December 1, 1998, which are the dates each community
achieved stabilized occupancy.
(4) Represents the total of property operating expenses divided by property
operating revenues expressed as a percentage.
Our same-property operating performance was highlighted by a 4.7%
increase in operating revenues, a 5.3% increase in net operating income, and a
0.7% increase in average occupancy from 94.6% to 95.3%. Our property management
team focused on implementing rent increases, achieving high occupancy levels,
and providing quality customer service to residents, which contributed to our
lease renewal rate of 55.7% during the six months ended June 30, 1999. Eight of
our communities were fully stabilized during both the six-month periods ended
June 30, 1999 and 1998: Bentley Place, Crestmark, Highland Park, Ivey Brook,
River Oaks, Rosewood Plantation, and the first phases of Plantation Trace, and
Preston Oaks. Same-property operating results for these communities are
summarized in the following table:
<TABLE>
<CAPTION>
PERCENTAGE SIX MONTHS ENDED JUNE 30,
CHANGE FROM ----------------------------------
1998 TO 1999 1999 1998
------------ ---- ----
<S> <C> <C> <C>
Rental income 2.7% $ 7,659,000 $ 7,459,000
Total operating revenues 4.7% $ 8,123,000 $ 7,755,000
Property operating expenses (1) 3.8% $ 2,802,000 $ 2,700,000
Net operating income (2) 5.3% $ 5,321,000 $ 5,055,000
Average stabilized occupancy (3) 0.7% 95.3% 94.6%
Operating expense ratio (4) (0.3%) 34.5% 34.8%
Average monthly rent per apartment home 2.4% $ 898 $ 877
Lease renewal percentage (5) (3.0%) 55.7% 58.7%
</TABLE>
(1) Property operating expenses include personnel, utilities, real estate
taxes, insurance, maintenance, landscaping, marketing, and property
administration expenses.
(2) Net operating income is equal to total operating revenues minus
property operating expenses.
(3) Represents the average physical occupancy of the stabilized properties
calculated by dividing the total number of vacant days by the total
possible number of vacant days for each period and subtracting the
resulting number from 100%.
(4) Represents the total of property operating expenses divided by property
operating revenues expressed as a percentage.
(5) Represents the number of leases renewed divided by the number of leases
expired during the period presented, expressed as a percentage.
The following discussion compares our statements of operations for the
six months ended June 30, 1999 and 1998.
Total operating revenues increased $1,518,000 or 18.8% from $8,094,000
for the six months ended June 30, 1998 to $9,612,000 for the six months ended
June 30, 1999. The increase in operating revenue is due to the following:
(1) a $1,317,000 increase in revenue from the Lease-Up
Communities;
(2) a $213,000 increase in same-property revenue, which is due to
an increase in occupancy from 94.6% to 95.3% along with a 2.4%
increase in the average monthly rent per apartment home from
$877 to $898 per month; and
(3) $155,000 in water sub-metering revenue;
15
<PAGE> 18
offset by
(4) a decrease in revenue of approximately $167,000 due to the
sales of Windsong and two retail centers, and decreased
miscellaneous revenue.
In the fourth quarter of 1998 we completed the installation of
water-metering equipment in each of our 1,778 existing apartment homes and
implemented a program to bill residents for their individual water consumption.
We expect that billing residents for their water usage will increase our
operating revenues by approximately $425,000 per year. Based on a total cost of
$380,000 to install the equipment, we estimate the payback period to be about
fourteen months. We expect that all new apartment communities we develop will
have water-metering equipment installed in each apartment home during
construction.
Property operating expenses, excluding depreciation and general and
administrative expenses, increased $400,000 or 13.7% from $2,929,000 for the six
months ended June 30, 1998 to $3,329,000 for the six months ended June 30, 1999.
The increase in operating expenses is due to the following:
(1) a $298,000 increase in expenses from the Lease-Up Communities;
and
(2) a $102,000 increase in same-property expenses primarily due to
higher personnel costs ($77,000) and property taxes ($40,000),
offset by lower administrative costs ($32,000).
General and administrative expenses increased $209,000 or 25.8% from
$811,000 for the six months ended June 30, 1998 to $1,020,000 for the six months
ended June 30, 1999. These expenses include legal, accounting and tax fees,
marketing and printing fees, salaries, director fees and other costs. The
increase is due primarily to higher personnel and associated costs, rent, and
legal and marketing costs. General and administrative expenses as a percentage
of operating revenues increased from 10.0% for the six months ended June 30,
1998 to 10.6% for the six months ended June 30, 1999. We expect that as we
continue to grow, those expenses will begin to decline as a percentage of
operating revenues, even though general and administrative expenses will
increase in absolute terms.
Depreciation expense increased $405,000 or 18.1% from $2,238,000 for
the six months ended June 30, 1998 to $2,643,000 for the six months ended June
30, 1999. The increase is due to the depreciation expense from the Lease-Up
Communities, offset by a decrease due to the sales of our two retail centers. We
record depreciation expense as apartment homes are completed and available for
occupancy.
Interest expense increased $456,000 or 22.2% from $2,057,000 for the
six months ended June 30, 1998 to $2,513,000 for the six months ended June 30,
1999. The increase is due primarily to the financing of Bradford Creek in June
1998, the refinancing of the mortgage loan secured by Rosewood Plantation in
June 1998 for a higher loan amount, the refinancing of the mortgage loans
secured by Crestmark in September 1998 for a higher loan amount, and the
refinancing of the mortgage loan secured by Plantation Trace in September 1998
for a higher loan amount.
On January 9, 1998, we sold the Windsong community for $9,750,000 in
cash resulting in a gain, net of minority interest, of $918,000 on the sale of
real estate assets and an extraordinary gain, net of minority interest, of
$68,000 on the buyer's assumption of related mortgage indebtedness. Net sales
proceeds were $5,194,000 after deduction for loan repayment of $3,959,000,
closing costs of $458,000, and prorations of $139,000. The net cash proceeds
from the sale of Windsong were reinvested in undeveloped land in June 1998 as
part of a Section 1031 tax-deferred exchange.
16
<PAGE> 19
LIQUIDITY AND CAPITAL RESOURCES
Comparison of Six Months Ended June 30, 1999 to Six Months Ended June 30,
1998
Cash and cash equivalents decreased $1,400,000 during the six months
ended June 30, 1999 compared to a decrease of $4,689,000 during the six months
ended June 30, 1998. The $1,400,000 decrease is due to a decrease in cash
provided by financing activities, offset by a decrease in cash used in investing
activities and an increase in cash provided by operating activities.
A primary source of our liquidity is cash flow from operations.
Operating cash flows have historically been determined by the number of
apartment homes, rental rates and operating expenses for those apartment homes.
Net cash provided by operating activities increased $815,000 from $3,114,000
during the six months ended June 30, 1998 to $3,929,000 during the six months
ended June 30, 1999. The increase in cash flow from operations is due primarily
to the additional cash flow from the Lease-Up Communities and stabilized
communities, offset by the sales of Windsong and the two retail centers. The
effects of revenue and expense accruals are not material in understanding our
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 $6,246,000 from net
cash used of $13,769,000 during the six months ended June 30, 1998 compared to
net cash used of $7,523,000 during the six months ended June 30, 1999. This
decrease is due primarily to the following:
(1) the purchase of three separate parcels of land for
$11,355,000;
(2) construction costs at Bradford Creek and the second phases of
Preston Oaks and Plantation Trace of $7,747,000 during the six
months ended June 30, 1998 compared to construction costs at
phase one of Addison Place and the second phase of Plantation
Trace of $7,523,000 during the six months ended June 30, 1999;
offset by
(3) net cash proceeds from the sale of Windsong totaling
$5,333,000 during the six months ended June 30, 1998.
We acquired no existing apartment communities during these periods.
Net cash provided by financing activities decreased $3,772,000 from
$5,966,000 during the six months ended June 30, 1998 to $2,194,000 during the
six months ended June 30, 1999. This decrease is due primarily to the following:
(1) the repurchase of 84,200 shares of treasury stock for $626,000
during the six months ended June 30, 1999 compared to no
treasury shares purchased during the six months ended June 30,
1998;
(2) the purchase of 3,917 partnership units for $28,000 during the
six months ended June 30, 1999 compared to the purchase of
6,055 partnership units for $52,000 during the six months
ended June 30, 1998;
(3) an increase of $61,000 in principal repayments on mortgage
notes payable due to the financing of Bradford Creek in June
1998, the refinancing of Rosewood Plantation for a higher loan
amount in June 1998, the refinancing of Crestmark for a higher
loan amount in September 1998, and the refinancing of
Plantation Trace for a higher loan amount in September 1998;
17
<PAGE> 20
(4) the refinancing of the mortgage note secured by the
Rosewood Plantation community that resulted in cash provided
of $1,593,000 in June 1998;
(5) the permanent financing of Bradford Creek for cash of
$7,200,000 in June 1998;
(6) an increase of $91,000 in quarterly distributions paid, from
$2,133,000 for the six months ended June 30, 1998 to
$2,224,000 for the six months ended June 30, 1999; and
(7) proceeds from a construction loan in the amount of $5,432,000
compared to no construction loan in 1998;
The following facts highlight our existing debt structure:
- Each of our nine communities is financed with
fixed-rate debt;
- The average interest rate for all nine communities is
6.99% per annum;
- No debt is scheduled to mature before October 2002;
- The average term to maturity is eight years; and
- Debt principal will amortize at a rate of
approximately $880,000 per year.
The following table summarizes the debt for each of our nine communities:
<TABLE>
<CAPTION>
FIXED INTEREST PRINCIPAL
RATE AS OF OUTSTANDING
06/30/99 MATURITY 06/30/99
-------------- -------- -----------
<S> <C> <C> <C>
Bentley Place 7.10% 08/15/06 $ 3,976,000
Bradford Creek 7.15% 06/15/08 8,317,000
Crestmark 6.57% 10/01/08 15,869,000
Highland Park 7.30% 02/15/03 7,893,000
Ivey Brook 7.14% 02/15/07 6,265,000
Plantation Trace 7.09% 10/15/08 11,822,000
Preston Oaks 7.21% 10/15/02 8,367,000
River Oaks 7.15% 11/15/03 9,000,000
Rosewood Plantation 6.62% 07/15/08 8,019,000
--------------
$ 79,528,000
==============
</TABLE>
Each of our existing mortgage loans will require balloon payments (in
addition to monthly principal amortization) coming due over the years 2002 to
2008 as summarized below:
<TABLE>
<S> <C>
2002 $ 8,025,000
2003 16,057,000
2006 3,554,000
2007 5,570,000
2008 38,233,000
--------------
Total $ 71,439,000
==============
</TABLE>
Because we anticipate that we will repay only a small portion of the
principal of our indebtedness before its maturity and that we will not have
funds on hand sufficient to repay our indebtedness when it matures, we will have
to refinance our debt through:
18
<PAGE> 21
- debt financing collateralized by mortgages on individual
communities or groups of communities,
- uncollateralized private or public debt offerings, and/or
- equity offerings.
Roberts Realty and Roberts Properties, Inc. have a $35,000,000 advised
guidance line with NationsBank N.A. to help us finance the acquisition or
development of multifamily communities. Financing under the guidance line is
available on a revolving basis and bears interest at LIBOR plus 1.80% or Prime
plus 0%, at our option, payable monthly. The guidance line is not a commitment
to lend, and each loan under the guidance line will be made at NationsBank's
discretion in accordance with normal loan approval procedures.
During the quarter ended September 30, 1998, we started construction on
the first phase of Addison Place, which is located in north Atlanta. This first
phase consists of 118 rental townhomes and occupancies began in June of 1999. We
are funding this first phase with the proceeds from recent mortgage loan
financings, operating cash, and a $9,500,000 construction loan that we obtained
on April 12, 1999. At June 30, 1999, $5,432,000 was outstanding under the
construction loan.
On July 20, 1999, Roberts Realty received a written commitment for a
$9,500,000 loan secured by the first phase of the Addison Place community. The
loan commitment included a 10-year term with a fixed interest rate of 6.95%
payable in monthly installments of $62,885 based on a 30-year amortization
schedule. The loan is scheduled to close in September 1999 after completion and
substantial lease-up of the first phase of the Addison Place community. The loan
is intended to provide permanent financing to repay the construction
indebtedness on this property.
During the quarter ended June 30, 1999, we started construction on the
second phase of Addison Place. This second phase will consist of 287 apartment
homes and we expect occupancies to begin in the first quarter of 2000. We expect
to begin construction on an additional 581 apartment homes, which will include a
332-unit community in Charlotte and a 249-unit community also located in north
Atlanta in the third and fourth quarters of 1999, respectively. We paid cash for
the land for these three new communities, and we expect to fund the cost of
construction with construction loans and cash flow from operations. We are in
the process of obtaining construction loans, and we do not expect to begin
substantial construction until we secure those construction loans.
We anticipate that each community's rental and other operating revenues
will be adequate to provide short-term (less than 12 months) liquidity for the
payment of direct rental operating expenses, interest and amortization of
principal on related mortgage notes payable and capital expenditures. We expect
to meet our other short-term liquidity requirements generally through our net
cash provided by operations, which we believe will be adequate to meet our
operating requirements in both the short-term and in the long-term - greater
than 12 months. We also expect to fund improvements and renovations at existing
communities from net cash provided by operations. We expect to meet our
long-term liquidity requirements, including future apartment development and
debt maturities, by issuing additional equity securities and obtaining
construction loans and permanent mortgages.
STOCK REPURCHASE PLAN
On September 3, 1998, we issued a press release announcing that our
board of directors had authorized the repurchase of up to 300,000 shares of our
outstanding common stock. We intend to repurchase our shares from time to time
by means of open market purchases depending on availability, our cash position
and price per share. We repurchased 84,200 treasury shares for $626,000 during
the six months ended June 30, 1999. We repurchased no treasury shares during the
six months ended June 30, 1998. From September 3, 1998 through June 30, 1999, we
have repurchased 103,500 shares for $771,000.
19
<PAGE> 22
SUPPLEMENTAL DISCLOSURE OF FUNDS FROM OPERATIONS
Funds from operations, commonly referred to as FFO, is defined by the
National Association of Real Estate Investment Trusts as net income (loss),
computed in accordance with generally accepted accounting principles, excluding
gains (or losses) from debt restructuring and sales of property and
non-recurring items, plus real estate related depreciation and amortization. We
compute FFO in accordance with the current NAREIT definition, which may differ
from the methodology for calculating FFO used by other equity REITs, and
accordingly, may not be comparable to those other REITs. FFO does not represent
amounts available for management's discretionary use because of needed capital
replacement or expansion, debt service obligations, property acquisitions,
development and distributions, or other commitments and uncertainties. FFO
should not be considered as an alternative to net income determined in
accordance with GAAP as an indication of our financial performance or cash flows
from operating activities determined in accordance with GAAP as a measure of our
liquidity, nor is it indicative of funds available to fund our cash needs,
including our ability to make distributions. We consider FFO to be an important
measure of our operating performance. While FFO does not represent cash flows
from operating, investing or financing activities as defined by 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. We believe that to gain a clear understanding of our operating
results, you should evaluate FFO along with net income determined in accordance
with GAAP. The following table reconciles net income (loss) to FFO.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ -------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income (loss) $ 23 $ (98) $ 32 $ 925
Minority interest of unitholders 13 37 19 81
Extraordinary items 0 158 0 93
Amortization (real estate related) 3 9 6 11
Loss on disposal of assets 19 27 28 51
Gain on sale of real estate asset 0 0 0 (918)
Depreciation expense 1,326 1,107 2,643 2,238
---------- ----------- ---------- -----------
Funds From Operations $ 1,384 $ 1,240 $ 2,728 $ 2,481
========== =========== ========== ===========
Weighted average shares and units
outstanding during the period 7,445,954 7,550,609 7,469,341 7,554,666
</TABLE>
INFLATION
Substantially all apartment leases are for an initial term of not more
than 12 months and thus may enable us to seek increases in rents after the
expiration of each lease. We believe the short-term nature of these leases
reduces our risks of the adverse effects of inflation.
YEAR 2000 COMPUTER ISSUES
The "Year 2000 problem" is a general term used to identify those
computer programs or applications that are programmed to use a two-digit field,
instead of a four-digit field, for the year component of a date. Those programs
or applications which are programmed in this manner may, for example, recognize
the year 2000 as the year 1900, thereby causing potential system failures or
miscalculations, which could result in disruptions of normal business
operations. We have evaluated our state of readiness, the costs involved to
become compliant,
20
<PAGE> 23
the risks involved, and our contingency plans. Our primary uses of software
systems are our corporate accounting and property management software.
We have completed an initial assessment of our core computer
information systems and are now undertaking the necessary steps to make our
systems Year 2000 compliant. Our property management software is Year 2000
compliant, and we expect to upgrade our accounting software in the fourth
quarter of 1999 to make it Year 2000 compliant. We do not expect the cost to
upgrade our accounting software to be material. We have evaluated and assessed
those computer systems that do not relate to information systems, such as
telecommunications, HVAC, and fire and safety systems, which typically include
embedded technology such as microcontrollers, and we have determined that these
systems are Year 2000 compliant.
We have contacted all significant vendors, including banks, mortgage
loan service companies, and our third party payroll vendor, to verify that those
vendors are also addressing the problem. We have developed contingency plans
where necessary. Certain Year 2000 issues that are beyond our control, such as
the failure of a utility company to provide power to residents, may adversely
affect our operations. At this time, we cannot estimate the potential adverse
impact that may result from the failure of any of our vendors to become Year
2000 compliant, although we continue to believe that there will be no direct
material effect on our operating performance or results of operations.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. These
statements appear in a number of places in this report and include all
statements that are not historical facts. Some of the forward-looking statements
relate to our intent, belief or expectations regarding our strategies and plans
for operations and growth, including development and construction of new
multifamily apartment communities in our existing markets and elsewhere in the
Southeast. Other forward-looking statements relate to trends affecting our
financial condition and results of operations, and our anticipated capital needs
and expenditures.
Our forward-looking statements are not guarantees of future performance
and involve risks and uncertainties, and actual results may differ materially
from those anticipated in the forward-looking statements, as a result of:
- competition and overbuilding in our markets, currently Atlanta
and Charlotte;
- increasing operating costs that cannot be passed along to
residents through rental rate increases;
- construction risks for our development pipeline due to factors
that include unexpected weather problems, shortages in
materials and supplies, and labor strikes;
- risks related to the national and local economic climate;
- our dependence upon the Atlanta market;
- risks of entering new markets outside the Atlanta area;
- financing risks including risks of substantial indebtedness,
not being able to obtain debt or equity financing to fund our
growth strategy, or not being able to refinance our existing
mortgage debt beginning in 2002;
- tax risks including the possible effects of changes in tax law
and regulation;
- possible environmental liability; and - costs of compliance
with the Americans With Disabilities Act and similar laws.
In addition, the market price of the common stock may from time to time
fluctuate as a result of, among other things:
21
<PAGE> 24
- our operating results;
- the operating results of other REITs, particularly apartment REITs;
and
- changes in the performance of the stock market in general.
Investors should review the more detailed description of these and
other possible risks contained in the "Risk Factors" section of the prospectus
included in our registration statement on Form S-3, registration number
333-31117, as declared effective by the SEC on December 8, 1997.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are exposed to market risk from changes in interest rates, which may
adversely affect our financial position, results of operations and cash flows.
In seeking to minimize the risks from interest rate fluctuations, we manage
exposures through our regular operating and financing activities. We do not use
financial instruments for trading or other speculative purposes. We are exposed
to interest rate risk primarily through our borrowing activities, which are
described in Note 3 to our consolidated financial statements. All of our
long-term borrowings are under fixed rate instruments, and our line of credit
rate is 150 basis points over the three-month LIBOR and our construction loan
rate is 160 basis points over the 30-day LIBOR. We have determined that there is
no material market risk exposure to our consolidated financial position, results
of operations or cash flows.
PART II
ITEM 1. LEGAL PROCEEDINGS.
Neither Roberts Realty, the operating partnership, nor the communities
are presently subject to any material litigation nor, to our 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 us and the operating partnership.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
We did not modify, limit or qualify the rights of the holders of common
stock during the quarter ended June 30, 1999.
