Current Report Filing (8-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT Pursuant

to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported):    January 13, 2015      

 

 

Roberts Realty Investors, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

Georgia

(State or Other Jurisdiction of Incorporation)

 

001-13183	58-2122873
(Commission File Number)	(IRS Employer Identification No.)

 

 

375 Northridge Road, Suite 330
Atlanta, Georgia	30350
(Address of Principal Executive Offices)	(Zip Code)

 

[phone]

(Registrant’s Telephone Number, Including Area Code)

 

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

	o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	x	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Item 1.01      Entry into a Material Definitive Agreement.

 

Roberts Realty Investors, Inc. (the “Company”) conducts business through Roberts Properties Residential, L.P., its operating partnership. On January 13, 2015, Northridge Parkway, LLC, a wholly owned subsidiary of the operating partnership, obtained a $2,000,000 loan from Paul J. A. Lex van Hessen, the lender. The proceeds of the loan will be used for working capital purposes prior to the closing contemplated in the stock purchase agreement dated November 19, 2014 among the Company, the operating partnership and A-III Investment Partners LLC (“A-III”), a joint venture between affiliates of Avenue Capital Group and C-III Capital Partners LLC, which is controlled by Island Capital Group LLC. As previously announced, the Company’s board of directors has unanimously approved the stock purchase agreement and related matters, which will be voted on at a special meeting of the Company’s shareholders to be held on January 22, 2015.

 

The $2,000,000 loan has a maturity date of July 13, 2015, and at its closing we paid a 1.0% origination fee to the lender and a 1.0% consulting fee to Petaque & Wall, LLC, the lender’s consultant. The loan has an interest rate of 12% per annum, and we prepaid the first three months of interest in the amount of $60,833. The loan is secured by our Northridge property, which we have historically used to secure working capital loans and which we owned debt free before the loan closing. The loan documents contain customary representations, covenants, and default provisions, and the loan was guaranteed by both the Company and the operating partnership. Upon repayment of the loan, we will pay the lender a 2% repayment fee.

 

The above description of the material terms of the Northridge loan is qualified in its entirety by reference to the full text of the Loan Agreement; Promissory Note; Deed to Secure Debt, Security Agreement and Fixture Filing; and Guaranty, which are attached as Exhibits 10.1 through 10.4, respectively, to this report and are incorporated into this Item 1.01 by this reference.

 

Item 2.03      Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 2.03 by reference.

 

Forward Looking Statements

 

This current report on Form 8-K 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, as amended. Some of the forward-looking statements relate to our intent, belief, or expectations regarding, the closing of the stock purchase agreement and the timing of such closing. These statements involve risks and uncertainties that include: whether the satisfaction of the conditions to closing will occur, including obtaining the requisite approval of our shareholders; and the timing of the closing of the transaction. For these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. For more information about other risks and uncertainties we face, please see the sections entitled “Risk Factors” in our most recent Annual Report on Form 10-K, our most recent Quarterly Report on Form 10-Q and our definitive proxy statement filed with the SEC on December 23, 2014 for the special meeting of shareholders to be held on January 22, 2015.

 

2

Additional Information and Where to Find It

 

This communication may be deemed to be solicitation material in respect of the approval of the proposed issuance of securities to A-III by the Company and related matters, and the proposed amendment to the Company’s articles of incorporation. The Company has filed a definitive proxy statement with the SEC and mailed the definitive proxy statement to its shareholders. Shareholders of the Company are strongly advised to read all relevant documents filed with the SEC, including the Company’s definitive proxy statement because these documents contain important information about the proposed transaction. These documents will be available at no charge on the SEC’s website at www.sec.gov. In addition, the Company will also provide copies of these documents for free to investors who direct their requests to Roberts Realty Investors, Inc., c/o Secretary, 375 Northridge Road, Suite 330, Atlanta, Georgia 30350.

 

Participants in Solicitation

 

The Company, its directors and its executive officers may be deemed to be participants in the solicitation of proxies from the holders of the Company’s common stock in respect of the proposals. Information about the directors and executive officers of the Company is set forth in the Company’s Annual Report on Form 10-K, which was filed with the SEC on March 6, 2014. Investors may obtain additional information regarding the interest of certain of those participants by reading the definitive proxy statement filed with the SEC on December 23, 2014.

 

Item 9.01      Financial Statements and Exhibits.

 

(d)      Exhibits

 

Exhibit No.	Exhibit
10.1	Loan Agreement dated January 13, 2015 by and between Northridge Parkway, LLC (a wholly owned subsidiary), Roberts Properties Residential, L.P., Roberts Realty Investors, Inc. and Paul J. A. Lex van Hessen (Northridge).
10.2	Promissory Note in the principal amount of $2,000,000 dated January 13, 2015 by and between Northridge Parkway, LLC and Paul J. A. Lex van Hessen (Northridge).
10.3	Deed to Secure Debt, Security Agreement and Fixture Filing dated January 13, 2015 by and between Northridge Parkway, LLC and Paul J. A. Lex van Hessen (Northridge).
10.4	Guaranty dated January 13, 2015 by Roberts Properties Residential, L.P. and Roberts Realty Investors, Inc. in favor of Paul J. A. Lex van Hessen (Northridge).

 

3

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be filed on its behalf by the undersigned hereunto duly authorized.

 

 

	ROBERTS REALTY INVESTORS, INC.
Dated:  January 20, 2015	By:	/s/ Anthony W. Shurtz
		Anthony W. Shurtz
		Chief Financial Officer

 

4

Exhibit 10.1

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT (“Agreement”) is made and entered into as of the 13^th day of January, 2015, by and between PAUL J. A. LEX VAN HESSEN, an individual (“Lender”) having an address c/o Hualalai Resort, P.O. Box 1596, Kailua-Kona Hawaii 96745, and NORTHRIDGE PARKWAY, LLC, a Georgia limited liability company (“Borrower”), ROBERTS PROPERTIES RESIDENTIAL, L.P., a Georgia limited partnership (“Partnership”) and ROBERTS REALTY INVESTORS, INC., a Georgia corporation (“Company” and, collectively with the Partnership, the “Guarantors” and individually a “Guarantor”) each having an address of 375 Northridge Road, Suite 330, Atlanta, GA 30350.

 

WHEREAS, Lender has made a loan to Borrower (the “Loan”) evidenced by a Promissory Note of even date herewith in the original principal amount of $2,000,000.00 payable by Borrower to Lender (“Note”).

 

WHEREAS, the Loan is secured by that certain Deed to Secure Debt, Security Agreement and Fixture Filing of even date herewith by Borrower in favor of Lender (“Deed to Secure Debt”) encumbering certain real property and improvements comprising 12.965 acres located on Northridge Parkway, Sandy Springs, Fulton County, Georgia, as more particularly described on Exhibit A hereto (the “Property”).

 

WHEREAS, the Loan is guaranteed by that certain Guaranty dated of even date herewith “Guaranty”) executed by Guarantors to and in favor of Lender. The Guaranty, together with the Note, this Agreement, the Deed to Secure Debt and any other documents or instruments evidencing or securing the Loan are collectively herein referred to as the “Loan Documents”.

 

NOW THEREFORE, in consideration of premises, the mutual promises hereinafter contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound hereby, agree as follows:

 

1.  The Loan. The Loan shall be made, secured, guaranteed and disbursed as follows:

 

(a)      Loan Amount. Subject to the terms of this Agreement, Lender agrees to loan to Borrower the amount of US$2,000,000.00 (the “Loan Amount”). The Loan will be evidenced by the Note (a copy of which is attached hereto as Exhibit B) and will be payable, subject to certain limitations on prepayment, as set forth therein.

 

(b)      Term. The Loan term will commence on the date of this Agreement and end on July 13, 2015 (“Maturity Date”). On the Maturity Date the entire outstanding principal balance of the Loan, together with all accrued interest thereon and all other sums due to Lender under the Loan and this Agreement, will be due and payable in full.

 

(c)      Interest. Interest shall accrue on the outstanding principal balance of the Note at the rate of twelve percent (12%) per annum, calculated on an actual three hundred and sixty (360) day basis. Interest only will be payable every month on the anniversary date of this Agreement in installments of US$20,277.78, resulting in the total amount of interest due prior to the Maturity Date of US$121,666.68. All such payments shall be sent by wire transfer to the following account:

 

Account Number:  45-274489

Paul J A Van Hessen.

Routing number #121301015

First Hawaiian Bank

1348 Hunakai St

Honolulu HI  96816

 

On even date with this Agreement, US$60,833.34 of the Loan proceeds has been retained by Lender as prepaid interest for the first three (3) months of the Loan term (the “Prepaid Interest”). From and after the Maturity Date, or upon the occurrence of an event of a default hereunder or under the Note, and until the Loan is paid in full, interest shall accrue at the per annum rate of eighteen percent (18%) per annum (“Default Rate”).

 

(d)      Fees.

 

(i)

Borrower shall pay to Lender a loan origination fee in the amount of one percent (1.00%) of the amount of the Loan or US$20,000.00 (the “Origination Fee”), payable at funding of the Loan.

 

(ii)

Borrower shall pay to Petacque & Wall LLC a loan consultant fee in the amount of one percent (1.00%) of the amount of the Loan or US$20,000.00 (the “Consultant Fee”), payable at funding of the Loan.

 

(iii)

Upon payment in full of the Loan and as a condition precedent to the release of Lender’s interest in and to the Property, Borrower shall pay to Lender, in addition to the outstanding principal amount of the Loan and all accrued and unpaid interest thereon, an exit fee in the amount of US$40,000.00 (“Exit Fee”).

 

(e)      Expenses. Concurrently with the execution and delivery of this Agreement, Borrower shall pay Lender’s expenses incurred in connection with the underwriting and closing of the Loan including, without limitation, attorney’s fees and due diligence expenses.

 

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Page 2

(f)      Security. The Loan will be secured by the following:

 

(i)

The Guaranty (a copy of which is attached hereto as Exhibit C) executed by the Guarantors jointly and severally in favor of Lender, guaranteeing the payment and performance of Borrower under the Note and other Loan Documents with full recourse.

 

(ii)

The Deed to Secure Debt encumbering the Property and granting a security interest in all personal property and fixtures relating thereto including, without limitation, contracts, plans, specifications, zoning approvals and other documents and instruments relating to the ownership, development and operation of the Property.

 

(iii)

An assignment of leases, rents and profits relating to or arising from the Property.

 

(iv)

A security interest in all personal property and fixtures located on or used in connection with the Property, as perfected by the filing of Uniform Commercial Code financing statements.

 

(g)     Use of Loan Proceeds. The proceeds of the Loan shall be used for those expenses set forth on Exhibit D attached hereto and incorporated herein by reference and for working capital of the Partnership.

 

(h)     Conditions to Loan Funding. Lender’s obligation to fund the Loan shall be subject to satisfaction of the following conditions:

 

(i)

Execution and delivery by Borrower of the Note, this Agreement, the Deed to Secure Debt and any other documents required by Lender to evidence and secure the Loan.

 

(ii)

Execution and delivery by the Guarantors of the Guaranty.

 

(iii)

Review and approval by Lender of existing appraisals, environmental reports, and engineering studies with respect to the Property.

 

(iv)

Verification that the Property is zoned to permit development of an apartment project having not less than 220 units, substantially in accordance with the preliminary project plans, copies of which have been delivered to Lender (the “Project”) and that Borrower has obtained, or will obtain in the normal course of business, without material impediment, all approvals, consents and permits necessary to construct the Project.

 

(v)

Receipt of a title commitment to insure the Deed to Secure Debt as a first priority security title to the Property subject only to such matters as are acceptable to Lender.

 

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(vi)

Receipt, review and approval of the formation and ownership documents for the Borrower and each Guarantor and receipt of resolutions of the mangers or directors of each authorizing the Loan transaction.

 

(vii)

Receipt of certifications that Borrower and the Guarantors are in compliance with the Net Worth and Minimum Cash Equity requirements set forth in Sections 3 (n) and (o) below.

 

(viii)

Receipt and review of a copy of that certain Stock Purchase Agreement filed with the SEC on November 19, 2014 by Company, together with all exhibits and schedules thereto (“Stock Sale Agreement”).

 

(ix)

Receipt of evidence satisfactory to Lender that A-III Investment Partners, LLC has approved the Loan.

 

(x)

Receipt and review of current financial statements for Borrower and each of the Guarantors, certified true and correct by an authorized officer of Borrower and Guarantors.

 

(xi)

Receipt and review of any other documents, instruments, reports, certifications or other diligence deemed necessary in Lender’s sole discretion.

 

2.  Certain Disbursements. Prior to the satisfaction of the conditions set forth herein, Lender may at its sole option, but shall have no obligation to, disburse such sums as Lender may elect, including, without limitation, amounts owed to Lender for expenses.

 

3.  Representations and Warranties of Borrower and Guarantors. In order to induce Lender to enter into this Agreement and to make the Loan for which provision is made herein, the Borrower and each of the Guarantors represents and warrants to Lender that:

 

(a)      Organization and Authority. The Borrower is a limited liability company, duly organized, validly existing and in good standing in the State of Georgia and is qualified or registered, as required by law, and in good standing in all jurisdictions where qualification or registration is necessary. Partnership is a limited partnership, duly organized, validly existing and in good standing in the State of Georgia and is qualified or registered, as required by law, and in good standing in all jurisdictions where qualification or registration is necessary. Company is a corporation, duly organized, validly existing and in good standing in the State of Georgia and is qualified or registered, as required by law, and in good standing in all jurisdictions where qualification or registration is necessary. The Borrower and each Guarantor have all requisite corporate, partnership and limited liability company power and authority, and have taken or caused to be taken all necessary corporate, partnership and limited liability company action (including any necessary shareholder, partner or member action) to execute, deliver, enter into and perform in accordance with the Loan Documents. Upon execution and delivery hereof and thereof, the Loan Documents will constitute valid and binding obligations of the Borrower and each Guarantor enforceable in accordance with their respective terms, and the Note will be entitled to the benefits of this Agreement, the Commitment and the other Loan Documents.

 

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Page 4

(b)      Adverse Change. The financial statements delivered to Lender for or on behalf of Borrower or any Guarantor are true and correct in all material respects and accurately represent the financial condition of the respective parties as of the date of such financial statements. There has been no material adverse change in the business, properties, or condition (financial or otherwise) of Borrower, any Guarantor or the Property since the date of the last financial statements furnished to Lender.

 

(c)      Litigation. There is no action, suit or proceeding at law or in equity or by or before any governmental instrumentality or other agency now pending, or, to the knowledge of the Borrower or any of the Guarantors threatened or in prospect against or affecting the Borrower, any Guarantor, the Property or any properties or rights of the Borrower or any Guarantor which may materially or adversely affect the business, properties, or financial condition of the Borrower, any Guarantor or the Property. Borrower is not currently affected by any strike or other labor disturbance, nor is the Borrower or any Guarantor in default in any respect under any judgment, order, injunction, rule, ruling or regulation of any court or governmental commission, agency or instrumentality.

