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 March 31, 2000
OR
[ ] 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 May 1, 2000
was 4,887,826.
<PAGE>
TABLE OF CONTENTS
PAGE
PART I FINANCIAL INFORMATION............................................. 1
ITEM 1. FINANCIAL STATEMENTS................................ 1
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS....... 9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK................................... 16
PART II OTHER INFORMATION................................................ 17
ITEM 1. LEGAL PROCEEDINGS................................... 17
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS........... 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................... 17
----------------
i
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
MARCH 31, DECEMBER 31,
ASSETS 2000 1999
---------- --------
(Unaudited)
REAL ESTATE ASSETS - At cost:
<S> <C> <C>
Land $ 21,120 $ 21,120
Buildings and improvements 96,295 96,124
Furniture, fixtures and equipment 11,831 11,654
--------- ---------
129,246 128,898
Less accumulated depreciation (22,305) (21,029)
--------- ----------
Operating real estate assets 106,941 107,869
Land held for future development 2,559 2,559
Construction in progress and real estate under development 14,652 12,393
--------- ---------
Net real estate assets 124,152 122,821
CASH AND CASH EQUIVALENTS 2,081 1,673
RESTRICTED CASH 1,230 1,202
DEFERRED FINANCING COSTS - Net of accumulated amortization of
$482 and $425 at March 31, 2000 and December 31, 1999, respectively 993 1,031
OTHER ASSETS - Net 326 351
--------- ---------
$ 128,782 $ 127,078
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Mortgage notes payable $ 84,391 $ 84,615
Land note payable 5,000 3,000
Line of credit 2,000 1,235
Accounts payable and accrued expenses 1,843 1,238
Dividends and distributions payable 1,007 1,010
Due to affiliates (including retainage payable of $255 and $216 at
March 31, 2000 and December 31, 1999, respectively) 822 1,214
Security deposits and prepaid rents 472 443
--------- ---------
Total liabilities 95,535 92,755
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note 4)
MINORITY INTEREST OF UNITHOLDERS IN THE OPERATING PARTNERSHIP 11,304 12,013
--------- ---------
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, 5,035,921
and 4,959,697 shares issued at March 31, 2000 50 49
and December 31, 1999, respectively
Additional paid-in capital 25,055 25,354
Less treasury shares, at cost (150,500 and 140,500 shares at
March 31, 2000 and December 31, 1999, respectively) (1,128) (1,054)
Unamortized restricted stock compensation (119) (136)
Accumulated deficit (1,915) (1,903)
--------- ---------
Total shareholders' equity 21,943 22,310
--------- ---------
$ 128,782 $ 127,078
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
1
<PAGE>
ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31,
2000 1999
---------- ------
(Unaudited) (Unaudited)
OPERATING REVENUES:
<S> <C> <C>
Rental operations $ 4,616 $ 4,500
Other operating income 359 264
------ -------
Total operating revenues 4,975 4,764
------ -------
OPERATING EXPENSES:
Personnel 454 432
Utilities 328 306
Repairs, maintenance and landscaping 300 297
Real estate taxes 434 422
Marketing, insurance and other 208 201
General and administrative expenses 485 508
Depreciation of real estate assets 1,361 1,317
------ -------
Total operating expenses 3,570 3,483
------ -------
INCOME FROM OPERATIONS 1,405 1,281
------ -------
OTHER INCOME (EXPENSE):
Interest income 46 45
Interest expense (1,373) (1,261)
Loss on disposal of assets (39) (9)
Amortization of deferred financing costs (57) (38)
Other amortization expense - (3)
------ --------
Total other expense (1,423) (1,266)
------ --------
(LOSS) INCOME BEFORE MINORITY INTEREST (18) 15
MINORITY INTEREST OF UNITHOLDERS IN THE OPERATING PARTNERSHIP 6 (6)
------ --------
NET (LOSS) INCOME $ (12) $ 9
====== ========
INCOME PER COMMON SHARE - BASIC AND DILUTED:
Net (loss) income $ (0.00) $ 0.00
======= ========
Weighted average common shares - basic 4,844,337 4,733,877
Weighted average common shares - diluted 7,405,986 7,493,100
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31,
2000 1999
-------- -------
(Unaudited) (Unaudited)
OPERATING ACTIVITIES:
<S> <C> <C>
Net (loss) income $ (12) $ 9
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Minority interest of unitholders in the Operating Partnership (6) 6
Loss on disposal of assets 39 9
Depreciation and amortization 1,418 1,358
Amortization of deferred compensation 15 9
Change in assets and liabilities:
Increase in restricted cash and cash equivalents (28) (30)
Decrease in other assets 25 66
Increase in accounts payable and accrued expenses relating to operations 616 623
Increase in security deposits and prepaid rent 29 4
------ -------
Net cash provided by operating activities 2,096 2,054
------ -------
INVESTING ACTIVITIES:
Construction of real estate assets (3,134) (2,366)
------ -------
Net cash used in investing activities (3,134) (2,366)
------ -------
FINANCING ACTIVITIES:
Proceeds from land note payable 2,000 -
Principal repayments on mortgage notes payable (224) (221)
Payment of loan costs (19) (8)
Proceeds from line of credit 765 -
Repurchase of partnership units - (28)
Repurchase of treasury shares (74) (550)
Payment of dividends and distributions (1,002) (1,092)
------ ------
Net cash provided by (used in) financing activities 1,446 (1,899)
------ -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 408 (2,211)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,673 4,106
------ -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $2,081 $ 1,895
====== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 1,591 $ 1,396
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
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 66.0% and 65.0% ownership interest
in it at March 31, 2000 and December 31, 1999, respectively, Roberts
Realty controls the Operating Partnership.