Except as described in the following paragraph, holders of partnership
units in the operating partnership generally have the right to require the
operating partnership to redeem their partnership units. Our articles of
incorporation limit ownership by any one holder to 6% of the outstanding shares
of our common stock, except for Mr. Roberts, who is limited to 25%. As a result,
unitholders cannot redeem their partnership units if doing so would violate
those ownership limits. A unitholder who submits partnership units for
redemption will receive, at our election, either an equal number of shares or
cash in the amount of the average of the daily market prices of the common stock
for the 10 consecutive trading days before the date of submission multiplied by
the number of partnership units submitted. We have adopted a policy of acquiring
partnership units in exchange for shares. We also have the right, at our
election, to issue shares in exchange for all outstanding partnership units.
On February 1, 1999, we began a six-month period in which partnership
units cannot be redeemed. We planned to register new shares with the SEC on or
about August 1 to simplify the process for holders of partnership units who
elect to exchange their units for shares. We registered these new shares with
the SEC on our registration statement on Form S-3, registration number
333-82453, as declared effective by the SEC on August 2, 1999. Unlike the shares
issued in exchange for partnership units before February 1, 1999 in reliance
upon the "intrastate" offering exemption, shares issued under the new
registration (a) will be freely tradeable,
22
<PAGE> 25
other than by affiliates, and (b) can be issued both to persons who reside in
Georgia and in other states. Before February 1, 1999, we paid cash to redeeming
unitholders who resided outside the state of Georgia.
Whenever we issue shares, we are obligated to contribute the net
proceeds from that issuance to the operating partnership, and the operating
partnership is obligated to issue the same number of partnership units to us.
The partnership agreement of the operating partnership permits the operating
partnership, without the consent of the unitholders, to sell additional
partnership units and add limited partners.
During the three and six months ended June 30, 1999, we issued a total
of 0 and 26,907 shares, respectively, in exchange for partnership units
submitted for redemption by unitholders. Through January 31, 1999, we issued the
shares in redemption of partnership units in reliance upon the "intrastate"
exemption from securities registration provided under Section 3(a)(11) of the
Securities Act and Rule 147 promulgated by the SEC regarding intrastate
offerings. We believe that we have satisfied the conditions of Rule 147 for each
of the issuances of shares to unitholders. We have delivered a prospectus to all
unitholders that is designed to satisfy the conditions of Rule 147. Unitholders
who reside outside of the state of Georgia are offered and receive only cash
instead of shares. All of the existing communities are located in the state of
Georgia. The certificates evidencing the shares issued in exchange for
partnership units before February 1, 1999 have a Rule 147 legend describing the
applicable restrictions on transfer printed on them, and we have issued stop
transfer instructions to our transfer agent for those shares. Further, we
notified the offerees that the applicable restrictions on transfer and
procedures will apply to the issuance of new certificates for any of the shares
that are presented for transfer during the nine month period from the end of the
offering during which transfer of the shares is restricted to residents of the
state of Georgia.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
We held our annual meeting on July 14, 1999, for the purpose of
electing two members of our Board of Directors. Proxies for the meeting were
solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934, and
there was no solicitation in opposition to management's solicitations.
Both of management's nominees for directors as listed in the proxy
statement were elected with the following vote:
<TABLE>
<CAPTION>
VOTES VOTES
FOR WITHHELD
--------- ---------
<S> <C> <C>
Wm. Jarell Jones 3,497,120 26,804
Dennis H. James 3,497,075 26,849
</TABLE>
23
<PAGE> 26
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The exhibits described in the following Index to Exhibits are
filed as part of this report on Form 10-Q.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- -----------
<S> <C>
4.1.3 Amendment #2 to First Amended and Restated Agreement of
Limited Partnership of Roberts Properties Residential, L.P.
[Incorporated by reference to Exhibit 10.1 from the
Company's Registration Statement on Form S-3 filed July 8,
1999, registration number 333-82453.]
10.14.01 Promissory Note executed by Roberts Properties Residential,
L.P. in favor of Compass Bank, dated April 12, 1999, in the
original principal amount of $9,500,000 (Addison Place).
10.14.02 Deed to Secure Debt and Security Agreement executed by
Roberts Properties Residential, L.P. in favor of Compass
Bank, dated April 12, 1999, and related collateral
documents (Addison Place).
10.14.03 Guaranty executed by Roberts Realty Investors, Inc. in
favor of Compass Bank, dated April 12, 1999 (Addison Place).
10.15.01 Line of Credit Note executed by Roberts Properties
Residential, L.P. in favor of Compass Bank, dated June 1,
1999, in the original principal amount of $2,000,000.
10.15.02 Loan Agreement executed by Roberts Properties Residential,
L.P. in favor of Compass Bank, dated June 1, 1999.
10.15.03 Continuing Guaranty executed by Roberts Realty Investors,
Inc. in favor of Compass Bank, dated June 1, 1999.
27 Financial Data Schedule (for SEC use only).
(b) We filed no reports on Form 8-K during the quarter ended
June 30, 1999.
</TABLE>
24
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 13, 1999 ROBERTS REALTY INVESTORS, INC.
By: /s/ Charles R. Elliott
-------------------------------------------------
Charles R. Elliott, Chief Financial Officer
(The Registrant's Principal Financial and Chief
Accounting Officer, who is duly authorized to
sign this report)
25
<PAGE> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- ------------
<S> <C>
4.1.3 Amendment #2 to First Amended and Restated Agreement of
Limited Partnership of Roberts Properties Residential, L.P.
[Incorporated by reference to Exhibit 10.1 from the
Company's Registration Statement on Form S-3 filed July 8,
1999, registration number 333-82453.]
10.14.01 Promissory Note executed by Roberts Properties Residential,
L.P. in favor of Compass Bank, dated April 12, 1999, in the
original principal amount of $9,500,000 (Addison Place).
10.14.02 Deed to Secure Debt and Security Agreement executed by
Roberts Properties Residential, L.P. in favor of Compass
Bank, dated April 12, 1999, and related collateral
documents (Addison Place).
10.14.03 Guaranty executed by Roberts Realty Investors, Inc. in
favor of Compass Bank, dated April 12, 1999 (Addison
Place).
10.15.01 Line of Credit Note executed by Roberts Properties
Residential, L.P. in favor of Compass Bank, dated June 1,
1999, in the original principal amount of $2,000,000.
10.15.02 Loan Agreement executed by Roberts Properties Residential,
L.P. in favor of Compass Bank, dated June 1, 1999.
10.15.03 Continuing Guaranty executed by Roberts Realty Investors,
Inc. in favor of Compass Bank, dated June 1, 1999.
27 Financial Data Schedule (for SEC use only).
</TABLE>
26
<PAGE> 1
EXHIBIT 10.14.01
PROMISSORY NOTE
$9,500,000
April 12, 1999
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned ROBERTS PROPERTIES RESIDENTIAL,
L.P. , a Georgia limited partnership (the "Borrower"), hereby promises to pay to
the order of COMPASS BANK (the "Lender"), at P.O. Box 10566, Birmingham, Alabama
35296, or at such other place as Lender may direct, in lawful money of the
United States of America constituting legal tender in payment of all debts and
dues, public and private, together with interest thereon calculated at the rate
and in the manner set forth herein, the principal amount of NINE MILLION FIVE
HUNDRED THOUSAND AND N0/100 DOLLARS ($9,500,000), or so much thereof as may be
advanced and outstanding hereunder. Payment of principal and interest shall be
in accordance with the following provisions:
1. INTEREST.
(a) The applicable interest rate (the "APPLICABLE RATE") under
this Note shall be an adjustable rate per annum equal to 160 basis
points (1.60%) in excess of the 30 day "LIBOR" rate (as defined herein)
from time to time in effect. "LIBOR" refers to the London Interbank
Offered Rate for the stated period as published in the WALL STREET
JOURNAL on the date of determination of the interest rate (or in the
event no such quotation is available on such date, as quoted on the day
most immediately preceding the date of determination on which such a
quotation was available). The Applicable Rate payable under this
Section l(a) will be set on the date hereof, and shall be subject to
change every thirty (30) days (the "Interest Adjustment Dates") while
any amount of principal is unpaid. On each Interest Adjustment Date,
the interest rate will be raised or lowered to reflect changes in the
LIBOR Rate.
(b) Interest on all principal amounts outstanding from time to
time hereunder shall be calculated on the basis of a 360-day year
applied to the actual number of days upon which principal is
outstanding, by multiplying the product of the principal amount
outstanding and the respective Applicable Rate set forth herein by the
actual number of days elapsed, and dividing by 360. In no event shall
the rate of interest calculated hereunder exceed the maximum rate
allowed by law. Any principal amounts outstanding hereunder after
maturity or earlier acceleration of this Note shall bear interest at a
floating rate equal to three percentage points (3%) in excess of
Compass Bank Prime until paid. Each change in the interest rate
resulting from a change in "COMPASS BANK PRIME" shall become effective
on the day on which such change in "Compass Bank Prime" occurs.
"Compass Bank Prime", as used herein, is a reference rate established
by the Lender for use in computing and adjusting interest, is subject
to increase, decrease, or change at the Lender's discretion, and is
only one of the reference rates or indices that Lender uses. Borrower
acknowledges that the Lender may lend to others at rates of interest
at, or greater or less than, "Compass Bank Prime" or the rate provided
herein.
<PAGE> 2
2. PAYMENT.
(a) Borrower promises to pay interest monthly on or before the
first (1st) day of each month, on the principal amount owing
hereunder from time to time, computed daily in the manner and
at the Applicable Rate set forth in Section 1 above; the first
such interest payment shall be due and payable on May 1, 1999.
(b) All unpaid principal, interest and other charges shall be due
and payable in full on December 31, 1999 (the "Maturity
Date").
3. PREPAYMENT. This Note may be prepaid in whole or in part
without penalty, provided that any partial prepayment shall be in integral
multiples of $10,000, and shall be accompanied by an amount equal to all accrued
interest and other charges on the amount so prepaid.
4. LOAN DOCUMENTS. The indebtedness evidenced hereby is secured
by, inter alia, the Loan Agreement executed by the Borrower in favor of the
Lender as of the date hereof (the "Loan Agreement"), and the Future Advance Deed
to Secure Debt, Assignment of Rents and Leases and Security Agreement on real
property (the "Property") located in Fulton County, Georgia, from Borrower to
Lender dated as of the date hereof, and the other Loan Documents defined in the
Loan Agreement (collectively, the "Loan Documents").
This Note is included in the indebtedness referred to in the Loan
Documents and is entitled to the benefits of those documents, but neither this
reference to those documents nor any provisions thereof shall affect or impair
the absolute and unconditional obligations of the Borrower to pay the principal
of and interest on this Note when due.
5. EVENTS OF DEFAULT. Upon the occurrence of any one or more of
the following events ("Events of Default"):
(a) Failure to make any payment of the principal of or interest on this
Note when and as the same becomes due and payable and such default is
not cured within three (3) days after receipt of written notice
thereof; and
(b) The occurrence of any default or event of default specified in the
Loan Agreement, the other Loan Documents, or in any other instrument
executed in connection with or securing this Note which is not cured
within any cure period provided with respect thereto (if any),
then, or at any time thereafter during the continuance of any such event, the
holder may, with or without notice to the Borrower, declare this Note and
indebtedness evidenced hereby to be forthwith due and payable, whereupon this
Note and the indebtedness evidenced hereby shall become forthwith due and
payable, both as to principal and interest, without presentment, demand,
protest, or other notice of any kind, all of which are hereby expressly waived,
anything contained herein or in any of the Loan Documents or in any other
instrument executed in connection with or securing this Note to the contrary
notwithstanding.
-2-
<PAGE> 3
6. WAIVERS. Borrower hereby waives demand, presentment for payment,
notice of dishonor, protest, and notice of protest and diligence in collection
or bringing suit and agrees that the holder hereof may accept partial payment,
or release or exchange security or collateral, without discharging or releasing
any unreleased collateral or the obligations evidenced hereby. Borrower further
waives any and all rights of exemption, both as to personal and real property,
under the constitution or laws of the United States, the State of Georgia, or
any other state.
7. LATE FEE. Any scheduled payment of principal and or interest which
is not paid within ten (10) days from the date due will be subject to a late
charge of five percent (5%) of such scheduled payment.
8. ATTORNEYS' FEES. Borrower agrees to pay reasonable attorneys' fees
and costs actually incurred by the holder hereof in collecting to collect this
Note, whether by suit or otherwise. Whenever reference is made to the payment of
"reasonable attorney's fees" or words of similar import in this Note the same
shall mean and refer to the payment of 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 defined in O.C.G.A. ss. 13-1-11.
9. MISCELLANEOUS. As used herein, the terms "Borrower", "Lender" and
"holder" shall be deemed to include their respective successors, legal
representatives and assigns, whether by voluntary action of the parties or by
operation of law. This Note is given under the seal of all parties hereto, and
it is intended that this Note is and shall constitute and have the effect of a
sealed instrument according to law. This Note has been negotiated, and is being
executed and delivered in the State of Georgia, or if executed elsewhere, shall
become effective upon the Lender's receipt and acceptance of the executed
original of this Note in the State of Georgia; provided, however, that the
Lender shall have no obligation to give, nor shall Borrower be entitled to
receive, any notice of such acceptance for this Note to become a binding
obligation of Borrower. Borrower hereby submits to jurisdiction in the State of
Georgia. This Note shall be governed by and be construed in accordance with the
laws of the State of Georgia. It is intended, and the Borrower and the holder
hereof specifically agree, that the laws of the State of Georgia governing
interest shall apply to this Note and to this transaction. This Note may not be
modified except by written agreement signed by the Borrower and the holder
hereof, or by their respective successors or assigns. Time is of the essence of
this Note.
10. AVOIDANCE OF USURY. If from any circumstances whatsoever,
fulfillment of any provision of this Note or of any other instrument evidencing
or securing the indebtedness evidenced hereby, 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 Note or under any
other instrument evidencing or securing the indebtedness evidenced hereby, that
is in excess of the current limit of such validity, but such obligations shall
be fulfilled to the limit of such validity. In determining whether or not the
rate of interest hereunder exceeds the highest lawful rate, Maker and Holder
agree and intend that all sums paid hereunder which are deemed interest for the
purposes of determining usury, shall be
-3-
<PAGE> 4
prorated, allocated or spread in equal parts over the longest period of time
permitted under the applicable laws of the State of Georgia.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed,
sealed and delivered as of the date first set forth above.
ROBERTS PROPERTIES RESIDENTIAL, L.P.,
a Georgia limited partnership
By: ROBERTS REALTY INVESTORS, INC.,
a Georgia corporation, its general partner
By: /s/ Charles S. Roberts
------------------------------------
Charles S. Roberts
Title: President
[CORPORATE SEAL]
-4-
<PAGE> 1
EXHIBIT 10.14.02
FUTURE ADVANCE DEED TO SECURE
DEBT,
ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
[COMPASS BANK LOGO]
STATE OF GEORGIA
COUNTY OF FULTON
THIS INDENTURE (herein this "DEED TO SECURE DEBT") made this 12th day of April,
1999, between ROBERTS PROPERTIES RESIDENTIAL, L.P., a Georgia limited
partnership (hereinafter called the "GRANTOR," whether one or more) and COMPASS
BANK (hereinafter called "BANK"), as grantee. The addresses of the Grantor and
the Bank are set forth in Paragraph 5.09 hereof.
W I T N E S S E T H:
WHEREAS, Grantor is justly indebted to Bank on a loan (the "LOAN") in the
principal sum of $9,500,000 or so much as may from time to time be disbursed
thereunder, as evidenced by a promissory note dated April 1, 1999, payable to
Bank with interest thereon as provided therein (the "NOTE"), which Note has a
maturity date of December 31, 1999; and
WHEREAS, Grantor may hereafter become indebted to Bank or to a subsequent holder
of this Deed to Secure Debt on loans or otherwise (the Bank and any subsequent
holder of this Deed to Secure Debt being referred to herein as "GRANTEE"); and
WHEREAS, the parties desire to secure the principal amount of the Note with
interest, and all renewals, extensions and modifications thereof, and all
refinancings of any part of the Note and any and all other additional
indebtedness of Grantor to Grantee, now existing or hereafter arising, whether
joint or several, due or to become due, absolute or contingent, direct or
indirect, liquidated or unliquidated, and any renewals, extensions,
modifications and refinancings thereof, and whether incurred or given as maker,
endorser, guarantor or otherwise, and whether the same be evidenced by note,
open account, assignment, endorsement, guaranty, pledge or otherwise (herein
"OTHER INDEBTEDNESS").
NOW, THEREFORE, the Grantor, in consideration of Grantee's making the Loan, and
to secure the prompt payment of same, with the interest thereon, and any
extensions, renewals, modifications and refinancings of same, and any charges
herein incurred by Grantee on account of Grantor, including but not limited to
attorneys' fees, and any and all Other Indebtedness as set forth above, and
further to secure the performance of the covenants, conditions and agreements
hereinafter set forth and set forth in the Note and set forth in all other
documents
LOAN NO. THIS INSTRUMENT Robert W. Reardon
PREPARED BY: MORRIS, MANNING & MARTIN, L.L.P.
1600 Atlanta Financial Center
3343 Peachtree Road
Atlanta, GA 30326
Page 1
<PAGE> 2
evidencing, securing or executed in connection with the Loan (this
Deed to Secure Debt, the Note and such other documents are sometimes referred to
herein as the "LOAN DOCUMENTS"), and as may be set forth in instruments
evidencing or securing Other Indebtedness (the "OTHER INDEBTEDNESS INSTRUMENTS")
has given, granted, bargained, sold and conveyed and does hereby give, grant,
bargain, sell, convey and confirm unto the Grantee, his heirs, successors and
assigns, the following described land, real estate, estates, buildings,
improvements, fixtures, furniture, and personal property (which together with
any additional such property in the possession of the Grantee or hereafter
acquired by the Grantor and subject to the lien of this Deed to Secure Debt, or
intended to be so, as the same may be constituted from time to time is
hereinafter sometimes referred to as the " PROPERTY") to-wit:
(A) All that tract or parcel or parcels of land and estates
particularly described on EXHIBIT A attached hereto and made a
part hereof (the "LAND");
(B) All buildings, structures, and improvements of every nature
whatsoever now or hereafter situated on the Land, and all
fixtures, fittings, building materials, machinery, equipment,
furniture and furnishings and personal property of every
nature whatsoever now or hereafter owned by the Grantor and
used or intended to be used in connection with or with the
operation of said property, buildings, structures or other
improvements, including all extensions, additions,
improvements, betterments, renewals, substitutions,
replacements and accessions to any of the foregoing, whether
such fixtures, fittings, building materials, machinery,
equipment, furniture, furnishings and personal property
actually are located on or adjacent to the Land or not, and
whether in storage or otherwise, and wheresoever the same may
be located (the "IMPROVEMENTS");
(C) All accounts, general intangibles, contracts and contract
rights relating to the Land and Improvements, whether now
owned or existing or hereafter created, acquired or arising,
including without limitation, all construction contracts,
architectural services contracts, management contracts,
leasing agent contracts, purchase and sales contracts, put or
other option contracts, and all other contracts and agreements
relating to the construction of improvements on, or the
operation, management and sale of all or any part of the Land
and Improvements;
(D) Together with all easements, rights of way, gores of land,
streets, ways, alleys, passages, sewer rights, waters, water
courses, water rights and powers, and all estates, leases,
subleases, licenses, rights, titles, interests, privileges,
liberties, tenements, hereditaments, and appurtenances
whatsoever, in any way belonging, relating or appertaining to
any of the property hereinabove described, or which hereafter
shall in any way belong, relate or be appurtenant thereto,
whether now owned or hereafter acquired by the Grantor, and
the reversion and reversions, remainder and remainders, rents,
issues and profits thereof, and all the estate, right, title,
interest, property, possession, claim and demand whatsoever at
law, as well as in equity, of the Grantor of, in and to the
same, including but not limited to:
(I) All rents, royalties, profits, issues and revenues of
the Land and Improvements from time to time accruing,
whether under leases or tenancies now existing or
hereafter created; and
(II) All judgments, awards of damages and settlements
hereafter made resulting from condemnation
proceedings or the taking of the Land and
Improvements or any part thereof under the power of
eminent domain, or for any damage (whether caused by
such taking or otherwise) to the Land and
Improvements or any part thereof, or to any rights
appurtenant thereto, including any award for change
of grade or streets. Grantee hereby is authorized on
behalf of and in the name of Grantor to execute and
deliver valid acquittances for, and appeal from, any
such judgments or awards. Grantee may apply all such
sums or any part thereof so received, after the
payment of all its expenses, including costs and
attorneys' fees, on any of the indebtedness secured
hereby in such manner as it elects or, at its option,
the entire amount or any part thereof so received may
be released;
(E) All cash and non-cash proceeds and all products of any of the
foregoing items or types of property described in (a), (b),
(c) or (d) above, including, but not limited to, all
insurance, contract and tort proceeds and claims, and
including all inventory, accounts, chattel paper, documents,
instruments, equipment, fixtures, consumer goods and general
intangibles acquired with cash proceeds of any of the
foregoing items or types of property described in (a), (b),
(c) or (d) above.
