REGISTRATION RIGHTS AGREEMENT

 

 

REGISTRATION RIGHTS AGREEMENT, dated as of January 30, 2015 (this “Agreement”),
between ROBERTS REALTY INVESTORS, INC., a Georgia corporation (the “Company”)
and A-III Investment Partners LLC, a Delaware limited liability company (the
“Purchaser”).

WHEREAS, the Purchaser has acquired on the date hereof an aggregate of 8,450,704
shares (the “Initial Shares”) of the Company’s common stock, $0.01 par value per
share (“Common Stock”) pursuant to the terms of a Stock Purchase Agreement dated
as of November 19, 2014 between the Company and the Purchaser (the “Purchase
Agreement”); and

WHEREAS, pursuant to Section 1.3 of the Purchase Agreement, the Company has
agreed, under certain circumstances, to issue additional shares of Common Stock
(the “True-Up Shares”) to Purchaser in a Post-Closing Issuance (as defined in
the Purchase Agreement); and

WHEREAS, pursuant to the Purchase Agreement, the Company has granted to the
Purchaser a warrant to purchase additional shares of Common Stock (the “Warrant
Shares” and, together with the Initial Shares and the True-Up Shares, the
“Shares”) pursuant to a Warrant Agreement dated as of the date hereof between
the Company and the Purchaser (the “Warrant Agreement”); and

WHEREAS, pursuant to the Purchase Agreement, the Company has agreed to grant
certain registration rights, subject to the terms and conditions set forth in
this Agreement, with respect to the Shares;

WHEREAS, the Company and the Purchaser wish to set forth their agreement with
respect to certain rights and obligations regarding the registration of the
Shares.

In consideration of the foregoing and of the mutual agreements contained herein
and in the Purchase Agreement, the Company and the Purchaser hereby agree as
follows:

  1. DEFINITIONS.

As used in this Agreement, the following capitalized defined terms shall have
the following meanings:

“Affiliate” means, with respect to any Person, (i) each Person that, directly or
indirectly, owns or controls, whether beneficially or as a trustee, guardian or
other fiduciary, 25% or more of the capital stock having ordinary voting power
in the election of directors of such Person, (ii) each Person that controls, is
controlled by or is under common control with such Person or any Affiliate of
such Person, or (iii) each of such Person’s executive officers and directors.
For the purpose of this definition, “control” of a Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities, by contract or otherwise.

 

 

 

“Board of Directors” means the board of directors of the Company from time to
time.

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” means the shares of the Company’s common stock, $0.01 par value
per share.

“Company” has the meaning specified in the recitals to this Agreement.

“Controlling Person” has the meaning specified in Section 7(a).

“End of Suspension Notice” has the meaning specified in Section 6(b).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.

“Fully Diluted Basis” means at any date as of which the number of shares of
Common Stock is to be determined, on a basis including all shares of Common
Stock outstanding at such date and the maximum shares of Common Stock issuable
in respect of Common Stock Equivalents (giving effect to the then current
respective conversion prices) and other rights to purchase (directly or
indirectly) shares of Common Stock or Common Stock Equivalents, outstanding on
such date, to the extent such rights to convert, exchange or exercise thereunder
are presently exercisable. For purposes of this definition, “Common Stock
Equivalents” means any security or obligation which is by its terms convertible
into or redeemable for shares of Common Stock (including any units of limited
partnership interest in Roberts Properties Residential, L.P.) and any option,
warrant or other subscription or purchase right with respect to Common Stock.

“Holder” shall mean each owner of any Registrable Securities from time to time.

“Indemnified Party” has the meaning specified in Section 7(c).

“Indemnifying Party” has the meaning specified in Section 7(c).

“Liabilities” has the meaning specified in Section 7(a).

“Material Adverse Change” or “Material Adverse Effect” shall mean any event,
circumstance, change or effect that would reasonably be likely, individually or
in the aggregate, to have a material adverse effect on the assets, business,
operations, earnings, properties or condition (financial or otherwise), of the
Company and its subsidiaries taken as a whole; provided, however, that none of
the following shall be deemed to constitute or shall be taken into account in
determining whether there has been a Material Adverse Effect: any event,
circumstance, change or effect arising out of or attributable to (a) changes in
the economy or financial markets, including, prevailing interest rates and
market conditions, generally in the United States or that are the result of acts
of war or terrorism, or (b) changes that are caused by factors generally
affecting the industry in which the Company and its subsidiaries operate.

 

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“Person” means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, fund, unincorporated association or
organization or government or other agency or political subdivision thereof.

“Piggyback Registrations” has the meaning specified in Section 2.2(a).

“Purchase Agreement” has the meaning specified in the recitals.

“Purchaser Indemnitee” has the meaning specified in Section 7(a).