At March 31, 2000, Roberts Realty owned nine completed multifamily
apartment communities totaling 1,779 apartment homes in Atlanta, and an
additional 604 apartment homes were under construction (285 in Atlanta
and 319 in Charlotte). Roberts Realty also held land under development
on which it expects to develop a 249-unit apartment community in
Atlanta in 2000.
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 90% 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 the Operating Partnership's units outstanding and will change
as additional shares and partnership units are issued, units are
exchanged for shares, or shares are repurchased in the open market. 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 34.6% and 36.8% for the three
months ended March 31, 2000 and 1999, respectively. The minority
interest of the unitholders in the Operating Partnership was
$11,304,000 and $12,013,000 at March 31, 2000 and December 31, 1999,
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
Partnership has the option either (a) to acquire those partnership
units in exchange for shares, on a one-for-one basis, or (b) to
4
<PAGE>
pay cash for those partnership units at their fair market value, based
upon the then current trading price of the shares. 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, 2000. Certain prior period amounts have been
reclassified to conform to the 2000 presentation. These financial
statements should be read in conjunction with Roberts Realty's audited
financial statements and the notes to them included in Roberts Realty's
Annual Report on Form 10-K for the year ended December 31, 1999.
3. NOTES PAYABLE
Line of Credit. Roberts Realty obtained a $2,000,000 revolving
unsecured line of credit in June 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 plus 150 basis points. At March 31,
2000, $2,000,000 was outstanding on the line.
Mortgage Notes. Mortgage notes payable were secured by the following
apartment communities at March 31, 2000 and December 31, 1999, as
follows:
<TABLE>
<CAPTION>
Fixed Interest Principal Outstanding
Rate as of
Property Securing Mortgage Maturity 03/31/00 03/31/00 12/31/99
-------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Addison Place - phase I 11/15/09 6.95% $ 9,500,000 $ 9,500,000
Bradford Creek 06/15/08 7.15 8,251,000 8,273,000
Crestmark 10/01/08 6.57 15,731,000 15,778,000
Highland Park 02/15/03 7.30 7,819,000 7,844,000
Ivey Brook 02/15/07 7.14 6,209,000 6,228,000
Plantation Trace 10/15/08 7.09 11,729,000 11,760,000
Preston Oaks 10/15/02 7.21 8,285,000 8,313,000
River Oaks 11/15/03 7.15 8,918,000 8,946,000
Rosewood Plantation 07/15/08 6.62 7,949,000 7,973,000
--------- ---------
$84,391,000 $84,615,000
=========== ============
</TABLE>
Land Loans. In October 1999, Roberts Realty closed a $3,000,000 land
loan to fund the initial construction of the second phase of Addison
Place. The loan is secured by the land for the second phase of Addison
Place, has a six-month term, and bears an interest rate of LIBOR plus
150 basis points. The loan will be repaid from proceeds of a
construction loan on the second phase of Addison Place.
On March 28, 2000, we received a written commitment for a $22,500,000
construction loan to complete the second phase of Addison Place. The
loan commitment provided for a 5-year term and an interest rate of
LIBOR plus 150 basis points. The loan is scheduled to close in May
2000.
On February 1, 2000, Roberts Realty closed a $2,000,000 land loan to
fund the initial construction of the Old Norcross community. The loan
is secured by the Old Norcross land, has a 12-month term, and bears an
interest rate of LIBOR plus 150 basis points.
5
<PAGE>
Interest capitalized was $218,000 and $136,000 for the three months
ended March 31, 2000 and 1999, respectively.
Real estate assets having a combined depreciated cost of approximately
$105,081,000 served as collateral for the outstanding mortgage debt at
March 31, 2000.