TO HAVE AND TO HOLD the Property and all parts thereof unto the Grantee, its
successors and assigns, in fee simple forever, subject, however. to the terms
and conditions herein.
This Deed to Secure Debt is intended to operate and is to be construed
as a deed passing the title to the Property to Grantee 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 the payment of the
following described indebtedness (hereinafter referred to collectively as the
"Secured Indebtedness"):
(a) The debt evidenced by the Note, together with any and all renewals,
modifications, consolidations and extensions of the indebtedness evidenced by
the Note; and
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(b) Any and all additional advances made by Grantee to protect or
preserve the Property or the security interest created hereby on the Premises,
or for taxes, assessments or insurance premiums as hereinafter provided, or for
performance of any of Grantor's obligations hereunder or for any other purpose
provided herein (whether or not the original Grantor remains the owner of the
Property at the time of such advances); and
(c) All obligations of Grantor to Grantee under that certain Loan
Agreement of even date herewith by and between Grantor and Grantee ("Loan
Agreement").
Should the Secured Indebtedness be paid according to the tenor and effect
thereof when the same shall become due and payable, and should Grantor perform
all covenants herein contained in a timely manner, then this Deed to Secure Debt
shall be canceled and surrendered.
AND the Grantor further represents, warrants, covenants and agrees with the
Grantee as follows:
ARTICLE I
GENERAL
1.01 PERFORMANCE OF DEED TO SECURE DEBT, NOTE AND LOAN DOCUMENTS. The Grantor
shall perform, observe and comply with all provisions hereof, of the Note, of
the other Loan Documents, and of the Other Indebtedness Instruments, and shall
duly and punctually pay to the Grantee the sum of money expressed in the Note,
with interest thereon, and all other sums required to be paid by the Grantor
pursuant to the provisions of this Deed to Secure Debt, of the Note, of the
other Loan Documents, and of the Other Indebtedness Instruments, all without any
deductions or credit for taxes or other similar charges paid by the Grantor.
1.02 WARRANTY OF TITLE. Grantor hereby warrants that it is lawfully seized of an
indefeasible estate in fee simple in the land and real property hereby
mortgaged, or is lawfully seized of such other estate or interest as is
described on EXHIBIT A hereto, and has good and absolute title to all existing
personal property hereby granted as security, and has good right, full power and
lawful authority to sell, convey and grant a security interest in the same in
the manner and form aforesaid; that the same is free and clear of all grants,
reservations, security interests, liens, charges, and encumbrances whatsoever,
subject to those matters set forth on EXHIBIT B attached hereto and by this
reference incorporated herein (the "Permitted Exceptions"), including, as to the
personal property and fixtures, conditional sales contracts, chattel mortgages,
security agreements, financing statements, and anything of a similar nature, and
that Grantor shall and will warrant and forever defend the title thereto and the
quiet use and enjoyment thereof unto the Grantee, their respective heirs,
successors and assigns, against the lawful claims of all persons whomsoever,
subject to the Permitted Exceptions.
1.03 FUTURE ADVANCES, REVOLVING AND OPEN-END LOANS, AND OTHER DEBTS. It is
expressly understood that this Deed to Secure Debt is given to and does secure
not only the Loan and the Note and future obligations and advances incurred
thereunder, but also any and all present and future Other Indebtedness,
obligations and liabilities, direct or contingent, of the Grantor to the
Grantee, whether now existing or hereafter arising, and any and all extensions,
renewals, modifications and refinancings of same, or any part thereof, whether
the same be evidenced by note, open account, assignment, endorsement, guaranty,
pledge or otherwise. The Loan and the Other Indebtedness may, if provided in the
applicable loan instruments, provide for revolving or open-end loans and
advances, all of which shall be secured by this Deed to Secure Debt.
1.04 MONTHLY TAX DEPOSIT. After the occurrence of an Event of Default, and if
required by Grantee, Grantor shall pay on the first day of each month
one-twelfth (1/12) of the yearly taxes on the Property, as estimated by Grantee,
in addition to each regular installment of principal and interest. Such sums
shall not draw interest and shall not be, nor be deemed to be, trust funds, but
may be commingled with the general funds of Grantee. Grantor agrees to pay
Grantee the amount of any deficiency necessary to enable Grantee to pay such
taxes when due. Such sums may be applied by the Grantee to the reduction of the
indebtedness secured hereby in any manner selected by Grantee if an Event of
Default shall occur under this Deed to Secure Debt or under the Note, any of the
other Loan Documents, or any of the Other Indebtedness Instruments, but, unless
otherwise agreed by the Grantee in writing, no application of tax deposits to
the Note, to Other Indebtedness, or to other obligations secured hereby, shall
delay, reduce, alter or otherwise affect any regularly scheduled payment with
respect to the Loan, the Other Indebtedness, or any such other obligations.
1.05 OTHER TAXES, UTILITIES AND LIENS.
(A) The Grantor shall pay promptly, when and as due, and, if
requested, will exhibit promptly to the Grantee receipts for
the payment of all taxes, assessments, water rates, utility
charges, dues, charges, fines, penalties, costs and other
expenses incurred, and impositions of every nature whatsoever
imposed, levied or assessed or to be imposed, levied or
assessed upon or against the Property or any part thereof or
upon the revenues, rents, issues and profits of the Property
or arising in respect of the occupancy, use or possession
thereof, or upon the interest of the Grantee in the Property
(other than any of the same for which provision has been made
in Paragraph 1.04 of this Article I), or any charge which, if
unpaid, would become a lien or charge upon the Property.
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(B) The Grantor promptly shall pay or bond and shall not suffer
any mechanic's, laborer's, statutory or other lien to be
created or to remain outstanding upon any of the Property.
(C) In the event of the passage of any state, federal, municipal
or other governmental law, order, rule or regulation,
subsequent to the date hereof, in any manner changing or
modifying the laws now in force governing the taxation of
mortgages or debts secured by mortgages or the manner of
collecting taxes, then Grantor immediately shall pay any
increased taxes if allowed by law, and if Grantor fails to pay
such additional taxes, or if Grantor is prohibited from paying
such taxes, or if Grantee in any way is adversely affected by
such law, order, rule or regulation, then in any of such
events, all indebtedness secured by this Deed to Secure Debt
and all interest accrued thereon shall without notice become
due and payable forthwith at the option of the Grantee.
1.06 INSURANCE.
(A) The Grantor shall procure for, deliver to, and maintain for
the benefit of the Grantee during the term of this Deed to
Secure Debt insurance policies in such amounts as the Grantee
shall require, insuring the Property against fire, extended
coverage, war damage (if available), and such other insurable
hazards, casualties and contingencies as the Grantee may
require. During the construction period, Grantor shall procure
for, deliver to and maintain builder's risk/extended
multi-peril hazard insurance. The form of such policies and
the companies issuing them shall be acceptable to the Grantee,
and, unless otherwise agreed by the Grantee in writing, shall
provide for coverage without coinsurance or deductibles. All
policies shall contain a New York standard, non-contributory
mortgagee endorsement making losses payable to the Grantee, as
mortgagee. At least fifteen (15) days prior to the expiration
date of all such policies, renewals thereof satisfactory to
the Lender shall be delivered to the Grantee. The Grantor
shall deliver to the Grantee receipts evidencing the payment
of all such insurance policies and renewals. In the event of
the foreclosure of this Deed to Secure Debt or any transfer of
title to the Property in partial or full extinguishment of the
indebtedness secured hereby, all right, title and interest of
the Grantor, or its assigns, in and to all insurance policies
then in force shall pass to the purchaser or grantee.
(B) The Grantee hereby is authorized and empowered, at its option,
to adjust or compromise any loss under any insurance policies
on the Property, and to collect and receive the proceeds from
any such policy or policies. Each insurance company hereby is
authorized and directed to make payment for all such losses
directly to the Grantee instead of to the Grantor and Lender
jointly. After deducting from said insurance proceeds any
expenses incurred by Lender in the collection or handling of
said funds, the Lender may apply the net proceeds, at its
option, either toward repairing or restoring the improvements
on the Property, or as a credit on any portion of the
Grantor's indebtedness selected by Lender, whether then
matured or to mature in the future, or at the option of the
Lender, such sums either wholly or in part may be used to
repair such improvements, or to build new improvements in
their place or for any other purpose and in a manner
satisfactory to the Lender, all without affecting the lien of
this Deed to Secure Debt for the full amount secured hereby
before such payment took place. Lender shall not be liable to
Grantor or otherwise responsible for any failure to collect
any insurance proceeds due under the terms of any policy
regardless of the cause of such failure.
(C) After the occurrence of an Event of Default, and if required
by the Lender, the Grantor shall pay on the first day of each
month, in addition to any regular installment of principal and
interest and other charges with respect to indebtedness
secured hereby, and the monthly tax deposit provided for in
Paragraph 1.04 hereof, one-twelfth (1/12) of the yearly
premiums for insurance maintained pursuant to the provisions
of this Paragraph 1.06. Such amount shall be used by Lender to
pay such insurance premiums when due. Such added payments
shall not be, nor be deemed to be, trust funds, but may be
commingled with the general funds of the Lender, and no
interest shall be payable in respect thereof. Upon demand of
the Lender, the Grantor agrees to deliver to the Lender such
additional moneys as are necessary to make up any deficiencies
in the amounts deposited by Grantor with Lender pursuant to
this Paragraph 1.06 to enable the Lender to pay such insurance
premiums when due. In the event of an Event of Default
hereunder or of a default by Grantor under the Note, any other
Loan Documents, or any Other Indebtedness Instruments, the
Lender may apply such sums to the reduction of the
indebtedness secured hereby in any manner selected by Lender,
but, unless otherwise agreed by the Lender in writing, no
application of insurance proceeds to the Loan, to Other
Indebtedness, or to other obligations secured hereby, shall
delay, reduce, alter or otherwise affect any regularly
scheduled payment with respect to the Loan, the Other
Indebtedness, or any such other obligations.
1.07 CONDEMNATION. If all or any part of the Property shall be damaged or taken
through condemnation (which term when used in this Deed to Secure Debt shall
include any damage or taking by any governmental or private authority, and any
transfer by private sale in lieu thereof), either temporarily or permanently,
the entire indebtedness secured hereby shall at the option of the Grantee become
immediately due and payable. The Grantee shall be entitled to all compensation,
awards, and other payments or relief for any condemnation and hereby is
authorized, at its option, to commence, appear in and prosecute, in its own or
the Grantor's name, any action or proceeding relating to any condemnation, and
to settle or compromise any claim in connection therewith. All such
compensation, awards, damages, claims, rights of action and proceeds and the
right thereto are hereby assigned by the Grantor to the Grantee, which, after
deducting therefrom all its expenses, including attorneys' fees, may release any
moneys so received by it without affecting the lien of this Deed to Secure Debt
or may apply the same in such manner as the Grantee shall determine to the
reduction of the indebtedness secured hereby, and any balance of such moneys
then
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remaining shall be paid to the Grantor. The Grantor agrees to execute such
further assignments of any compensations, awards, damages, claims, rights of
action and proceeds as the Grantee may require. The Grantor promptly shall
notify the Grantee in the event of the institution of any condemnation or
eminent domain proceeding or in the event of any threat thereof. The Grantee
shall be entitled to retain, at the expense of the Grantor, its own legal
counsel in connection with any such proceedings or threatened proceedings.
Grantee shall be under no obligation to the Grantor or to any other person to
determine the sufficiency or legality of any condemnation award and may accept
any such award without question or further inquiry.
1.08 CARE OF THE PROPERTY.
(A) The Grantor will preserve and maintain the Property in good
condition and repair, and shall not commit or suffer any waste
and shall not do or suffer to be done anything which will
increase the risk of fire or other hazard to the Property or
any part thereof.
(B) Except as otherwise provided herein, no buildings, fixtures,
personal property, or other part of the Property shall be
removed, demolished or substantially altered without the prior
written consent of the Grantee. The Grantor may sell or
otherwise dispose of, free from the lien of this Deed to
Secure Debt, furniture, furnishings, equipment, tools,
appliances, machinery or appurtenances, subject to the lien
hereof which may become worn out, undesirable, obsolete,
disused or unnecessary for use in the operation of the
Property, not exceeding in value at the time of disposition
thereof Five Thousand Dollars ($5,000.00) for any single
transaction, or a total of Twenty Thousand Dollars
($20,000.00) in any one year, upon replacing the same with, or
substituting for the same, free and clear of all liens and
security interests except those created by the Loan Documents
or Other Indebtedness Instruments, other furniture,
furnishings, equipment, tools, appliances, machinery or
appurtenances not necessarily of the same character, but of at
least equal value and of equal or greater utility in the
operation of the Property, and costing not less than the
amount realized from the property sold or otherwise disposed
of. Such substitute furniture, furnishings, equipment, tools,
appliances, machinery and appurtenances shall forthwith
become, without further action, subject to the provisions of
this Deed to Secure Debt.
(C) If the Property or any part thereof is damaged by fire or any
other cause, the Grantor shall give immediate written notice
of the same to the Grantee.
(D) The Grantee hereby is authorized, upon 24 hours prior notice,
to enter upon and inspect the Property, and to inspect the
Grantor's or Grantor's agent's records with respect to the
ownership, use, management and operation of the Property, at
any time during normal business hours.
(E) If all or any part of the Property shall be damaged by fire or
other casualty, the Grantor promptly shall restore the
Property to the equivalent of its original condition,
regardless of whether or not there shall be any insurance
proceeds therefor; provided, however, that if there are
insurance proceeds, the Grantor shall not be required to
restore the Property as aforesaid unless the Grantee shall
apply any net proceeds from the casualty in question and held
by Grantee, as allowed under Paragraph 1.06, toward restoring
the damaged improvements.
1.09 FURTHER ASSURANCES; AFTER-ACQUIRED PROPERTY.
(A) At any time, and from time to time, upon request by the
Grantee, the Grantor, at Grantor's expense, will make, execute
and deliver or cause to be made, executed and delivered to the
Grantee and, where appropriate, to cause to be recorded and/or
filed and from time to time thereafter to be re-recorded
and/or refiled at such time and in such offices and places as
shall be deemed desirable by the Grantee any and all such
other and further mortgages, instruments of further assurance,
certificates and other documents as may, in the opinion of the
Grantee, be necessary or desirable in order to effectuate,
complete, or perfect, or to continue and preserve the
obligation of the Grantor under the Note and this Deed to
Secure Debt, and the priority of this Deed to Secure Debt as a
first and prior security title to all of the Property, whether
now owned or hereafter acquired by the Grantor. Upon any
failure by the Grantor so to do, the Grantee may make,
execute, and record any and all such mortgages, instruments,
certificates, and documents for and in the name of the
Grantor, and the Grantor hereby irrevocably appoints the
Grantee the agent and attorney-in-fact of the Grantor so to
do. The rights and title hereunder automatically will attach,
without further act, to all after-acquired property (except
consumer goods, other than accessions, not acquired within ten
(10) days after the Grantee has given value under the Note)
attached to and/or used in the operation of the Property or
any part thereof.
(B) Without limitation to the generality of the other provisions
of this Deed to Secure Debt, including subparagraph (a) of
this Paragraph 1.09, it hereby expressly is covenanted, agreed
and acknowledged that the lien and rights hereunder
automatically will attach to any further, greater, additional,
or different estate, rights, titles or interests in or to any
of the Property at any time acquired by the Grantor by
whatsoever means, including that in the event the Grantor is
the owner of an estate or interest in the Property or any part
thereof (such as, for example, as the lessee or tenant) other
than as the fee simple owner thereof, and prior to the
satisfaction of record of this Deed to Secure Debt the Grantor
obtains or otherwise acquires such fee simple or other estate,
then such further, greater, additional, or different estate in
the Property, or a part
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thereof, shall automatically, and without any further action
or filing or recording on the part of the Grantor or the
Grantee or any other person or entity, be and become subject
to this Deed to Secure Debt and the lien hereof. In
consideration of Grantee's making the Loan as aforesaid, and
to secure the Loan, the Other Indebtedness and obligations set
forth above, Grantor hereby grants, bargains, sells and
conveys to Grantee, on the same terms as set forth in this
Deed to Secure Debt and intended to be a part hereof, all such
after-acquired property and estates.
1.10 ADDITIONAL SECURITY. The Grantee also shall have and hereby is granted a
security interest in all monies, securities and other property of the Grantor,
now or hereafter assigned, held, received, or coming into the possession,
control, or custody of the Grantee by or for the account of the Grantor
(including indebtedness due from the Grantee to the Grantor, and any and all
claims of Grantor against Grantee, at any time existing) whether expressly as
collateral security, custody, pledge, transmission, collection or for any other
purpose, and also upon any and all deposit balances, including any dividends
declared, or interest accruing thereon, and proceeds thereof. On an Event of
Default, the Grantee may, in addition to any other rights provided by this Deed
to Secure Debt or any of the other Loan Documents, but shall not be obligated
to, apply to the payment of the Loan or Other Indebtedness secured hereby, and
in such manner as the Grantee may determine, any such monies, securities or
other property held or controlled by the Grantee. No such application of funds
shall, unless otherwise expressly agreed by the Grantee in writing, reduce,
alter, delay or otherwise affect any regularly scheduled payment with respect to
the Loan or such Other Indebtedness or obligations.
1.11 LEASES AFFECTING PROPERTY. The Grantor shall comply with and observe its
obligations as landlord or tenant under all leases affecting the Property or any
part thereof. If requested by Grantee, Grantor shall furnish Grantee with
executed copies of all leases now or hereafter existing on the Property; and all
leases now or hereafter entered into will be in form and substance subject to
the approval of Grantee. Grantor shall not accept payment of rent more than one
(1) month in advance without the express written consent of Grantee. If
requested by the Grantee, the Grantor shall execute and deliver to Grantee, as
additional security, such other documents as may be requested by Grantee to
evidence further the assignment to Grantee hereunder, and to assign any and all
such leases whether now existing or hereafter created, including, without
limitation, all rents, royalties, issues and profits of the Property from time
to time accruing. The Grantor shall not cancel, surrender or modify any lease
affecting the Property or any part thereof without the written consent of the
Grantee; provided, that if the Property is a residential apartment complex, this
paragraph shall not apply to leases (a) entered into on forms approved by
Grantee, or (b) modified, amended or terminated in the ordinary course of
business of operating a residential apartment complex.
1.12 EXPENSES. The Grantor shall pay or reimburse the Grantee for all reasonable
attorneys' fees, costs and expenses incurred by the Grantee in connection with
the collection of the indebtedness secured hereby or the enforcement of any
rights or remedies provided for in this Deed to Secure Debt, in any of the other
Loan Documents or the Other Indebtedness Instruments, or as may otherwise be
provided by law, or incurred by Grantee in any proceeding involving the estate
of a decedent or an insolvent, or in any action, proceeding or dispute of any
kind in which the Grantee is made a party, or appears as party plaintiff or
defendant, affecting this Deed to Secure Debt, the Note, any of the other Loan
Documents, any of the Other Indebtedness Instruments, Grantor or the Property,
including but not limited to the foreclosure of this Deed to Secure Debt, any
condemnation action involving the Property, any environmental condition of or
affecting the Property, or any action to protect the security hereof; and any
such amounts paid or incurred by the Grantee shall be added to the indebtedness
secured hereby and shall be further secured by this Deed to Secure Debt.