 

(d)      No Violations. Neither the execution nor delivery of this Agreement, nor any of the other Loan Documents, nor the consummation of the transactions contemplated hereby and thereby, nor compliance with the terms and provisions hereof and thereof, will conflict with, violate or result in a breach of or default under, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever on any of the assets of the Borrower (including, without limitation, the Property) or any Guarantor, pursuant to the terms of any provision of any contract or agreement, charter, bylaw, partnership agreement, trust indenture, or other corporate, partnership or trust restriction, any law, ordinance, rule, order, certificate, license, regulation or decree of the United States or any state, territory or political subdivision thereof, or any court, agency or other tribunal under which the Borrower, any Guarantor or any of Borrower’s or Guarantor’s assets are subject. Neither Borrower nor any Guarantor is in default with respect to the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of the foregoing which are material to its financial condition.

 

(e)      Payment of Taxes. The Borrower and Guarantors have filed or caused to be filed all federal, state and local tax returns, which are required to be filed, except the amended tax returns outlined in the Stock Sale Agreement. Borrower and Guarantors have paid or caused to be paid all taxes as shown on said returns or on any assessment received by them, to the extent that such taxes have become due, except as otherwise permitted by the provisions hereof. The Borrower and Guarantors have no reason to believe that any additional taxes are due for prior calendar tax years that have not been audited by the respective tax authorities beyond the amounts provided in the financial statements heretofore furnished to Lender.

 

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(f)      Location of Records. All records of the Borrower pertaining to the Property and the Project are and shall be kept at the Borrower’s address set forth on the first page of this Agreement.

 

(g)      Permits; Governmental and Other Approvals. Borrower and each Guarantor possess such licenses and permits as are required for the conduct of their respective businesses. No approval, consent or authorization of any governmental authority which has not heretofore been obtained is necessary for the execution or delivery by Borrower or any Guarantor of this Agreement, the Guaranty or the other Loan Documents or for the performance by Borrower or any Guarantor of any of the terms or conditions hereof or thereof.

 

(h)     Title to Property. The Borrower has good and marketable title to the Property and all of the Borrower’s other assets; and the Property and all such other assets are free and clear of Liens, except as disclosed in the financial statements referred to in Section 3(b) and as otherwise permitted or required by the provisions of this Agreement and the other Loan Documents.

 

(i)       Consents, Registrations, Approvals, etc. No registration with or consent or approval of, or other action by any governmental authority is required for the execution, delivery and performance of any Loan Document or Guaranty to which Borrower or either Guarantor is a party.

 

(j)       Solvency. The Borrower and each of the Guarantors is and will remain solvent, taking into account the consummation of the transactions provided in the Loan Documents.

 

(k)      Property. (a) The Property has been properly and finally zoned to permit the development of the Project; (b) the use of the Property for Borrower’s intended purpose will not violate any restrictive covenant, any applicable governmental building law (herein “Building Law”), or other governmental law, ordinance or regulation applicable thereto; (c) the Property has convenient and adequate access to all electric, gas, water, storm sewer, sanitary sewer, telephone, cable television and other utility services necessary for the construction of the proposed improvements on Property and the intended use of the Property, such utilities are available to the Borrower in sufficient quantities to accommodate the intended use of the Property and to comply with all Building Laws, and with all other applicable governmental laws, rules, ordinances and codes (herein “Governmental Requirements”), and the Borrower has all easements, grants, permits, approvals and other rights necessary to tie into and use such utilities; (d) the Property has access to existing public roads and highways (including all necessary rights and governmental approvals for related ingress and egress) that is adequate for the intended use of the Property; (e) the Property complies (and the Project when completed will comply) with all applicable Building Laws and Governmental Requirements; (f) the Borrower has obtained, or will obtain in the ordinary course of business, all permits necessary to construct the Project on the Property and Borrower is not aware of any impediment to the acquisition of any such required permits; (g) no portion of the Property is located within a special flood hazard area; and (h) no building or improvement on any adjoining property encroaches onto the Property except for a dumpster pad, an 8-foot wooden fence and grass island that encroach on the southwest corner of Tract One of the Property, and landscaping encroaching on the north side of Tract One of the Property, all as shown on the survey of the Property delivered to Lender.

 

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(l)

Information Regarding Loans; Purpose. All of the information contained in the request for the Loan is true and correct in all material respects and all statements, representations and warranties contained therein and in any other Loan Document signed in connection herewith are true and correct in all material respects, and do not contain any untrue statement of a material fact or omit a material fact necessary to make them not misleading. The proceeds of the Loan will be used solely for the expenses described on Schedule D and operating expenses of Partnership and/or Company and for other business or commercial purposes, and none of such proceeds will be used for personal, family, household or agricultural purposes.

 

(m)

Changes in Management. The Borrower shall not permit any change in the management of the Property without the prior written consent of the Lender; provided, however, that Lender expressly consents to the changes in management contemplated by the Stock Sale Agreement.

 

(n)

Net Worth. The Borrower and Guarantors represent and warrant that as of the date of this Agreement, the consolidated Net Worth of the Guarantors is not less than $12,000,000.00. For purposes of this Agreement, “Net Worth” shall mean the value of the assets of Guarantors less liabilities, determined in accordance with generally accepted accounting practices (“GAAP”), as shown on the consolidated financial statement of the Guarantors.

(o)

Equity. On or before the date of this Agreement, Borrower and Guarantors have invested, in the aggregate, not less than $250,000 cash equity in the Property (“Minimum Cash Equity”). Borrower and Guarantors shall, during the term of the Loan, maintain the Minimum Cash Equity in the Property.

 

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(p)

Stock Sale Agreement. The Stock Sale Agreement is in full force and effect and has not been terminated. Borrower’s and/or Guarantors’ execution and delivery of the Loan Documents and their respective performance thereunder does not and will not violate any term or condition of the Stock Sale Agreement or result in an event of default thereunder. Borrower and/or Guarantors’ shall provide to Lender upon receipt a copy of any notice delivered or received by or on behalf of Borrower or any Guarantor with respect to the Stock Sale Agreement.

 

4.  Prepaid Interest. The Prepaid Interest in the amount of $60,833.34 (to be withheld from the proceeds of the Loan) will be retained by Lender for the purpose of prepaying interest under the Loan for the initial three (3) months of the Loan term. In the event that the Loan is prepaid by Borrower on or prior to the end of such three (3) month period, the balance of the Prepaid Interest will be retained by Lender as a prepayment premium. In no event will any portion of the Prepaid Interest be disbursed to Borrower.

 

5.  Events of Default. The occurrence of any of the following events, and, except with respect to (i) payment defaults, (ii) defaults under §§5(a), (b), (c), (f), (h), (i), (m) (n), (p), (q) and (v) or (iii) where a different time is specified, the continuance of such event for ten (10) days or more after written notice thereof from Lender to Borrower (or in the event said default cannot be cured within ten (10) days, said period may be extended for such additional time as may be required to cure such defaults provided Borrower is diligently attempting to cure same and diligently prosecutes such cure to completion), shall constitute an Event of Default hereunder (“Event of Default”):

 

(a)      If Borrower fails to make any payment of the principal of or interest (together with premium thereon, if any) on the Note within three (3) days of the date the same becomes due and payable (excluding, however, the payment due on the Maturity Date for which there is and shall be no grace period);

 

(b)      If the Deed to Secure Debt and the other Loan Documents shall not provide Lender with a first priority security title to and security interest in and to the Property and other real and personal property covered thereby;

 

(c)      If without the prior written consent of Lender, the Property or any part thereof or any interest of the Borrower therein, is sold, transferred, conveyed or encumbered in any way, except for leases approved by Lender;

 

(d)      If the improvements on the Property shall encroach upon any street or upon adjoining property and such encroachment shall materially, adversely affect title to or the use of the Property;

 

(e)      If Borrower shall fail to comply with any of the covenants, terms or conditions contained herein, in the Commitment Letter, in the Note, or in any of the other Loan Documents, giving consideration to any grace or cure period specifically provided therefor;

 

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(f)      The filing by the Borrower or any Guarantor of a voluntary petition in bankruptcy or the Borrower’s adjudication as a bankrupt or insolvent, or the filing by the Borrower or any 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 Borrower’s or any Guarantor’s seeking or consenting to or acquiescence in the appointment of any trustee, receiver or liquidator of the Borrower or any 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 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

 

(g)      The entry by a court of competent jurisdiction of any order, judgment, or decree approving a petition filed against the Borrower or any Guarantor 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 Borrower or any 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 without the consent or acquiescence of the Borrower or any Guarantor which appointment shall remain unvacated and unstayed for an aggregate of sixty (60) days (whether or not consecutive); or

 

(h)      To the full extent not prohibited by applicable law, if a final non-appealable judgment by a court of competent jurisdiction is entered against Borrower or any Guarantor, which judgment is material to Borrower’s financial condition or ability to pay the Loan;

 

(i)       If Borrower does not permit Lender, or representatives of Lender, to enter upon the Property to inspect the Property at all reasonable times;

 

(j)      If Borrower executes any security agreement, except to Lender, covering any materials, fixtures or articles used in the Property or covering articles of personal property placed in the Property as a fixture;

 

(k)      If Borrower fails to comply with any requirement of any governmental authority having jurisdiction within thirty (30) days after receipt of notice in writing of such requirement shall have been given to Borrower or within the time specified in such notice, whichever is greater;

 

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(l)       If Borrower fails to notify Lender of the filing of any lien against the Property within ten (10) business days after Borrower receives notice of such lien;

 

(m)     If any representation or warranty made herein or in any of the other Loan Documents shall prove to be false or misleading in any material respect;

 

(n)      If any report, certificate, financial statement or other instrument furnished in connection with the Loan Documents, the Project or the borrowing hereunder shall prove to be false or misleading in any material respect;

 

(o)     If Borrower or any other Person fails to observe or perform any other covenant, condition or agreement under the Loan Documents within any applicable cure period, or if there shall occur a default or an Event of Default under the Loan Documents;

 

(p)     If Partnership shall cease to be the sole owner and holder of the entire ownership interest in Borrower;

 

(q)     If any action whatsoever shall be taken, or if there shall be any occurrence which could or does have the effect of, terminating, dissolving, liquidating or winding-up the business of the Borrower or any Guarantor;

 

(r)      If Borrower and Guarantors fail to maintain the Minimum Cash Equity in the Property. Borrower shall deliver to Lender, within fifteen (15) days after the end of each calendar quarter, a statement of compliance with the Minimum Cash Equity covenant;

 

(s)      If (i) Guarantors do not satisfy the initial Net Worth requirement set forth in Section 3(n) above. Guarantors shall deliver to Lender, within thirty (30) days after the end of each calendar quarter, a statement of compliance with the Net Worth covenant.

 

(t)      If (i) shareholders of the Company fail to approve the transaction that is the subject of the Stock Sale Agreement (the “Stock Sale”) on or before January 22, 2015, (ii) a default or event of default occurs under the Stock Sale Agreement or (iii) the Stock Sale Agreement is terminated for any reason whatsoever (each a “Stock Sale Default”), and Borrower fails to cure such default before the earlier to occur of (x) ninety (90) days after the occurrence of the Stock Sale Default, or (y) July 13, 2015.

 

(u)      If the Company is delisted by the NYSE MKT Exchange as a result of failure to timely file its 10-Q on or before February 18, 2015, and Company fails to cure such default within ninety (90) days after the occurrence thereof.

 

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Page 10

(v)      If the Stock Sale (i) closes on or prior to March 12, 2015, and the Deposit is not delivered to the Agent (as set forth in Section 24 below) or any of the other conditions set forth in Section 24 are not satisfied by Borrower, or (ii) closes after March 12, 2015, and the Loan is not immediately paid in full.

 

6.  Remedies. Upon the occurrence of any one or more of the above-listed Events of Default, then, or at any time thereafter, Lender may, without notice to the Borrower, Guarantors or any other Person, declare the unpaid principal of and interest and other charges on the Loan immediately due and payable, together with any other Liabilities (hereinafter defined) of the Borrower to Lender, and such amounts thereupon shall become immediately due and payable, without presentment, demand, protest, notice of protest or notice of any kind, all of which are hereby expressly waived by Borrower, and if all such amounts are not immediately paid in full, Lender may exercise all rights given to it under the laws of the State of Georgia and any other state and under this Agreement and the other Loan Documents, including without limitation, foreclosure of the Deed to Secure Debt and/or the filing of actions in law or in equity for the collection of all amounts due under the Note, this Agreement, the Guaranty and the other Loan Documents. Upon the occurrence of any one or more of the above-listed Events of Default, all obligations on the part of Lender to make loans and advances hereunder shall, if Lender so elects, cease and terminate; provided, however, that Lender may, in its sole discretion, make additional advances without becoming liable to make any other advances, notwithstanding anything to the contrary contained or implied herein, in the Commitment Letter or in any other Loan Document.

 

7.  Setoff. Lender is hereby given a continuing lien as additional security for the Note and all other Liabilities and indebtedness of Borrower to Lender (as defined herein and in the Deed to Secure Debt or in any other Loan Document) upon any and all moneys, securities, and other property of Borrower, and the proceeds thereof, now or hereafter held or received by or in transit to the Lender from or for Borrower, whether for safekeeping, custody, pledge, transmission, collection, or otherwise, and any and all claims of Borrower against the Lender at any time existing, and upon the occurrence of any Event of Default hereunder, the Lender may apply or set off the same against the Indebtedness and Liabilities (as defined herein or in the Deed to Secure Debt or other Loan Documents) secured by the Deed to Secure Debt and other Loan Documents.

 

8.  Borrower Defined; Successors and Assigns. The term “Borrower”, wherever used herein, shall mean the Borrower described on the first page of this Agreement, and its successors and assigns, and all of the covenants, conditions, and agreements hereof shall bind the successors and assigns of Borrower and shall inure to the benefit of and be available to the successors and assigns of Lender.

 

9.  Person and Liabilities Defined. The term “Person” shall include natural persons, corporations (which shall be deemed to include business trusts), associations, partnerships, limited liability companies and all such similar entities. Except as otherwise may be defined with respect to a particular Loan Document, the term “Liabilities” shall mean all indebtedness, liabilities and obligations of Borrower to Lender, whether joint or several, matured or unmatured, liquidated or unliquidated, direct or indirect, primary or secondary, absolute or contingent, now existing or hereafter arising and whether arising by contract, operation of law or otherwise, and all extensions, modifications, amendments, consolidations, renewals and replacements thereof, and whether incurred or given as maker, endorser, guarantor, surety or otherwise, including without limitation, the Loan and the indebtedness evidenced by the Note or any extension, modification, amendment, consolidation, renewal or replacement thereof or therefor.

 

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Page 11

10.  Delay; No Waiver. No delay or failure of Lender to exercise any option or right herein given or reserved shall constitute a waiver of such option or right or estop Lender thereafter to exercise the same or any other option or right at any time, and Lender’s payment or contracting to pay anything Borrower has herein agreed to pay shall not constitute a waiver of the default of Borrower in failing to make any such payment. A waiver by Lender of any option or right herein given or reserved on any one occasion shall not be deemed a waiver of said option or right on any future occasion. Lender may in its discretion extend the time of payment of the principal evidenced and secured by the Note and other Loan Documents and any extension so granted shall be deemed to be made in pursuance of this Agreement and not in modification thereof.