4. 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 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. These contracts relate to
the construction of real estate assets. Roberts Construction
constructed the first phase of Addison Place, consisting of 118
townhomes, pursuant to a cost plus 10% arrangement. Roberts
Construction is currently constructing the second phase of Addison
Place, consisting of 285 apartment homes, under a cost plus 10%
arrangement. Roberts Construction started construction of the
Ballantyne community pursuant to a cost plus 10% arrangement and
intends to hire a third-party general contractor to complete
construction of the community under its supervision. The material terms
of the arrangement between Roberts Realty and Roberts Construction will
not be altered. Roberts Construction will continue to oversee the
project. In the second quarter of 2000, Roberts Realty expects to enter
into a contract with Roberts Construction related to the construction
of the Old Norcross project in Atlanta. At March 31, 2000, the
remaining commitments totaled $17,620,000 as summarized in the
following table:
Estimated Estimated
Total Remaining
Contract Amount Contractual
Amount Incurred Commitment
========= ======== ===========
Addison Place - phase I $ 9,684,000 $ 9,445,000 $ 239,000
Addison Place - phase II 20,605,000 3,224,000 17,381,000
------------ ------------ -----------
$ 30,289,000 $ 12,669,000 $17,620,000
============ ============ ===========
5. SHAREHOLDERS' EQUITY
Exchanges of Partnership Units for Shares. During the three months
ended March 31, 2000 and 1999, a total of 76,491 and 26,907 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 March 31, 2000, no partnership units were redeemed for cash.
During the three months ended March 31, 1999, a total of 3,917
partnership units were redeemed for cash of $28,000.
Treasury Stock Repurchases. During the three months ended March 31,
2000, Roberts Realty repurchased 10,000 shares at a total cost of
$74,000. During the three months ended March 31, 1999, Roberts Realty
repurchased 74,100 shares at a total cost of $550,000.
6
<PAGE>
Restricted Stock Awards. During the three months ended March 31, 2000,
Roberts Realty cancelled 267 shares of restricted stock as a result of
an employee leaving Roberts Realty's employment. The unamortized book
value of the cancelled grants equaled $2,000. During the three months
ended March 31, 1999, Roberts Realty did not grant or cancel any
shares. These transactions have been recorded as unamortized restricted
stock compensation and are shown as a separate component of
stockholders' equity. This restricted stock vests 100% at the end of a
two-and-a-half to four-year vesting period and is being amortized to
compensation expense ratably over the vesting period.
Dividends. On March 20, 2000, Roberts Realty's Board of Directors
declared a quarterly distribution in the amount of $0.135 per common
share and partnership unit payable on April 14, 2000 to shareholders
and unitholders of record on March 31, 2000. The first quarter 1999
dividend was $0.15 and was paid to shareholders and unitholders of
record as of March 31, 1999.
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
------------------
3/31/00 3/31/99
------- -------
<S> <C> <C>
Net (loss) income - basic $ (12) $ 9
Minority interest of Unitholders in the Operating
Partnership in income (loss) (6) 6
---------- ---------
Net (loss) income - diluted $ (18) $ 15
========== =========
Weighted average shares - basic 4,844,337 4,733,877
Dilutive securities - weighted average partnership units 2,561,649 2,759,223
--------- ---------
Weighted average shares - diluted 7,405,986 7,493,100
========= =========
</TABLE>
6. SEGMENT REPORTING
SFAS No. 131 established standards for reporting financial and
descriptive information about operating segments in annual financial
statements. Operating segments are defined as components of an
enterprise about which separate financial information is available that
is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance.
Roberts Realty's chief operating decision maker is its chief executive
officer.
Roberts Realty owns, operates, and develops multifamily apartment
communities in two major markets located in Georgia and North Carolina.
These apartment communities generate rental revenue and other income
through leasing of apartment homes to a diverse group of residents.
Roberts Realty evaluates the performance of each of its apartment
communities on an individual basis. However, because each of the
apartment communities have similar economic characteristics, residents,
and products and services, the apartment communities have been
aggregated into one reportable segment. This segment comprises 100% of
Roberts Realty's total revenues for each of the three months ended
March 31, 2000 and 1999.
The primary financial measure for Roberts Realty's reportable business
segment is net operating income ("NOI"), which represents total
property revenues less total property operating expenses, excluding
general and administrative and depreciation expenses. Current quarter
NOI is compared to prior quarter NOI and current quarter budgeted NOI
as a measure of financial performance. NOI from apartment communities
totaled
7
<PAGE>
$3,251,000, and $3,106,000 for the three months ended March 31, 2000
and 1999, respectively. All other segment measurements are disclosed in
Roberts Realty's consolidated financial statements.
7. NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities,"
establishes standards for reporting and display of derivative
instruments, hedges and their components. Roberts Realty will be
required to adopt SFAS 133, amended by SFAS 137, on January 1, 2001. As
of March 31, 2000, Roberts Realty has had no derivative instruments or
hedging activities and, therefore, does not expect this statement to
have a material effect on its financial position and results of
operations.