1.13 PERFORMANCE BY GRANTEE OF DEFAULTS BY GRANTOR. If the Grantor shall default
in the payment of any tax, lien, assessment or charge levied or assessed against
the Property, or otherwise described in Paragraphs 1.04 and 1.05 hereof; in the
payment of any utility charge, whether public or private; in the payment of
insurance premiums; in the procurement of insurance coverage and the delivery of
the insurance policies required hereunder; or in the performance or observance
of any other covenant, condition or term of this Deed to Secure Debt, of the
Note, of any of the other Loan Documents, or of any of the Other Indebtedness
Instruments, then the Grantee, at its option, may perform or observe the same;
and all payments made for costs or expenses incurred by the Grantee in
connection therewith shall be secured hereby and shall be, without demand,
immediately repaid by the Grantor to the Grantee with interest thereon
calculated in the manner set forth in the Note, and at the default interest rate
specified in the Note, or, if no default interest rate is specified, then at the
rate set forth in the Note, plus two percentage points (2%). The Grantee shall
be the sole judge of the legality, validity and priority of any such tax, lien,
assessment, charge, claim and premium, of the necessity for any such actions and
of the amount necessary to be paid in satisfaction thereof. The Grantee hereby
is empowered to enter and to authorize others to enter upon the Property or any
part thereof for the purpose of performing or observing any such defaulted
covenant, condition or term, without thereby becoming liable to the Grantor or
any person in possession holding under the Grantor for trespass or otherwise.
1.14 BOOKS AND RECORDS. The Grantor shall keep and maintain at all times full,
true and accurate books of accounts and records, adequate to reflect correctly
the results of the operation of the Property. Upon request of the Grantee, the
Grantor shall furnish to the Grantee (i) within one hundred twenty (120) days
after the end of the Grantor's fiscal year a balance sheet and a statement of
income and expenses, both in reasonable detail and form satisfactory to Grantee
and certified by a Certified Public Accountant, and (ii) within ten (10) days
after request therefor from Grantee, a rent schedule of the Property, certified
by the Grantor, showing the name of each tenant, and for each tenant, the space
occupied, the lease expiration date and the rent paid.
1.15 ESTOPPEL AFFIDAVITS. The Grantor within ten (10) days after written request
from the Grantee shall furnish a written statement, duly acknowledged, setting
forth the unpaid principal of and interest on the Loan and Other Indebtedness
and whether or not any offsets or defenses exist against any principal and
interest.
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1.16 ALIENATION OR SALE OF PROPERTY. The Grantor shall not sell, assign,
mortgage, encumber, grant a security interest in or otherwise convey all or any
part of the Property without obtaining the express written consent of the
Grantee at least thirty (30) days prior to such conveyance. If Grantor should
sell, assign, mortgage, encumber, grant a security interest in or convey all, or
any part, of the Property without such consent by Grantee, then, in such event,
the entire balance of the indebtedness (including the Loan and all Other
Indebtedness) secured by this Deed to Secure Debt and all interest accrued
thereon (or such parts as Grantee may elect) shall without notice become due and
payable forthwith at the option of the Grantee.
1.17 ENVIRONMENTAL AND COMPLIANCE MATTERS. Grantor represents, warrants and
covenants as follows:
(A) Based on the environmental report prepared by United
Consulting dated June 1, 1998 (the "Environmental Report") and
except as set forth therein, no Hazardous Materials
(hereinafter defined) have been, are, or will be, while any
part of the indebtedness secured by this Deed to Secure Debt
remains unpaid, contained in, treated, stored, handled,
generated, located on, discharged from, or disposed of on, or
constitute a part of, the Property. As used herein, the term
"HAZARDOUS MATERIALS" includes, without limitation, any
asbestos, urea formaldehyde foam insulation, flammable
explosives, radioactive materials, hazardous materials,
hazardous wastes, hazardous or toxic substances, or related or
unrelated substances or materials defined, regulated,
controlled, limited or prohibited in the Comprehensive
Environmental Response Compensation and Liability Act of 1980
("CERCLA") (42 U.S.C. Sections 9601, et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. Sections 1801, et
seq.), the Resource Conservation and Recovery Act ("RCRA") (42
U.S.C. Sections 6901, et seq.), the Clean Water Act (33 U.S.C.
Sections 1251, et seq.), the Clean Air Act (42 U.S.C. Sections
7401, et seq.), the Toxic Substances Control Act (15 U.S.C.
Sections 2601, et seq.), each such Act as amended from time to
time, and in the rules and regulations adopted and
publications promulgated pursuant thereto, and in the rules
and regulations of the Occupational Safety and Health
Administration ("OSHA") pertaining to occupational exposure to
asbestos, as amended from time to time, or in any other
federal, state or local environmental law, ordinance, rule, or
regulation now or hereafter in effect;
(B) Based on the Environmental Report and except as set forth
therein, no underground storage tanks, whether in use or not
in use, are located in, on or under any part of the Property;
(C) Based on the Environmental Report and except as set forth
therein, all of the Property complies and will comply in all
respects with applicable environmental laws, rules,
regulations, and court or administrative orders;
(D) There are no pending claims or threats of claims by private or
governmental or administrative authorities relating to
environmental impairment, conditions, or regulatory
requirements with respect to the Property;
(E) The Grantor promptly shall comply with all present and future
laws, ordinances, rules, regulations, orders and decrees of
any governmental authority affecting the Property or any part
thereof. Without limiting the foregoing, the Grantor
represents and covenants that the Property is in present
compliance with, and in the future shall comply with, as
applicable, the Americans With Disabilities Act of 1990,
("ADA") (42 U.S.C. Sections 12101, et seq), as amended from
time to time, and in the rules and regulations adopted and
publications promulgated pursuant thereto.
(F) Grantor shall give immediate oral and written notice to
Grantee of its receipt of any notice of a violation of any
law, rule or regulation covered by this Paragraph 1.17, or of
any notice of other claim relating to the environmental or
physical condition of the Property, or of its discovery of any
matter which would make the representations, warranties and/or
covenants herein to be inaccurate or misleading in any
respect.
Grantor agrees to and does hereby indemnify and hold Grantee harmless from all
loss, cost, damage, claim and expense incurred by Grantee on account of (i) the
violation of any representation or warranty set forth in this Paragraph 1.17,
(ii) Grantor's failure to perform any obligations of this Paragraph 1.17, (iii)
Grantor's or the Property's failure to fully comply with all environmental laws,
rules and regulations, with all occupational health and safety laws, rules and
regulations, or with the ADA, as applicable, or (iv) any other matter related to
environmental or physical conditions on, under or affecting the Property. This
indemnification shall survive the closing of the Loan, payment of the Loan, the
exercise of any right or remedy under any Loan Document, and any subsequent sale
or transfer of the Property, and all similar or related events or occurrences.
However, this indemnification shall not apply to any new Hazardous Materials
first stored, generated or placed on the Property after the acquisition of title
to the Property by Grantee through foreclosure or deed in lieu of foreclosure or
after purchase by a third party after the Loan has been paid in full.
1.18 INSPECTION RIGHTS AND EASEMENTS. In addition to other inspection rights of
Grantee, the Grantor shall and hereby does grant and convey to the Grantee, its
agents, representatives, contractors, and employees, to be exercised by Grantee
following an Event of Default hereunder or under any of the other Loan
Documents, an easement and license to enter on the Property at any time upon 24
hours prior notice for the purpose of making such audits, tests, inspections,
and examinations, including, without limitation, inspection of buildings and
improvements, subsurface exploration and testing and groundwater testing (herein
"INSPECTIONS"), as the Grantee, in its sole discretion, deems necessary,
convenient, or proper to determine the condition and use of the Property, to
make an inventory of the Property, and to determine
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whether the ownership, use and operation of the Property are in compliance with
all federal, state, and local laws, ordinances, rules, and regulations,
including, without limitation, environmental laws, health and public
accommodation laws, the ADA and the Rehabilitation Act, as applicable, and
ordinances, rules and regulations relating thereto. Notwithstanding the grant of
the above easement and license to the Grantee, the Grantee shall have no
obligation to perform any such Inspections, or to take any remedial action. All
the costs and expenses incurred by the Grantee with respect to any Inspections
which the Grantee may conduct or take pursuant to this Paragraph 1.18,
including, without limitation, the fees of any engineers, laboratories, and
contractors, shall be repaid by the Grantor, with interest, and shall be secured
by this Deed to Secure Debt and the other Loan Documents.
ARTICLE II
ASSIGNMENT OF RENTS AND LEASES
2.01 ASSIGNMENT. Grantor, in consideration of Grantee's making the Loan as
aforesaid and for other good and valuable consideration, and to secure the
prompt payment of same, with the interest thereon, and any extensions, renewals,
modifications and refinancings of same, and any charges herein incurred by
Grantee on account of Grantor, including but not limited to attorneys' fees, and
any and all Other Indebtedness, and further to secure the performance of the
covenants, conditions and agreements hereinafter set forth and set forth in the
Note, in the other Loan Documents, and in the Other Indebtedness Instruments,
does hereby sell, assign and transfer unto the Grantee all leases, subleases and
lease guaranties of or relating to all or part of the Property, whether now
existing or hereafter created or arising, including without limitation those
certain leases, if any, specifically described on an exhibit to this Deed to
Secure Debt, and all the rents, issues and profits now due and which may
hereafter become due under or by virtue of any such lease, whether written or
verbal, or any letting of, or of any agreement for the use or occupancy of the
Property or any part thereof, which may have been heretofore or may be hereafter
made or agreed to or which may be made or agreed to by the Grantee under the
powers herein granted, it being the intention of the parties to hereby establish
an absolute transfer and assignment of all the said leases, subleases, lease
guaranties and agreements, and all the avails thereof, to the Grantee, and the
Grantor does hereby appoint irrevocably the Grantee its true and lawful attorney
in its name and stead (with or without taking possession of the aforesaid
Property as hereinafter provided), to rent, lease or let all or any portion of
the Property to any party or parties at such rental and upon such term, in its
discretion as it may determine, and to collect all of said avails, rents, issues
and profits arising from or accruing at any time hereafter, and all now due, or
that may hereafter become due under each and all of the leases, subleases, lease
guaranties and agreements, written or verbal, or other tenancy existing or which
may hereafter exist on the Property, with the same rights and powers and subject
to the same immunities, exoneration of liability and rights of recourse and
indemnity as the Grantee would have upon taking possession of the Property
pursuant to the provisions hereinafter set forth.
2.02 PREPAYMENT OF RENT. The Grantor represents and agrees that no rent has been
or will be paid by any person in possession of any portion of the Property for
more than one installment in advance and that the payment of none of the rents
to accrue for any portion of said Property has been or will be waived, released,
reduced, or discounted, or otherwise discharged or compromised by the Grantor.
The Grantor waives any right of setoff against any person in possession of any
portion of the Property. The Grantor agrees that it will not assign any of the
rents or profits except to the purchaser or grantee of the Property.
2.03 NOT MORTGAGEE IN POSSESSION; NO LIABILITY. Nothing herein contained shall
be construed as constituting the Grantee as "mortgagee in possession" in the
absence of the taking of actual possession of the Property by the Grantee
pursuant to the provisions hereinafter contained. In the exercise of the powers
herein granted the Grantee, no liability shall be asserted or enforced against
the Grantee, all such liability being expressly waived and released by the
Grantor.
2.04 PRESENT ASSIGNMENT. It is the intention of the parties that this assignment
of rents and leases shall be a present assignment; however, it is expressly
understood and agreed, anything herein contained to the contrary
notwithstanding, that Grantor shall have the right to collect the rents so long
as there exists no Event of Default under this Deed to Secure Debt, and provided
further, that Grantor's right to collect such rents shall terminate and cease
automatically upon the occurrence of any such Event of Default without the
necessity of any notice or other action whatsoever by Grantee.
2.05 NO OBLIGATION OF GRANTEE UNDER LEASES. The Grantee shall not be obligated
to perform or discharge, nor does it hereby undertake to perform or discharge,
any obligation, duty or liability under any leases, subleases or rental
agreements relating to the Property, and the Grantor shall and does hereby agree
to indemnify and hold the Grantee harmless of and from any and all liability,
loss or damage which it may or might incur under any leases, subleases or
agreements or under or by reason of the assignment thereof and of and from any
and all claims and demands whatsoever which may be asserted against it by reason
of any alleged obligations or undertakings on its part to perform or discharge
any of the terms, covenants or agreements contained in said leases, subleases or
agreements. Should the Grantee incur any such liability, loss or damage, under
said leases or under or by reason of the assignment thereof, or in the defense
of any claims or demands asserted against the Grantee in connection with any one
or more of said leases, subleases or agreements, the Grantor agrees to reimburse
the Grantee for the amount thereof, including costs, expenses and reasonable
attorneys' fees immediately upon demand, and until the same are fully reimbursed
by the Grantor, all such costs, expenses and attorneys' fees shall be secured by
the assignment hereunder and by this Deed to Secure Debt.
2.06 INSTRUCTION TO LESSEES. The Grantor does further specifically authorize and
instruct each and every present and future lessee, tenant, sublessee or
subtenant of the whole or any part of the Property to pay all unpaid rental
agreed upon in any lease, sublease or tenancy to the Grantee upon receipt of
demand from said Grantee to pay the same.
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2.07 DEFAULT (ASSIGNMENT). Upon the occurrence of any Event of Default, as
described in Paragraph 4.01 of this Deed to Secure Debt, then, in
addition to the right to demand and collect directly from tenants rents
accruing from leases of the Property, Grantee shall have all rights and
remedies set forth in Article IV or elsewhere in this Deed to Secure
Debt.
ARTICLE III
SECURITY AGREEMENT
3.01 GRANT OF SECURITY INTEREST. Grantor (the "debtor" for purposes of the
Uniform Commercial Code), in consideration of Grantee's (the "secured
party" for purposes of the Uniform Commercial Code) making the Loan as
aforesaid and for other good and valuable consideration, and to secure
the prompt payment of same, with the interest thereon, and any
extensions, renewals, modifications and refinancings of same, and any
charges herein incurred by Grantee on account of Grantor, including but
not limited to attorneys' fees, and any and all Other Indebtedness, and
further to secure the performance of the covenants, conditions and
agreements hereinafter set forth and set forth in the Note, in the
other Loan Documents, and in the Other Indebtedness Instruments, does
hereby assign and grant to Grantee title to and a security interest in
such portions of the Property the security interest in and disposition
of which is governed by the Uniform Commercial Code (the "COLLATERAL").
3.02 DEFINITIONS. All terms used herein which are defined in the Georgia
Uniform Commercial Code (the "UNIFORM COMMERCIAL CODE") shall have the
same meaning herein as in the Uniform Commercial Code unless otherwise
indicated herein.
3.03 FINANCING STATEMENTS. No financing statement covering any Collateral or
any proceeds thereof is on file in any public office, except for
financing statements specifically set forth on an addendum attached
hereto, if any, and except for the financing statements executed by
Grantor as debtor and naming the Grantee as secured party. At the
Grantee's request, the Grantor will join with Grantee in executing one
or more financing statements pursuant to the Uniform Commercial Code in
form satisfactory to the Grantee, and will pay the cost of filing the
same in all public offices wherever filing is deemed by the Grantee to
be necessary or desirable. The Grantor authorizes the Grantee to
prepare and to file financing statements covering the Collateral signed
only by the Grantee and to sign the Grantor's signature to such
financing statements in jurisdictions where Grantor's signature is
required. The Grantor promises to pay to the Grantee the fees incurred
in filing the financing statements, including but not limited to
mortgage recording taxes payable in connection with filings on
fixtures, which fees shall become part of the indebtedness secured
hereby.
3.04 REPRESENTATIONS OF GRANTOR (COLLATERAL). With respect to all of the
Collateral, Grantor represents and warrants that:
(A) The Collateral is used or bought primarily for business
purposes;
(B) If the Loan is a construction loan, the Collateral is being
acquired and/or installed with the proceeds of the Note which
Grantee may disburse directly to the seller, contractor, or
subcontractor;
(C) All the Collateral will be kept at the address of Grantor
shown in Paragraph 5.08(a) or, if not, at the real property
described in EXHIBIT A hereto. Grantor promptly shall notify
Grantee of any change in the location of the Collateral.
Except for transactions in the ordinary course of Grantor's
business, Grantor, its agents or employees, will not remove
the Collateral from said location without the prior written
consent of the Grantee;
(D) If certificates of title are issued or outstanding with
respect to any of the Collateral, the Grantor shall cause the
Grantee's interest to be properly noted thereon; and
(E) Grantor's name has always been as set forth on the first page
of this Deed to Secure Debt, except as otherwise disclosed in
writing to the Grantee. Grantor promptly shall advise the
Grantee in writing of any change in Grantor's name.
3.05 ASSIGNMENT OF LIABILITIES. If at any time or times by sale,
assignment, negotiation, pledge, or otherwise, Grantee transfers any or
all of the indebtedness or instruments secured hereby, such transfer
shall, unless otherwise specified in writing, carry with it Grantee's
rights and remedies hereunder with respect to such indebtedness or
instruments transferred, and the transferee shall become vested with
such rights and remedies whether or not they are specifically referred
to in the transfer. If and to the extent Grantee retains any of such
indebtedness or instruments, Grantee shall continue to have the rights
and remedies herein set forth with respect thereto.
3.06 NO OBLIGATION OF GRANTEE UNDER ASSIGNED CONTRACTS. The Grantee shall
not be obligated to perform or discharge, nor does it hereby undertake
to perform or discharge, any obligation, duty or liability under any
contracts or agreements relating to the Property, and the Grantor shall
and does hereby agree to indemnify and hold the Grantee harmless of and
from any and all liability, loss or damage which it may or might incur
under any such contracts or agreements or under or by reason of the
assignment thereof and of and from any and all claims and demands
whatsoever which may be asserted against it by reason of any alleged
obligations or undertakings on its part to perform or discharge any of
the terms, covenants or agreements contained in said contracts or
agreements. Should the Grantee incur any such liability, loss or
damage, under said contracts or agreements or under or by reason of the
assignment thereof, or in the defense of any claims or demands asserted
against the Grantee in connection with any one or more of said
contracts or agreements, the Grantor agrees to reimburse the Grantee
for the amount thereof, including costs, expenses and reasonable
attorneys' fees immediately upon demand, and until the same are fully
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reimbursed by the Grantor, all such costs, expenses and attorneys' fees shall be
secured by the assignment hereunder and by this Deed to Secure Debt.
3.07 DEFAULT (SECURITY AGREEMENT). Upon the occurrence of any Event of
Default, as described in Paragraph 4.01 of this Deed to Secure Debt, the Grantee
shall have all rights and remedies set forth in Article IV or elsewhere in this
Deed to Secure Debt.