“Registrable Securities” means the Initial Shares purchased by the Purchaser in
connection with the Purchase Agreement, any True-Up Shares issued by the Company
to the Purchaser pursuant to the Purchase Agreement and the Warrant Shares
issued or issuable to the Purchaser pursuant to the Warrant Agreement, in each
case including upon the transfer thereof by the original Holder or any
subsequent Holder, and any shares or other securities issued in respect of such
shares of Common Stock by reason of or in connection with any stock dividend,
stock distribution, stock split, purchase in any rights offering or in
connection with any exchange for or replacement of such shares of Common Stock
or any combination of shares, recapitalization, merger or consolidation, or any
other equity securities issued pursuant to any other pro rata distribution with
respect to such shares of Common Stock. Any Registrable Security will cease to
be a Registrable Security when: (a) a registration statement covering such
Registrable Security has been declared effective by the Commission and the
Registrable Security has been disposed of pursuant to such effective
registration statement, (b) the Registrable Security is sold under circumstances
in which all of the applicable conditions of Rule 144 (or any similar provisions
then in force) under the Securities Act are met or (c) the Registrable Security
has been otherwise transferred, the Company has delivered a new certificate or
other evidence of ownership for the Registrable Security not bearing a legend
restricting further transfer, and the Registrable Security may be resold without
subsequent registration under the Securities Act.

“Registration Expenses” means all expenses incident to the Company’s performance
of or compliance with this Agreement, including without limitation all
Commission and stock exchange or NYSE registration and filing fees and expenses,
fees and expenses of compliance with securities or blue sky laws (including
without limitation reasonable fees and disbursements of one counsel for all
underwriters or holders as a group in connection with blue sky qualifications of
the Registrable Securities), rating agency fees, printing expenses, messenger,
telephone and delivery expenses, the fees and expenses incurred in connection
with the listing of the securities to be registered on each securities exchange
or national market system on which similar securities issued by the Company are
then listed, fees and disbursements of counsel for the Company and all
independent certified public accountants (including the expenses of any annual
audit, special audit and “cold comfort” letters required by or incident to such
performance and compliance), securities laws liability insurance (if the Company
so desires), the fees and expenses of any “qualified independent underwriter”
that is required to be retained by any holder of Registrable Securities pursuant
to the rules and regulations of the Financial Industry Regulatory Authority
(“FINRA”) customarily paid by issuers or sellers of securities (but not
including any underwriting discounts or commissions attributable to the sale of
Registrable Securities by the sellers of Registrable Securities) and the
reasonable fees of counsel selected pursuant to Section 6 hereof by the Holders
in connection with each such registration.

 

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“Registration Statement” means a registration statement of the Company that
covers the resale of Registrable Securities pursuant to the provisions of this
Agreement, including any prospectus included in such registration statement,
amendments and supplements to such registration statement or prospectus,
including pre- and post-effective amendments, all exhibits thereto and all
material incorporated by reference or deemed to be incorporated by reference, if
any, in such registration statement.

“Securities Act” means the Securities Act of 1933, as amended.

“Shelf Registration Statement” has the meaning specified in Section 2.1(a).

“Suspension Event” has the meaning specified in Section 6(b).

“Suspension Notice” has the meaning specified in Section 6(b).

“Underwritten Offering” means a sale of securities of the Company to an
underwriter or underwriters for reoffering to the public.

  2. REGISTRATION RIGHTS.

2.1              MANDATORY REGISTRATION RIGHTS.

(a)    As set forth in Section 5 hereof, the Company agrees to file on or before
the 180th day after the date of this Agreement a shelf Registration Statement on
Form S-11 or such other form under the Securities Act then available to the
Company providing for the resale of any Registrable Securities pursuant to Rule
415 from time to time by the Holders (a “Shelf Registration Statement”). The
Company shall use its commercially reasonable best efforts to cause such Shelf
Registration Statement to be declared effective by the Commission as soon as
practicable thereafter, and, for this purpose, the Company shall be entitled to
consider the advice of the managing underwriter(s) of a public offering of the
Company’s Common Stock which is then pending as to the effect that the
effectiveness of the Shelf Registration Statement could reasonably be expected
to have on the marketing of the public offering. Any Shelf Registration
Statement shall provide for the resale from time to time, and pursuant to any
method or combination of methods legally available (including, without
limitation, an Underwritten Offering, a direct sale to purchasers or a sale
through brokers or agents, which may include sales over the internet) by the
Holders of any and all Registrable Securities.

(b)   PRIORITY ON SHELF REGISTRATION STATEMENT. The Company will not include in
any Shelf Registration Statement any securities that are not Registrable
Securities without the prior written consent of the Holders of at least 66.66%
of the Registrable Securities. If the managing underwriters of an underwritten
offering under the Shelf Registration Statement advise the Company in writing
that in their opinion the number of Registrable Securities and, if permitted
hereunder, other securities requested to be included in such offering exceeds
the number of Registrable Securities and other securities, if any, which can be
sold therein without adversely affecting the marketability of the offering, the
Company will include in such registration, (i) first, the Registrable
Securities; and (ii) second, other securities, if any, requested to be included
in such registration, pro rata among the holders of such other securities, on
the basis of the number of shares of other securities owned by each such holder
and requested to be included therein.