8
<PAGE>
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 are intended to 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 333-82453), as declared effective by the SEC on August 2, 1999. 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 March 31, 2000, we owned
nine completed multifamily apartment communities, of which eight were
stabilized, consisting of 1,779 apartment homes.
We are developing and building three new multifamily communities
totaling 971 apartment homes, of which 118 apartment homes were completed during
the fourth quarter of 1999. The 853 apartment homes under development or
construction will increase the size of our portfolio 48% from 1,779 to 2,632
apartment homes. One of our communities under construction is located in
Charlotte, North Carolina, and is the first step in our diversification
strategy. The other two communities are located in north Atlanta. We began
construction of the 285-unit second phase of Addison Place during the third
quarter of 1999, and we expect to commence construction of a 249-unit apartment
community located in north Atlanta on our Old Norcross land during the second
quarter of 2000.
Results of Operations
Comparison of Three Months Ended March 31, 2000 to Three Months Ended
March 31, 1999. For the three months ended March 31, 2000, we recorded a net
loss of $12,000, compared to net income of $9,000 for the three months ended
March 31, 1999. Our operating results are due to the following:
(a) the start of leasing operations at the first phase of Addison Place in
April 1999;
(b) a $107,000 increase in same-property rental income; and
(c) a $58,000 increase in water submetering revenue from $72,000 to
$130,000;
offset by:
(d) the sale of Bentley Place in August 1999;
(e) higher interest expense due to:
o the permanent financing of the first phase of Addison Place in
October 1999;
o the land loans on Old Norcross and the second phase of Addison Place;
and
o higher average borrowings on the line of credit.
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<PAGE>
(f) increased depreciation expense; and
(g) the decline in average stabilized occupancy from 95.3% to 93.4%.
Our operating performance for all apartment communities is summarized in the
following table:
<TABLE>
<CAPTION>
Percentage
Change from Three Months Ended March 31,
1999 to 2000 2000 1999
------------ ---- ----
<S> <C> <C> <C>
Rental income 2.6% $ 4,616,000 $ 4,500,000
Total operating revenues 4.4% $ 4,975,000 $ 4,764,000
Property operating expenses (1) 4.0% $ 1,724,000 $ 1,658,000
Net operating income (2) 4.7% $ 3,251,000 $ 3,106,000
General and administrative expenses (4.5%) $ 485,000 $ 508,000
Depreciation of real estate assets 3.3% $ 1,361,000 $ 1,317,000
Average stabilized occupancy (3) (1.9%) 93.4% 95.3%
Operating expense ratio (4) (0.1%) 34.7% 34.8%
</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 Bentley Place only
through August 23, 1999, which was the date the community was sold.
(4) Represents the total of property operating expenses divided by property
operating revenues expressed as a percentage.
Our same-property operating performance, when compared to the three
months ended March 31, 1999, includes a 4.2% increase in operating revenues, a
6.0% increase in net operating income, a 4.4% increase in average monthly rent
per apartment home, higher operating margins, and a 1.9% decrease in stabilized
occupancy from 95.3% to 93.4%. Eight of our communities were fully stabilized
during both the three-month periods ended March 31, 2000 and 1999: Bradford
Creek, Crestmark, Highland Park, Ivey Brook, Plantation Trace, Preston Oaks,
River Oaks, and Rosewood Plantation. Same-property operating results for these
communities are summarized in the following table:
<TABLE>
<CAPTION>
Percentage
Change from Three Months Ended March 31,
1999 to 2000 2000 1999
------------ ---- ----
<S> <C> <C> <C>
Rental income 2.5% $ 4,345,000 $ 4,238,000
Total operating revenues 4.2% $ 4,683,000 $ 4,494,000
Property operating expenses (1) 0.8% $ 1,550,000 $ 1,538,000
Net operating income (2) 6.0% $ 3,133,000 $ 2,956,000
Average stabilized occupancy (3) (1.9%) 93.4% 95.3%
Operating expense ratio (4) (1.1%) 33.1% 34.2%
Average monthly rent per apartment home 4.4% $ 955 $ 915
Lease renewal percentage (5) (5.6%) 52.4% 58.0%
</TABLE>
10
<PAGE>
(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 March 31, 2000 and 1999.
Property operating revenue increased $211,000 or 4.4% from $4,764,000
for the three months ended March 31, 1999 to $4,975,000 for the three months
ended March 31, 2000. The increase in operating revenue is due primarily to the
following:
(1) a $290,000 increase in revenue from the first phase of
Addison Place; and
(2) a $189,000 increase in same-property operating revenue,
which includes a $58,000 increase in water sub-metering
revenue;
offset by
(3) a decrease in revenue of approximately $270,000 due to the
sale of Bentley Place.