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
4.01 EVENT OF DEFAULT. The term "EVENT OF DEFAULT," wherever used in
this Deed to Secure Debt, shall mean the occurrence or existence of any one or
more of the following events or circumstances:
(A) Failure by the Grantor to pay as and when due and payable any
installment of principal, interest or escrow deposit, or other
charge payable under the Note, this Deed to Secure Debt or
under any other Loan Document and failure to cure such default
within three (3) days after receipt of written notice thereof;
or
(B) Failure by the Grantor to duly observe any other covenant,
condition or agreement of this Deed to Secure Debt, of the
Note, of any of the other Loan Documents, or of any of the
Other Indebtedness Instruments, or the occurrence of any other
Event of Default under any of the other Loan Documents or
Other Indebtedness Instruments and failure to cure such
default within thirty (30) days after receipt of written
notice thereof; or if such default is not capable of cure
within 30 days, and Grantor has commenced to cure within the
30-day period and is diligently pursuing same, then within a
reasonable period thereafter not to exceed in any event 90
days after receipt of notice; or
(C) The filing by the Grantor or any guarantor of any indebtedness
secured hereby or of any of Grantor's obligations hereunder,
of a voluntary petition in bankruptcy or the Grantor's or any
such guarantor's adjudication as a bankrupt or insolvent, or
the filing by the Grantor or any such guarantor of any
petition or answer seeking or acquiescing in any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under
any present or future federal, state or other statute, law or
regulation relating to bankruptcy, insolvency or other relief
for debtors, or the Grantor's or any such guarantor's seeking
or consenting to or acquiescence in the appointment of any
trustee, receiver or liquidator of the Grantor or any such
guarantor or of all or any substantial part of the Property or
of any or all of the rents, revenues, issues, earnings,
profits or income thereof, or of any interest or estate
therein, or the making of any general assignment for the
benefit of creditors or the admission in writing of its
inability to pay its debts generally as they become due; or
(D) The entry by a court of competent jurisdiction or any order,
judgment, or decree approving a petition filed against the
Grantor or any guarantor of any of the indebtedness secured
hereby or of any of Grantor's obligations hereunder, seeking
any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present
or future federal, state or other statute, law or regulation
relating to bankruptcy, insolvency or other relief for
debtors, which order, judgment or decree remains unvacated and
unstayed for an aggregate of sixty (60) days (whether or not
consecutive) from the date of entry thereof, or the
appointment of any trustee, receiver or liquidator of the
Grantor or any such guarantor or of all or any substantial
part of the Property or of any or all of the rents, revenues,
issues, earnings, profits or income thereof, or of any
interest or estate therein, without the consent or
acquiescence of the Grantor and/or any such guarantor which
appointment shall remain unvacated and unstayed for an
aggregate of sixty (60) days (whether or not consecutive); or
(E) The filing or enforcement of any other mortgage on the
Property or any part thereof, or of any interest or estate
therein.
4.02 ACCELERATION OF MATURITY. If an Event of Default shall have occurred,
then the entire balance of the indebtedness (including but not limited to the
Loan and the Other Indebtedness) secured hereby with interest accrued thereon
shall, at the option of the Lender, become due and payable without notice or
demand, time being of the essence. Any omission on the part of the Lender to
exercise such option when entitled to do so shall not be considered as a waiver
of such right.
4.03 RIGHT OF LENDER TO ENTER AND TAKE POSSESSION.
(A) If an Event of Default shall have occurred and be continuing,
the Grantor, upon demand of the Lender, shall forthwith
surrender to the Lender the actual possession of the Property,
and if and to the extent permitted by law, the Lender or its
agents may enter and take and maintain possession of all the
Property, together with all the documents, books, records,
papers and accounts of the Grantor or then owner of the
Property relating thereto, and may exclude the Grantor and its
agents and employees wholly therefrom.
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(B) Upon every such entering upon or taking of possession, the
Grantee, as attorney-in-fact or agent of the Grantor, or in
its own name as mortgagee and under the powers herein granted,
may hold, store, use, operate, manage and control the Property
(or any portion thereof selected by Grantee) and conduct the
business thereof either personally or by its agents, and, from
time to time (i) make all necessary and proper maintenance,
repairs, renewals, replacements, additions, betterments and
improvements thereto and thereon and purchase or otherwise
acquire additional fixtures, personalty and other property;
(ii) insure or keep the Property (or any portion thereof
selected by Grantee) insured; (iii) manage and operate the
Property (or any portion thereof selected by Grantee) and
exercise all the rights and powers of the Grantor in its name
or otherwise, with respect to the same, including legal
actions for the recovery of rent, legal dispossessory actions
against tenants holding over and legal actions in distress of
rent, and with full power and authority to cancel or terminate
any lease or sublease for any cause or on any ground which
would entitle the Grantor to cancel the same, and to elect to
disaffirm any lease or sublease made subsequent to this Deed
to Secure Debt or subordinated to the lien hereof; (iv) enter
into any and all agreements with respect to the exercise by
others of any of the powers herein granted the Grantee, all as
the Grantee from time to time may determine to be to its best
advantage; and the Grantee may collect and receive all the
income, revenues, rents, issues and profits of the Property
(or any portion thereof selected by Grantee), including those
past due as well as those accruing thereafter, and, after
deducting (aa) all expenses of taking, holding, managing, and
operating the Property (including compensation for the
services of all persons employed for such purposes), (bb) the
cost of all such maintenance, repairs, renewals, replacements,
additions, betterments, improvements and purchases and
acquisitions, (cc) the cost of such insurance, (dd) such
taxes, assessments and other charges prior to this Deed to
Secure Debt as the Grantee may determine to pay, (ee) other
proper charges upon the Property or any part thereof, and (ff)
the reasonable compensation, expenses and disbursements of the
attorneys and agents of the Grantee, Grantee shall apply the
remainder of the moneys so received by the Grantee, first to
the payment of accrued interest under the Note; second to the
payment of tax deposits required in Paragraph 1.04; third to
the payment of any other sums required to be paid by Grantor
under this Deed to Secure Debt or under the other Loan
Documents; fourth to the payment of overdue installments of
principal on the Note; fifth to the payment of any sums due
under Other Indebtedness Instruments, whether principal,
interest or otherwise; and the balance, if any, as otherwise
required by law.
(C) Whenever all such Events of Default have been cured and
satisfied, the Grantee may, at its option, surrender
possession of the Property to the Grantor, or to whomsoever
shall be entitled to possession of the Property as a matter of
law. The same right of taking possession, however, shall exist
if any subsequent Event of Default shall occur and be
continuing.
4.04 RECEIVER.
(A) If an Event of Default shall have occurred and be continuing,
the Grantee, upon application to a court of competent
jurisdiction, shall be entitled, without notice and without
regard to the adequacy of any security for the indebtedness
hereby secured or the solvency of any party bound for its
payment, to the appointment of a receiver to take possession
of and to operate the Property and to collect the rents,
profits, issues, royalties and revenues thereof.
(B) The Grantor shall pay to the Grantee upon demand all costs and
expenses, including receiver's fees, attorneys' fees, costs
and agent's compensation, incurred pursuant to the provisions
contained in this Paragraph 4.04; and all such expenses shall
be secured by this Deed to Secure Debt.
4.05 RIGHTS OF A SECURED PARTY. Upon the occurrence of an Event of Default,
the Grantee, in addition to any and all remedies it may have or exercise under
this Deed to Secure Debt, the Note, any of the other Loan Documents, the Other
Indebtedness Instruments or under applicable law, may immediately and without
demand exercise any and all of the rights of a secured party upon default under
the Uniform Commercial Code, all of which shall be cumulative. Such rights shall
include, without limitation:
(A) The right to take possession of the Collateral without
judicial process and to enter upon any premises where the
Collateral may be located for the purposes of taking
possession of, securing, removing, and/or disposing of the
Collateral without interference from Grantor and without any
liability for rent, storage, utilities or other sums;
(B) The right to sell, lease, or otherwise dispose of any or all
of the Collateral, whether in its then condition or after
further processing or preparation, at public or private sale;
and unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on
a recognized market, Grantee shall give to Grantor at least
ten (10) days' prior notice of the time and place of any
public sale of the Collateral or of the time after which any
private sale or other intended disposition of the Collateral
is to be made, all of which Grantor agrees shall be reasonable
notice of any sale or disposition of the Collateral;
(C) The right to require Grantor, upon request of Grantee, to
assemble and make the Collateral available to Grantee at a
place reasonably convenient to Grantor and Grantee; and
(D) The right to notify account debtors, and demand and receive
payment therefrom.
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To effectuate the rights and remedies of Grantee upon default, Grantor does
hereby irrevocably appoint Grantee attorney-in-fact for Grantor, with full power
of substitution to sign, execute, and deliver any and all instruments and
documents and do all acts and things to the same extent as Grantor could do, and
to sell, assign, and transfer any collateral to Grantee or any other party.
4.06 POWER OF SALE. (a) If an Event of Default shall have occurred,
Grantee, at its option, may sell the Property or any part of the Property at one
or more public sale or sales before the door of the courthouse of the county in
which the Land or any part of the Land is situated, to the highest bidder for
cash, in order to pay the Secured Indebtedness and all expenses of 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. At any
such public sale, Grantee 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, Grantor hereby constitutes and appoints Grantee the
agent and attorney-in-fact of Grantor to make such sale and conveyance, and
thereby to divest Grantor of all right, title and equity that Grantor 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
upon Grantor. 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 hereby or by law for collection of the
Secured Indebtedness and shall not be exhausted by one exercise thereof but may
be exercised until full payment of all of the Secured Indebtedness. In the event
of any sale under this Deed to Secure Debt by virtue of the exercise of the
powers herein granted, or pursuant to any order in any judicial proceeding or
otherwise, the Property may be sold as an entirety or in separate parcels and in
such manner or order as Grantee in its sole discretion may elect, and if Grantee
so elects, Grantee may sell the personal property covered by this Deed to Secure
Debt at one or more separate sales in any manner permitted by the Uniform
Commercial Code of the State of Georgia, and one or more exercises of the powers
herein granted shall not extinguish nor exhaust such powers, until the entire
Property are sold or the Secured Indebtedness is paid in full. If the Secured
Indebtedness is now or hereafter further secured by any chattel mortgages,
pledges, contracts of guaranty, assignments of lease or other security
instruments, Grantee may at its option exhaust the remedies granted under any of
said security instruments either concurrently or independently, and in such
order as Grantee may determine.
(B) If an Event of Default shall have occurred, Grantee may, in
addition to and not in abrogation of the rights covered under Paragraph 4.06(a),
either with or without entry or taking possession as herein provided or
otherwise, proceed by a suit or suits in law or in equity or by any other
appropriate proceeding or remedy (i) to enforce payment of the Note or the
performance of any term, covenant, conditions or agreement of this Deed to
Secure Debt or any other right and (ii) to pursue any other remedy available to
it, all as Grantee at its sole discretion shall elect.
4.07 PURCHASE BY GRANTEE. Upon any foreclosure sale or sales of all or any
portion of the Property under the power herein granted, Grantee may bid for and
purchase the Property and shall be entitled to apply all or any part of the
Secured Indebtedness as a credit to the purchase price.
4.08 APPLICATION OF FORECLOSURE OR SALE PROCEEDS. The proceeds of any
foreclosure sale pursuant to Paragraph 4.05, or any sale pursuant to Paragraph
4.06, shall be applied as follows:
(A) First, to the costs and expenses of (i) retaking, holding,
storing and processing the Collateral and preparing the
Collateral or the Property (as the case may be) for sale, and
(ii) making the sale, including reasonable attorneys' fees for
such services as may be necessary in the collection of the
indebtedness secured by this Deed to Secure Debt or the
foreclosure of this Deed to Secure Debt;
(B) Second, to the repayment of any money, with interest thereon
to the date of sale at the applicable rate or rates specified
in the Note, this Deed to Secure Debt, the other Loan
Documents or the Other Indebtedness Instruments, as
applicable, which Grantee may have paid, or become liable to
pay, or which it may then be necessary to pay for taxes,
insurance, assessments or other charges, liens, or debts as
hereinabove provided, and as may be provided in the Note or
the other Loan Documents, such repayment to be applied in the
manner determined by Grantee;
(C) Third, to the payment of the indebtedness (including but not
limited to the Loan and the Other Indebtedness) secured
hereby, with interest to date of sale at the applicable rate
or rates specified in the Note, this Deed to Secure Debt, the
other Loan Documents or the Other Indebtedness Instruments, as
applicable, whether or not all of such indebtedness is then
due;
(D) Fourth, the balance, if any, shall be paid as provided by
law.
4.09 WAIVERS. Grantor hereby waives any rights or remedies on account of any
extensions of time, releases granted or other dealings between Grantee and any
subsequent owner of the Property. The foregoing waiver shall not be construed as
affecting or otherwise amending the provisions of Paragraph 1.16 hereof. Upon
the occurrence of an Event of Default, neither Grantor nor anyone claiming
through or under Grantor shall or may set up, claim or seek to take advantage of
any appraisement, valuation, stay, extension, homestead, exemption or redemption
laws now or hereafter in force, to prevent or hinder the enforcement or
foreclosure of this Deed to Secure Debt, or the absolute sale
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of the Property, or the final and absolute putting into possession thereof,
immediately after such sale, of the purchasers thereat, and Grantor, for itself
and those claiming through or under it, hereby waives to the full extent that it
may lawfully so do, the benefit of all such laws, and any and all right to have
the Property marshalled upon any foreclosure of the lien hereof. Except for the
notices required in Paragraph 4.01 herein, Grantor further waives any and all
notices including, without limitation, notice of intention to accelerate the
indebtedness secured hereby and notice of acceleration of such indebtedness.
4.10 SUITS TO PROTECT THE PROPERTY. The Grantee shall have power (a) to
institute and maintain such suits and proceedings as it may deem expedient to
prevent any impairment of the Property by any acts which may be unlawful or in
violation of this Deed to Secure Debt; (b) to preserve or protect its interest
in the Property and in the income, revenues, rents and profits arising
therefrom; and (c) to restrain the enforcement of or compliance with any
legislation or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid, if the enforcement of or compliance with
such enactment, rule or order would impair the security hereunder or be
prejudicial to the interest of the Grantee. In case Grantee voluntarily or
otherwise shall become a party to any suit or legal proceeding to protect the
Property or the security title of this Deed to Secure Debt, Grantee shall be
saved harmless and reimbursed by Grantor for any amounts paid, including all
reasonable costs, charges and attorneys' fees incurred in any such suit or
proceeding, which obligations shall be secured by this Deed to Secure Debt.
4.11 GRANTOR TO PAY THE NOTE ON ANY DEFAULT IN PAYMENT; APPLICATION OF
MONEYS BY GRANTEE. If default shall occur in the payment of any amount due under
this Deed to Secure Debt, the Note, any of the other Loan Documents or any of
the Other Indebtedness Instruments, or if any other Event of Default shall occur
under this Deed to Secure Debt, then, upon demand of the Grantee, the Grantor
shall pay to the Grantee the whole amount due and payable under the Note and
under all Other Indebtedness Instruments; and in case the Grantor shall fail to
pay the same forthwith upon such demand, the Grantee shall be entitled to sue
for and to recover judgment for the whole amount so due and unpaid together with
costs, which shall include the reasonable compensation, expenses and
disbursements of the Grantee's agents and attorneys.
4.12 DELAY OR OMISSION NO WAIVER. No delay or omission of the Grantee or of
any holder of the Note to exercise any right, power or remedy accruing upon any
default shall exhaust or impair any such right, power or remedy or shall be
construed to be a waiver of any such default, or acquiescence therein; and every
right, power and remedy given by the Note, this Deed to Secure Debt, any of the
other Loan Documents, or the Other Indebtedness Instruments to the Grantee may
be exercised from time to time and as often as may be deemed expedient by the
Grantee.
4.13 NO WAIVER OF ONE DEFAULT TO AFFECT ANOTHER. No waiver of any default
hereunder, under any of the other Loan Documents, or under any of the Other
Indebtedness Instruments shall extend to or shall affect any subsequent or any
other then existing default or shall impair any rights, powers or remedies
consequent thereon.
If the Grantee (a) grants forbearance or an extension of time for the payment of
any indebtedness secured hereby; (b) takes other or additional security for the
payment thereof; (c) waives or does not exercise any right granted herein, in
the Note, in any of the other Loan Documents, or in any of the Other
Indebtedness Instruments; (d) releases any part of the Property from this Deed
to Secure Debt or otherwise changes any of the terms of this Deed to Secure
Debt, the Note, any of the other Loan Documents or the Other Indebtedness
Instruments; (e) consents to the filing of any map, plat, or replat of or
consents to the granting of any easement on, all or any part of the Property; or
(f) makes or consents to any agreement subordinating the priority of this Deed
to Secure Debt, any such act or omission shall not release, discharge, modify,
change, or affect the original liability under this Deed to Secure Debt, the
Note, the other Loan Documents, or the Other Indebtedness Instruments of the
Grantor or any subsequent purchaser of the Property or any part thereof, or any
maker, co-signer, endorser, surety or guarantor; nor shall any such act or
omission preclude the Grantee from exercising any right, power or privilege
herein granted or intended to be granted in the event of any other default then
made or of any subsequent default, nor, except as otherwise expressly provided
in an instrument or instruments executed by the Grantee shall the provisions of
this Deed to Secure Debt be altered thereby. In the event of the sale or
transfer by operation of law or otherwise of all or any part of the Property,
the Grantee, without notice to any person, corporation or other entity (except
notice shall be given to Grantor so long as Grantor remains liable under the
Note, this Deed to Secure Debt or any of the other Loan Documents) hereby is
authorized and empowered to deal with any such vendee or transferee with
reference to the Property or the indebtedness secured hereby, or with reference
to any of the terms or conditions hereof, or of the other Loan Documents, as
fully and to the same extent as it might deal with the original parties hereto
and without in any way releasing or discharging any of the liabilities or
undertakings hereunder.
4.14 DISCONTINUANCE OF PROCEEDINGS C POSITION OF PARTIES RESTORED. In case
the Grantee shall have proceeded to enforce any right or remedy under this Deed
to Secure Debt by foreclosure, entry or otherwise, and such proceedings shall
have been discontinued or abandoned for any reason, or shall have been
determined adversely to the Grantee, then and in every such case the Grantor and
the Grantee shall be restored to their former positions and rights hereunder,
and all rights, powers and remedies of the Grantee shall continue as if no such
proceeding had been taken.
4.15 REMEDIES CUMULATIVE. No right, power, or remedy conferred upon or
reserved to the Grantee by this Deed to Secure Debt is intended to be exclusive
of any other right, power or remedy, but each and every such right, power and
remedy shall be cumulative and concurrent and shall be in addition to any other
right, power and remedy given hereunder, or under the Note, any of the other
Loan Documents, the Other Indebtedness Instruments or now or hereafter existing
at law or in equity or by statute.
Page 13
<PAGE> 14
4.16 WAIVER OF BORROWER'S RIGHTS. BY EXECUTION OF THIS DEED, BORROWER
EXPRESSLY: (A) ACKNOWLEDGES THE RIGHT OF LENDER TO ACCELERATE THE INDEBTEDNESS
EVIDENCED BY THE NOTE AND ANY OTHER SECURED INDEBTEDNESS AND THE POWER OF
ATTORNEY GIVEN HEREIN TO LENDER TO SELL THE PREMISES BY NONJUDICIAL FORECLOSURE
UPON DEFAULT BY BORROWER WITHOUT ANY JUDICIAL HEARING AND WITHOUT ANY NOTICE
OTHER THAN SUCH NOTICE (IF ANY) AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER
THE PROVISIONS OF THIS DEED; (B) WAIVES ANY AND ALL RIGHTS WHICH BORROWER MAY
HAVE UNDER THE CONSTITUTION OF THE UNITED STATES OF AMERICA (INCLUDING, WITHOUT
LIMITATION, THE FIFTH AND FOURTEENTH AMENDMENTS THEREOF), THE VARIOUS PROVISIONS
OF THE CONSTITUTIONS FOR THE SEVERAL STATES, OR BY REASON OF ANY OTHER
APPLICABLE LAW, (1) TO NOTICE AND TO JUDICIAL HEARING PRIOR TO THE EXERCISE BY
LENDER OF ANY RIGHT OR REMEDY HEREIN PROVIDED TO LENDER, EXCEPT SUCH NOTICE (IF
ANY) AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER THE PROVISIONS OF THIS DEED,
AND (2) CONCERNING THE APPLICATION, RIGHTS OR BENEFITS OF ANY STATUTE OF
LIMITATION OR ANY MORATORIUM, REINSTATEMENT, MARSHALING, FORBEARANCE,
APPRAISEMENT, VALUATION, STAY, EXTENSION, HOMESTEAD, EXEMPTION OR REDEMPTION
LAWS; (C) ACKNOWLEDGES THAT BORROWER HAS READ THIS DEED AND ANY AND ALL
QUESTIONS OF BORROWER REGARDING THE LEGAL EFFECT OF THIS DEED AND ITS PROVISIONS
HAVE BEEN EXPLAINED FULLY TO BORROWER, AND BORROWER HAS CONSULTED WITH COUNSEL
OF BORROWER'S CHOICE PRIOR TO EXECUTING THIS DEED; AND (D) ACKNOWLEDGES THAT ALL
WAIVERS OF THE AFORESAID RIGHTS OF BORROWER HAVE BEEN MADE KNOWINGLY,
INTENTIONALLY AND WILLINGLY BY BORROWER AS PART OF A BARGAINED-FOR LOAN
TRANSACTION AND THAT THIS DEED IS VALID AND ENFORCEABLE BY LENDER AGAINST
BORROWER IN ACCORDANCE WITH ALL THE TERMS AND CONDITIONS HEREOF.