 

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(c)    SELECTION OF UNDERWRITERS. Subject to an engagement agreement to which
the Company is a party, the Company shall have the right to select the
investment banker or bankers, underwriters and managers to administer any
Underwritten Offering under a Shelf Registration Statement; PROVIDED, HOWEVER,
that such investment banker or bankers, underwriters and managers shall be
reasonably satisfactory to the Holders of at least 66.66% of the Registrable
Securities. All Holders proposing to distribute their Registrable Securities
through such Underwritten Offering shall enter into an underwriting agreement in
customary form with the managing underwriters selected for such underwriting and
furnish to the Company such information in writing as the Company may reasonably
request for inclusion in the Shelf Registration Statement; provided, however,
that no Holder shall be required to make any representations or warranties to or
agreements with the Company or the managing underwriters other than
representations, warranties or agreements as are customary and reasonably
requested by the managing underwriters. If any Holder disapproves of the terms
of such Underwritten Offering, such Holder may elect to withdraw therefrom by
written notice to the Company and the managing underwriter delivered at least
ten (10) business days prior to the effective date of the Shelf Registration
Statement. Any Registrable Securities excluded or withdrawn from such
Underwritten Offering shall be excluded and withdrawn from the Shelf
Registration Statement.

2.2              DEMAND REGISTRATION ON FORM S-3

(a)    If (i) the Company shall receive a written request (specifying that it is
being made pursuant to this subsection) from one or more Holders that the
Company file a registration statement on Form S-3 (or any successor form to Form
S-3 regardless of its designation) for a public offering of Registrable
Securities the reasonably anticipated aggregate price to the public of which
would equal or exceed $5,000,000, and (ii) the Company is a registrant entitled
to use Form S-3 (or any successor form to Form S-3) to register such securities,
then the Company shall promptly notify all other Holders of such request and
shall use its commercially reasonable best efforts to cause all Registrable
Securities that Holders have requested be registered to be registered on Form
S-3 (or any successor form to Form S-3).

 

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(b)   Notwithstanding the foregoing, (i) the Company shall not be obligated to
effect a registration pursuant to this subsection during the period starting
with the date sixty (60) days prior to the Company’s estimated date of filing
of, and ending on a date six (6) months following the effective date of, a
registration statement pertaining to an underwritten public offering of
securities for the account of the Company; provided, that the Company is
actively employing in good faith its best efforts to cause such registration
statement to become effective and that the Company’s estimate of the date of
filing such registration statement is made in good faith; (ii) the Company shall
not be obligated to effect a registration pursuant to this subsection within six
(6) months after the effective date of a prior registration under this Section;
and (iii) if the Company shall furnish to the Holders a certificate signed by
the President of the Company stating that in the good faith judgment of the
Board of Directors it would be seriously detrimental to the Company or its
shareholders for a registration statement to be filed in the near future, then
the Company’s obligation to use its best efforts to file a registration
statement shall be deferred for a period not to exceed 90 days; provided,
however, that the Company shall not be permitted to so defer its obligation more
than once in any 12-month period.

(c)    The Holders’ rights to registration under this Section 2.2 are in
addition to, and not in lieu of, their rights to registration under any other
section of this Agreement.

2.3              RIGHT TO PIGGYBACK REGISTRATION.

(a)    If at any time following the date of this Agreement and prior to the
registration of Registrable Securities pursuant to Section 2.1, the Company
proposes for any reason to register any shares of Common Stock under the
Securities Act (other than pursuant to a registration statement on Form S-4 or
Form S-8 (or a similar or successor form)) with respect to an offering of Common
Stock by the Company for its own account or for the account of any of its
stockholders, it shall at each such time promptly give written notice to the
Holders of its intention to do so (but in no event less than 30 days before the
anticipated filing date) and include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within 15 days after receipt of the Company’s notice (a
“Piggyback Registration”). Such notice shall offer the Holders the opportunity
to register such number of shares of Registrable Securities as each Holder may
request and shall indicate the intended method of distribution of such
Registrable Securities.

(b)   The Company shall use its commercially reasonable best efforts to cause
the managing underwriter or underwriters of a proposed Underwritten Offering to
permit the shares of Registrable Securities requested to be included in the
Registration Statement for such offering to be included (on the same terms and
conditions as the Common Stock of the Company included therein to the extent
appropriate). Notwithstanding the foregoing, if in the reasonable judgment of
the managing underwriter or underwriters due to the size of the offering which
the Company or such other persons or entities intends to make, the success of
the offering would be adversely affected by inclusion of the Registrable
Securities requested to be included, then, if the offering is by the Company for
its own account or is an offering by other holders registering shares of Common
Stock of the Company pursuant to demand registration rights, then the number of
shares of Common Stock to be offered for the accounts of Holders and other
holders registering shares of Common Stock of the Company pursuant to similar
piggyback registration rights shall be reduced pro rata based on the relative
percentage ownership of all shares of Common Stock then outstanding owned by the
Holders and such other holders to the extent necessary to reduce the total
number of shares of Common Stock to be included in such offering to the amount
recommended by such managing underwriter or underwriters.

 

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  3. HOLDBACK AGREEMENTS.