Property operating expenses, excluding depreciation and general and
administrative expenses, increased $66,000 or 4.0% from $1,658,000 for the three
months ended March 31, 1999 to $1,724,000 for the three months ended March 31,
2000. The increase in operating expenses is due primarily to the following:
(1) a $167,000 increase in expenses from the first phase of
Addison Place;
offset by
(2) a decrease in expenses of approximately $94,000 due to the
sale of Bentley Place.
General and administrative expenses decreased $23,000 or 4.5% from
$508,000 for the three months ended March 31, 1999 to $485,000 for the three
months ended March 31, 2000. These expenses include legal, accounting and tax
fees, marketing and printing fees, salaries, director fees, and other costs. The
decrease is due primarily to lower personnel and associated costs. General and
administrative expenses as a percentage of operating revenues decreased from
10.7% for the three months ended March 31, 1999 to 9.7% for the three months
ended March 31, 2000. We expect that as we continue to grow, these expenses will
continue to decline as a percentage of operating revenues.
Depreciation expense increased $44,000 or 3.3% from $1,317,000 for the
three months ended March 31, 1999 to $1,361,000 for the three months ended March
31, 2000. The increase is due to the depreciation expense from the first phase
of Addison Place, offset by a decrease due to the sale of Bentley Place. We
record depreciation expense as apartment homes are completed and available for
occupancy.
11
<PAGE>
Interest expense increased $112,000 or 8.9% from $1,261,000 for the
three months ended March 31, 1999 to $1,373,000 for the three months ended March
31, 2000. The increase is due primarily to the following:
(1) the $9,500,000 financing of the first phase of Addison Place in October
1999;
(2) the closing of the $2,000,000 land loan secured by the second phase of
Addison Place in October 1999;
(3) the closing of the $2,000,000 Old Norcross land loan in February 2000;
and
(4) higher average borrowings on our line of credit;
offset by:
(5) higher capitalized interest related to the Ballantyne project and the
second phase of Addison Place.
Liquidity and Capital Resources
Comparison of Three Months Ended March 31, 2000 to Three Months Ended
March 31, 1999. Cash and cash equivalents increased $408,000 during the three
months ended March 31, 2000 compared to a decrease of $2,211,000 during the
three months ended March 31, 1999. The increase is due to an increase in cash
provided by operating and financing activities partially offset by an increase
in cash used in investing 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 $42,000 from $2,054,000
during the three months ended March 31, 1999 to $2,096,000 during the three
months ended March 31, 2000. The increase in cash flow from operations is due
primarily to the additional cash flow from the first phase of Addison Place and
the stabilized communities, offset by the sale of Bentley Place. 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 increased $768,000 from
$2,366,000 during the three months ended March 31, 1999 to $3,134,000 during the
three months ended March 31, 2000. This increase is due primarily to $721,000 of
new construction and development costs and fees, as well as $47,000 of capital
improvements. We acquired no existing apartment communities during these
periods.
Net cash provided by financing activities increased $3,345,000 from net
cash used in financing activities of $1,899,000 during the three months ended
March 31, 1999 to net cash provided by financing activities of $1,446,000 during
the three months ended March 31, 2000. This increase is due primarily to the
following:
(a) the closing of a $2,000,000 land loan on our Old Norcross property in
February 2000;
(b) net borrowings of $765,000 from the $2,000,000 line of credit during
the first quarter of 2000;
(c) the repurchase of 74,100 treasury shares for $550,000 during the three
months ended March 31, 1999 compared to the repurchase of 10,000
treasury shares for $74,000 during the three months ended March 31,
2000;
(d) the purchase of 3,917 partnership units for $28,000 during the three
months ended March 31, 1999 compared to no partnership units purchased
during the three months ended March 31, 2000; and
12
<PAGE>
(e) a decrease of $90,000 in quarterly distributions paid, from $1,092,000
for the three months ended March 31, 1999 to $1,002,000 for the three
months ended March 31, 2000.
The following facts highlight our existing debt structure:
o each of our nine communities is financed with fixed-rate debt;
o the average interest rate for all nine communities is 6.98% per
annum;
o no debt is scheduled to mature before October 2002;
o the average term to maturity is eight years; and
o debt principal will amortize at a rate of approximately
$927,000 per year.