ARTICLE V
MISCELLANEOUS
5.01 BINDING EFFECT. Wherever in this Deed to Secure Debt one of the parties
hereto is named or referred to, the heirs, administrators, executors,
successors, assigns, distributees, and legal and personal representatives of
such party shall be included, and all covenants and agreements contained in this
Deed to Secure Debt by or on behalf of the Grantor or by or on behalf of Grantee
shall bind and inure to the benefit of their respective heirs, administrators,
executors, successors, assigns, distributees, and legal and personal
representatives, whether so expressed or not. Notwithstanding the foregoing, the
Grantor shall not be entitled to assign any of its rights, titles, and interests
hereunder, or to delegate any of its obligations, liabilities, duties, or
responsibilities hereunder, and will not permit any such assignment or
delegation to occur (voluntarily or involuntarily, or directly or indirectly),
without the prior written consent of the Grantee.
5.02 HEADINGS. The headings of the articles, sections, paragraphs and
subdivisions of this Deed to Secure Debt are for convenience of reference only,
are not to be considered a part hereof, and shall not limit or otherwise affect
any of the terms hereof. "Herein," "hereby," "hereunder," "hereof," and other
equivalent words or phrases refer to this Deed to Secure Debt and not solely to
the particular portion thereof in which any such word or phrase is used, unless
otherwise clearly indicated by the context.
5.03 GENDER; NUMBER. Whenever the context so requires, the masculine
includes the feminine and neuter, the singular includes the plural, and the
plural includes the singular.
5.04 INVALID PROVISIONS TO AFFECT NO OTHERS. In case any one or more of the
covenants, agreements, terms or provisions contained in this Deed to Secure
Debt, in the Note, in any of the other Loan Documents, or in the Other
Indebtedness Instruments shall be invalid, illegal or unenforceable in any
respect, the validity of the remaining covenants, agreements, terms or
provisions contained herein, and in the Note, in the other Loan Documents and in
the Other Indebtedness Instruments shall be in no way affected, prejudiced or
disturbed thereby.
5.05 LOAN DOCUMENTS. Wherever reference is made herein to this Deed to
Secure Debt, the Note, the Loan Documents, or the Other Indebtedness
Instruments, such reference shall include all renewals, extensions,
modifications and refinancings thereof.
5.06 INSTRUMENT UNDER SEAL. This Deed to Secure Debt is given under the
seal of all parties hereto, and it is intended that this Deed to Secure Debt is
and shall constitute and have the effect of a sealed instrument according to
law.
5.07 INTEREST NOT TO EXCEED MAXIMUM ALLOWED BY LAW. The parties hereto
shall in no event be deemed to have contracted for a greater rate of interest
than the maximum rate permitted by law. Should a greater amount be collected, it
shall be construed as a mutual mistake of the parties and the excess shall be
returned to the party paying same.
5.08 GOVERNING LAW. THIS DEED TO SECURE DEBT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
5.09 ADDRESSES OF PARTIES.
(A) NAME OF GRANTOR (DEBTOR): Roberts Properties Residential, L.P.
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<PAGE> 15
ADDRESS OF GRANTOR: 8010 Roswell Road
Suite 120
Atlanta, Georgia 30350
(B) NAME OF BANK (SECURED PARTY
AND GRANTEE): Compass Bank
ADDRESS OF BANK: P.O. Box 10566
Birmingham, Alabama 35296
Attention: Commercial Real
Estate Loan Department
5.10 RIDER. Additional provisions of this Deed to Secure Debt, if any, are
set forth below or on a Rider attached hereto and made a part hereof.
IN WITNESS WHEREOF, Grantor has caused this Deed to Secure Debt to be
executed under seal and delivered as of the day and year first above written.
<TABLE>
Signed, sealed and delivered GRANTOR:
in the presence of:
<S> <C>
/s/ Charles R. Elliott ROBERTS PROPERTIES RESIDENTIAL, L.P.,
- ----------------------------------- a Georgia limited partnership
Witness
By: ROBERTS REALTY INVESTORS, INC.,
a Georgia corporation, its general partner
/s/ Joey M. Bushey
- -----------------------------------
Notary Public
By: /s/ Charles S. Roberts
---------------------------------------
My Commission expires: Title: President
[CORPORATE SEAL]
</TABLE>
Notary Public, DeKalb County, Georgia
My Commission Expires June 21, 2002
[NOTARIAL SEAL]
[Joey M. Bushey, Notary Public, DeKalb County, Georgia]
Page 15
<PAGE> 16
EXHIBIT A
ALL THAT TRACT of land in Land Lots 230 and 235 of the 1st District, 1st
Section, Fulton County, Georgia, described as follows:
To find the true point of beginning, commence at the corner common to Land Lots
197, 198, 230 and 231 of the 1st District, 1st Section, Fulton County, Georgia;
running thence along the land lot line common to said Land Lots 230 and 231
South 88 degrees 50 minutes 38 seconds East 771.67 feet to a property corner
found; thence South 51 degrees 09 minutes 57 seconds West 296.24 feet to the
TRUE POINT OF BEGINNING; from the TRUE POINT OF BEGINNING as thus established,
running thence South 65 degrees 22 minutes 41 seconds East 207.50 feet to a
point; thence North 75 degrees 00 minutes 00 seconds East 190.00 feet to a
point; thence North 87 degrees 15 minutes 00 seconds East 300.00 feet to a
point; thence South 73 degrees 51 minutes 50 seconds East 173.42 feet to a
property corner found; thence South 05 degrees 27 minutes 32 seconds East 537.95
feet to a property corner found; thence South 69 degrees 52 minutes 35 seconds
West 767.26 feet to a property corner found; thence South 69 degrees 38 minutes
04 seconds West 202.76 feet to a point on the northeast right-of-way line of
Abbotts Bridge Road (also known as State Route 120) (right of way line being 55
feet from centerline); running thence along the northeast right-of-way line of
Abbotts Bridge Road (also known as State Route 120) the following courses and
distances: (1) North 33 degrees 27 minutes 01 seconds West 459.30 feet to a
point, and (2) along the arc of a curve to the left (which arc is subtended by a
chord having a bearing and distance of North 40 degrees 56 minutes 58 seconds
West 262.88 feet and a radius of 1,120.91 feet) 263.49 feet to a point; thence,
leaving said right-of-way line, North 51 degrees 09 minutes 57 seconds East
573.06 feet to the TRUE POINT OF BEGINNING, said tract containing approximately
19.23 acres as shown on Plat of Survey for Roberts Properties Residential, L.P.
and Fidelity National Title Insurance Company by Jordan Jones & Goulding,
bearing the seal and certification of Charles H. Jackson, Georgia Registered
Professional Land Surveyor No. 2351, dated April 5, 1999.
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<PAGE> 17
EXHIBIT "B"
1. Taxes and assessments for the year 1999 and subsequent years, a lien
not yet due and payable.
2. The following matters disclosed on that certain ALTA/ASCM Survey for
Roberts Properties Residential, L.P., Compass Bank and Fidelity
National Title Insurance Company prepared by Charles H. Jackson,
Georgia Registered Land Surveyor No. 2351 of Jordan Jones & Goulding,
dated April 5, 1999:
a) 50-foot front building line along the southwesterly boundary line
of subject property;
b) 20-foot landscape buffer along the southwesterly boundary line of
subject property;
c) 10-foot landscape strip along the northwesterly boundary line of
subject property;
d) 20-foot setback line along the northwesterly boundary line of
subject property;
e) wooden fence located along the southeasterly and easterly boundary
lines of subject property;
f) barbed wire fence located along the southeasterly boundary line of
subject property;
g) Fulton County sanitary sewer manhole located in the easterly
boundary line of subject property;
3. Rights of upper and lower riparian owners in and to the waters of
lakes, rivers, creeks or branches crossing or adjoining the subject
property, and the natural flow thereof, free from diminution or
pollution.
4. Easement contained in Right-of Way Deed from G. L. Bennett, et al. to
Fulton County, dated August 18, 1952, filed for record October 7, 1952,
and recorded in Deed Book 2784, page 369, aforesaid records.
5. Right-of-Way Easement from R.C. Vaughan to Sawnee Electric Membership
Corporation, dated March 15, 1963, filed for record March 26, 1963, and
recorded in Deed Book 4032, page 244, aforesaid records.
6. Right-of-Way Easement from Wallace T. Hale to Sawnee Electric
Membership Corporation, dated September 11, 1974, filed for record
October 31, 1974, and recorded in Deed Book 6164, page 173, aforesaid
records.
7. Right-of-Way Easement from Benton A. Wood to Sawnee Electric Membership
Corporation, dated June 4, 1964, filed for record June 26, 1964, and
recorded in Deed Book 4256, page 561, aforesaid records.
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<PAGE> 18
8. Right-of-Way Easement from Jeffrey R. Novak and Stacy G. Novak to
Sawnee Electric Membership Corporation, dated August 23, 1983, filed
for record September 26, 1983, and recorded in Deed Book 8661, page
201, aforesaid records.
9. Flood Plain Indemnification from Roberts Properties Residential, L.P.
in favor of Fulton County, dated August 18, 1998, recorded in Deed Book
24983, page 330, aforesaid records.
10. Easement contained in that certain Right-of-Way Deed from Roberts
Properties Residential, L.P. to Fulton County, dated August 18, 1998,
filed September 21, 1998, recorded in Deed Book 25219, page 141,
aforesaid records.
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<PAGE> 19
RIDER
1. Notwithstanding anything to the contrary in Sections 1.06 and 1.07 of
this Deed to Secure Debt, (i) in the event that the Property shall be damaged by
casualty or condemnation; and (ii) in Grantee's judgment, the damage to the
Property can be repaired in a timely and economically feasible manner, and in a
manner which causes the Property to remain in compliance with applicable
building, zoning and subdivision codes; such insurance proceeds or condemnation
proceeds shall be made available by Grantee to reimburse for the costs of repair
and restoration of the Property, subject to the following conditions:
(a) There shall be no Event of Default hereunder or under any of the
Loan Documents;
(b) No portion of the proceeds shall be made available for
architectural review or other purposes not directly attributable to the cost of
reconstructing the portions of the Property taken, damaged or destroyed unless
insurance proceeds or monies deposited by Grantor are sufficient to pay for such
review or other purposes.
(c) Grantor shall have provided assurances satisfactory to Grantee that
such repairs can be timely completed (including without limitation depositing
with Grantee such amounts as in the opinion of Grantee may be required in
addition to the available insurance or condemnation proceeds, to fully pay the
cost of such repair and restoration); and
(d) Each disbursement by Grantee of such proceeds and deposits (i)
shall be funded on a periodic basis, but not more frequently than monthly, (ii)
shall not in any instance be in an amount greater than the actual cost of such
repair and restoration which has been performed (aa) since the date of
performance of that portion of such work which was reimbursed with the
immediately preceding disbursement, or (bb) with respect to the first
disbursement, since the date of commencement of such work (which cost shall be
verified in writing in each instance by an architect, engineer or other party
theretofore approved by Grantee), (iii) shall be further conditioned upon
satisfaction that any undisbursed proceeds and deposits are sufficient to fully
pay the then remaining costs of completing such repair and restoration, and (iv)
conditioned upon the approval of each draw request by an architect or engineer
approved by Grantee (whose expenses shall be paid by Grantor) as to the matters
described in (i) - (iii) above and that the work is being performed in
accordance with plans and specifications for such work which have been
previously submitted to and approved in writing by Grantee. In the event and to
the extent such insurance proceeds or condemnation proceeds are not required or
used for the repair and restoration of the Property as aforesaid, Grantee shall
be entitled to apply such sums on account of the indebtedness secured by this
Deed to Secure Debt, regardless of whether the same shall then be due and
payable, and any balance of such sums thereafter remaining shall be paid to
Grantor.
2. Whenever reference is made to the payment of "reasonable attorney's
fees" or words of similar import in this Deed to Secure Debt, the Note, the
Continuing Guaranty of even date executed by Roberts Realty Investors, Inc. and
the other Loan Documents, the same shall mean and refer to the payment of 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 defined in
O.C.G.A. ss. 13-1-11.
Page 19
<PAGE> 1
EXHIBIT 10.14.03
COMPASS [LOGO]
BANK
CONTINUING GUARANTY
(UNLIMITED)
(1) FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby acknowledged, the undersigned (hereinafter called "Guarantors"), jointly
and severally unconditionally guarantee and promise to pay to COMPASS BANK
(hereinafter called "Bank" or order in lawful money of the Unites States, any
and all Indebtedness of ROBERTS PROPERTIES RESIDENTIAL, L.P., a Georgia limited
partnership (hereinafter called "Borrowers" to Bank. The word 'Indebtedness" is
used herein in its most comprehensive sense and includes any and all advances,
debts, obligations and liabilities of Borrowers or any one or more of them to
Bank, heretofore, now, or hereafter existing, made, incurred or created, whether
voluntary or involuntary and however arising, whether due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined, not
limited to, but including principal, interest, cost of collection, attorney's
fees and all other lawful charges, and whether Borrowers may be liable
individually or jointly with others, or whether recovery upon such Indebtedness
maybe or hereafter become barred by any statute of limitations, or whether such
Indebtedness may be now or hereafter become otherwise unenforceable.
(2) The liability of Guarantors shall be unlimited and shall cover all
Indebtedness of Borrowers to Bank. This is a continuing guaranty relating to any
Indebtedness, including Indebtedness arising under successive transactions which
shall either continue Indebtedness or from time to time renew Indebtedness after
such Indebtedness has been satisfied. This Guaranty shall remain in effect until
Bank's written acknowledgment of Bank's receipt of written notice of revocation
by one or more Guarantors as to future transactions, and even after Bank's
receipt and acknowledgment or revocation, this Guaranty shall remain effective
as to Indebtedness then outstanding, and as to all advances or extensions of
credit made to or on behalf of Borrowers subsequent thereto pursuant to any
commitment or credit arrangement relating to any Indebtedness in effect at the
time of Bank's acknowledgment of revocation which commitment or credit
arrangement permits, provides for or obligates Bank to make such advance or
extension of credit, including any construction loan, line of credit or letter
of credit. A notice of revocation shall be effective only with respect to those
of the Guarantors (if more than one) as shall have given notice of revocation as
specified herein. Notwithstanding anything to the contrary contained or implied
herein or in any other document, this Guaranty may not be revoked or terminated,
other than with the prior written consent of the Bank, except upon strict
compliance with the conditions and requirements heretofore set forth in this
Section (2), and this Guaranty will not be revoked or terminated by any action,
event or circumstance, including payment in full of all of the Indebtedness. In
the event any sums or other things of value that are paid or transferred to or
otherwise received by the Bank are rescinded, recovered, required to be
returned, set aside, rendered void or otherwise adversely affected in any legal
proceeding or for any cause whatsoever, including under any law, rule or
regulation relative to bankruptcy, insolvency, fraudulent transfers or other
relief of debtors, then this Guaranty shall continue to be effective or shall be
revived and reinstated, as necessary in order to give full effect to the
Guarantors' liability hereunder, to the same extent as if such payment, transfer
and/or receipt had never occurred. This Guaranty shall not release, modify,
revoke or terminate any other guaranty heretofore or hereafter executed by any
of the Guarantors; nor shall any other guaranty heretofore or hereafter executed
by any Guarantor release, modify, revoke or terminate this Guaranty unless such
other guaranty specifically refers to this Guaranty and the release,
modification, revocation or termination (as applicable) is accepted by Bank in
writing.
(3) The obligations of the Guarantors hereunder are joint and several, and
independent of the obligations of Borrowers, and a separate action or actions
may be brought and prosecuted against any one or more of the Guarantors whether
action if brought against Borrowers or any other Guarantor or whether any of the
Borrowers or other Guarantors are joined in any such action or actions.
(4) It is the intent hereof that this obligation of Guarantors shall be and
remain unaffected, (a) by the existence or non-existence, validity or
invalidity, of any pledge, assignment or conveyance given as security; or (b) by
any understanding or agreement that any other person, firm or corporation was or
is to execute this or any other guaranty, any of the notes evidencing the
Indebtedness, or any part thereof, or any other document or instrument or was or
is to provide collateral for any Indebtedness; or (c) by resort on the part of
Bank, or failure of Bank to resort, to any other security or remedy for the
collection of said Indebtedness; or (d) by the death, bankruptcy, insolvency,
dissolution or incapacitation of any of the Guarantors, any of the Borrowers or
any other person, and in case of any such death or bankruptcy, the failure of
Bank to file a claim against the deceased Guarantor's estate or against such
bankrupt's estate, or the failure of Bank otherwise to seek remedies as a
consequence of such events.
(5) Each of the Guarantors authorizes Bank, without notice or demand and
without affecting any Guarantor's liability hereunder, from time to time to (a)
renew, compromise, extend, accelerate, restate, consolidate, replace, refinance
or otherwise change the time for payment of, or otherwise change the terms of,
the Indebtedness or any part thereof, including increasing or decreasing the
rate of interest thereof; (b) take and hold security for the payment of this
Guaranty or any of the Indebtedness and/or exchange, modify, enforce, waive and
release any such security; (c) apply such security and direct the order or
manner of sale thereof as Bank in its discretion may determine; and/or (d)
release or substitute any one or more of the borrowers or other obligors,
endorsers or guarantors of all or any part of the Indebtedness (including,
without limitation, any one or more of the Guarantors).
(6) Each of the Guarantors waives any right to require Bank (a) to proceed
against any one or more of the Borrowers or Guarantors; (b) to protect,
preserve, proceed against or exhaust any security held from Borrowers; or (c) to
pursue any other remedy in Bank's power whatsoever. Each of the Guarantors
waives any defense arising by reason of any disability or other defense of any
one or more of the Borrowers or Guarantors (including any defense based on or
arising out of the unenforceability of any part of the Indebtedness for any
cause whatsoever) or by reason of the cessation from any cause whatsoever of the
liability of any one or more of the Borrowers or Guarantors. Until all
Indebtedness shall have been paid in full, Guarantors shall not have any rights
of subrogation, reimbursement, contribution or indemnity or any right of
recourse to any assets or properties of any of the borrowers or any of the other
Guarantors, and each of the Guarantors waives (i) all such rights, if any, of
subrogation, reimbursement, contribution, indemnity and recourse, (ii) any right
to enforce any remedy which Bank now has or may hereafter have against any one
or more of the Borrowers or any other Guarantor and (iii) any benefit of, and
any right of recourse to or to participate in any security now or hereafter held
by Bank or otherwise constituting collateral for any Indebtedness. Each of the
Guarantors waives all presentments, demands for performance, notices of
<PAGE> 2
nonperformance, notice of acceleration, notice of intent to accelerate,
protests, notices of protest, notices of dishonor, and notices of acceptance of
this Guaranty and of the existence, creation, or incurrence of new or additional
Indebtedness, and waives any rights or defenses based, in whole or in part, upon
an offset by any one or more of the Borrowers or Guarantors against any
obligation or Indebtedness now or hereafter owned to any of the Borrowers or any
of the Guarantors (including to any Guarantor by any Borrower). Each of the
Guarantors waives the benefit of any statute of limitations or other defenses
affecting the Borrower's liability for the Indebtedness or the enforcement
thereof or such Guarantors liability hereunder or the enforcement thereof, and
each of the Guarantors further agrees that any payment by any of the Borrowers
or other circumstances that operate to toll any statute of limitations as to any
one or more Borrowers shall operate to toll statute of limitations as to each of
the Guarantors. Each of the Guarantors waives any rights to exemption under the
constitution of the State of Georgia or any other state as to any indebtedness
or obligation created hereunder.