 

11.  No Partnership or Joint Venture. Notwithstanding anything to the contrary herein contained or implied, Lender, by this Agreement, or by any action pursuant thereto or hereto, shall not be deemed a partner, joint venturer or participant in the venture with Borrower, and Borrower hereby indemnifies and agrees to defend and hold Lender harmless (including the payment of reasonable attorneys’ fees) from any and all damages resulting from such a construction of the parties’ relationship. The requirements herein, and the restrictions imposed in this Agreement and the other Loan Documents, are for the sole protection and benefit of Lender.

 

12.  Assignments. Lender may assign this Loan or any parts hereof to one or more parties of its choice. Borrower shall not assign or delegate this Agreement or any of its rights or duties hereunder without the prior written consent of Lender. In the event of such assignment by Borrower with Lender’s consent, Borrower shall execute, or cause the execution of, all documents necessary or appropriate to continue the full force and effect of the Note and other Loan Documents.

 

13.  Modifications; Waiver. Neither this Agreement nor any provision hereof may be changed, modified, amended, waived, discharged, abandoned or terminated except by an instrument in writing signed by the party against whom enforcement of the change, modification, amendment, waiver, discharge, abandonment or termination is sought. In the event that Lender 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.

 

14.  Remedies Cumulative. No right or remedy conferred upon Lender in this Agreement is intended to be exclusive of any other right or remedy contained in the Note, this Agreement, or any other Loan Document, and every such right or remedy shall be cumulative and in addition to every other right or remedy contained herein or therein or now or hereafter available to the Lender at law, in equity, by statute or otherwise.

 

15.  Invalid Provisions; No Conflict. If any of the provisions of this Agreement or the other Loan Documents or the application thereof to any Person or circumstances, shall, to any extent, be invalid or unenforceable, the remainder of said documents and instruments, 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 Agreement and the other Loan Documents shall be valid and enforceable to the fullest extent permitted by law. No provision of this Agreement or the other Loan Documents shall be deemed in conflict with any other provision hereof or thereof, and the Borrower acknowledges that no such provision or any interpretation thereof shall be deemed to diminish the rights of the Lender, any assignee, or the holder of the Note under the terms and conditions or any other provisions hereof or thereof. Lender may at its option exhaust its remedies hereunder, under the Note, and under the other Loan Documents, either concurrently or independently, and in such order as it may determine.

 

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Page 12

16.  Indemnification. Borrower and each Guarantor shall and does hereby indemnify and hold harmless Lender from and against any and all claims, charges, losses, expenses and costs, including without limitation reasonable attorneys’ fees, resulting from any claims, actions or proceedings in connection with the execution, delivery and performance of this Agreement, the Guaranty or the other Loan Documents, except for claims, charges, losses, expenses and costs resulting directly from the Lender’s willful misconduct or gross negligence. The indemnification provided in this section shall survive the payment in full of the Loan.

 

17.  Headings; Under Seal; Entire Agreement. Article and section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement or be used to construe any provision hereof or for any other purpose. This Agreement is intended to be under the seal of all parties hereto and to have the effect of a sealed instrument in accordance with the law. This Agreement, together with Commitment Letter, the Guaranty and the other Loan Documents, embodies the entire agreement and understanding between the parties, supersedes all prior agreements and understandings related to the subject matter hereof and thereof, and may not be amended except by written agreement between Borrower and Lender.

 

18.  No Third Party Beneficiaries. There are no third party beneficiaries to this Agreement or to any of the other Loan Documents. All conditions to Lender’s obligations to make disbursements under this Agreement and the other Loan Documents are imposed solely and exclusively for the benefit of Lender. Neither Borrower, nor any Guarantor nor any other Person shall have standing to require satisfaction of any such condition or be entitled to assume that Lender will refuse to make disbursements in the absence of strict compliance with any or all such conditions, and neither Borrower, nor any Guarantor nor any other Person shall, under any circumstances, be deemed to be a beneficiary of any conditions hereof, any or all of which conditions may be waived freely, in whole or in part by Lender at any time if, in its sole discretion, Lender deems it advisable so to do. Lender makes no representations or warranties and assumes no obligation or responsibility with respect to the quality of the construction of the improvements or any part of the Property. This Agreement and the other Loan Documents shall not benefit, and may not be relied upon by, any Person other than the Borrower, the Guarantors and the Lender.

 

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Page 13

19.  Notices. Any notice shall be deemed conclusively to have been received by a party hereto and be effective on the earlier of (a) the day on which personally delivered to such party at the address set forth below (or at any other address as such party shall specify to the other party in writing), or (b) the next business day after deposit of such notice with a nationally-recognized overnight courier service, addressed to such party at said address.

 

	If to Lender:	Paul J. A. Lex Van Hessen
		c/o Hualalai Resort
		P.O. Box 1596
		Kailua-Kona Hawaii 96745
	With copy to:	Arie B. Zoller
		LVH Partners, LLC
		1200 N. Ashland Avenue
		Suite 600
		Chicago, IL 60622
	If to Borrower,
	Partnership
	or Company:	375 Northridge Road
		Suite 330
		Atlanta, GA  30350
		Attn:  Anthony Shurtz

 

20.  Governing Law. This Agreement and the other Loan Documents, and the rights and obligations of the parties hereunder and thereunder shall be governed by and be construed in accordance with the laws of the State of Georgia. Borrower and each Guarantor hereby submits itself to jurisdiction in the State of Georgia for any action or cause of action arising out of or in connection with the Loan or the Loan Documents, agrees that venue for any such action shall be in Georgia, and waives any and all rights under the laws of any state to object to jurisdiction or venue within the State of Georgia. Notwithstanding the foregoing, nothing contained in this section shall prevent Lender from bringing any action or exercising any rights against Borrower, any Guarantor, any security for the Loan, or any of Borrower’s properties in any other county, state or jurisdiction. Initiating such action or proceeding or taking any such action in any other state shall in no event constitute a waiver by Lender of any of the foregoing.

 

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Page 14

21.  Inspections; Lender’s Benefit Only. Lender shall have the right, and Borrower shall allow Lender and any of its authorized representatives and construction consultants, if any shall be employed, at all times after 24 hours prior notice to inspect the Property. The Borrower and Guarantors also shall permit Lender and any of its authorized representatives to examine, inspect and make extracts from books and records of the Borrower and Guarantors, and Borrower and Guarantors will discuss with Lender or its representatives the affairs, finances and accounts of the Borrower and Guarantors, all at such reasonable times and as often as may be reasonably requested by Lender. Any inspections and reports made by, for or on behalf of Lender, or any approvals of inspection reports made by Lender pursuant to (i) the provisions hereof, (ii) the Commitment Letter, or (iii) any other provisions of the Loan Documents giving Lender a right of inspection of the Property, shall be solely for the benefit of Lender, and neither Borrower, nor any Guarantor nor any third party shall be beneficiaries of the same, or shall be entitled to claim any loss or damage as a result of such inspections, approvals, disapprovals or the failure of Lender to make the same. Borrower and each Guarantor acknowledges that Lender is not acting in a fiduciary capacity for Borrower or any Guarantor in any respect relative to the Loan, including without limitation, in the making of any such inspections or in reviewing or approving any such inspection reports.

 

22.  Financial Statements, Reports, etc. The Borrower and Guarantors shall furnish to the Lender:

 

(a)      Not later than forty five (45) days after the end of each calendar quarter, financial statements (including a balance sheet and the related statements of income and cash flows) and operating reports of the Borrower and Guarantors prepared in accordance with GAAP (or other comprehensive basis of accounting acceptable to the Lender) for the period beginning on the first day of such calendar quarter and ending on the last day of such period, together with statements in comparative form for the corresponding period in the preceding fiscal year, such reports to be certified by an authorized representative of the Borrower and the respective Guarantor.

 

(b)      Together with the financial statements required by subsection (a) above, a certificate of an authorized representative of the Borrower stating that, except as disclosed in such certificate, (1) no event of default exists under any of the Loan Documents or under any instrument evidencing or securing any other indebtedness or contingent liability of the Borrower, and (2) no event has occurred and is continuing which, with notice or lapse of time or both, would constitute an event of default under any of the Loan Documents or under any instrument evidencing or securing any other indebtedness or contingent liability of the Borrower. If any such event of default exists or any such event has occurred and is continuing, such certificate shall contain a description of the nature and extent thereof.

 

(c)      (i) Not later than fifteen (15) days after the end of each calendar quarter certification by Borrower of compliance with the Minimum Cash Equity requirement and (ii) not later than thirty (30) days after the end of each calendar quarter certification by Guarantors of compliance with the Net Worth requirement.

 

(d)      Not later than five (5) business days after the receipt thereof by Borrower, copies of any correspondence, notices, agreements, or any other documents or instruments affecting the Property.

 

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Page 15

(e)      Such other information regarding the Property or the financial condition or operations of the Borrower, the Guarantors, or the Property as the Lender shall reasonably request from time to time.

 

23.      Foreign Status of Lender.  Lender has provided Borrower with a complete, executed copy of US Internal Revenue Service Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals), indicating that Lender is an individual with foreign status for which, under United States treaty, income tax need not be withheld by Borrower in connection with payment of interest, including prepaid interest, associated with the Loan, all such interest being exempt from taxation by treaty or otherwise treated as portfolio interest subject to withholding exemption including under 26 CFR Section 1.871-14.  Borrower shall not withhold income tax from the interest payments due hereunder and, as between Borrower and Lender, Lender alone shall be liable for all taxation that may later be determined to have been applicable to all payments in excess of principal made hereunder.

 

24.      Payment Escrow Deposit.

 

(a)      Notwithstanding anything to the contrary contained in the Note, this Agreement or the other Loan Documents, provided no default or Event of Default has occurred and is continuing hereunder or under any of the other Loan Documents, Borrower shall have the right to prepay the Loan, in whole but not in part, on or after March 12, 2015. During the period from the date of this Agreement through March 12, 2015 (“Lock Out Period”), Borrower shall not have any right to prepay the Loan in whole or in part. In the event that the Stock Sale occurs during the Lock-Out Period, Borrower shall have no right to prepay the Loan, however, Borrower shall deposit from the proceeds of the Stock Sale the amount of the Deposit specified below and satisfy the following conditions:

 

i)

Borrower shall provide prior written notice to Lender specifying the date (the “Deposit Election Date”) on which the Deposit (hereinafter defined) is to be made;

 

ii)

Borrower shall remit to Lender on the Deposit Election Date all amounts then due and payable under the Note, this Agreement and the other Loan Documents in addition to the Deposit;

 

iii)

Borrower shall irrevocably deposit with Morris, Manning & Martin, LLP (“Agent”) cash collateral (the “Deposit”) in the amount of $2,040,000.00. Borrower shall and hereby does grant to Lender a first priority lien and security interest in and to the Deposit. Any interest accrued on the Deposit shall be payable to Borrower upon release of the Deposit; and

 

iv)

Borrower shall deliver to Lender a certificate of an authorized representative of Borrower certifying that the requirements of this subparagraph (a) have been satisfied.

 

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Page 16

(b)      Upon compliance with the requirements of subparagraph (a) above, Lender shall (i) execute a satisfaction of the Deed to Secure Debt and a UCC termination in the forms attached hereto as Exhibit E (collectively the “Release Deed”) releasing the Deed to Secure Debt and the other documents or instruments encumbering the Property (collectively the “Security Instruments”) and (ii) deliver same to the Agent to be held in escrow with the Deposit. Lender and Borrower hereby irrevocably direct the Agent (i) to pay the Deposit to Lender on March 13, 2015 (the “Escrow Release Date”), to be applied to the payment of the outstanding amounts due under the Loan, and (ii) to deliver the Release Deed to Borrower on the Escrow Release Date for recording in the appropriate records. No further writing shall be required from either Lender or Borrower to the Agent to effect the delivery of the Deposit and Release Deed by the Agent. Borrower further covenants and agrees that Borrower has and shall have no right, actual or contingent, in and to the Deposit after delivery of same to the Agent and that upon delivery, the Deposit is and shall be subject to the sole and absolute control of Lender. Borrower hereby waives any and all right in and to the Deposit except the right to have the Deposit applied to the payment of the Loan in accordance with the provisions of this Agreement. In the event that Borrower, any affiliate of Borrower or any person claiming by through or under Borrower takes any action to delay, avoid, limit, prevent or obstruct Lender’s receipt of the Deposit, the Release Deed shall be and be deemed void ab initio and of no force and effect, the Deed to Secure Debt shall reinstated and in full force and effect and Lender shall have each and all of its rights and remedies thereunder, hereunder, at law or in equity. Upon receipt by Lender of the Deposit, Lender shall have no further rights with respect to the Release Deed.

 

(c)      Effective upon distribution of the Deposit to the Lender and delivery of the Release Deed to Borrower, each of Lender, Borrower and each of the Guarantors, for themselves and for their respective parents, subsidiaries, affiliates, members, partners, officers, directors and agents shall and do hereby release each of the other parties from and against all loss, cost, damage, claim, cause of action or liability arising, directly or indirectly, from the Loan or any of the Loan Documents that shall have occurred from the beginning of time to the Escrow Release Date. Such release shall be and become immediately effective upon the delivery of the Deposit to Lender and the Release Deed to Borrower. The parties further agree and covenant not to sue any of the other parties for any matter released hereunder.

 

25. No Usurious Amounts. It is the intent of the parties hereto in the execution of this Loan Agreement, the Note, and all other Loan Documents to contract in strict compliance with the usury laws governing the Loan. In furtherance thereof, the parties stipulate and agree that none of the terms and provisions contained in this Loan Agreement and the other Loan Documents shall ever be construed to create a contract for the use, forbearance, or detention of money requiring payment of interest at a rate in excess of the maximum interest rate permitted to be charged by the laws governing the Loan. All sums paid or agreed to be paid for the use, forbearance or detention of money payable under the Loan shall, to the full extent allowed by applicable law, be amortized, prorated, allocated and spread throughout the full term of the Loan. In the event Lender shall collect monies that are deemed to constitute interest and that would otherwise increase the effective interest rate on the Loan to a rate in excess of that permitted to be charged by the laws governing the Loan, all such sums deemed to constitute interest in excess of the legal rate shall be applied to the unpaid principal balance of the Loan and, if in excess of such balance, shall be immediately returned to Borrower upon such determination.       

 

[Signatures begin on following page]

 

Loan Agreement

Page 17

IN WITNESS WHEREOF, Lender and Borrower have caused this Agreement to be duly and properly executed, under seal, as of the date first set forth above.