The following table summarizes the debt for each of our nine
communities:
Fixed Interest Principal
Rate as of Outstanding
03/31/00 Maturity 03/31/00
-------------- -------- -----------
Addison Place - phase I 6.95% 11/15/09 $ 9,500,000
Bradford Creek 7.15 06/15/08 8,251,000
Crestmark 6.57 10/01/08 15,731,000
Highland Park 7.30 02/15/03 7,819,000
Ivey Brook 7.14 02/15/07 6,209,000
Plantation Trace 7.09 10/15/08 11,729,000
Preston Oaks 7.21 10/15/02 8,285,000
River Oaks 7.15 11/15/03 8,918,000
Rosewood Plantation 6.62 07/15/08 7,949,000
--------------
$ 84,391,000
==============
Each of our existing mortgage loans will require balloon payments (in
addition to monthly principal amortization) coming due over the years 2002 to
2009 as summarized below:
2002 $ 8,025,000
2003 16,057,000
2007 5,570,000
2008 38,232,000
2009 8,387,000
--------------
Total $ 76,271,000
==============
Because we anticipate that only a small portion of the principal of
that indebtedness will be repaid before maturity and that we will not have funds
on hand sufficient to repay that indebtedness, it will be necessary for us to
refinance that debt through (a) debt financing collateralized by mortgages on
individual communities or groups of communities and/or (b) equity offerings.
During the quarter ended December 31, 1999, we completed construction
on the 118-unit first phase of Addison Place, located in north Atlanta. We
funded this project with the proceeds from mortgage loan financings, operating
cash, and a $9,500,000 construction loan. On October 25, 1999, we repaid the
$8,019,000 outstanding on the construction loan plus accrued interest of $38,000
upon closing a $9,500,000 permanent loan secured by the project. Because the
property was less than 95% occupied at closing, the lender required us to obtain
an $843,000 letter of credit secured by an equal amount of cash. At May 10,
2000, the property was 83% occupied, and the letter of credit will be released
when the
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<PAGE>
property achieves 95% occupancy. The permanent loan includes 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 first 12 payments are interest-only
payments of $55,021 per month.
During the quarter ended June 30, 1999, we started construction on the
second phase of Addison Place, which will consist of 285 apartment homes. We
expect occupancy to begin in the third quarter of 2000. We began construction on
a 319-unit community in Charlotte during the fourth quarter of 1999, and we
expect to start construction of a 249-unit community located in north Atlanta on
our Old Norcross land in the second quarter of 2000. We paid cash for the land
for these three new communities, and we expect to fund the cost of construction
with construction loans. We are in the process of obtaining construction loans,
and we do not expect to begin substantial construction until construction loans
are secured.
On March 28, 2000, we received a written commitment for a $22,500,000
construction loan to complete the second phase of Addison Place. The loan
commitment included a five-year term and provides for an interest rate of LIBOR
plus 150 basis points. When the loan was closed in May 2000, the interest rate
was synthetically converted to a fixed rate of 8.62%.
On February 1, 2000, we closed a $2,000,000 land loan to fund the
initial construction of the Old Norcross community. The loan is secured by the
Old Norcross land, has a 12-month term, and bears an interest rate of LIBOR plus
150 basis points.
We obtained a $2,000,000 revolving line of credit in June 1999 to
provide funds for short-term working capital purposes. The line has a one-year
term and bears an interest rate of LIBOR plus 150 basis points. At March 31,
2000, $2,000,000 was outstanding under the line.
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 property operations. We expect to meet our long-term liquidity
requirements, including future developments and debt maturities, from the
proceeds of construction and permanent loans and/or the proceeds of property
sales.
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 purchased 10,000 treasury shares for $74,000 during the
three months ended March 31, 2000. We repurchased 74,100 treasury shares for
$550,000 during the three months ended March 31, 1999. From October 1, 1998
through March 31, 2000, we have repurchased 150,500 shares for $1,128,000.
Redemptions of Units for Cash
During the three months ended March 31, 1999, we paid $28,000 to
purchase 3,917 units from unitholders who resided outside the state of Georgia.
We purchased no units during the three months ended March 31, 2000.
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<PAGE>
Supplemental Disclosure of Funds From Operations
We consider funds from operations ("FFO") to be a useful performance
measure of the operating performance of an equity REIT. Together with net income
and cash flows, FFO provides investors with an additional basis to evaluate a
REIT's ability to incur and service debt and to fund distributions and capital
expenditures. We believe that to obtain a clear understanding of our operating
results, investors should consider FFO along with net income as presented in the
financial statements and data included elsewhere in this report. We compute FFO
in accordance with standards establish by the National Association of Real
Estate Investment Trusts ("NAREIT"). Effective January 1, 2000, NAREIT amended
its definition of FFO to include in FFO all non-recurring items, except those
defined as extraordinary items under generally accepted accounting principles,
or GAAP, and gains and losses from sales of depreciable operating property. We
are using the amended definition of FFO in reporting our results for all periods
on or after January 1, 2000. FFO for the three months ended March 31, 2000 is
stated on a consistent basis and was not affected by the adoption of the new
NAREIT definition.