(7) In addition to all liens upon, and rights of setoff against, moneys,
securities or other property of any one or more of the Guarantors given to Bank
by law, Bank shall have and hereby is granted a lien upon, security interest in
and a right of setoff against all moneys, securities and other property of each
of the Guarantors now or hereafter in the possession of or on deposit with Bank,
whether held in a general or special account or deposit, or for safekeeping or
otherwise; and every such lien, security interest or right of setoff may be
exercised without demand upon or notice to any of the Guarantors. No lien,
security interest or right of setoff shall be deemed to have been waived by any
act or conduct on the part of Bank, or by failure to exercise such right of
setoff or to enforce such lien or security interest, or by any delay in so
doing, and every right of setoff and lien shall continue in full force and
effect until such right of setoff or lien specifically is waived or released in
a written instrument executed by Bank.
(8) Any indebtedness of any Borrower to any Guarantor, whether now
existing, hereafter arising, secured or unsecured, and if secured, the security
for same, hereby is subordinated to the Indebtedness; and such subordinated
indebtedness, if Bank so requests, shall be collected, enforced and received by
such Guarantor as trustee for Bank and be paid over to Bank on account of the
Indebtedness but without reducing or affecting in any manner the liability of
any Guarantor under this Guaranty.
(9) Where any one or more of Borrowers or Guarantors are corporations,
partnerships, joint ventures, trusts, limited liability companies, business
organizations or enterprises, It shall not be necessary for Bank to inquire into
the power or authority of Borrowers or Guarantors or the officers, directors,
partners, trustees or agents acting or purporting to act on their behalf.
(10) Guarantors shall pay attorney's fees and all other costs and expenses
which are incurred by Bank in the enforcement of this Guaranty.
(11) No right or power of Bank hereunder shall be deemed to have been
waived by any act or conduct or failure or delay to act on the part of Bank or
any of its agents, employees or representatives; and the terms and provisions
hereof may not be waived, altered, modified, or amended except in writing duly
signed by a duly authorized officer of the Bank. In the event that Bank shall
waive in writing any provision or requirement hereunder, such waiver shall be
effective only for the specific purposes, circumstances and duration stated in
said waiver. Bank may without notice assign this Guaranty in whole or in part
and each reference herein to Bank shall be deemed to include its successors and
assigns. The provisions of the Guaranty are binding upon each of the Guarantors
and the heirs, distributees, executors, administrators, legal representatives,
personal representatives, successors and assigns thereof and shall inure to the
benefit of the Bank and each of its successors and assigns. THIS GUARANTY AND
THE RIGHTS AND OBLIGATIONS OF THE GUARANTORS AND THE BANK HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.
Each of the Guarantors acknowledges that any cause of action arising under this
Guaranty will be a cause of action arising from an Georgia transaction and that
the Indebtedness is owing to a banking organization organized under Alabama law
or that has its principal place of business in Alabama, that it is foreseeable
that this Guaranty and the performance hereof have and will have significant
effects in the State of Georgia, and that Guarantors' execution of this Guaranty
will subject Guarantors to judicial jurisdiction in the State of Georgia. If any
of the provisions of this Guaranty or the application thereof to any person or
circumstance shall, to any extent, be invalid or unenforceable, the remainder of
the provisions of this Guaranty, or the application of such provision or
provisions to persons or circumstances other than those as to whom or which it
is held invalid or unenforceable, shall not be affected thereby, and every
provision of this Guaranty shall be valid and enforceable to the fullest extent
permitted by law. Except as expressly set forth in this Guaranty, this Guaranty
is the entire agreement of the Guarantors and the Bank with respect to the
guarantee of the Indebtedness by the Guarantors and no representation,
understanding, promise or condition concerning the subject matter hereof shall
be binding upon the Bank unless expressed herein. Any notice by a Guarantor to
the Bank shall be effective only upon the actual receipt thereof by an officer
of Bank at the address specified below, and in the event no such address is
specified, at Bank's principal corporate office in Birmingham , Alabama,
Attention: General Counsel.
(12) This Guaranty is given under the seal of all parties hereto, and
it is intended that this Guaranty is and shall constitute and have the effect of
a sealed instrument according to law.
Page -2-
<PAGE> 3
IN WITNESS WHEREOF, the undersigned Guarantors have executed this Guaranty
effective the 1st day of April, 1999.
<TABLE>
GUARANTOR:
<S> <C>
- ------------------------------------------ ----------------------------------------------
(SEAL)
ADDRESS OF GUARANTOR
- ------------------------------------------
- ------------------------------------------ ---------------------------------------------
(SEAL)
ADDRESS OF GUARANTOR
- ------------------------------------------
8010 Roswell Rd., Ste. 120
- ------------------------------------------
ADDRESS OF GUARANTOR ROBERTS REALTY INVESTORS, INC.
Atlanta, GA 30350 By: /s/ Charles S. Roberts
- ------------------------------------------- ----------------------------------------------
Its President
- ------------------------------------------- -----------------------------------------
ADDRESS OF BANK (SEAL)
</TABLE>
STATE OF GEORGIA)
COUNTY OF DEKALB)
I, Joey M. Bushey, a Notary Public in and for such County in said
State, hereby certify that Charles S. Roberts, whose name as President of
Roberts Realty Investors, Inc., a Georgia corporation, is signed to the
foregoing instrument, and is known to me, acknowledged before me on this day
that, being informed of the contents of the instrument, he, as such President
and with full authority, executed the same voluntarily for and as the act of
said corporation on the day the same bears date.
Given under my hand this 12th day of April, 1999.
/s/ Joey M. Bushey
----------------------------------------------------
Notary Public
Notary Public, DeKalb County, Georgia
My Commission Expires: June 21, 2002
(NOTARIAL SEAL)
Page -3-
<PAGE> 4
ADDENDUM TO GUARANTY OF
ROBERTS REALTY INVESTORS, INC. ("GUARANTOR")
RELATING TO DEBTS AND OBLIGATIONS OF
ROBERTS PROPERTIES RESIDENTIAL, L.P. ("BORROWER")
The above-referenced Guaranty is modified to add the following additional
provisions:
1. Guarantor agrees that the Indebtedness guaranteed extends to and includes any
and all liability of Borrower under Section 1.17 of the Future Advance Deed to
Secure Debt, Assignment of Rents and Leases, and Security Agreement (the "Deed
to Secure Debt") executed by Borrower in connection with a $9,500,000 loan from
Bank to Borrower (the "Loan"), including, without limitation, the indemnities
set forth in said Section. Notwithstanding any other provision of this Guaranty,
the provisions of this paragraph shall automatically expire and be of no further
force and effect if, as and when the Indebtedness secured hereby has been paid
in full and (i) such payments have become final and are not subject to being
voided or refunded under the Bankruptcy Code or other applicable law, and (ii)
such satisfaction of Indebtedness did not result from or was not related to the
Bank accepting or acquiring title to the Property described in the Deed to
Secure Debt given by Borrower, whether by foreclosure, deed in lieu of
foreclosure, or otherwise. The Guarantor agrees that, unless the provisions of
this paragraph shall automatically expire pursuant to the provisions of the
preceding sentence, the Guarantor's guaranty of the Indebtedness of Borrower
with respect to the matters set forth in this paragraph shall survive
indefinitely, and shall not be extinguished by the payment of the Loan, the
exercise of any right or remedy under any Loan document including, but not
limited to foreclosure or the taking of a deed in lieu of foreclosure, or any
subsequent sale or transfer of the Property.
2. Notwithstanding anything to the contrary in the Guaranty, the term
"Indebtedness" as use herein shall be limited to (i) the indebtedness of
Borrower to Bank evidenced by that certain Promissory Note of even date herewith
from Borrower payable to Bank in the principal amount of $9,500,000 (the
"Note"); and (ii) the payment and performance obligations of Borrower under the
terms of the (a) Deed to Secure Debt, (b) the Construction Loan Agreement of
even date by and between Borrower and Bank, and (c) any other documents or
instruments executed by Borrower to evidence or secure the Loan.
3. Whenever reference is made to the payment of "reasonable attorney's fees" or
words of similar import in the Guaranty, the same shall mean and refer to the
payment of 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 defined in O.C.G.A. ss. 13-1-11.
4. In the event of any conflict between this Addendum and the Guaranty, the
terms of this Addendum shall control.
GUARANTOR:
ROBERTS REALTY INVESTORS, INC.
By: /s/ Charles S. Roberts
------------------------------
(SEAL)
Title: President
[CORPORATE SEAL]
Date: April 12, 1999
Page -4-
<PAGE> 5
STATE OF GEORGIA)
COUNTY OF DEKALB)
I, Joey M. Bushey, a Notary Public in and for such County in said
State, hereby certify that Charles S. Roberts, whose name as President of
Roberts Realty Investors, Inc., a Georgia corporation, is signed to the
foregoing instrument, and is known to me, acknowledged before me on this day
that, being informed of the contents of the instrument, he, as such President
and with full authority, executed the same voluntarily for and as the act of
said corporation on the day the same bears date.
Given under my hand this 12th day of April, 1999.
/s/ Joey M. Bushey
----------------------------------------------------
Notary Public
Notary Public, DeKalb County, Georgia
My Commission Expires: June 21, 2002
(NOTARIAL SEAL)
Page -5-
<PAGE> 1
EXHIBIT 10.15.01
LINE OF CREDIT NOTE
$2,000,000
June 1, 1999
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned ROBERTS PROPERTIES RESIDENTIAL,
L.P., a Georgia limited partnership (the "Borrower"), hereby promises to pay to
the order of COMPASS BANK (the "Lender"), at P.O. Box 10566, Birmingham, Alabama
35296, or at such other place as Lender may direct, in lawful money of the
United States of America constituting legal tender in payment of all debts and
dues, public and private, together with interest thereon calculated at the rate
and in the manner set forth herein, the principal amount of TWO MILLION AND
No/100 DOLLARS ($2,000,000), or so much thereof as may be advanced and
outstanding hereunder. Payment of principal and interest shall be in accordance
with the following provisions:
1. LINE OF CREDIT
Upon the execution and delivery of this Note, a line of credit (the
"Line of Credit") shall be opened by Lender for the benefit of Borrower so that,
subject to the other terms and conditions hereof, Borrower may borrow and repay
and reborrow prior to the maturity hereof up to the maximum aggregate principal
amount outstanding at any one time of Two Million and No/100 Dollars
($2,000,000). At the time of making a request for an advance under the Line of
Credit, Borrower shall advise Lender of the amount of the requested advance, and
the purpose therefore, and Borrower shall furnish Lender with such information
as Lender may request concerning the transaction for which Borrower proposes to
borrow and concerning Borrower's financial status at the time of such request.
In no event may any advances be used for personal, family or household purposes.
All advances to Borrower under the Line of Credit shall be evidenced by this
Note. Lender, at its sole discretion, is hereby authorized to make advances
under this Note upon telephonic communication of the borrowing request from
Charles S. Roberts or Charles R. Elliott representing himself to be such person.
Each such telephonic request for borrowing shall be confirmed by Borrower in
writing, delivered to Lender no later than five (5) days after such telephonic
request; provided, however, that the absence of such written confirmation shall
in no way diminish Borrower's liability to repay such advance.
2. INTEREST.
(a) The applicable interest rate (the "APPLICABLE RATE") under
this Note shall be an adjustable rate per annum equal to 150 basis
points (1.50%) in excess of the 30 day "LIBOR" rate (as defined herein)
from time to time in effect. "LIBOR" refers to the London Interbank
Offered Rate for the stated period as published in the WALL STREET
JOURNAL on the date of determination of the interest rate (or in the
event no such quotation is available on such date, as quoted on the day
most immediately preceding the date of determination on which such a
quotation was available). The Applicable Rate payable under this
Section 2(a) will be set on the date hereof, and shall be subject to
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<PAGE> 2
change on the first day of each month thereafter (the "Interest
Adjustment Dates") while any amount of principal is unpaid. On each
Interest Adjustment Date, the interest rate will be raised or lowered
to reflect changes in the LIBOR Rate. In the event that at any time
during the term of this Note, the LIBOR ceases to be published and is
no longer ascertainable, the term "LIBOR rate" shall mean a substitute
and comparable rate selected by Lender in its sole discretion.
(b) Interest on all principal amounts outstanding from time to
time hereunder shall be calculated on the basis of a 360-day year
applied to the actual number of days upon which principal is
outstanding, by multiplying the product of the principal amount
outstanding and the respective Applicable Rate set forth herein by the
actual number of days elapsed, and dividing by 360. In no event shall
the rate of interest calculated hereunder exceed the maximum rate
allowed by law. Any principal amounts outstanding hereunder after
maturity or earlier acceleration of this Note shall bear interest at a
floating rate equal to three percentage points (3%) in excess of
Compass Bank Prime until paid. Each change in the interest rate
resulting from a change in "COMPASS BANK PRIME" shall become effective
on the day on which such change in "Compass Bank Prime" occurs.
"Compass Bank Prime", as used herein, is a reference rate established
by the Lender for use in computing and adjusting interest, is subject
to increase, decrease, or change at the Lender's discretion, and is
only one of the reference rates or indices that Lender uses. Borrower
acknowledges that the Lender may lend to others at rates of interest
at, or greater or less than, "Compass Bank Prime" or the rate provided
herein.
3. PAYMENT.
(a) Borrower promises to pay interest quarterly on the first (1st)
day of each calendar quarter, commencing on July 1, 1999, on
the principal amount outstanding hereunder from time to time,
computed daily in the manner and at the Applicable Rate set
forth in Section 2 above.
(b) All unpaid principal, interest and other charges shall be due
and payable in full on May 31, 2000 (the "Maturity Date").
4. PREPAYMENT.
This Note may be prepaid in whole or in part without penalty. It is
intended that Borrower shall have the right to borrow, repay and reborrow funds
under this Note with the maximum amount outstanding at any time during the term
of the Note of $2,000,000.
5. EVENTS OF DEFAULT.
Upon the failure to make any payment of the principal of or interest on
this Note when and as the same becomes due and payable, then, or at any time
thereafter during the continuance of any such event, the holder may, with or
without notice to the Borrower, declare this Note and indebtedness evidenced
hereby to be forthwith due and payable, whereupon this Note and the indebtedness
evidenced hereby shall become forthwith due and payable, both as to principal
and
-2-
<PAGE> 3
interest, without presentment, demand, protest, or other notice of any kind, all
of which are hereby expressly waived, anything contained herein or in any of the
Loan Documents or in any other instrument executed in connection with or
securing this Note to the contrary notwithstanding.
6. WAIVERS.
Borrower hereby waives demand, presentment for payment, notice of
dishonor, protest, and notice of protest and diligence in collection or bringing
suit and agrees that the holder hereof may accept partial payment, or release or
exchange security or collateral, without discharging or releasing any unreleased
collateral or the obligations evidenced hereby. Borrower further waives any and
all rights of exemption, both as to personal and real property, under the
constitution or laws of the United States, the State of Alabama, the State of
Georgia, or any other state.
7. LATE FEE.
Any scheduled payment of principal and or interest which is not paid
within ten (10) days from the date due will be subject to a late charge of five
percent (5%) of such scheduled payment.
8. ATTORNEYS' FEES.
Borrower agrees to pay actual attorneys' fees incurred based on the
attorney's normal hourly rate and the number of hours worked and not the
attorneys' fees statutorily defined in O.C.G.A. ss.13-1-11, and costs actually
incurred by the holder hereof in collecting to collect this Note, whether by
suit or otherwise.
9. MISCELLANEOUS.
As used herein, the terms "Borrower", "Lender" and "holder" shall be
deemed to include their respective successors, legal representatives and
assigns, whether by voluntary action of the parties or by operation of law. This
Note is given under the seal of all parties hereto, and it is intended that this
Note is and shall constitute and have the effect of a sealed instrument
according to law. This Note has been negotiated, and is being executed and
delivered in the State of Georgia, or if executed elsewhere, shall become
effective upon the Lender's receipt and acceptance of the executed original of
this Note in the State of Georgia; provided, however, that the Lender shall have
no obligation to give, nor shall Borrower be entitled to receive, any notice of
such acceptance for this Note to become a binding obligation of Borrower.
Borrower hereby submits to jurisdiction in the State of Georgia. This Note shall
be governed by and be construed in accordance with the laws of the State of
Georgia. It is intended, and the Borrower and the holder hereof specifically
agree, that the laws of the State of Georgia governing interest shall apply to
this Note and to this transaction. This Note may not be modified except by
written agreement signed by the Borrower and the holder hereof, or by their
respective successors or assigns. Time is of the essence of this Note.
-3-
<PAGE> 4
IN WITNESS WHEREOF, Borrower has caused this Note to be executed,
sealed and delivered as of the date first set forth above.
ROBERTS RESIDENTIAL PROPERTIES,
L.P., a Georgia limited partnership
/s/ Charles R. Elliott
- ----------------------------
WITNESS By: ROBERTS REALTY INVESTORS, INC.,
a Georgia corporation, its general
partner
By: /s/ Charles S. Roberts
----------------------------------------
Title: President
[CORPORATE SEAL]
-4-
<PAGE> 1
EXHIBIT 10.15.02
COMPASS BANK
LOAN AGREEMENT
This Loan Agreement (the "Agreement") dated as of June 1, 1999, by and
between COMPASS BANK ("Bank") and ROBERTS PROPERTIES RESIDENTIAL, L.P., a
Georgia limited partnership (the "Borrower").
In consideration of the Loan described below and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, Bank
and Borrower agree as follows:
1. DEFINITIONS AND REFERENCE TERMS. In addition to any other terms defined
herein, the following terms shall have the meaning set forth with
respect thereto:
A. LOAN. Any loan described in Section 2 hereof and any
subsequent loan which states that it is subject to this Loan
Agreement.
B. LOAN DOCUMENTS. Loan Documents means this Loan Agreement and
any and all promissory notes executed by Borrower in favor of
Bank and all other documents, instruments, guarantees,
certificates and agreements executed and/or delivered by
Borrower, any guarantor or third party in connection with any
Loan.
C. ACCOUNTING TERMS. All accounting terms not specifically
defined or specified herein shall have the meanings generally
attributed to such terms under generally accepted accounting
principles ("GAAP"), as in effect from time to time,
consistently applied, with respect to the financial statements
referenced in Section 3.F. hereof.
2. LOAN. Bank hereby agrees to make (or has made) one or more loans to
Borrower in the aggregate principal face amount of $2,000,000. The
obligation to repay the loans is evidenced by a promissory note or
notes dated as of June 1, 1999 (the promissory note or notes together
with any and all renewals, extensions or rearrangements thereof being
hereafter collectively referred to as the "Note") having a maturity
date, repayment terms and interest rate as set forth in the Note. The
Loan provides for a revolving line of credit (the "Line") under which
Borrower may from time to time, borrow, repay and re-borrow funds.
3. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Bank as follows:
A. GOOD STANDING. Borrower is a limited partnership, duly organized,
validly existing and in good standing under the laws of Georgia
and has the power and authority to own its property and to carry
on its business in each jurisdiction in which Borrower does
business.
-1-
<PAGE> 2
B. AUTHORITY AND COMPLIANCE. Borrower has full power and authority to
execute and deliver the Loan Documents and to incur and perform
the obligations provided for therein, all of which have been duly
authorized by all proper and necessary action of the appropriate
governing body of Borrower. No consent or approval of any public
authority or other third party is required as a condition to the
validity of any Loan Document, and Borrower, to Borrower's
knowledge, is in compliance with all laws and regulatory
requirements to which it is subject.
C. BINDING AGREEMENT. This Agreement and the other Loan Documents
executed by Borrower constitute valid and legally binding
obligations of Borrower, enforceable in accordance with their
terms.
D. LITIGATION. There is no proceeding involving Borrower pending or,
to the knowledge of Borrower, threatened before any court or
governmental authority, agency or arbitration authority, which
would have a material adverse affect on Borrower, except as
disclosed to Bank in writing and acknowledged by Bank prior to the
date of this Agreement.