(a)    The Holders agree not to effect any public sale or distribution
(including sales pursuant to Rule 144 under the Securities Act) of equity
securities, including, without limitation, the Shares, of the Company, or any
securities convertible into or exchangeable or exercisable for such securities,
during the seven days prior to and the 90-day period beginning on the effective
date of any Shelf Registration Statement or Piggyback Registration for a public
offering to be underwritten on a firm commitment basis (except as part of such
underwritten registration), unless the investment bankers or underwriters
managing the public offering otherwise agree.

(b)   The Company agrees to use its commercially reasonable best efforts to
cause each of its directors and executive officers and each holder of at least
5% (on a Fully Diluted Basis) of the Company’s equity securities, including,
without limitation, Common Stock, or any securities convertible into or
exchangeable or exercisable for such securities, purchased from the Company at
any time after the date of this Agreement (other than in a registered public
offering or distribution or securities issued pursuant to the Company’s 2006
Restricted Stock Plan, as amended) to agree not to effect any public sale or
distribution (including sales pursuant to Rule 144 under the Securities Act) of
any such securities during the period described in clause (a) above (except as
part of such underwritten registration), unless the underwriters managing the
public offering or distribution otherwise agree.

  4. Rule 144 and 144a reporting.

With a view to making available the benefits of certain rules and regulations of
the Commission that may permit the sale of the Registrable Securities to the
public without registration, the Company agrees to, so long as any Holder owns
any Registrable Securities:

(a)    use its commercially reasonable best efforts to make and keep public
information available, as those terms are understood and defined in Rule 144(c)
under the Securities Act;

(b)   use its commercially reasonable best efforts to file with the Commission
in a timely manner all reports and other documents required to be filed by the
Company under the Securities Act and the Exchange Act; and

(c)    furnish to any Holder promptly upon request (i) a written statement by
the Company that it has complied with the reporting requirements of Rule 144 or
that it qualifies as a registrant whose securities may be resold pursuant to
Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
of the Company and (iii) such other information as a Holder may reasonably
request in availing itself of any rule or regulation of the Commission allowing
a Holder to sell any such Registrable Securities without registration or
pursuant to such form.

 

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5.                  REGISTRATION PROCEDURES.

Whenever the Holders have requested that any Registrable Securities be
registered pursuant to this Agreement, the Company will use its commercially
reasonable best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof, and pursuant thereto the Company will as expeditiously as reasonably
practicable:

(a)    Prepare and file with the Commission a Registration Statement with
respect to such Registrable Securities and use its commercially reasonable best
efforts to cause such Registration Statement to become effective (provided that
before filing a Registration Statement or prospectus or any amendments or
supplements thereto, the Company will furnish to counsel selected by the Holders
copies of all such documents proposed to be filed);

(b)   Subject to Section 7, prepare and file with the Commission such amendments
and supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective for a period of not less than one year and comply with the provisions
of the Securities Act with respect to the disposition of all securities covered
by such Registration Statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
Registration Statement;

(c)    Furnish to the Holders such number of copies of such Registration
Statement, each amendment and supplement thereto, the prospectus included in
such Registration Statement (including each preliminary prospectus) and such
other documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities;

(d)   Use its commercially reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions of the United States of America as the Holders reasonably request
and shall maintain such qualification in effect so long as required; (provided
that the Company will not be required to (i) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this subsection, (ii) subject itself to taxation in any such jurisdiction or
(iii) consent to general service of process (i.e., service of process which is
not limited solely to securities law violations) in any such jurisdiction);

(e)    notify each Holder promptly and, if requested by any Holder, confirm such
advice in writing (i) when a Registration Statement registering the Registrable
Securities has become effective and when any post-effective amendments and
supplements thereto become effective, (ii) of the issuance by the Commission or
any state securities authority of any stop order suspending the effectiveness of
a Registration Statement or the initiation of any proceedings for that purpose,
(iii) of any request by the Commission or any other federal, state or foreign
governmental authority for amendments or supplements to a Registration Statement
or related prospectus or for additional information, and (iv) of the happening
of any event during the period a Registration Statement is effective as a result
of which such Registration Statement covering the Registrable Securities or the
related prospectus or any document incorporated by reference therein contains
any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading (which information shall be accompanied by an instruction to suspend
the use of the prospectus until the requisite changes have been made);

 

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(f)    Use its commercially reasonable best efforts to cause all such
Registrable Securities to be listed on the same securities exchange on which
securities of the same class are then listed;

(g)   Provide a transfer agent and registrar for all such Registrable Securities
not later than the effective date of such Registration Statement;

(h)   Enter into such customary agreements (including underwriting agreements in
customary form) and take all such other reasonable actions as the Holders or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities;

(i)     Use its commercially reasonable best efforts to make available, subject
to any confidentiality agreements reasonably requested by the Company, for
inspection by one representative appointed by the Holders any underwriter
participating in any disposition pursuant to such Registration Statement and any
attorney, accountant or other agent retained by such representative of the
Holders or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company’s officers,
directors, employees and independent accountants to supply all information
reasonably requested by any Holder, such underwriter, attorney, accountant or
agent in connection with such Registration Statement;