FFO as defined by NAREIT represents net income (loss) determined in
accordance with GAAP, excluding extraordinary items as defined under GAAP and
gains or losses from sales of depreciable operating property, plus certain
non-cash items such as real estate depreciation and amortization, and after
adjustment for unconsolidated partnerships and joint ventures. FFO presented in
this report is not necessarily comparable to FFO presented by other real estate
companies, because not all real estate companies use the same definition. Our
FFO is comparable, however, to the FFO of real estate companies that use the
amended NAREIT definition. 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.
The following table reconciles net income (loss) to FFO.
Three Months Ended March 31,
2000 1999
---- ----
Net income (loss) $ (12) $ 9
Minority interest of holders of units (6) 6
Amortization (real estate related) 0 3
Loss on disposal of real estate assets 39 9
Depreciation of real estate assets 1,361 1,317
-------- ---------
Funds From Operations $ 1,382 $ 1,344
========= ==========
Weighted average shares and partnership units
outstanding during the period 7,405,986 7,493,100
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.
Disclosure Regarding Forward-Looking Statements
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 appear in a number of places in this
15
<PAGE>
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. These
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and actual results may differ materially from those
that are anticipated in the forward-looking statements. These risks include the
following:
o Unfavorable changes in market and economic conditions in Atlanta
and Charlotte could hurt our occupancy and rental rates.
o Increased competition in the Atlanta and Charlotte markets could
limit our ability to lease our apartment homes or increase or
maintain rents.
o Conflicts of interest inherent in business transactions between
or among Roberts Realty and/or the operating partnership on one
hand, and Mr. Roberts and/or his affiliates on the other hand,
could result in our paying more for property or services than we
would pay an independent seller or provider.
o Construction and lease-up risks inherent in our development of
the Addison Place, Ballantyne and Old Norcross communities, and
the other communities we may develop in the future, could
adversely affect our financial performance.
o We might not be able to obtain replacement financing to make
balloon payments on our fixed-rate debt, or we might have to
refinance our debt on less favorable terms.
o Because our organizational documents do not limit the amount of
debt we may incur, we could increase the amount of our debt as a
percentage of the estimated value of our properties.
o Our operations could be adversely affected if we lose key
personnel, particularly Mr. Roberts.
o We could incur costs from environmental problems even though we
did not cause, contribute to or know about them.
o Compliance or failure to comply with the Americans with
Disabilities Act and other similar laws could result in
substantial costs.
In addition, the market price of our common stock may fluctuate as a result of,
among other things:
o our operating results;
o the operating results of other REITs, particularly apartment
REITs; and
o 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 final prospectus
filed with the SEC on August 2, 1999 included in our Registration Statement on
Form S-3.
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 the consolidated financial statements included in this
report. All of our long-term borrowings are under fixed rate instruments, and
our line of credit and land loan interest rates are 150 basis points over the
three-month LIBOR rate. We have determined there is no material market risk
exposure to our consolidated financial position, results of operations or cash
flows.
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PART II
ITEM 1. LEGAL PROCEEDINGS.
Neither Roberts Realty, Roberts Properties Residential, L.P., nor our
apartment 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 Roberts Properties Residential, L.P.
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 March 31, 2000.
During the three months ended March 31, 2000, Roberts Realty cancelled
267 shares of restricted stock as a result of an employee leaving Roberts
Realty's employment. The unamortized book value of the cancelled grants equaled
$2,000. During the three months ended March 31, 1999, Roberts Realty did not
grant or cancel any shares. These transactions have been recorded as unamortized
restricted stock compensation and are shown as a separate component of
stockholders' equity.
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.
Exhibit
No. Description
- ------- -----------
10.16.1 Promissory Note executed by Roberts Properties Residential, L.P.
in favor of Compass Bank, dated January 31, 2000 (Old Norcross).
10.16.2 Future Advance Deed to Secure Debt, Assignment of Rents and
Leases and Security Agreement executed by Roberts Properties
Residential, L.P. in favor of Compass Bank, dated January 31,
2000 (Old Norcross).
10.16.3 Continuing Guaranty (Unlimited) executed by Roberts Realty
Investors, Inc. in favor of Compass Bank, dated January 31, 2000
(Old Norcross).
27 Financial Data Schedule.
(b) We filed no reports on Form 8-K during the quarter ended March 31, 2000.
17
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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: May 10, 2000 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)
18
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
10.16.1 Promissory Note executed by Roberts Properties Residential, L.P.
in favor of Compass Bank, dated January 31, 2000 (Old Norcross).
10.16.2 Future Advance Deed to Secure Debt, Assignment of Rents and
Leases and Security Agreement executed by Roberts Properties
Residential, L.P. in favor of Compass Bank, dated January 31,
2000 (Old Norcross).