 

LENDER:                /s/ Arie Zoller, attorney-in-fact         [Seal] PAUL J. A. LEX VAN HESSEN, an individual

 

 

[Signatures continue on following page]

 

Loan Agreement

Page 18

		BORROWER:
		NORTHRIDGE PARKWAY, LLC, a Georgia limited liability company
		By:	Roberts Properties Residential, L.P., a Georgia limited
			partnership, its sole manager
			By:	Roberts Realty Investors, Inc., a Georgia
				corporation, its sole general partner
				By:	/s/ Anthony Shurtz
				Name:	Anthony Shurtz
				Title:	CFO
					[CORPORATE SEAL]

 

 

		GUARANTORS:
		ROBERTS PROPERTIES RESIDENTIAL, L.P., a Georgia limited partnership
		By:	Roberts Realty Investors, Inc., a Georgi
			corporation, its sole general partner

 

 

				By:	/s/ Anthony Shurtz
				Name:	Anthony Shurtz
				Title:	CFO
					[CORPORATE SEAL]

 

 

			ROBERTS REALTY INVESTORS, INC., a Georgia corporation
				By:	/s/ Anthony Shurtz
				Name:	Anthony Shurtz
				Title:	CFO
					[CORPORATE SEAL]

 

Loan Agreement

Page 19

EXHIBIT A

 

PROPERTY DESCRIPTION

 

EXHIBIT B

 

PROMISSORY NOTE

 

EXHIBIT C

 

GUARANTY

 

EXHIBIT D

 

USE OF PROCEEDS

 

Northridge Loan
Estimated Use of Proceeds
December 22, 2014

 

Description		Amount
Consulting Fee (Petaque & Wall)		$	20,000
Loan Origination Fee on Northridge Loan		$	20,000
Exit Fee on Northridge loan		$	40,000
Interest  on Northridge Loan for Six Months		$	121,666
Attorney’s Fees for Northridge Loan Closing		$	20,000
Salaries and Related Costs		$	82,214
General and Administrative Expenses		$	77,054
Transfer Agent and Exchange Listing Fees		$	32,100
Debt Service on Existing Loans		$	177,720
Legal- Transaction and Closing Costs		$	274,851
Audit and Tax Costs for the Closing		$	315,000
Edgar and XBRL Costs for Closing		$	25,000
Special  Shareholders Meeting		$	30,000
Remaining Working Capital		$	764,395
Total Loan Amount		$	2,000,000

 

EXHIBIT E

 

RELEASE DEED

 

	After recording please return to:
	Ms. Kate Moore
	Holt Ney Zatcoff & Wasserman, LLP
	100 Galleria Pkwy., Suite 1800
	Atlanta, Georgia  30339

 

	Re:	Deed Book _______, page ___,
		Fulton County, Georgia records; and
		Deed Book _______, page __,
		aforesaid records

 

CANCELLATION OF DEED TO SECURE DEBT, SECURITY AGREEMENT
AND FIXTURE FILING
AND ASSIGNMENT OF LEASES, RENTS AND PROFITS

 

The indebtedness referred to in that certain Deed to Secure Debt, Security Agreement and Fixture Filing, dated as of January __, 2015, executed by Northridge Parkway, LLC, a Georgia limited liability company, to Paul J. A. Lex Van Hessen, recorded in Deed Book _________, page ___, Fulton County, Georgia records, and in that certain Assignment of Leases, Rents and Profits dated January __, 2015, executed by Northridge Parkway, LLC, a Georgia limited liability company, to Paul J.A. Lex Van Hessen, recorded in Deed Book __________, page ___, aforesaid records, having been paid in full and the undersigned being the present record holder and owner of such Deed to Secure Debt, Security Agreement and Fixture Filing and Assignment of Leases, Rents and Profits by virtue of being the original grantee, the Clerk of such Superior Court is authorized and directed to cancel said Deed to Secure Debt, Security Agreement and Fixture Filing and Assignment of Leases, Rents and Profits of record as provided in O.C.G.A. § 44-14-4 for other mortgage cancellations.

IN WITNESS WHEREOF, the undersigned has signed, sealed and delivered this Cancellation of Deed to Secure Debt, Security Agreement and Fixture Filing and Assignment of Leases, Rents and Profits this ___ day of ______________, 2015.

Signed, sealed and delivered In the presence of:                                                            Unofficial Witness                                                            Notary Public   (NOTARY SEAL)   My Commission expires:

(SEAL) Paul J.A. Lex Van Hessen

 

authorization to record ucc amendment

 

Holt Ney Zatcoff & Wasserman, LLP is hereby authorized and directed to record the attached UCC Amendment terminating UCC Financing Statement No. 0602015-________ having Northridge Parkway, LLC as Debtor, and Paul J.A. Lex Van Hessen, as Secured Party, filed in the Fulton County, Georgia records on January __, 2015.

IN WITNESS WHEREOF, the undersigned has caused this Authorization to be signed, sealed and delivered this ___ day of ____________, 2015.

Paul J. A. Lex Van Hessen

 

Exhibit 10.2

 

PROMISSORY NOTE

 

 

$2,000,000.00	January 13, 2015
	Atlanta, Georgia

 

1.      PROMISE TO PAY.  FOR VALUE RECEIVED, the undersigned NORTHRIDGE PARKWAY, LLC, a Georgia limited liability company (hereinafter referred to as “Maker”), promises to pay to the order of PAUL J. A. LEX VAN HESSEN, an individual (hereinafter referred to as “Payee”; Payee and any subsequent holder of all or any part interest in this Note being hereinafter referred to collectively as “Holder”), to the attention of Payee at c/o Hualalai Resort, P.O. Box 1596, Kailua-Kona Hawaii 96745, or at any such other place as Holder may designate to Maker in writing from time to time, the principal sum of TWO MILLION AND NO/100^TH DOLLARS ($2,000,000.00), or so much thereof as shall be disbursed hereunder and shall from time to time be outstanding and unpaid, together with interest thereon at the rates hereinafter set forth, in lawful money of the United States of America, which at the time of payment shall be legal tender in payment of all debts and dues, public and private, such principal and interest to be paid in the manner hereinafter provided.

2.      INTEREST RATE. (a) From and after the date hereof (until maturity or the occurrence of a Default as hereinafter provided), interest on the principal balance hereof outstanding from time to time shall accrue at the rate per annum equal to twelve and no/100^th percent (12.00%).

(b)      Interest under this Note shall be computed on a simple interest basis, based upon a year comprised of three-hundred sixty (360) days and the actual number of days elapsed.

3.      PAYMENTS. Payments of interest only in the amount of $20,277.78 shall be due and payable monthly, in arrears, commencing on February 13, 2015, and continuing on the same day of each month thereafter (each a “Payment Date”) through and including June 13, 2015.

4.      MATURITY DATE. On July 13, 2015, the entire outstanding principal balance of the indebtedness hereby evidenced, together with all accrued but unpaid interest thereon, and all other sums due to Holder hereunder or under the Loan Documents hereinafter defined, shall be due and payable in full.

 5.      PREPAYMENT. Subject to the limitations on prepayment set forth in Section 24 of the Loan Agreement Maker shall have the right to prepay the indebtedness, in whole but not in part. If such prepayment occurs prior to the end of the three (3) month period commencing on the date of this Note, Lender shall retain the balance of the Prepaid Interest (as defined in the Loan Agreement) as a prepayment premium. Holder shall have no obligation to accept such prepayment without the prepayment premium. In no event, shall any prepayment premium required herein exceed an amount which, when added to interest accrued hereunder from the date of this Note to the date of prepayment, is permitted under applicable usury law in the State of Georgia.

6.      LATE CHARGE. A late charge shall be due and payable in the amount of five percent (5.0%) of the amount of any installment or payment of interest, principal and/or other sums not paid within five (5) days of the date on which such installment or payment was due. Holder shall have no obligation to accept any such delinquent installment or payment without the accompanying late charge, and the acceptance by Holder of such delinquent installment or payment without the accompanying late charge shall not constitute a waiver by Holder of the right to enforce and collect such late charge. Maker acknowledges and agrees that the late charge herein provided is not a charge in the nature of interest imposed for the use of money advanced under this Note; rather, the late charge is imposed to compensate Holder for the expense, inconvenience and economic frustration experienced by Holder as a result of Maker’s failure to make timely payments due hereunder, and is a reasonable forecast and estimate of Holder’s actual damages and loss on account of such delinquent payments.

7.      DEFAULT AND ACCELERATION. As used herein, the term “Default” shall mean the occurrence of any of the following events or conditions: (a) default in any payment of principal, interest or late charge stipulated above, or (b) the occurrence of a “Default” under and as defined in any of the Loan Documents (as that term is hereafter described) not cured within any applicable cure period. Upon the occurrence of any Default, the outstanding principal balance of the indebtedness evidenced hereby, and any other sums advanced hereunder or under the Loan Documents, together with all accrued and unpaid interest thereon and all unpaid late charges shall, at the option of Holder and without notice to Maker, at once become due and payable and may be collected forthwith, regardless of the stipulated date of maturity. Interest (hereinafter referred to as “Default Interest”) shall accrue on the outstanding principal balance of this Note from the Maturity Date, or upon the occurrence of a Default and for so long as such Default continues, regardless of whether or not there has been an acceleration of the indebtedness evidenced hereby, at the rate of eighteen and no/100^th percent (18.00%) per annum. All such Default Interest shall be paid at the time of and as a condition precedent to the curing of any Default. Time is of the essence of this Note. In the event this Note, or any part thereof, is collected by or through an attorney-at-law, Maker agrees to pay all costs of collection including, but not limited to, reasonable attorney’s fees, actually incurred based upon the attorneys’ normal hourly rate and the number of hours billed.

8.      WAIVERS.

(a)      Presentment for payment, demand, protest and notice of demand, protest and non-payment and all other notices, except for any notices required to be given hereunder or under any of the Loan Documents, are hereby waived by Maker. No failure to accelerate the debt evidenced hereby by reason of a Default hereunder, acceptance of a past due installment, or indulgences granted from time to time shall be construed (i) as a novation of this Note or as a reinstatement of the indebtedness evidenced hereby or as a waiver of such right of acceleration or of the right of Holder thereafter to insist upon strict compliance with the terms of this Note, or (ii) to prevent the exercise of such right of acceleration or any other right granted hereunder or by the laws of the State of Georgia; and Maker hereby expressly waives the benefit of any statute or rule of law or equity now provided, or which may hereafter be provided, which would produce a result contrary to or in conflict with the foregoing. No extension of the time for the payment of this Note or any installment due hereunder, made by agreement with any person now or hereafter liable for the payment of this Note, shall operate to release, discharge, modify, change or affect the original liability of Maker under this Note, either in whole or in part, unless Holder agrees otherwise in writing. This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.

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(b)      Maker hereby waives and renounces for itself, its heirs, successors and assigns, all rights to the benefit of any statute of limitations and any moratorium, reinstatement, marshaling, forbearance, valuation, stay, extension, redemption, appraisement, exemption and homestead now provided, or which may hereafter be provided by the Constitution and laws of the United States of America and of any state thereof, both as to itself and in and to all of its property, real and personal, against the enforcement and collection of the obligations evidenced by this Note. Maker hereby transfers, conveys and assigns to Holder a sufficient amount of such homestead or exemption as may be set apart in bankruptcy, to pay this Note in full, with all costs of collection, and does hereby direct any trustee in bankruptcy having possession of such homestead or exemption to deliver to Holder a sufficient amount of property or money set apart as exempt to pay the indebtedness evidenced hereby, or any renewal thereof, and does hereby appoint Holder the attorney-in-fact for Maker to claim any and all homestead exemptions allowed by law.

9.      LOAN DOCUMENTS. The indebtedness evidenced by this Note and the obligations created hereby are secured by the Loan Agreement, a Deed to Secure Debt, Security Agreement and Fixture Filing, and an Assignment of Leases, Rents and Profits, all executed of even date herewith by and between Maker and Payee (together with all other documents evidencing or securing or in any way relating to the indebtedness evidenced hereby, herein referred to collectively as the “Loan Documents”).

10.      GOVERNING LAW. This Note is intended as a contract under and shall be governed by and construed and enforceable in accordance with the substantive, and not the conflict, laws of the State of Georgia.

11.      DEFINITIONS. As used herein, the terms “Maker” and “Holder” shall be deemed to include their respective heirs, successors, legal representatives and assigns, whether by voluntary action of the parties or by operation of law. In the event that more than one person, firm or entity is a Maker hereunder, then all references to “Maker” shall be deemed to refer equally to each of said persons, firms, or entities, all of whom shall be jointly and severally liable for all of the obligations of Maker hereunder.

12.      TITLES. The titles of sections or paragraphs herein are used for the convenience of the parties only and neither amplify, modify or alter in any way the provisions of this instrument.

13.      AVOIDANCE OF USURY. If from any circumstances whatsoever, fulfillment of any provision of this Note or of any other instrument evidencing or securing the indebtedness evidenced hereby, at the time performance of such provision shall be due, shall involve transcending the limit of validity presently prescribed by any applicable usury statute or any other applicable law, with regard to obligations of like character and amount, then ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, so that in no event shall any exaction be possible under this Note or under any other instrument evidencing or securing the indebtedness evidenced hereby, that is in excess of the current limit of such validity, but such obligations shall be fulfilled to the limit of such validity. In determining whether or not the rate of interest hereunder exceeds the highest lawful rate, Maker and Holder agree and intend that all sums paid hereunder which are deemed interest for the purposes of determining usury, shall be prorated, allocated or spread in equal parts over the longest period of time permitted under applicable laws of the State of Georgia.

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IN WITNESS WHEREOF, Maker has executed this Note under seal on the date first above written.

 

		NORTHRIDGE PARKWAY, LLC, a Georgia limited liability company
		By:	Roberts Properties Residential, L.P., a Georgia limited
			partnership, its sole manager
			By:	Roberts Realty Investors, Inc., a Georgia
				corporation, its sole general partner
				By:	/s/ Anthony Shurtz
				Name:	Anthony Shurtz
				Title:	CFO
					[CORPORATE SEAL]

 

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Exhibit 10.3

 

 

 

 

Prepared by and return to:

Robert W. Reardon

Morris, Manning & Martin, LLP

1600 Atlanta Financial Center

3343 Peachtree Road

Atlanta, GA 30326

 

Deed to Secure Debt,

Security Agreement AND FIXTURE FILING

 

 

STATE OF GEORGIA

 

COUNTY OF FULTON

 

This Deed to Secure Debt, Security Agreement AND FIXTURE FILING (“Deed”), made and entered into as of the 13^th day of January, 2015, by and between NORTHRIDGE PARKWAY, LLC, a Georgia limited liability company (“Grantor”), having a business address at 375 Northridge Road, Suite 330, Atlanta, GA 30350, and PAUL J. A. LEX VAN HESSEN, (together with his successors and assigns, “Grantee”), having an address c/o Hualalai Resort, P.O. Box 1596, Kailua-Kona Hawaii 96745.