E. NO CONFLICTING AGREEMENTS. There is no charter, bylaw, stock
provision, partnership agreement or other document pertaining to
the organization, power or authority of Borrower and no provision
of any existing agreement, mortgage, indenture or contract binding
on Borrower or affecting its property, which would have a
materially adverse effect on the execution, delivery or carrying
out of the terms of this Agreement and the other Loan Documents.
F. FINANCIAL STATEMENTS. The financial statements of Borrower
heretofore delivered to Bank have been prepared in accordance with
GAAP applied on a consistent basis throughout the period involved
and fairly present Borrower's financial condition as of the date
or dates thereof. All factual information furnished by Borrower to
Bank in connection with this Agreement and the other Loan
Documents is and will be accurate and complete on the date as of
which such information is delivered to Bank and is not and will
not be incomplete by the omission of any material fact necessary
to make such information not misleading.
G. CONTINUATION OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made under this Agreement shall be
deemed to be made at and as of the date hereof and at and as of
the date of any advance under any Loan.
4. AFFIRMATIVE COVENANTS. Until full payment and performance of all
obligations of Borrower under the Loan Documents, Borrower will,
unless Bank consents otherwise in writing (and without limiting any
requirement of any other Loan Document):
A. FINANCIAL CONDITION. Maintain it's financial condition
substantially as it exists as of the date of this Agreement.
-2-
<PAGE> 3
B. FINANCIAL STATEMENTS AND OTHER INFORMATION. Maintain a system of
accounting satisfactory to Bank and in accordance with GAAP applied on
a consistent basis throughout the period involved, permit Bank's
officers or authorized representatives to visit and inspect Borrower's
books of account and other records at such reasonable times and as
often as Bank may desire. Unless written notice of another location is
given to Bank, Borrower's books and records will be located at
Borrower's chief executive office set forth above. All financial
statements called for below shall be prepared in form and content
acceptable to Bank and by independent certified public accountants.
C. EXISTENCE AND COMPLIANCE. Maintain its existence, good standing and
qualification to do business, where required and comply with all laws,
regulations and governmental requirements including, without
limitation, environmental laws applicable to it or to any of its
property, business operations and transactions.
D. ADVERSE CONDITIONS OR EVENTS. Promptly advise Bank in writing of (i)
any condition, event or act which comes to its attention that would
materially adversely affect Borrower's financial condition or
operations or Bank's rights under the Loan Documents, (ii) any
litigation filed by or against Borrower that would have a material
adverse affect, and (iii) any event that has occurred that would
constitute an event of default under any Loan Documents.
E. COMPLIANCE STATEMENT. Borrower shall provide to Bank a Covenant
Compliance Statement, with calculations, semi-annually. Covenants shall
be as follows:
1. Universal Default: A default under any debt obligation owing
to Bank of the Borrower or guarantor shall be a default under
this facility.
2. Debt Service coverage shall be 1.75X or greater at all times
calculated as:
Income from Operations + Depreciation
-------------------------------------
Interest Expense
3. Leverage shall be 70% or less measured as follows:
Mortgage Notes Payable
----------------------
Net Real Estate Assets + Accumulated Depreciation
5. DEFAULT. Borrower shall be in default under this Agreement and under
each of the other Loan Documents if it shall default in the payment of
any amounts due and owing under the Loan or should it fail to timely
and properly observe, keep or perform any term, covenant, agreement or
condition in any Loan Document or in any promissory note, or other
contract securing or evidencing payment of any indebtedness of Borrower
to Bank or any affiliate or subsidiary of Bank.
-3-
<PAGE> 4
6. REMEDIES UPON DEFAULT. If an event of default shall occur, Bank shall
have all rights, powers and remedies available under each of the Loan
Documents as well as all rights and remedies available at law or in
equity.
7. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank
immediately upon demand the full amount of all costs and expenses,
including actual attorneys' fees, incurred based on the attorney's
normal hourly rate and the number of hours worked and not the
attorneys' fees statutorily defined in O.C.G.A. ss.13-1-11 incurred by
Bank in connection with (a) negotiation and preparation of this
Agreement and each of the Loan Documents, and (b) all other costs and
attorneys' fees incurred by Bank for which Borrower is obligated to
reimburse Bank in accordance with the terms of the Loan Documents.
8. MISCELLANEOUS. Borrower and Bank further covenant and agree as follows,
without limiting any requirement of any other Loan Document:
A. CUMULATIVE RIGHTS AND NO WAIVER. Each and every right granted to Bank
under any Loan Document, or allowed it by law or equity shall be
cumulative of each other and may be exercised in addition to any and
all other rights of Bank, and no delay in exercising any right shall
operate as a waiver thereof, nor shall any single or partial exercise
by Bank of any right preclude any other or future exercise thereof or
the exercise of any other right. Borrower expressly waives any
presentment, demand, protest or other notice of any kind, including but
not limited to notice of intent to accelerate and notice of
acceleration. No notice to or demand on Borrower in any case shall, of
itself, entitle Borrower to any other or future notice or demand in
similar or other circumstances.
B. APPLICABLE LAW. This Loan Agreement and the rights and obligations of
the parties hereunder shall be governed by and interpreted in
accordance with the laws of Georgia and applicable United States
federal law.
C. AMENDMENT. No modification, consent, amendment or waiver of any
provision of this Loan Agreement, nor consent to any departure by
Borrower therefrom, shall be effective unless the same shall be in
writing and signed by an officer of Bank, and then shall be effective
only in the specified instance and for the purpose for which given.
This Loan Agreement is binding upon Borrower, its successors and
assigns, and inures to the benefit of Bank, its successors and assigns;
however, no assignment or other transfer of Borrower's rights or
obligations hereunder shall be made or be effective without Bank's
prior written consent, nor shall it relieve Borrower of any obligations
hereunder. There is no third party beneficiary of this Loan Agreement.
D. DOCUMENTS. All documents, certificates and other items required under
this Loan Agreement to be executed and/or delivered to Bank shall be in
form and content satisfactory to the parties and their counsel.
-4-
<PAGE> 5
E. PARTIAL INVALIDITY. The unenforceability or invalidity of any provision
of this Loan Agreement shall not affect the enforceability or validity
of any other provision herein and the invalidity or unenforceability of
any provision of any Loan Document to any person or circumstance shall
not affect the enforceability or validity of such provision as it may
apply to other persons or circumstances.
F. SURVIVABILITY. All covenants, agreements, representations and
warranties made herein or in the other Loan Documents shall survive the
making of the Loan and shall continue in full force and effect so long
as the Loan is outstanding or the obligation of the Bank to make any
advances under the Line shall not have expired.
9. NO ORAL AGREEMENT. This written Agreement and the other Loan Documents
represent the final agreement between the parties and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal by their duly authorized representatives as of
the date first above written.
BANK: BORROWER:
COMPASS BANK ROBERTS PROPERTIES RESIDENTIAL,
L.P., a Georgia limited partnership
By: ROBERTS REALTY INVESTORS,
INC., its general partner
By: /s/ John L. Davis By: /s/ Charles S. Roberts
------------------------------ -------------------------
Name: John L. Davis Name: Charles S. Roberts
Title: Senior Vice President Title: President
[CORPORATE SEAL]
-5-
<PAGE> 1
EXHIBIT 10.15.03
[GRAPHIC]
COMPASS
BANK
CONTINUING GUARANTY
(UNLIMITED)
(1) FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby acknowledged, the undersigned (hereinafter called "Guarantor")
unconditionally guaranties and promises to pay to COMPASS BANK (hereinafter
called "Bank") or order in lawful money of the United States, any and all
Indebtedness of ROBERTS PROPERTIES RESIDENTIAL, L.P., a Georgia limited
partnership (hereinafter called "Borrower") to Bank. The word "Indebtedness" is
used herein in its most comprehensive sense and includes any and all advances,
debts, obligations and liabilities of Borrower to Bank, heretofore, now, or
hereafter existing, made, incurred or created, whether voluntary or involuntary
and however arising, whether due or not due, absolute or contingent, liquidated
or unliquidated, determined or undetermined, not limited to, but including
principal, interest, cost of collection, attorney's fees and all other lawful
charges, and whether Borrower may be liable individually or jointly with others,
or whether recovery upon such Indebtedness maybe or hereafter become barred by
any statute of limitations, or whether such Indebtedness may be now or hereafter
become otherwise unenforceable.
(2) The liability of Guarantor shall be unlimited and shall cover all
Indebtedness of Borrower to Bank. This is a continuing guaranty relating to any
Indebtedness, including Indebtedness arising under successive transactions which
shall either continue Indebtedness or from time to time renew Indebtedness after
such Indebtedness has been satisfied. This Guaranty shall remain in effect until
Bank's written acknowledgment of Bank's receipt of written notice of revocation
by Guarantor as to future transactions, and even after Bank's receipt and
acknowledgment or revocation, this Guaranty shall remain effective as to
Indebtedness then outstanding, and as to all advances or extensions of credit
made to or on behalf of Borrower subsequent thereto pursuant to any commitment
or credit arrangement relating to any Indebtedness in effect at the time of
Bank's acknowledgment of revocation which commitment or credit arrangement
permits, provides for or obligates Bank to make such advance or extension of
credit, including any construction loan, line of credit or letter of credit. A
notice of revocation shall be effective only with respect to those of the
Guarantors (if more than one) as shall have given notice of revocation as
specified herein. Notwithstanding anything to the contrary contained or implied
herein or in any other document, this Guaranty may not be revoked or terminated,
other than with the prior written consent of the Bank, except upon strict
compliance with the conditions and requirements heretofore set forth in this
Section (2), and this Guaranty will not be revoked or terminated by any action,
event or circumstance, including payment in full of all of the Indebtedness. In
the event any sums or other things of value that are paid or transferred to or
otherwise received by the Bank are rescinded, recovered, required to be
returned, set aside, rendered void or otherwise adversely affected in any legal
proceeding or for any cause whatsoever, including under any law, rule or
regulation relative to bankruptcy, insolvency, fraudulent transfers or other
relief of debtors, then this Guaranty shall continue to be effective or shall be
revived and reinstated, as necessary in order to give full effect to the
Guarantor's liability hereunder, to the same extent as if such payment, transfer
and/or receipt had never occurred. This Guaranty shall not release, modify,
revoke or terminate any other guaranty heretofore or hereafter executed by
Guarantor; nor shall any other guaranty heretofore or hereafter executed by
Guarantor release, modify, revoke or terminate this Guaranty unless such other
guaranty specifically refers to this Guaranty and the release, modification,
revocation or termination (as applicable) is accepted by Bank in writing.
(3) The obligations of THE GUARANTOR HEREUNDER ARE independent of the
obligations of Borrower, and a separate action or actions may be brought and
prosecuted against the Guarantor whether action if brought against Borrower or
whether the Borrower or Guarantor is joined in any such action or actions.
(4) It is the intent hereof that this obligation of Guarantor shall be and
remain unaffected, (a) by the existence or non-existence, validity or
invalidity, of any pledge, assignment or conveyance given as security; or (b) by
any understanding or agreement that any other person, firm or corporation was or
is to execute this or any other guaranty, any of the notes evidencing the
Indebtedness, or any part thereof, or any other document or instrument or was or
is to provide collateral for any Indebtedness; or (c) by resort on the part of
Bank, or failure of Bank to resort, to any other security or remedy for the
collection of said Indebtedness; or (d) by the bankruptcy, insolvency or
dissolution of the Guarantor, the Borrower or any other person, and in case of
any such bankruptcy, the failure of Bank to file a claim against such bankrupt's
estate, or the failure of Bank otherwise to seek remedies as a consequence of
such events.
(5) The Guarantor authorizes Bank, without notice or demand and without
affecting the Guarantor's liability hereunder, from time to time to (a) renew,
compromise, extend, accelerate, restate, consolidate, replace, refinance or
otherwise change the time for payment of, or otherwise change the terms of, the
Indebtedness or any part thereof, including increasing or decreasing the rate of
interest thereof; (b) take and hold security for the payment of this Guaranty or
any of the Indebtedness and/or exchange, modify, enforce, waive and release any
such security; (c) apply such security and direct the order or manner of sale
thereof as Bank in its discretion may determine; and/or (d) release or
substitute the Borrower or other obligors, endorsers or guarantors of all or any
part of the Indebtedness (including, without limitation, the Guarantor).
(6) The Guarantor waives any right to require Bank (a) to proceed against
the Borrower; (b) to protect, preserve, proceed against or exhaust any security
held from Borrower; or (c) to pursue any other remedy in Bank's power
whatsoever. The Guarantor waives any defense arising by reason of any disability
or other defense of the Borrower or Guarantor (including any defense based on or
arising out of the unenforceability of any part of the Indebtedness for any
cause whatsoever) or by reason of the cessation from any cause whatsoever of the
liability of the Borrower or Guarantor. Until all Indebtedness shall have been
paid in full, Guarantor shall not have any rights of subrogation, reimbursement,
contribution or indemnity or any right of recourse to any assets or properties
of the Borrower, and the Guarantor waives (i) all such rights, if any, of
subrogation, reimbursement, contribution, indemnity and recourse, (ii) any right
to enforce any remedy which Bank now has or may hereafter have against the
Borrower or the Guarantor and (iii) any benefit of, and any right of recourse to
or to participate in any security now or hereafter held by Bank or otherwise
constituting collateral for any Indebtedness. The Guarantor waives all
presentments, demands for performance, notices of nonperformance, notice of
acceleration, notice of intent to accelerate, protests, notices of protest,
notices of dishonor, and notices of acceptance of this Guaranty and of the
existence, creation, or incurrence of new or additional Indebtedness, and waives
any rights or defenses based, in whole or in part, upon an offset by the
Borrower or Guarantor against any
<PAGE> 2
obligation or Indebtedness now or hereafter owed to the Borrower or the
Guarantor (including to the Guarantor by the Borrower). The Guarantor waives the
benefit of any statute of limitations or other defenses affecting the Borrower's
liability for the Indebtedness or the enforcement thereof or such Guarantor's
liability hereunder or the enforcement thereof, and the Guarantor further agrees
that any payment by the Borrower or other circumstances that operate to toll any
statute of limitations as to the Borrower shall operate to toll statute of
limitations as to the Guarantor. The Guarantor waives any rights to exemption
under the constitution of the State of Alabama or any other state as to any
indebtedness or obligation created hereunder.
(7) In addition to all liens upon, and rights of setoff against, moneys,
securities or other property of the Guarantor given to Bank by law, Bank shall
have and hereby is granted a lien upon, security interest in and a right of
setoff against all moneys, securities and other property of the Guarantor now or
hereafter in the possession of or on deposit with Bank, whether held in a
general or special account or deposit, or for safekeeping or otherwise; and
every such lien, security interest or right of setoff may be exercised without
demand upon or notice to the Guarantor. No lien, security interest or right of
setoff shall be deemed to have been waived by any act or conduct on the part of
Bank, or by failure to exercise such right of setoff or to enforce such lien or
security interest, or by any delay in so doing, and every right of setoff and
lien shall continue in full force and effect until such right of setoff or lien
specifically is waived or released in a written instrument executed by Bank.
(8) Any indebtedness of the Borrower to the Guarantor, whether now existing,
hereafter arising, secured or unsecured, and if secured, the security for same,
hereby is subordinated to the Indebtedness; and such subordinated indebtedness,
if Bank so requests, shall be collected, enforced and received by such Guarantor
as trustee for Bank and be paid over to Bank on account of the Indebtedness but
without reducing or affecting in any manner the liability of the Guarantor under
this Guaranty.
(9) Where the Borrower or Guarantor are corporations, partnerships, joint
ventures, trusts, limited liability companies, business organizations or
enterprises, it shall not be necessary for Bank to inquire into the power or
authority of Borrower or Guarantor or the officers, directors, partners,
trustees or agents acting or purporting to act on their behalf.
(10) Guarantor shall pay attorney's fees actually incurred based on the
attorney's normal hourly rate and the number of hours worked and not the
attorneys' fees statutorily defined in O.C.G.A. ss.13-1-11 and all other costs
and expenses which are incurred by Bank in the enforcement of this Guaranty.
(11) No right or power of Bank hereunder shall be deemed to have been waived
by any act or conduct or failure or delay to act on the part of Bank or any of
its agents, employees or representatives; and the terms and provisions hereof
may not be waived, altered, modified, or amended except in writing duly signed
by a duly authorized officer of the Bank. In the event that Bank shall waive in
writing any provision or requirement hereunder, such waiver shall be effective
only for the specific purposes, circumstances and duration stated in said
waiver. Bank may without notice assign this Guaranty in whole or in part and
each reference herein to Bank shall be deemed to include its successors and
assigns. The provisions of the Guaranty are binding upon the Guarantor and the
legal representatives, personal representatives, successors and assigns thereof
and shall inure to the benefit of the Bank and each of its successors and
assigns. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE GUARANTOR AND THE
BANK HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF GEORGIA. The Guarantor acknowledges that any cause of action
arising under this Guaranty will be a cause of action arising from a Georgia
transaction and that it is foreseeable that this Guaranty and the performance
hereof have and will have significant effects in the State of Georgia, and that
Guarantor's execution of this Guaranty will subject Guarantor to judicial
jurisdiction in the State of Georgia. If any of the provisions of this Guaranty
or the application thereof to any person or circumstance shall, to any extent,
be invalid or unenforceable, the remainder of the provisions of this Guaranty,
or the application of such provision or provisions to persons or circumstances
other than those as to whom or which it is held invalid or unenforceable, shall
not be affected thereby, and every provision of this Guaranty shall be valid and
enforceable to the fullest extent permitted by law. Except as expressly set
forth in this Guaranty, this Guaranty is the entire agreement of the Guarantor
and the Bank with respect to the guarantee of the Indebtedness by the Guarantor
and no representation, understanding, promise or condition concerning the
subject matter hereof shall be binding upon the Bank unless expressed herein.
Any notice by a Guarantor to the Bank shall be effective only upon the actual
receipt thereof by an officer of Bank at the address specified below, and in the
event no such address is specified, at Bank's principal corporate office in
Birmingham, Alabama, Attention: General Counsel.
(12) This Guaranty is given under the seal of all parties hereto, and it is
intended that this Guaranty is and shall constitute and have the effect of a
sealed instrument according to law.
<PAGE> 3
IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty under
seal effective as of the 1st day of June, 1999.
GUARANTOR:
<TABLE>
<S> <C>
Mr. Charles S. Roberts Roberts Realty Investors, Inc., a Georgia corporation
C/o Roberts Properties, Inc.
- --------------------------------------
ADDRESS OF GUARANTOR By: /s/ Charles S. Roberts
--------------------------------------------------
8010 Roswell Road, Suite 120 Title: President
- -------------------------------------- -----------------------------------------------
Atlanta, GA 30350
[CORPORATE SEAL]
</TABLE>
STATE OF GEORGIA )
COUNTY OF FULTON )
I, Joey M. Bushey, a Notary Public in and for such County in said
State, hereby certify that Charles S. Roberts, whose name as Chief Executive
Officer of Roberts Realty Investors, Inc., is signed to the foregoing
instrument, and is known to me, acknowledged before me on this day that, being
informed of the contents of the instrument, he, as such Chief Executive Officer
and with full authority, executed the same voluntarily for and as the act of
said Corporation on the day the same bears date.
Given under my hand this 10th day of June, 1999.
/s/ Joey M. Bushey
-----------------------------------------
Notary Public
My commission expires: Notary Public, Dekalb County, Georgia
(NOTARIAL SEAL) My Commission Expires June 21, 2002
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 3,102,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,102,000
<PP&E> 144,119,000
<DEPRECIATION> 19,471,000
<TOTAL-ASSETS> 129,107,000
<CURRENT-LIABILITIES> 10,297,000
<BONDS> 79,528,000
0
0
<COMMON> 47,000
<OTHER-SE> 24,701,000
<TOTAL-LIABILITY-AND-EQUITY> 129,107,000
<SALES> 0
<TOTAL-REVENUES> 9,612,000
<CGS> 0
<TOTAL-COSTS> 6,992,000
<OTHER-EXPENSES> 56,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,513,000
<INCOME-PRETAX> 32,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 32,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,000
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