(j)     Otherwise use its commercially reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and, if required, make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning with
the first day of the Company’s first full calendar quarter after the effective
date of the Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

(k)   use its commercially reasonable best efforts to avoid the issuance of any
stop order suspending the effectiveness of a Registration Statement, or of any
order suspending or preventing the use of any related prospectus or suspending
the qualification of any equity securities, including, without limitation, the
Common Stock, included in such Registration Statement for sale in any
jurisdiction; in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any equity securities, including, without limitation, the Common Stock, included
in such Registration Statement for sale in any jurisdiction, the Company will
use its commercially reasonable best efforts promptly to obtain the withdrawal
of such order;

 

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(l)     Use its commercially reasonable best efforts to cause such Registrable
Securities covered by such Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be reasonably
necessary to enable the sellers thereof to consummate the disposition of such
Registrable Securities;

(m) Except as provided in Section 7, upon the occurrence of any event
contemplated by Section 5(e)(iv) of this Agreement, use its commercially
reasonable best efforts to promptly prepare a supplement or post-effective
amendment to a Registration Statement or the related prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities, such
prospectus will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and, upon request, promptly furnish to each requesting
Holder a reasonable number of copies each such supplement or post-effective
amendment;

(n)   if requested by the managing underwriter(s), if any, or any Holders of
Registrable Securities (i) as promptly as practicable incorporate in a
prospectus supplement or post-effective amendment relating to the Registrable
Securities such material information as the managing underwriter(s), if any, or
such Holders indicate in writing relates to them or that they reasonably request
be included therein and (ii) use its commercially reasonable best efforts to
make all required filings of such prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received written
notification of the matters to be incorporated in such prospectus supplement or
post-effective amendment;

(o)   in the case of an Underwritten Offering, use its commercially reasonable
best efforts to furnish to each Holder of Registrable Securities covered by such
Registration Statement and the underwriters a signed counterpart, addressed to
each such Holder and the underwriters, of: (i) an opinion of counsel for the
Company, dated the date of each closing under the underwriting agreement,
reasonably satisfactory to such Holder and the underwriters; and (ii) a
“comfort” letter, dated the effective date of such Registration Statement and
the date of each closing under the underwriting agreement, signed by the
independent public accountants who have certified the Company’s financial
statements included in such Registration Statement, covering substantially the
same matters with respect to such Registration Statement (and the prospectus
included therein) and with respect to events subsequent to the date of such
financial statements, as are customarily covered in accountants’ letters
delivered to underwriters in underwritten public offerings of securities and
such other financial matters as such Holder and the underwriters may reasonably
request;

(p)   provide a CUSIP number, if necessary, for all Registrable Securities, not
later than the effective date of the Registration Statement; and

(q)   if requested by any holder of Registrable Securities, obtain a “cold
comfort” letter from the Company’s independent registered public accounting firm
in customary form and covering such matters of the type customarily covered by
“cold comfort” letters as the Purchaser reasonably requests.

 

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It shall be a condition precedent to the obligation of the Company to take any
action pursuant to this Agreement in respect of the securities which are to be
registered at the request of the Holders that the Holders shall furnish to the
Company such information regarding the Registrable Securities held by the
Holders and the intended method of disposition thereof as the Company shall
reasonably request in connection with such registration.

  6. REGISTRATION EXPENSES.

(a)    Except as otherwise expressly provided in this Agreement, all
Registration Expenses will be borne by the Company. To the extent Registration
Expenses are not required to be paid by the Company pursuant to this Agreement,
each holder of securities included in any registration or qualification
hereunder will pay those Registration Expenses allocable to the registration or
qualification of such holders’ securities so included, and any Registration
Expenses not so allocable will be borne by all sellers of securities included in
such registration in proportion to the aggregate selling price of the securities
to be so registered or qualified.

(b)   Except as otherwise expressly provided in this Agreement, in connection
with each Shelf Registration Statement and any Piggyback Registration, the
Company will reimburse the Holders covered by such Registration Statement for
the reasonable fees and disbursements of one United States legal counsel, which
counsel shall be selected (i) in the case of a Shelf Registration Statement by
the Holders holding a majority of the Registrable Securities, and (ii) in all
other cases, by the Holders of a majority of the Registrable Securities, and in
each case in consultation with the Company.