 

W I T N E S S E T H :

 

THAT, for and in consideration of the sum of Ten and No/100 Dollars ($10.00) and other valuable consideration, the receipt and sufficiency whereof are hereby acknowledged, and in order to secure the indebtedness and other obligations hereinafter set forth, Grantor has granted, bargained, sold and conveyed, and does hereby grant, bargain, sell and convey, unto Grantee the following property (collectively, the “Premises”), to-wit:

 

a.                   All that certain tract or parcel of land (the “Land”) lying and being in Fulton County, Georgia and being more particularly described in Exhibit “A” attached hereto and incorporated herein by this reference; and

 

b.             All buildings, structures and other improvements of every kind and nature whatsoever now or hereafter situated on the Land; and all machinery, equipment, fixtures, appliances and building, construction, development and landscaping supplies and materials now or hereafter placed on or in the Land; and all of the things addressed in this paragraph (b), whether generally or specifically, shall be deemed to be fixtures and accessions to the freehold and a part of the Land as between the parties hereto and all persons claiming, by, through or under either of them; and

 

c.                   All and singular the easements, rights-of-way, strips and gores of land, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights and powers, estates, rights, titles, interests, minerals, royalties, privileges, liberties, tenements, hereditaments and appurtenances whatsoever, in any way now or hereafter belonging, relating or appertaining to the Land or the improvements now or hereafter located thereon, or any part thereof, whether now owned or hereafter acquired by Grantor, and the reversion or reversions, remainder and remainders, rents, issues and profits thereof; and all right to receive excess payments in any tax sale of the Land and the improvements now or hereafter located thereon, or any part thereof; and all the estate, right, title, interest, claim and demand whatsoever of Grantor of, in and to the same; and

 

d.                  Any and all rents which are now due or may hereafter become due by reason of the renting, leasing and bailment of the Land or the improvements now or hereafter located thereon, or any part thereof; and

 

e.                   All right, title and interest of Grantor in, to and under all franchise agreements, management contracts, service contracts, utility contracts, sewer capacity agreements, leases of equipment, documents, agreements and approvals relating to the construction, operation and use of any improvements on the Land (including any and all construction contracts, architectural contracts, engineering contracts, designs, plans, specifications, drawings, surveys, tests, reports, bonds and zoning and other governmental approvals, variances and consents) and all other contracts, licenses and permits now or hereafter affecting the Land or any part thereof and all guaranties and warranties with respect to any of the foregoing;

f.                   Any and all awards or payments, including interest thereon, and the right to receive the same, as a result of (i) the exercise of the right of eminent domain, (ii) the alteration of the grade of any street, or (iii) any other injury to the taking of, or decrease in the value of, the Land or the improvements now or hereafter located thereon;

 

TO HAVE AND TO HOLD all the Premises to the use, benefit and behoof of the Grantee, its successors and assigns, in FEE SIMPLE forever. Grantor warrants that Grantor has good title to the Premises, and is lawfully seized and possessed of the Premises and every part thereof, and has the right to convey same; that the Premises are unencumbered; and the Grantor will forever warrant and defend the title to the Premises unto Grantee against the claims of all persons whomsoever.

 

This instrument is a deed and security agreement passing legal title to the Premises to Grantee pursuant to the laws of the State of Georgia governing loan or security deeds and security agreements, and is not a mortgage; and is made and intended to secure the following described indebtedness, terms, provisions and conditions herein described and set forth, in such order or priority as Grantee may elect (all of which present and future indebtedness are hereinafter collectively referred to as the “Secured Indebtedness”):

 

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a.                   Payment of the debt evidenced by that certain Promissory Note (herein called the “Note”), dated January 13, 2015, made by Grantor payable to the order of Grantee in the original principal face amount of TWO MILLION and No/100 Dollars ($2,000,000.00), with the final payment being due on or before July 13, 2015; together with any and all renewals and/or extensions or renewals of the indebtedness evidenced by the Note together with the performance and discharge of each and every obligation of Grantor set forth in the Note.

 

b.                  Payment of all other sums, with interest thereon, becoming due or payable to Grantee under the provisions hereof or the provisions of any other instrument executed by Grantor for the purpose of further securing, or otherwise executed in connection with, the indebtedness represented by the Note;

 

c.                   Due, prompt and complete observance and performance of each and every obligation, covenant and agreement of Grantor contained herein, in that certain Loan Agreement of even date herewith by and between Grantor and Grantee (the “Loan Agreement”), or in any other instrument executed by Grantor for the purpose of further securing, or otherwise executed in connection with, the indebtedness represented by the Note;

 

d.                  Such additional sums with interest thereon as may be hereafter borrowed from Grantee, its successors or assigns, by the then record owner or owners of the Premises when evidenced by another Promissory Note or notes, which are by the terms thereof secured by this Deed; and

 

e.                   Any and all other indebtedness, obligations and liabilities of any kind, of Grantor to Grantee, now or hereafter existing, absolute or contingent, joint and/or several, due or not due, secured or unsecured, arising by operation of law or otherwise or direct or indirect including indebtedness, obligations and liabilities to Grantee of Grantor as a member of any partnership, syndicate or association or other group and whether incurred by Grantor as principal, surety, endorser, guarantor, accommodation party or otherwise, and any obligations which give rise to an equitable remedy for breach of performance if such breach gives rise to an obligation by Grantor to pay Grantee.

 

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 shall be cancelled and surrendered.

 

Grantor covenants and agrees as follows:

 

Article I

 

1.1              Payment of Secured Indebtedness. Grantor shall pay to Grantee the Secured Indebtedness with interest thereon as and when the same becomes due and payable in accordance with the terms thereof.

 

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1.2              Payment of Taxes, Etc. Grantor shall pay, when due and payable, (a) all taxes, assessments, general or special, and other charges levied on, or assessed, placed or made against the Premises, this Deed, the Note or the Secured Indebtedness or any interest of the Grantee in the Premises or the obligations secured hereby; and (b) premiums on policies of fire and other hazard insurance covering the Premises, as required in Section 1.3 herein. If Grantor fails to promptly make any such payment, then Grantee may, at its option, make such payment, without notice, and the amount so advanced shall become part of the Secured Indebtedness and shall bear interest from the date advanced at the rate of interest from time to time in effect in the Note for principal. If, in the opinion of Grantee, any state, federal, municipal or other governmental law, order, rule or regulation prohibits Grantor from paying any such tax, assessment or other charge or would penalize Grantee if Grantor were to make such payment, or if, in the opinion of Grantee, the making of such payment might result in the imposition of interest beyond the maximum amount permitted by applicable law, then the Secured Indebtedness shall, at the option of Grantee, become immediately due and payable.

 

1.3              Insurance. (a) Grantor shall maintain public liability insurance with coverages and amounts acceptable to Grantee. Grantor shall keep improvements (if any) on the Premises insured for the benefit of Grantee against loss or damage by fire, lightning, windstorm, hail, collapse, explosion, malicious mischief, riot, riot attending a strike, civil commotion, aircraft, vehicles and smoke and such other hazards as Grantee may from time to time require, all in amounts approved by Grantee not exceeding 100% of full insurable value. All insurance herein provided for shall be in form and with companies approved by Grantee; and, regardless of the types or amounts of insurance required and approved by Grantee, Grantor shall assign and deliver to Grantee, as collateral and further security for the payment of the Secured Indebtedness, all policies of insurance which insure against any loss or damage to the Premises, with loss payable to Grantee, without contribution, pursuant to the New York Standard or other mortgagee clause satisfactory to Grantee.  If Grantee, by reason of such insurance, receives any money for loss or damage, such amount shall, at the option of Grantee, either be disbursed for the repair and restoration of the Premises in accordance with and subject to the conditions for disbursement that Grantee would customarily impose as a prudent lender in a construction or development loan, or retained by Grantee and applied toward payment of the Secured Indebtedness. Grantee shall in no event be obligated to see to the proper application of any amount paid over to Grantor.

 

(b)      Not less than twenty (20) days prior to the expiration date of each policy of insurance required of Grantor pursuant to this paragraph 1.3, and of each policy of insurance held as additional collateral to secure the Secured Indebtedness, Grantor shall deliver to Grantee a renewal policy or policies marked “premium paid” or accompanied by other evidence of payment satisfactory to Grantee.

 

(c)      In the event of a foreclosure of this Deed, the purchaser of the Premises shall succeed to all the rights of Grantor in and to all policies of insurance required by this paragraph 1.3 and all policies of insurance assigned or delivered to Grantee regardless of whether or not required by this 1.3, including without limitation the right to unearned premiums.

 

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1.4              Condemnation. Notwithstanding any taking of, injury to, or decrease in the value of, any portion of the Premises by or as the result of eminent domain, the alteration of the grade of any street, or any other public or quasi-public action, Grantor shall continue to pay principal and interest on the Secured Indebtedness, and any reduction in the Secured Indebtedness resulting from the application by Grantee of any award or payment for such taking, alteration, injury or decrease in value of the Premises shall be deemed to take effect only on the date of such receipt. Any such award or payment may, at the option of Grantee, be retained and applied by Grantee toward payment of the Secured Indebtedness, or be paid over, wholly or in part, to Grantor for the purpose of altering, restoring or rebuilding any part of the Premises which may have been altered, damaged or destroyed as a result of any such taking, alteration of grade, or other injury to the Premises, or for any other purpose or object satisfactory to Grantee, but Grantee shall not be obligated to see to the application of any amount paid over to Grantor. If, prior to the receipt by Grantee of such award or payment, the Premises shall have been sold on foreclosure of this Deed, Grantee shall have the right to receive said award or payment to the extent of any deficiency found to be due upon such sale, whether or not a deficiency judgment on this Deed shall have been sought or recovered or denied, together with legal interest thereon and the costs (including reasonable attorney’s fees) incurred by Grantee in the obtaining and collection of such award or payment.

 

1.5              Care of Premises. Grantor shall maintain the Premises in good condition and repair, shall not commit or suffer any waste to the Premises, and shall comply with, or cause to be complied with, all restrictive covenants, statutes, ordinances and requirements of any governmental authority relating to the Premises and the use thereof or any part thereof.  Grantor shall promptly repair, restore, replace or rebuild any part of the Premises, now or hereafter encumbered by this Deed, which may be affected by any proceeding of the character referred to in paragraph 1.4 hereof.  No part of the Premises, including, but not limited to, any building, structure, parking lot, driveway, landscape scheme, timber or other ground improvement, equipment or other property, now or hereafter conveyed as security by or pursuant to this Deed, shall be removed, demolished or materially altered without the prior written consent of Grantee.  Grantor shall complete, within a reasonable time, and pay for any building, structure or other improvement at any time in the process of construction on the property herein conveyed.  Grantor shall not initiate, join in or consent to any change in any private restrictive covenant, zoning ordinance or other public or private restrictions limiting or defining the uses which may be made of the Premises or any part thereof.  Grantee and any persons authorized by Grantee shall have the right to enter and inspect the Premises at all reasonable times and access thereto shall be permitted for that purpose.

 

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1.6              Security Agreement. (a) This Deed shall also constitute a security agreement within the meaning of the Uniform Commercial Code of the State of Georgia (the “Code”) with respect to all the following: (i) all sums of Grantor on deposit with Grantee from time to time (the “Deposits”); (ii) all income received from the sale of all or any portion of the Land (the “Sales Income”); (iii) all fixtures and personal property included (whether generally or specifically) in the definition of “Premises” set forth herein and now or hereafter acquired by Grantor, and all replacements, substitutions and additions thereto (the “Fixtures and Personalty”); (iv) all franchise agreements, management contracts, service contracts, utility contracts, sewer capacity agreements, leases of equipment, documents, agreements and approvals relating to the construction, operation and use of any improvements on the Land (including any and all construction contracts, architectural contracts, engineering contracts, designs, plans, specifications, drawings, surveys, tests, reports, bonds and zoning and other governmental approvals, variances and consents) and all other contracts, licenses and permits now or hereafter affecting the Land or any part thereof and all guaranties and warranties with respect to any of the foregoing (the “Improvement Documents”); and (v) all proceeds (including cash and insurance proceeds and proceeds of proceeds) of all of the foregoing (all such Deposits, Sales Income, Fixtures and Personalty, Improvement Documents and proceeds are collectively referred to herein as the “Collateral”). Grantor hereby grants to Grantee a security interest in and to the Collateral and every component thereof, and does hereby transfer and assign to Grantee all of Grantor’s right, title and interest in and to the Collateral and every component thereof, to secure the payment of the Secured Indebtedness as and when the same becomes due and payable. With respect to the Fixtures and Personalty, while an Event of Default is continuing, Grantee shall also have the right (i) to proceed against the Fixtures and Personalty in accordance with Grantee’s rights and remedies with respect to the real property, in which event the provisions of the Code shall not govern the default and Grantee’s remedies, or (ii) to proceed against the Fixtures and Personalty separately from the real property. When proceeding against any of the Collateral under the provisions of the Code, ten (10) days’ notice of Grantee’s determination to proceed against such Collateral shall be deemed reasonable notice. The reasonable expenses of retaking, holding, preparing for sale and selling the Collateral shall be deemed to include (without limitation) reasonable attorneys’ fees. Grantor agrees not to remove any of the Fixtures and Personalty from the Premises without the prior written consent of Grantee; provided, however, that Grantor may sell or otherwise dispose of obsolete, inadequate, useless or unserviceable items of the Fixtures and Personalty in the ordinary course of its management and operation of the Premises without Grantee’s consent. At the request of Grantee from time to time, Grantor will provide Grantee with an inventory or schedule of all of the Collateral.

 

(b)      Grantor further covenants and agrees that all of the Fixtures and Personalty are and shall be owned by Grantor and, except as disclosed to and approved by Grantee in writing, shall not be the subject matter of any lease or other instrument, agreement or transaction whereby the ownership or beneficial interest thereof or therein shall be held by any person or entity other than Grantor, nor shall Grantor create or cause to be created any security interest covering any such property other than the security interest created herein in favor of Grantee.

 

(c)      This Deed shall constitute a “fixture filing” within the meaning of Code Section 11-9-502(c). The following information is included for purposes of satisfying the provisions of such Section:

 

	Secured Party:	Paul J. A. Lex van Hessen
		c/o Hualalai Resort
		P.O. Box 1596
		Kailua-Kona Hawaii 96745
	Debtor:	Northridge Parkway, LLC
		375 Northridge Road
		Suite 330
		Atlanta, GA  30350
	Property:	See Exhibit A attached hereto.

 

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1.7              Further Assurances. Grantor shall execute and deliver (and pay the costs of preparation and recording thereof) to Grantee and to any subsequent holder from time to time, upon demand, any further instrument or instruments, including, but not limited to, security deeds, security agreements, financing statements, assignments and renewal and substitution notes, so as to reaffirm, to correct and to perfect the evidence of the Secured Indebtedness and the legal security title of Grantee to all or any part conveyed, later substituted for, or acquired subsequent to the date of this Deed and extensions or modifications thereof. Grantor, upon request, made either personally or by mail, shall certify by a writing, duly acknowledged, to Grantee or to any proposed assignee of this Deed, the amount of principal and interest then owing on the Secured Indebtedness and whether or not any offsets or defenses exist against the Secured Indebtedness, within five (5) business days in case the request is made personally, or within ten (10) days after the mailing of such request in case the request is made by mail.