10.16.3 Continuing Guaranty (Unlimited) executed by Roberts Realty
Investors, Inc. in favor of Compass Bank, dated January 31, 2000
(Old Norcross).
27 Financial Data Schedule.
PROMISSORY NOTE
$2,000,000
January 31, 2000
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
N0/100 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. 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 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 1(a) will be
set on the date hereof, and shall be subject to change on the same day
of each month hereafter (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 two percentage points (2%) 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.
<PAGE>
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.
2. Payment.
(a) Borrower promises to pay interest monthly on or before the
fifth (5th) 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 March 5,
2000.
(b) All unpaid principal, interest and other charges shall be
due and payable in full on January 31, 2001 (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 Future Advance Deed to Secure Debt, Assignment of
Rents and Leases and Security Agreement on real property (the "Property")
located in Gwinnett County, Georgia, from Borrower to Lender dated as of the
date hereof, and the other documents or instruments evidencing or securing the
Loan (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 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
-2-
<PAGE>
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 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
-3-
<PAGE>
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 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
---------------------------------
Title: President
[CORPORATE SEAL]
FUTURE ADVANCE DEED TO SECURE
DEBT,
ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
STATE OF GEORGIA
COUNTY OF FULTON
THIS INDENTURE (herein this "Deed to Secure Debt") made as of the 31st day of
January, 2000, 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 TWO MILLION DOLLARS ($2,000,000) or so much as may from time to
time be disbursed thereunder, as evidenced by a promissory note dated January
31, 2000, payable to Bank with interest thereon as provided therein (the
"Note"), which Note has a maturity date of January 31, 2001; 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>
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, its 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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<PAGE>
(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 remaining shall be paid to the
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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 thereof, shall automatically, and
without any further action or filing or recording on the part
of the Grantor or the Grantee
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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 Phase I Environmental Site Assessment prepared by
Law Engineering dated April 6, 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 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, and the ADA, as
applicable, and ordinances, rules and
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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
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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.
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
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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 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 - 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.
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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>
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.
Signed, sealed and delivered GRANTOR:
in the presence of :
ROBERTS PROPERTIES RESIDENTIAL, L.P.,
a Georgia limited partnership
Charles R. Elliott
- ----------------------------
Witness
By: ROBERTS REALTY INVESTORS, INC.,
a Georgia corporation,
Laurie Heberle its general partner
- ----------------------------
Notary Public
By: /s/ Charles S. Roberts
-----------------------------
My Commission expires: Title: President
August 2003
[NOTARIAL SEAL] [CORPORATE SEAL]
<PAGE>
EXHIBIT A
Description of Land
<PAGE>
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.
Compass [GRAPHIC OMITTED]
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
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,
<PAGE>
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>
IN WITNESS WHEREOF, the undersigned Guarantors have executed this Guaranty
effective the 31st day of January, 2000.
GUARANTOR:
_____________________________________ ROBERTS REALTY INVESTORS, INC.,
a Georgia corporation
ADDRESS OF GUARANTOR
_____________________________________ By: /s/ Charles S. Roberts
-----------------------------------
Name: Charles S. Roberts
-----------------------------------
Title: President
[CORPORATE SEAL]
Signed, sealed and delivered in the presence of:
Charles R. Elliott
- -------------------------------------
Witness
Laurie Heberle
- -------------------------------------
Notary Public
My commission expires:
August 19, 2003
[Notary Seal]
Page 3
<PAGE>
ADDENDUM TO GUARANTY OF
ROBERTS PROPERTIES, 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 $2,000,000 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
"Indebtedeness" 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 $2,000,000 (the
"Note"); and (ii) the payment and performance obligations of Borrower under the
terms of the (a) Deed to Secure Debt, and (b) 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.
Signed, sealed and delivered in
the presence of: GUARANTOR:
Charles R. Elliott
- -------------------------------- ROBERTS REALTY INVESTORS, INC.
Witness
Laurie Heberle By: /s/Charles S. Roberts
- -------------------------------- ----------------------------------
Notary Public Name: Charles S. Roberts
Title: President
My commission expires: [CORPORATE SEAL]
[Notary Seal] Date: January 31, 2000
Page 4
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 1011109
<NAME> Roberts Realty
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000>
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,311,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,311,000
<PP&E> 146,457,000
<DEPRECIATION> 22,305,000
<TOTAL-ASSETS> 128,782,000
<CURRENT-LIABILITIES> 11,144,000
<BONDS> 0
0
0
<COMMON> 50,000
<OTHER-SE> 21,893,000
<TOTAL-LIABILITY-AND-EQUITY> 128,782,000
<SALES> 0
<TOTAL-REVENUES> 4,975,000
<CGS> 0
<TOTAL-COSTS> 3,570,000
<OTHER-EXPENSES> 50,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,373,000
<INCOME-PRETAX> (12,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,000)
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