  7. Black out period.

(a)    Subject to the provisions of this Section 7, the Company shall have the
right, but not the obligation, from time to time to suspend the use of the
Registration Statement, following the effectiveness of a Registration Statement
(and the filings with any international, federal or state securities
commissions), the Company, by written notice to the Holders, may direct the
Holders to suspend sales of the Registrable Securities pursuant to a
Registration Statement for such times as the Company reasonably may determine is
necessary and advisable if a majority of the independent members of the Board of
Directors of the Company shall have determined in good faith, after the advice
of counsel, that the Company is required by law, rule or regulation, or that it
is in the best interests of the Company, to (i) supplement the prospectus or
(ii) file a post-effective amendment to the Registration Statement in the case
of (i) or (ii) to incorporate information into the Registration Statement for
the purpose of (1) including in the Registration Statement any prospectus
required under Section 10(a)(3) of the Securities Act; (2) reflecting in the
prospectus any facts or events arising after the effective date of the
Registration Statement (or of the most-recent post-effective amendment) that,
individually or in the aggregate, represents a fundamental change in the
information set forth therein; or (3) including in the prospectus any material
information with respect to the plan of distribution not disclosed in the
Registration Statement or any material change to such information. In no event
may a suspension in the case of (i) last for more than five (5) business days in
any singular instance and in the case of (i) and (ii) cumulatively last for more
than an aggregate of ninety (90) days in any rolling twelve (12) month period
commencing on the Closing Date or for more than an aggregate of sixty (60) days
in any rolling ninety (90) day period, except as a result of a refusal by the
Commission to declare any post-effective amendment to the Registration Statement
effective after the Company shall have used all commercially reasonable best
efforts to cause such post-effective amendment to be declared effective, in
which case the suspension shall be terminated immediately following the
effective date of the post-effective amendment to the Registration Statement.
Upon the occurrence of any such suspension, the Company shall use its
commercially reasonable best efforts to cause the Registration Statement to
become effective or to promptly amend or supplement the Registration Statement
on a post-effective basis or to take such action as is necessary to make resumed
use of the Registration Statement compatible with the Company’s best interests,
as applicable, so as to permit the Holders to resume sales of the Registrable
Securities as soon as possible.

 

11

 

(b)   In the case of an event that causes the Company to suspend the use of a
Registration Statement (a “Suspension Event”), the Company shall give written
notice (a “Suspension Notice”) to the Holders to suspend sales of the
Registrable Securities pursuant to the Registration Statement and such notice
shall state generally the basis for the notice and that such suspension shall
continue only for so long as the Suspension Event or its effect is continuing
and the Company is using its commercially reasonable best efforts and taking all
reasonable steps to terminate suspension of the use of the Registration
Statement as promptly as possible. No Holder shall effect any sales of the
Registrable Securities pursuant to such Registration Statement (or such filings)
at any time after it has received a Suspension Notice from the Company and prior
to receipt of an End of Suspension Notice (as defined below). Each Holder agrees
to keep confidential the fact that the Company has issued a Suspension Notice
and the contents thereof. If so directed by the Company, each Holder will
deliver to the Company all copies, other than permanent file copies then in such
Holder’s possession, of the prospectus covering the Registrable Securities at
the time of receipt of the Suspension Notice. The Holders may recommence
effecting sales of the Registrable Securities pursuant to the Registration
Statement (or such filings) following further notice to such effect (an “End of
Suspension Notice”) from the Company, which End of Suspension Notice shall be
given by the Company to the Holders in the manner described above promptly
following the conclusion of any Suspension Event.

(c)    Notwithstanding any provision herein to the contrary, if the Company
shall give a Suspension Notice pursuant to this Section 7, the Company agrees
that it shall extend the period of time during which the applicable Registration
Statement shall be maintained effective pursuant to this Agreement by the number
of days during the period from the date of receipt by the Holders of the
Suspension Notice to and including the date of receipt by the Holders of the End
of Suspension Notice and copies of the supplemented or amended prospectus
necessary to resume sales; PROVIDED that such period of time shall not be
extended beyond the date that securities are no longer Registrable Securities.

 

12

 

 

  8. INDEMNIFICATION and contribution.

(a)    The Company agrees to indemnify and hold harmless (i) each Holder and any
underwriter (as determined in the Securities Act) for such Holder, (ii) each
Person, if any, who controls (within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act), any such Person described in clause
(i) (any of the Persons referred to in this clause (ii) being hereinafter
referred to as a “Controlling Person”), and (iii) the respective officers,
directors, partners, employees, representatives, affiliates and agents of any
such Person or any Controlling Person (any Person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as a “Purchaser Indemnitee”), to
the fullest extent lawful, from and against any and all losses, claims, damages,
judgments, actions, out-of-pocket expenses, and other liabilities (the
“Liabilities”), including without limitation and as incurred, reimbursement of
all reasonable costs of investigating, preparing, pursuing or defending any
claim or action, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, including the reasonable fees and expenses of
counsel to any Purchaser Indemnitee, joint or several, directly or indirectly
related to, based upon, arising out of or in connection with any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or prospectus included in such Registration Statement (as
amended or supplemented if the Company shall have furnished to such Purchaser
Indemnitee any amendments or supplements thereto), or any preliminary prospectus
or any other document used to sell the Registrable Securities, or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except insofar as such
Liabilities arise out of or are based upon (i) any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Purchaser Indemnitee furnished to the Company
or any underwriter in writing by such Purchaser Indemnitee expressly for use
therein, or (ii) any untrue statement contained in or omission from a
preliminary prospectus if a copy of the prospectus (as then amended or
supplemented, if the Company shall have furnished to or on behalf of the Holder
participating in the distribution relating to the relevant Registration
Statement any amendments or supplements thereto) was not sent or given by or on
behalf of such Holder to the Person asserting any such Liabilities who purchased
Registrable Securities, if such prospectus (or prospectus as amended or
supplemented) is required by law to be sent or given at or prior to the written
confirmation of the sale of such Registrable Securities to such Person and the
untrue statement contained in or omission from such preliminary prospectus was
corrected in the prospectus (or the prospectus as amended or supplemented), or
(iii) any use of any Registration Statement or prospectus included therein
during a period when a stop order has been issued in respect thereof or any
action or proceedings for that purpose have been initiated, or use of a
Registration Statement or a prospectus included therein (including any
preliminary prospectus) that has been suspended pursuant to Sections 5(e)(ii),
5(e)(iii), or 5(e)(iv) of this Agreement; provided that, with respect to this
subsection (iii), the Holder using such Registration Statement or prospectus
(including any preliminary Prospectus) received the notice required by Section
5(e) hereof in advance of such use. The Company shall notify the Holders
promptly of the institution, threat or assertion of any claim, proceeding
(including any governmental investigation), or litigation of which it shall have
become aware in connection with the matters addressed by this Agreement which
involves the Company or a Purchaser Indemnitee. The indemnity provided for
herein shall remain in full force and effect regardless of any investigation
made by or on behalf of any Purchaser Indemnitee.