 

1.8              Expenses. Upon demand Grantor shall pay, or reimburse Grantee for the payment of, all actual attorneys’ fees, costs and expenses incurred by Grantee in any suit, action, legal proceeding or dispute of any kind in which Grantee is made a party or appears as party plaintiff or defendant, affecting the Secured Indebtedness, this Deed or the rights and interest created herein, or the Premises, including without limitation the exercise of the power of sale contained in this Deed, any condemnation action involving the Premises or any action to protect the security hereof; and any such amounts paid by Grantee shall be added to the indebtedness secured by this Deed.

 

1.9              Subrogation. Grantee shall be subrogated to the claims and liens of all parties whose claims or liens are discharged or paid with the proceeds of the Secured Indebtedness or otherwise discharged or paid by Grantee. Grantor waives all rights of subrogation until all indebtedness and obligations secured hereby have been paid in full.

 

1.10          Transfer of the Premises. Grantor shall not sell, transfer, lease, let, mortgage, pledge, encumber, create a security interest in, or otherwise hypothecate all or any part of the Premises without Grantor’s prior written consent.

 

1.11          Limit of Validity. If from any circumstance whatsoever the fulfillment of any provision of this Deed, the Note or the Loan Agreement, at the time that the performance of such provision is due, involves 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 Deed, the Note or the Loan Agreement that is in excess of the applicable limit of such validity, but such obligation shall be fulfilled to the limit of such validity. The provisions of this paragraph 1.11 shall control every other provision of this Deed, the Note and the Loan Agreement.

 

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1.12          Status of Title. Grantor represents and warrants that it is the lawful owner of the Premises in fee simple, subject to no liens or encumbrances, except for covenants, conditions, restrictions, easements and rights-of-way of record, if any. Grantor represents and warrants that it has full right, power and authority to convey and mortgage the Premises and to execute this Deed. Grantor also agrees to protect, preserve and defend its interest in the Premises and title thereto, including full performance of any prior claim or lien; to appear and defend this Deed in any action or proceeding affecting or purporting to affect the Premises, the lien of this Deed thereon or any of the rights of Grantee hereunder, and to pay all costs and expenses incurred by Grantee in or in connection with any such action or proceeding, including reasonable attorneys’ fees, whether any such action or proceeding progresses to judgment and whether brought by or against Grantee. Grantee shall be reimbursed for any such costs and expenses in accordance with the provisions of paragraph 1.8 hereof. Grantee may, but shall not be under any obligation to, appear or intervene in any such action or proceeding and retain counsel therein and defend the same or otherwise take such action therein as it may deem advisable or may settle or compromise the same and, for any of such purposes, may expend and advance such sum of money as it may deem necessary, and Grantee shall be reimbursed therefore in accordance with the provisions of Paragraph 1.8 hereof.

 

1.13          Representations and Warranties of Grantor. Grantor hereby represents and warrants as follows:

 

a.                   That this Deed, the Note and all other instruments executed and delivered to Grantee concurrently herewith were executed in accordance with the requirements of law and are valid, binding and enforceable in accordance with their terms.

 

b.                  That the execution of this Deed, the Note and any other instrument executed and delivered to Grantee in connection with this transaction, and the full and complete performance of the provisions thereof, will not result in any breach of, or constitute a default under, any indenture, mortgage, bank loan or credit agreement or other instrument to which Grantor is a party or by which Grantor is bound, and will not result in the creation of any lien, charge or encumbrance (other than those contained herein or in any instrument delivered to Grantee in connection with this transaction) upon any Premises or assets of Grantor.

 

c.                   That as of the date of execution of this Deed it is the sole owner of the Premises.

 

d.                  The improvements on the Premises, existing and proposed, and their intended use will, when completed, comply fully with all applicable environmental, air quality, zoning, planning, building, subdivision and other governmental laws and requirements. Grantor specifically warrants that the existing improvements on the Premises comply with the applicable zoning ordinance.

 

e.                   The Premises is composed of one or more whole tax parcels with a separate tax assessment, independent of any land or improvements not encumbered by this Deed.

 

f.                   There is no litigation pending or, to the best of Grantor’s knowledge, threatened against the Premises. There is no litigation pending or, to the best of Grantor’s knowledge, threatened against Grantor, which might, so far as Grantor can now foresee, have a material adverse effect on Grantor’s ability to repay the Note or to perform the provisions of this Deed or of any other document evidencing, securing or executed in connection with this transaction. Grantor has disclosed all litigation pending and threatened against Grantor to Grantee in writing, and will disclose all future such litigation to Grantee in writing within thirty (30) days of its receipt of notice thereof.

 

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g.                  The Premises complies in all material respects with applicable subdivision laws, ordinances, regulations, rules and other requirements.

 

h.                  Grantor is not in default with respect to any existing indebtedness or obligation.

 

i.                    Grantor has the power and authority to enter into and perform all terms and conditions of this Deed, the Note, and all other documents evidencing, securing or executed in connection with this transaction, and to incur the obligations herein and therein provided for.

 

j.                    Grantor has not made any agreement or taken any action which may cause anyone to become entitled to a commission or finder’s fee as a result of the making of any loan to Grantor by Grantee.

k.                  As of the date of this Deed, no improvements have been constructed on the Premises and no parties other than Grantor are occupying or have any right to occupy all or any portion of the Premises.

 

1.14          Extensions and Modifications. From time to time, without affecting the obligation of Grantor or Grantor’s successors or assigns to pay the sums secured by this Deed and to observe the covenants of Grantor contained herein, without affecting the guaranty of any person, corporation, partnership or other entity for payment of indebtedness secured hereby, and without affecting the lien or priority of lien hereof on the Premises, Grantee may, at Grantee’s option, without giving notice to or obtaining the consent of Grantor, Grantor’s successors or assigns or of any other lienholders or guarantors, and without liability on Grantee’s part, extend the time for payment of said indebtedness or any part thereof, reduce the payments thereon, release anyone liable on any of said indebtedness, accept a renewal Note or notes therefor, modify the terms and time of payment of said indebtedness, release from this Deed any part of the Premises, take or release other or additional security, reconvey any part of the Premises, consent to the granting of any easement or dedication, join in any extension or subordination agreement and agree in writing with any person obligated to pay the same to modify the rate of interest or period of amortization of the indebtedness secured hereby or change the amount of the installments payable thereon. Grantor shall pay Grantee a reasonable service charge, together with such title insurance premiums and attorneys’ fees as may be incurred at Grantee’s option, for any such action if taken at Grantor’s request.

 

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Article II

 

2.1              Events of Default. Each of the following events shall constitute an “Event of Default” under this Deed:

 

a.                   should Grantor fail to pay the Secured Indebtedness or any part thereof when due;

 

b.                  should any warranty or representation of Grantor herein contained prove untrue or misleading in any material respect;

 

c.                   should the Premises be subject to actual or threatened waste, or any part thereof be removed, demolished or materially altered so that the value of the Premises be diminished except as provided for in 1.4;

 

d.                  should any federal tax lien or claim of lien for labor or material be filed of record against Grantor or against the Premises and not be removed by payment or bond within thirty (30) days from date of recording;

 

e.                   should a third party assert the priority of a lien, security interest, or security deed over that of this Deed in any legal proceeding;

 

f.                   Should Grantor or any guarantor fail to keep, observe, perform, carry out and execute in every particular the covenants, agreements, obligations and conditions set out in, or should a breach, default event of default or failure of condition or performance (however denominated), occur under, this Deed, the Note, the Loan Agreement, or any other document or instrument securing or given with respect to the Secured Indebtedness (this Deed, the Note, the Loan Agreement and all such other documents and instruments are collectively referred to herein as the “Loan Documents”);

 

g.                  should there occur any sale, transfer, leasing, or encumbering of all or any portion of the Premises without the prior written consent of Grantee, which consent may be withheld or delayed in the sole discretion of Grantee;

 

h.                  should there occur any change in the legal or equitable ownership of Grantor or in the legal or equitable ownership of, or the management of, the Premises without Grantee’s prior written consent;

 

i.                    if the holder of any lien or security interest on the Premises (without hereby implying Grantee’s consent to the existence, placing, creating or permitting of any such lien or security interest) institutes foreclosure or other proceedings for the enforcement of its remedies thereunder.

 

2.2              Enforcement, etc. If an Event of Default occurs and is continuing, Grantee may do any one or more of the following:

 

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a.                   enter upon and take possession of the Premises, with or without the appointment of a receiver or an application therefor, employ a managing agent of the Premises and let the same, either in its own name, or in the name of Grantor, and receive the rents, incomes, issues and profits of the Premises and apply the same, after payment of all necessary charges and expenses, on account of the Secured Indebtedness; and Grantor will transfer and assign to Grantee, in form satisfactory to Grantee, Grantor’s interest as lessor in any lease now or hereafter affecting the whole or any part of the Premises;

 

b.                  pay any sums in any form or manner deemed expedient by Grantee to protect the security of this instrument or to cure any Event of Default other than payment of interest or principal on the Secured Indebtedness; make any payment hereby authorized to be made according to any bill, statement or estimate furnished or procured from the appropriate public officer or the party claiming payment without inquiry into the accuracy or validity thereof, and the receipt of any such public officer or party in the hands of Grantee shall be conclusive evidence of the validity and amount of items so paid, in which event the amounts so paid, with interest thereon from the date of such payment at the default rate of interest specified in the Note shall be added to and become a part of the Secured Indebtedness and be immediately due and payable to Grantee; and Grantee shall be subrogated to any encumbrance, lien, claim or demand, and to all the rights and securities for the payment thereof, paid or discharged with the principal sum secured hereby or by Grantee under the provisions hereof, and any such subrogation rights shall be additional and cumulative security to this instrument;

 

c.                   without notice (except as provided in the Loan Agreement), demand, presentment, notice of nonpayment or nonperformance, protest, notice of protest, notice of intent to accelerate, notice of acceleration, or any other notice or any other action, all of which are hereby waived by Grantor and all other parties obligated in any manner whatsoever on the Secured Indebtedness, declare the entire unpaid balance of the Secured Indebtedness immediately due and payable; and upon such declaration, the entire unpaid balance of the Secured Indebtedness shall be immediately due and payable. Notwithstanding anything to the contrary contained in or inferable from any provision hereof, upon the occurrence of an Event of Default as defined in subparagraph 2.1(l) herein, the principal balance, the unpaid accrued interest under the Note and any other accrued but unpaid portion of the Secured Indebtedness shall be automatically and immediately due and payable in full without the necessity of any action on the part of the Grantee.

 

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d.                  declare the entire Secured Indebtedness immediately due, payable and collectible, regardless of maturity, and, in that event, the entire Secured Indebtedness shall become immediately due, payable and collectible; and thereupon, Grantee may sell and dispose of the Premises at public auction, at the usual place for conducting sales at the courthouse in the county where the Premises or any part thereof may be located, to the highest bidder for cash, first advertising the time, terms and place of such sale by publishing a notice thereof once a week for four (4) consecutive weeks (without regard to the actual number of days) in a newspaper in which sheriff’s advertisements are published in said county, all other notice being hereby waived by Grantor; and Grantee may thereupon execute and deliver to the purchaser at said sale a sufficient conveyance of the Premises in fee simple, which conveyance may contain recitals as to the happening of the default upon which the execution of the power of sale, herein granted, depends, and said recitals shall be presumptive evidence that all preliminary acts prerequisite to said sale and deed were in all things duly complied with; and Grantee, its agents, representatives, successors or assigns, may bid and purchase at such sale and may apply such bid as a credit against the Secured Indebtedness; and Grantor hereby constitutes and appoints Grantee or its assigns as agent and attorney-in-fact to make such recitals, sale and conveyance, and all of the acts of such attorney-in-fact are hereby ratified, and Grantor agrees that such recitals shall be binding and conclusive upon Grantor and that the conveyance to be made by Grantee, or its assigns (and in the event of a deed in lieu of foreclosure, then as to such conveyance) shall be effectual to bar all right, title and interest, equity of redemption, including all statutory redemption, homestead, dower, curtesy and all other exemptions of Grantor, or its successors in interest, in and to said Premises; and Grantee, or its assigns, shall collect the proceeds of such sale, reserving therefrom all unpaid Secured Indebtedness with interest then due thereon, and all amounts advanced by Grantee for taxes, assessments, fire insurance premiums and other charges, with interest at the rate of interest specified in the Note thereon from date of payment, together with all costs and charges for advertising, and commissions for selling the Premises, and actual attorney’s fees, and pay over any surplus to Grantor (or in the event of a deficiency Grantor shall immediately on demand from Grantee pay over to Grantee, or its nominee, an amount equal to such deficiency); and Grantor agrees that in case of a foreclosure sale, as herein provided, Grantor or any person in possession under Grantor shall then become and be tenants at sufferance, and shall forthwith deliver possession to the purchaser at such sale, or be summarily dispossessed in accordance with the provisions of law applicable to tenants at sufferance; the power and agency hereby granted are coupled with an interest and are irrevocable by death or otherwise as long as any portion of the Secured Indebtedness remains unpaid or any other indebtedness or obligation secured hereby remains unpaid or unperformed, and are in addition to any and all other remedies which Grantee may have at law or in equity;

 

e.                   Exercise any and all rights accruing to a secured party under this Deed, the Code and any other applicable law.

 

2.3              Receiver. Grantee, in any action to foreclose this Deed, or upon any Event of Default, shall be at liberty to apply for the appointment of a receiver of the rents and profits of the Premises without notice, and shall be entitled to the appointment of such a receiver as a matter of right, without consideration of the value of the Premises as security for the amounts due the Grantee, or the solvency of any person or corporation liable for the payment of such amounts.

 

2.4              Sale in Parcels. In case of any sale under this Deed by virtue of the exercise of the power herein granted, or pursuant to any order in any judicial proceedings or otherwise, at the election of Grantee the Premises or any part thereof may be sold in one parcel and as an entirety, or in such parcels, manner or order as Grantee in its sole discretion may elect, and one or more exercises of the powers herein granted shall not extinguish or exhaust the power unless the entire Premises are sold or the Secured Indebtedness paid in full.

 

2.5              Waiver of Homestead. Grantor hereby waives and renounces all right of homestead exemption in the Premises provided by the Constitution or Laws of the United States, the State of Georgia, or any other State in the United States.

 

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2.6              Grantee’s Right to Sue. Grantee shall have the right from time to time to sue for any sums, whether interest, principal or any installment of either or both, taxes, penalties, or any other sums required to be paid under the terms of this Deed, as the same become due, without regard to whether or not all of the Secured Indebtedness shall be due on demand, and without prejudice to the right of Grantee thereafter to enforce any appropriate remedy against Grantor, including an action of foreclosure, or any other action, for a default or defaults by Grantor existing at the time such earlier action was commenced.

 

2.7              No Obligation to Marshal Assets. In realizing upon the security and collateral for the Secured Indebtedness during the subsistence of an Event of Default, Grantee shall have no obligation whatsoever to marshal assets, or to realize upon all of such security and collateral; rather, Grantee shall have the right to realize upon all or any part of such collateral from time to time as Grantee deems appropriate.