 

13

 

(b)   In connection with any Registration Statement in which a Holder of
Registrable Securities participating, and as a condition to such participation,
such Holder agrees, severally and not jointly, to indemnify and hold harmless
the Company, each Person who signs the Registration Statement, each Person who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act and the respective partners, directors,
officers, members, representatives, employees and agents of the Company, such
Person or Controlling Person to the same extent as the foregoing indemnity from
the Company to each Purchaser Indemnitee, but only with reference to untrue
statements or omissions or alleged untrue statements or omissions made in
reliance upon and in strict conformity with information relating to such
Purchaser Indemnitee furnished to the Company in writing by such Purchaser
Indemnitee expressly for use in any Registration Statement or related
prospectus, any amendment or supplement thereto or any related preliminary
prospectus. The liability of any Purchaser Indemnitee pursuant to this paragraph
shall in no event exceed the net proceeds received by such Purchaser Indemnitee
from sales of Registrable Securities giving rise to such obligations.

(c)    If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any Person
in respect of which indemnity may be sought pursuant to paragraph (a) or (b)
above, such Person (the “Indemnified Party”) shall promptly notify the Person
against whom such indemnity may be sought (the “Indemnifying Party”), in
writing, of the commencement thereof (but the failure to so notify an
Indemnifying Party shall not relieve it from any liability which it may have
under this Section 8, except to the extent the Indemnifying Party is materially
prejudiced by the failure to give notice), and the Indemnifying Party, upon
request of the Indemnified Party, shall retain counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party and any others the
Indemnifying Party may reasonably designate in such proceeding and shall assume
the defense of such proceeding and shall pay the reasonable fees and expenses
actually incurred by such counsel related to such proceeding. Notwithstanding
the foregoing, in any such proceeding, any Indemnified Party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Party, unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed in writing to the contrary,
(ii) the Indemnifying Party failed within a reasonable time after notice of
commencement of the action to assume the defense and employ counsel reasonably
satisfactory to the Indemnified Party, (iii) the Indemnifying Party and its
counsel do not actively and vigorously pursue the defense of such action or
(iv) the named parties to any such action (including any impleaded parties),
include both such Indemnified Party and the Indemnifying Party, or any Affiliate
of the Indemnifying Party, and such Indemnified Party shall have been reasonably
advised by counsel that, either (x) there may be one or more legal defenses
available to it which are different from or additional to those available to the
Indemnifying Party or such Affiliate of the Indemnifying Party or (y) a conflict
may exist between such Indemnified Party and the Indemnifying Party or such
Affiliate of the Indemnifying Party (in which case the Indemnifying Party shall
not have the right to assume nor direct the defense of such action on behalf of
such Indemnified Party, it being understood, however, that the Indemnifying
Party shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel), for all such Indemnified Parties, which firm shall be designated in
writing by those Indemnified Parties who sold a majority of the Registrable
Securities sold by all such Indemnified Parties and any such separate firm for
the Company, the directors, the officers and such control Persons of the Company
as shall be designated in writing by the Company). The Indemnifying Party shall
not be liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, but if settled with
such consent or if there is a final judgment for the plaintiff, the Indemnifying
Party agrees to indemnify any Indemnified Party from and against any loss or
liability by reason of such settlement or judgment. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such proceeding.