 

2.8              Rights Cumulative. The rights of Grantee, granted and arising under the clauses and covenants contained in this Deed and the other Loan Documents, shall be separate, distinct and cumulative of other powers and rights herein granted and all other rights which Grantee may have at law or in equity, and none of them shall be in exclusion of the others; and all of them are cumulative to the remedies for collection of indebtedness, enforcement of rights under security deeds, and preservation of security as provided at law.  No act of Grantee shall be construed as an election to proceed under any one provision herein or under the Note or any of the other Loan Documents to the exclusion of any other provision, or an election of remedies to the bar of any other remedy allowed at law or in equity, anything herein or otherwise to the contrary notwithstanding.

 

2.9              Discontinuance of Proceedings. If Grantee commences the enforcement of any right, power or remedy, whether afforded under this Deed or otherwise, and including without limitation foreclosure or entry upon the Premises, and such enforcement is then discontinued or abandoned for any reason, or is determined adversely to Grantee, then and in every such case Grantor and Grantee shall be restored to their former positions and rights hereunder, without waiver of any Event of Default and without novation, and all rights, powers and remedies of Grantee shall continue as if no such enforcement had been commenced.

 

2.10          Deficiency; Liabilities and Rights After Default. To the extent permitted by law and by the Note, Grantor shall be and remain liable for any deficiency remaining after sale either pursuant to the Uniform Commercial Code, the power of sale created hereby, or judicial foreclosure. After default or breach, Grantor shall pay Grantee’s reasonable attorneys’ fees actually incurred, Grantee’s fees and its costs and expenses incurred as a result of said default or breach, and if suit is brought, all costs of suit, all of which sums shall be secured by this Deed. Grantor’s statutory rights of reinstatement, if any, are expressly conditioned upon Grantor’s payment of all sums required under the applicable statute and performance of all required acts.

 

a.                   The interest of Grantee under this deed and the liability and obligation of Grantor for the payment of the Secured Indebtedness arise from a “commercial transaction” with the meaning of O.C.G.A. Section 44-14-260(1).

 

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Article III

 

3.1              Successors and Assigns. This Deed shall inure to the benefit of and be binding upon Grantor and Grantee and their respective successors and assigns. (No right in Grantor to sell, transfer or encumber the Premises may be inferred from this.)

 

3.2              Terminology. The words “Grantor” and “Grantee” shall include the successors and assigns of the parties hereto, and all those holding under either of them. If more than one party shall execute this Deed, the term “Grantor” shall mean all parties signing, and each of them, and each agreement, obligation and Secured Indebtedness of Grantor shall be and mean the several as well as joint undertaking of each of them. Pronouns used herein shall include both genders and both the singular and the plural, and the grammatical construction of sentences shall be deemed conformed thereto. 

 

3.3              Captions for Convenience. The captions and headings in this Deed have been provided for convenience only and shall not limit the scope or extent of any provision hereof.

 

3.4              Severability. If any provision of this Deed should be held by a court of competent jurisdiction to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect the validity, legality and enforceability of the remaining provisions of this Deed.

 

3.5              Applicable Law. This Deed shall be governed by and construed in accordance with the laws of the State of Georgia.

 

3.6              Time of the Essence. Time is of the essence of this Deed and each of the other Loan Documents.

 

3.7              Notice, Etc. Notices and other communications hereunder shall be effective if given in accordance with the provisions of the Loan Agreement.

 

3.8              No Implied Waiver by Grantee. No indulgence or departure at any time by the Grantee from any of the provisions hereof, or of any obligation hereby secured, shall modify the same or relate to the future or waive future compliance therewith by the Grantor.

 

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3.9              WAIVER OF GRANTOR’S RIGHTS. GRANTOR EXPRESSLY: (1) ACKNOWLEDGES THE RIGHT TO ACCELERATE THE DEBT AND THE POWER OF ATTORNEY GIVEN IN THIS DEED TO SECURE DEBT TO GRANTEE TO SELL THE PREMISES BY NON-JUDICIAL FORECLOSURE UPON DEFAULT BY GRANTOR 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 TO SECURE DEBT OR OTHER LOAN DOCUMENTS; (2) WAIVES ANY AND ALL RIGHTS WHICH GRANTOR MAY HAVE UNDER THE FIFTH AND FOURTEENTH AMENDMENTS TO THE CONSTITUTION OF THE UNITED STATES, THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL STATES, OR BY REASON OF ANY OTHER APPLICABLE LAW, TO NOTICE AND TO JUDICIAL HEARING PRIOR TO THE EXERCISE BY GRANTEE OF ANY RIGHT OR REMEDY PROVIDED TO GRANTEE, EXCEPT SUCH NOTICE (IF ANY) AS IS SPECIFICALLY REQUIRED TO BE PROVIDED IN THIS DEED TO SECURE DEBT OR OTHER LOAN DOCUMENTS; (3) ACKNOWLEDGES THAT GRANTOR HAS READ THIS DEED TO SECURE DEBT AND ANY AND ALL QUESTIONS REGARDING THE LEGAL EFFECT OF THIS DEED TO SECURE DEBT AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO GRANTOR, AND GRANTOR HAS BEEN AFFORDED AN OPPORTUNITY TO CONSULT WITH COUNSEL OF GRANTOR’S CHOICE PRIOR TO EXECUTING THIS DEED TO SECURE DEBT; (4) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF GRANTOR HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY GRANTOR; AND (5) AGREES THAT GRANTOR’S RIGHT TO NOTICE SHALL BE LIMITED TO THOSE RIGHTS TO NOTICE PROVIDED BY THIS DEED TO SECURE DEBT AND OTHER LOAN DOCUMENTS.

 

3.10          Usury Disclaimer. Any provision contained herein, in the Loan Agreement or in the Note or in any other instrument now or hereafter evidencing, securing or otherwise relating to any secured indebtedness to the contrary notwithstanding, neither Grantee nor the holder of any other secured indebtedness shall be entitled to receive or collect, nor shall Grantor be obligated to pay, interest on any of the secured indebtedness in excess of the maximum rate of interest at the particular time in question, if any, which, under applicable law, Grantee is then permitted to charge Grantor on the Note (herein the “Maximum Rate”) provided that the Maximum Rate shall be automatically increased or decreased as the case may be, without notice to Grantor from time to time as of the effective time of each change in the Maximum Rate, and if any provision herein, in the Loan Agreement or in the Note or in such other instrument shall ever be construed or held to permit the collection or to require the payment of any amount of interest in excess of that permitted by applicable law, the provisions of this paragraph shall control and shall override any contrary or inconsistent provision herein, in the Loan Agreement or in the Note or in such other instrument. The intention of the parties being to conform strictly to the usury limitations under applicable law, the Note, the Loan Agreement, this Deed, and each other instrument now or hereafter evidencing or relating to any secured indebtedness shall be held subject to reduction to the amount allowed under said applicable law as now or hereafter construed by the courts having jurisdiction.

 

 

[Signatures begin on following page]

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IN WITNESS WHEREOF, this Deed has been duly executed under seal by Grantor as of the day and year first above written.

 

Signed, sealed and delivered in the presence of:		GRANTOR:
		NORTHRIDGE PARKWAY, LLC, a Georgia limited liability company
/s/ David M. Phillips
Witness		By:	Roberts Properties Residential, L.P., a Georgia
			limited partnership, its sole manager
/s/ Sarah Roberts
Notary Public			By:	Roberts Realty Investors, Inc., a Georgia
				corporation, its sole general partner
(affix seal and commission expiration date)				By:	/s/ Anthony Shurtz
Fulton County, GA				Name:	Anthony Shurtz
Expires:  July 27, 2018				Title:	CFO
					[CORPORATE SEAL]

 

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EXHIBIT “A”

LEGAL DESCRIPTION

 

TRACT ONE:

 

All that tract of land in Land Lots 25 and 26 of the 17th District, and in Land Lots 385 and 386 of the 18^th District, Fulton County, Georgia, described as follows:

 

Beginning at a point at the intersection of the North right-of-way line of Northridge Parkway (right-of-way varies) with the West line of said Land Lot 385, said point being the True Point of Beginning; Running THENCE along said right-of-way line of Northridge Parkway, the following courses and distances: North 81 degrees 24 minutes 03 seconds West for a distance of 43.13 feet to a POINT; THENCE South 08 degrees 35 minutes 57 seconds West for a distance of 3.47 feet to a POINT; THENCE North 81 degrees 24 minutes 03 seconds West for a distance of 34.91 feet to a pk nail set; THENCE leaving said right-of-way North 09 degrees 32 minutes 31 seconds East for a distance of 33.22 feet to a pk nail set; THENCE North 20 degrees 22 minutes 20 seconds East for a distance of 53.01 feet to a pk nail set; THENCE North 35 degrees 10 minutes 51 seconds East for a distance of 92.75 feet to a pk nail set; THENCE North 00 degrees 08 minutes 26 seconds West for a distance of 129.97 feet to a 1/2“rebar found; THENCE North 00 degrees 04 minutes 15 seconds East for a distance of 157.44 feet to a 1/2“rebar found; THENCE North 53 degrees 35 minutes 55 seconds East for a distance of 137.24 feet to a 3/8“rebar found; THENCE North 62 degrees 58 minutes 05 seconds East for a distance of 167.53 feet to a 1“crimp top pipe; THENCE South 71 degrees 01 minute 34 seconds East for a distance of 51.67 feet to a 1” open top pipe; THENCE South 00 degrees 04 minutes 19 seconds West for a distance of 70.28 feet to a 3/8“rebar found; THENCE South 85 degrees 55 minutes 21 seconds East for a distance of 47.87 feet to a 1“crimp top pipe; THENCE South 85 degrees 26 minutes 22 seconds East for a distance of 49.98 feet to a 1/2“rebar found; THENCE South 85 degrees 33 minutes 17 seconds East for a distance of 149.90 feet to a 1/2“rebar found; THENCE South 85 degrees 01 minute 18 seconds East for a distance of 99.92 feet to a 1/2“rebar found; THENCE South 85 degrees 00 minutes 38 seconds East for a distance of 149.73 feet to a 1“rebar found; THENCE South 85 degrees 07 minutes 06 seconds East for a distance of 38.89 feet to a 1/2“rebar found; THENCE South 03 degrees 10 minutes 27 seconds West for a distance of 474.12 feet to a 1/2“rebar found on the North right-of-way line of said Northridge Parkway (right-of-way varies); Running THENCE along said right-of-way line of Northridge Parkway, the following courses and distances: South 66 degrees 55 minutes 55 seconds West for a distance of 38.49 feet to a POINT; THENCE along a curve to the right having a radius of 778.51 feet and an arc length of 432.82 feet, being subtended by a chord of South 82 degrees 40 minutes 19 seconds West for a distance of 427.27 feet to a POINT; THENCE North 81 degrees 24 minutes 03 seconds West for a distance of 340.98 feet to a POINT; THENCE North 08 degrees 35 minutes 37 seconds East for a distance of 8.47 feet to a POINT; THENCE North 81 degrees 24 minutes 27 seconds West for a distance of 21.45 feet to the True Point of Beginning, said tract being designated “Tract One – 10.929 acres” as shown on plat of ALTA/ACSM Land Title Survey prepared by Precision Planning, Inc. for Northridge Parkway, LLC, Dutch American Finance, LLC, Chicago Title Insurance Company and Paul J. A. van Hessen, bearing the seal and certification of Randall W. Dixon, Georgia Registered Land Surveyor No. 1678, dated February 9, 2012.

 

TRACT TWO:

 

All that tract of land in Land Lot 25 of the 17th District, Fulton County, Georgia, described as follows:

 

Commence at a point at the intersection of the North right-of-way line of Northridge Parkway (right-of-way varies) with the West line of Land Lot 385 of the 18th District, Fulton County, Georgia, THENCE South 00 degrees 48 minutes 34 seconds East for a distance of 89.73 feet to a 1/2” rebar found on the south right-of-way line of said Northridge Parkway, said point being the True Point of Beginning; THENCE South 00 degrees 32 minutes 22 seconds West for a distance of 74.11 feet to a 1/2” rebar found; THENCE South 61 degrees 01 minute 34 seconds West for a distance of 43.27 feet to a pk nail found in a rock; THENCE North 88 degrees 01 minute 58 seconds West for a distance of 34.84 feet to a POINT; THENCE North 45 degrees 18 minutes 03 seconds West for a distance of 35.67 feet to a POINT; THENCE North 81 degrees 51 minutes 27 seconds West for a distance of 47.05 feet to a POINT; THENCE South 87 degrees 35 minutes 49 seconds West for a distance of 37.47 feet to a POINT; THENCE South 56 degrees 54 minutes 36 seconds West for a distance of 53.53 feet to a POINT; THENCE South 79 degrees 23 minutes 27 seconds West for a distance of 12.71 feet to a POINT; THENCE South 78 degrees 27 minutes 12 seconds West for a distance of 334.23 feet to a 1” open top pipe found; THENCE South 60 degrees 36 minutes 33 seconds West for a distance of 31.31 feet to a 1 1/2” crimp top pipe found; THENCE South 86 degrees 32 minutes 28 seconds West for a distance of 234.61 feet to a POINT; THENCE North 84 degrees 33 minutes 25 seconds West for a distance of 31.85 feet to a POINT; said point being along the Easterly right-of-way of Roswell Road (A.K.A. Georgia Highway #9; right-of-way varies), Running THENCE along said right-of-way line of Roswell Road, the following courses and distances: THENCE North 02 degrees 18 minutes 44 seconds West for a distance of 58.99 feet to a concrete monument found; THENCE North 72 degrees 43 minutes 10 seconds East for a distance of 51.86 feet to a concrete monument found; THENCE North 03 degrees 12 minutes 14 seconds West for a distance of 18.88 feet to a concrete monument found; THENCE North 72 degrees 21 minutes 59 seconds West for a distance of 53.37 feet to a concrete monument found; THENCE North 02 degrees 45 minutes 39 seconds West for a distance of 44.00 feet to a concrete monument found; THENCE North 84 degrees 20 minutes 00 seconds East 14.52 feet to a concrete monument found; THENCE North 02 degrees 37 minutes 47 seconds West for a distance of 13.12 feet to a concrete monument found, said point being at the intersection of the Easterly right-of-way of Roswell Road (right-of-way varies) and Southerly right-of-way of Northridge Parkway (right-of-way varies); THENCE along said right-of-way line of Northridge Parkway, the following courses and distances: THENCE along a curve to the right having a radius of 138.06 feet and an arc length of 67.05 feet, being subtended by a chord of North 85 degrees 46 minutes 26 seconds East for a distance of 66.39 feet to a POINT; THENCE South 79 degrees 46 minutes 41 seconds East for a distance of 279.89 feet to a POINT; THENCE along a curve to the left having a radius of 257.60 feet and an arc length of 120.56 feet, being subtended by a chord of North 86 degrees 48 minutes 52 seconds East for a distance of 119.46 feet to a POINT; THENCE North 73 degrees 24 minutes 25 seconds East for a distance of 202.55 feet to a POINT; THENCE along a curve to the right having a radius of 324.80 feet and an arc length of 142.81 feet, being subtended by a chord North 86 degrees 00 minutes 10 seconds East for a distance of 141.66 feet to a POINT; THENCE South 81 degrees 18 minutes 45 seconds East for a distance of 58.08 feet to a POINT; said point being the True Point of Beginning, said tract being designated “Tract Two – 2.036 acres” as shown on plat of ALTA/ACSM Land Title Survey prepared by Precision Planning, Inc. for Northridge Parkway, LLC, Dutch American Finance, LLC, Chicago Title Insurance Company and Paul J. A. van Hessen, bearing the seal and certification of Randall W. Dixon, Georgia Registered Land Surveyor No. 1678, dated February 9, 2012.

 

TOGETHER WITH, a non-exclusive right, title and interest in and to the easements appurtenant to the above described Tracts created pursuant to that certain:

 

(i)      Amended and Restated Declaration of Reciprocal Easements among MLH Income Realty Partnership III, a New York limited partnership, Northridge 400 Associates, a Georgia general partnership, NationsBank of Georgia, N.A., formerly known as The Citizens and Southern National Bank, and Roberts Properties Highland Park, L.P., a Georgia limited partnership, dated as of August 12, 1994, filed August 19, 1994, recorded in Deed Book 18640, page 98, Fulton County, Georgia records; as amended by that certain First Amendment to Amended and Restated Declaration of Reciprocal Easements between and among MLH Income Realty Partnership III, a New York limited partnership, Northridge 400 Associates, a Georgia general partnership, Roberts Properties Residential, L.P. and Roberts Properties, Inc., dated December X, 1995, filed December 21, 1995, recorded in Deed Book 20394, page 302, aforesaid records; as re-filed on February 5, 1996, re-recorded in Deed Book 20586, page 132, aforesaid records; as further amended by that certain Second Amendment to Amended and Restated Declaration of Reciprocal Easements between and among Roberts Properties Residential, L.P., a Georgia limited partnership, and Gateway Mosswood, Inc., dated August 6, 2003, filed August 7, 2003, recorded in Deed Book 35630, page 176, aforesaid records;

 

(ii)      Grant of Drainage Easement by and between Roberts Properties, Inc., a Georgia corporation, and Northridge Atlanta, Inc., a Delaware corporation, dated February 23, 2001, filed March 2, 2001, recorded in Deed Book 30028, page 362, aforesaid records (the “Drainage Easement”); and

 

(iii)      Declaration of Easements by Roberts Properties Residential, L.P., a Georgia limited partnership, dated June 28, 2001, filed June 29, 2001, recorded in Deed Book 30621, page 508, aforesaid records; as amended by that certain First Amendment to Declaration of Easements by Roberts Properties Residential, L.P., a Georgia limited partnership and Northridge Parkway, LLC, a Georgia limited liability company, dated October 30, 2013, filed November 5, 2013, recorded in Deed Book 53314, page 578, aforesaid records.

 

Exhibit 10.4

 

GUARANTY

THIS GUARANTY (“Guaranty”) is given as of January 13, 2015, to PAUL J. A. LEX VAN HESSEN, an individual (the “Lender”) by ROBERTS PROPERTIES RESIDENTIAL, L.P., a Georgia limited partnership and ROBERTS REALTY INVESTORS, INC., a Georgia corporation (collectively the “Guarantor”) for the obligations of NORTHRIDGE PARKWAY, LLC (“Borrower”).

 

RECITALS

WHEREAS, Lender has made a loan to Borrower (“Loan”) as evidenced by that certain Promissory Note of even date herewith in the amount of $2,000,000.00 payable to Lender (“Note”); and

WHEREAS, Guarantor has an ownership interest in Borrower and will receive a direct or indirect benefit from the Note, and therefore has agreed to guarantee to the Lender the obligations of the Borrower as set forth herein; and

WHEREAS, but for this Guaranty, the Lender would be unwilling to extend the Loan to Borrower.

NOW, THEREFORE, in consideration of the Lender’s financial accommodations to Borrower, the Guarantor hereby covenants and agrees with the Lender as follows:

1.      Guaranty. The Guarantor, jointly and severally, hereby unconditionally and irrevocably guaranties to the Lender the full payment and performance, when due, by acceleration or otherwise, of all indebtedness, liabilities, and obligations of Borrower to the Lender of any kind and description (collectively, the “Indebtedness”) under and pursuant to the Note or any of the other documents evidencing or securing the Loan (collectively the “Loan Documents”). The guaranty of the Guarantor as set forth in this section is an absolute, continuing, primary, and unconditional guaranty of payment and not of collection. The “Indebtedness” guaranteed hereby shall include, without limitation, the obligations and indemnities of Borrower under that certain Environmental Indemnity Agreement of even date by Borrower in favor of Lender.

If a claim is ever made upon the Lender for the repayment or recovery of any amount or amounts received by the Lender in payment of any of the Indebtedness and the Lender repays all or part of such amount by reason of (a) any judgment, decree, or order of any court or administrative body having jurisdiction over the Lender or any of its property, or (b) any settlement or compromise of any such claim effected by the Lender with any such claimant, including the Borrower, then in such event the Guarantor agrees that any such judgment, decree, order, settlement, or compromise shall be binding upon the Guarantor, notwithstanding any revocation hereof or the cancellation of the Note or other instrument evidencing any of the Indebtedness, and the Guarantor shall be and remain obligated to the Lender hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by the Lender, such amount to be included in the term “Indebtedness.”

This Guaranty may be enforced by the Lender against the Guarantor without the necessity at any time of the Lender’s (a) having recourse against Borrower on the Note, or (b) exercising any other rights available to it under the Note or other Loan Documents. The Guarantor on demand shall pay to the Lender in immediately available funds, in lawful money of the United States of America, any sum or sums due to the Lender hereunder.

2.      Nature of Obligations. The Guarantor acknowledges and agrees that no change in the nature or terms of the Indebtedness or the Note (including any novation), whether by operation of law or otherwise, including, without limitation any impairment, modification, change, release, or limitation of the liability of Borrower by reason of Borrower’s bankruptcy or insolvency or any subsequent reorganization, merger, or consolidation of Borrower or any other change in its composition, nature, personnel, or location shall discharge all or any part of the liabilities and obligations of the Guarantor pursuant to this Guaranty. It is the purpose and intent of the Guarantor and the Lender that the covenants, agreements, and all liabilities and obligations of the Guarantor hereunder are absolute, unconditional, and irrevocable under any and all circumstances, including, without limitation, the invalidity or unenforceability of the Note or any other Loan Documents. Without limiting the generality of the foregoing, the Guarantor agrees that until each and every one of the covenants and agreements of this Guaranty are fully performed, the Guarantor’s undertakings hereunder shall not be released, in whole or in part, by any action or thing which might, but for this paragraph of this Guaranty, be deemed a legal or equitable discharge of a surety or guarantor, or by reason of any waiver, omission of the Lender, or its failure to proceed promptly or otherwise, or by reason of any action taken or omitted by the Lender, whether or not such action or failure to act varies or increases the risk of, or affects the rights or remedies of, the Guarantor, including, without limitation, the failure of the Lender to perfect, or to continue the perfection of, any lien or security interest in any security or any delay by the Lender in perfecting any such lien or security interest, or by reason of any further dealings between the Borrower and the Lender, or any other guarantor or surety, and the Guarantor hereby expressly waives and surrenders any defense to its liability hereunder based upon, and shall be deemed to have consented to, any of the foregoing acts, omissions, things, agreements, or waivers. Without limiting the generality of the foregoing, the Guarantor hereby gives its consent for the Lender to do any one or more of the following without in any manner affecting, impairing, limiting, modifying, or releasing any of the obligations of the Guarantor under this Guaranty and without notice to or consent of the Guarantor: (a) exchange, compromise, or surrender the whole or any part of the security now or hereafter held for the Indebtedness; (b) exchange, extend, or renew the time or place of payment of the Indebtedness in whole or in part, to a time certain or otherwise whether or not longer than the original period, or withdraw credit or time to pay; (c) extend or change the terms of performance of any other obligations of Borrower under the Note or other Loan Documents; (d) modify, amend, or waive any of the provisions of the Note or other Loan Documents; (e) release or grant indulgences to Borrower; (f) receive property or other security as collateral for the Indebtedness; (g) fail to exercise due diligence or omit to enforce any right, power, or privilege under the Note or other Loan Documents; and (h) apply any payment received by the Lender from Borrower of, or on account of, the Indebtedness, in any manner the Lender elects.

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3.      Waiver of Rights. The Guarantor expressly waives: (a) notice of the execution and delivery of the Note and creation of the Indebtedness; (b) notice of acceptance of this Guaranty by the Lender and of all extensions of credit to Borrower by the Lender; (c) presentment and demand for payment of any of the Indebtedness; (d) protest and notice of dishonor or of default or nonpayment to the Guarantor or to any other party with respect to the Indebtedness or with respect to any security therefor; (e) notice of the Lender’s obtaining, amending, substituting for, releasing, waiving, or modifying any security interest, liens, or encumbrances now or hereafter securing the Indebtedness, or the Lender’s subordinating, compromising, discharging, or releasing such security interests, liens, or encumbrances and any other notices whatever; (f) demand for payment under this Guaranty; (g) the provisions of Section 10-7-24 of the Official Code of Georgia Annotated; and (h) all rights of subrogation, indemnification, contribution, and reimbursement from Borrower, all rights to enforce any remedy the Lender may have against Borrower, and any benefit of, or right to participate in, any collateral or security now or hereinafter held by the Lender in respect of the Indebtedness, even upon payment in full of the Indebtedness.

4.      Term of Guaranty: Warranties. This Guaranty shall continue in full force and effect until the Indebtedness is fully paid, performed, and discharged. Each Guarantor warrants and represents to the Lender that (a) the Guarantor will directly benefit from the financial accommodations being extended to the Borrower by the Lender; (b) this Guaranty is binding upon and enforceable against the Guarantor, in accordance with its terms; (c) the execution and delivery of this Guaranty do not violate or constitute a breach of any agreement to which either Guarantor is a party or of any applicable laws; and (d) there is no litigation, claim, action, or proceeding pending, or, to the best knowledge of the Guarantor, threatened against the Guarantor that would materially adversely affect the financial condition of the Guarantor or its ability to fulfill its obligations hereunder.

5.      Attorneys’ Fees and Costs of Collection. If at any time or times hereafter the Lender employs counsel to pursue collection, to intervene, to sue for enforcement of, or take any other action with respect to the terms hereof or of the Note, then in such event, all of the reasonable attorneys’ fees, actually incurred (and not statutory attorney’s fees), and disbursements relating thereto and any other fees and disbursements incurred by or on behalf of the Lender, due to the failure of Borrower to pay the Indebtedness when due and payable, shall be an additional liability of the Guarantor to the Lender, payable on demand.

6.      Events of Default. The occurrence of any one or more of the following events shall constitute an event of default (an “Event of Default”) under this Guaranty: (a) the failure of the Guarantor to perform, observe, or comply with any of the provisions of this Guaranty, including, without limitation, the payment provisions, (b) a default under the Note or any other Loan Document or (c) the occurrence of an event of default under the terms of that certain Loan Agreement of even date herewith by and between Borrower and Lender (“Loan Agreement”).

Upon the occurrence and during the continuance of an Event of Default under this Guaranty, the Lender may, at its option, declare the Indebtedness to be immediately due and payable by the Guarantor, and the Guarantor shall on demand pay the same to the Lender in immediately available funds, in lawful money of the United States of America.

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7.      Security Interests and Setoff. As security for the Guarantor’s obligations hereunder, the Guarantor agrees that (a) in the event the Guarantor fails to pay its obligations hereunder when due and payable under the Guaranty, any of the Guarantor’s assets of any kind, nature, or description (including, without limitation, deposit accounts) in the possession, control, or custody of the Lender, may, without notice to the Guarantor, be reduced to cash or the like and applied by the Lender in reduction or payment of the Guarantor’s obligations hereunder; (b) all security interests, liens, and encumbrances heretofore, now and at any time or times hereafter granted by the Guarantor to the Lender also shall secure the Guarantor’s obligations hereunder; and (c) the Lender shall have the right, immediately and without further action by it, to set off against the Indebtedness all money owed by the Lender in any capacity to the Guarantor, whether or not due, and the Lender shall be deemed to have made a charge against any such money immediately upon the occurrence of such obligation becoming due even though such charge is made or entered on the books of the Lender subsequent thereto.

8.      Cumulative Rights. All rights of the Lender hereunder or otherwise arising under the Note or other Loan Documents are separate and cumulative and may be pursued separately, successively, or concurrently, or not pursued, without affecting or limiting any other right of the Lender and without affecting or impairing the liability of the Guarantor.

9.      Assignment. The Lender may, without notice to, or consent of, the Guarantor, sell, assign, or transfer to any person or persons all or any part of the Indebtedness, and each such person or persons shall have the right to enforce this Guaranty as fully as the Lender, provided that the Lender shall continue to have the unimpaired right prior and superior to that of any such assignee, transferee, or holder to enforce this Guaranty as to so much of the Indebtedness that it has not sold, assigned, or transferred.

10.      Successors and Assigns. This Guaranty shall bind each Guarantor and their respective successors, and assigns and shall inure to the benefit of, and be enforceable by, the Lender and its successors and assigns, including, without limitation, each and every person who shall from time to time be or become the holder of the Note.

11.      Notices. Notices under this Guaranty shall be given in accordance with the provisions of the Loan Agreement.

12.      Amendment. This Guaranty may be terminated, amended, supplemented, waived, released or modified only by an instrument in writing signed by the party against whom the enforcement of the termination, amendment, supplementation, waiver, release, or modification is sought.

13.      Usury. Notwithstanding any other provisions herein contained, no provision of this Guaranty shall require or permit the collection from the Guarantor of interest in excess of the maximum rate or amount that the Guarantor may be required or permitted to pay pursuant to any Applicable Law.

14.      Governing Law. This Guaranty shall be deemed to be a contract made under, and for all purposes shall be construed in accordance with, the laws of the State of Georgia.

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15.      Time. Time is of the essence of this Guaranty.

IN WITNESS WHEREOF, Guarantor has executed this Guaranty under seal as of the day and year first above written.

 

	ROBERTS PROPERTIES RESIDENTIAL, L.P., a Georgia limited partnership
	By:	Roberts Realty Investors, Inc., a Georgia corporation, its
		sole general partner

 

 

	By:	/s/ Anthony Shurtz
	Name:	Anthony Shurtz
	Title:	CFO
		[CORPORATE SEAL]

 

 

 

ROBERTS REALTY INVESTORS, INC., a Georgia corporation

 

 

	By:	/s/ Anthony Shurtz
	Name:	Anthony Shurtz
	Title:	CFO
		[CORPORATE SEAL]

 

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