 

14

 

(d)   If the indemnification provided for in paragraphs (a) and (b) of this
Section 8 is for any reason held to be unavailable to an Indemnified Party in
respect of any Liabilities referred to therein (other than by reason of the
exceptions provided therein) or is insufficient to hold harmless a party
indemnified thereunder, then each Indemnifying Party under such paragraphs, in
lieu of indemnifying such Indemnified Party thereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Liabilities
(i) in such proportion as is appropriate to reflect the relative benefits of the
Indemnified Party on the one hand and the Indemnifying Party(ies) on the other
in connection with the statements or omissions that resulted in such
Liabilities, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Indemnifying Party(ies) and the Indemnified Party, as well as any
other relevant equitable considerations. The relative fault of the Company on
the one hand and any Purchaser Indemnitees on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by such Purchaser Indemnitees
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

(e)    The parties agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation (even if such
Indemnified Parties were treated as one entity for such purpose), or by any
other method of allocation that does not take account of the equitable
considerations referred to in paragraph 8(d) above. The amount paid or payable
by an Indemnified Party as a result of any Liabilities referred to in paragraph
8(d) shall be deemed to include, subject to the limitations set forth above, any
reasonable legal or other expenses actually incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, in no event shall a Purchaser
Indemnitee be required to contribute any amount in excess of the amount by which
proceeds received by such Purchaser Indemnitee from sales of Registrable
Securities exceeds the amount of any damages that such Purchaser Indemnitee has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. For purposes of this Section 8, each
Person, if any, who controls (within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act) a Holder shall have the same rights to
contribution as such Holder and each Person, if any, who controls (within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) the
Company, and each officer, director, partner, employee, representative, agent or
manager of the Company shall have the same rights to contribution as the
Company. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party or
parties, notify each party or parties from whom contribution may be sought, but
the omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 8 or otherwise, except to the extent that any party is
materially prejudiced by the failure to give notice. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act), shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.

 

15

 

(f)    The indemnity and contribution agreements contained in this Section 8
will be in addition to any liability which the Indemnifying Parties may
otherwise have to the Indemnified Parties referred to above. The Purchaser
Indemnitee’s obligations to contribute pursuant to this Section 8 are several in
proportion to the respective number of Registrable Securities sold by each of
the Purchaser Indemnitees hereunder and not joint.

9.                  PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person’s securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all customary
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.

  10. MISCELLANEOUS.

(a)    NOTICES. All notices or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telecopied or
sent by certified, registered or express mail, postage prepaid. Any such notice
shall be deemed given when so delivered personally, telecopied or sent by
certified, registered or express mail or, if mailed, five days after the date of
deposit in the United States mail, as follows:

 

16

 

If to the Company:

Roberts Realty Investors, Inc.

375 Northridge Road

Suite 330

Atlanta, GA 30350

Attention: Chief Executive Officer

 

With a copy to:

A-III Manager LLC

c/o Avenue Capital Group

399 Park Avenue

New York, New York 10022

Attention: Edward Gellert

Telephone: 212-850-7534

Email: egellert@avenuecapital.com

 

If to the Purchaser:

A-III Investment Partners

c/o Avenue Capital Group

399 Park Avenue

New York, New York 10022

Attention: Edward Gellert

Telephone: 212-850-7534

Email: egellert@avenuecapital.com

 

With a copy to:

Hunton & Williams LLP

951 East Byrd Street, Riverfront Plaza

Richmond, Virginia 23219

Attention: Daniel M. LeBey, Esq.

 

Any party may by notice given in accordance with this Section 9(a) designate
another address or person for receipt of notices hereunder.

(b)   AMENDMENT AND WAIVER.

(i)                 No failure or delay on the part of any party hereto in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the parties
hereto at law, in equity or otherwise.

 

17

 

(ii)               Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by any party from the terms of any provision of
this Agreement, shall be effective, (a) only if it is made or given in writing
and signed by the Company and by the holders of at least 66-2/3% of the
Registrable Securities and (b) only in the specific instance and for the
specific purpose for which made or given.

(c)    SPECIFIC PERFORMANCE. The parties hereto intend that each of the parties
have the right to seek damages or specific performance in the event that any
other party hereto fails to perform such party’s obligations hereunder.
Therefore, if any party shall institute any action or proceeding to enforce the
provisions hereof, any party against whom such action or proceeding is brought
hereby waives any claim or defense therein that the plaintiff party has an
adequate remedy at law.

(d)   HEADINGS. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

(e)    SEVERABILITY. If any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.

(f)    ENTIRE AGREEMENT. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein or therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.

(g)   TERM OF AGREEMENT. The provisions of this Agreement shall become effective
upon the execution hereof and shall terminate as provided herein.

(h)   VARIATIONS IN PRONOUNS. All pronouns and any variations thereof refer to
the masculine, feminine or neuter, singular or plural, as the context may
require.

(i)     GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICTS OF LAW THEREOF.

 

18

 

(j)     FURTHER ASSURANCES. Each of the parties shall, and shall cause their
respective Affiliates to, execute such instruments and take such action as may
be reasonably required or desirable to carry out the provisions hereof and the
transactions contemplated hereby.

(k)   SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors, heirs, legatees and
legal representatives. This Agreement is not assignable except in connection
with a transfer of Shares in accordance with this Agreement.

(l)     COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.

[Signatures on next page]

 

19

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

COMPANY: ROBERTS REALTY INVESTORS, INC.                 /s/ Charles S. Roberts  
  Name: Charles S. Roberts     Title: CEO and President               PURCHASER:
A-III Investment Partners LLC                 /s/ Edward Gellert     Name:
Edward Gellert     Title: Authorized Signatory  

 

[Signature page to Registration Rights Agreement]