Execution Version

 

 

Roberts realty investors, inc.

STOCK PURCHASE AGREEMENT

 

 

 

TABLE OF CONTENTS

 

    Page       1. Purchase and Sale of Common Stock. 1   1.1 Issuance and Sale
of Common Stock. 1   1.2 Closing; Delivery. 1   1.3 Post-Closing Adjustment. 1  
1.4 Defined Terms Used in this Agreement. 2       2. Representations and
Warranties of the Company and the Operating Partnership. 8   2.1 Organization of
the Company. 9   2.2 Organization of the Operating Partnership. 9   2.3
Authorization; Enforceability. 10   2.4 Capitalization. 10   2.5 Subsidiaries.
11   2.6 Valid Issuance of Shares. 12   2.7 Brokers. 12   2.8 Governmental
Consents and Filings. 12   2.9 Legal Actions. 12   2.10 Possession of
Intellectual Property. 13   2.11 Certain Transactions. 13   2.12 Rights of
Registration and Voting Rights. 14   2.13 Absence of Violation, Defaults and
Conflicts. 14   2.14 Financial Statements; Non-GAAP Financial Measures. 15  
2.15 Compliance with Laws and Orders. 16   2.16 Changes. 16   2.17 Employee
Matters. 17   2.18 ERISA. 18   2.19 Transfer Taxes. 19   2.20 Permits. 19   2.21
Title to Property. 19   2.22 Accounting Controls and Disclosure Controls. 20  
2.23 Compliance with the Sarbanes-Oxley Act. 20   2.24 Investment Company Act.
21   2.25 Insurance. 21   2.26 Organizational Documents. 21   2.27 Environmental
and Safety Laws. 21   2.28 Data Privacy. 22   2.29 Foreign Corrupt Practices
Act. 22   2.30 Money Laundering Laws. 23   2.31 OFAC. 23   2.32 Shell Company.
23   2.33 SEC Reports. 23   2.34 Company Proxy Statement. 24   2.35 Material
Contracts. 24

 

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TABLE OF CONTENTS

(continued)

 

  2.36 Loans and Guarantees. 26   2.37 Taxes. 26   2.38 Certificates. 27        
3. Representations and Warranties of the Purchaser. 27   3.1 Organization. 27  
3.2 Authorization; Enforceability. 28   3.3 No Violation of Conflict; No
Consents. 28   3.4 Purchase Entirely for Own Account. 28   3.5 Accredited
Investor. 28   3.6 Brokers. 29   3.7 Governmental Consents and Filings. 29   3.8
Company Proxy Statement. 29   3.9 Financial Capability. 29   3.10 Legal Actions.
29         4. Conditions to the Purchaser’s Obligations at Closing. 29   4.1
Representations and Warranties. 30   4.2 Performance. 30   4.3 No Litigation. 30
  4.4 Compliance Certificate. 31   4.5 Opinion of the Company Counsel. 31   4.6
REIT Tax Certificate 31   4.7 No Shell Company Status. 31   4.8 No Suspension in
Trading or De-Listing of Common Stock. 31   4.9 Board of Directors. 32   4.10
Governance and Voting Agreement. 32   4.11 Management Agreement. 32   4.12
Registration Rights Agreement. 32   4.13 Tax Protection Agreement. 32   4.14
Warrant Agreement. 32   4.15 Shareholder Vote. 33   4.16 Resignation of
Employees, Officers and Directors. 33   4.17 Employment Agreement. 33   4.18
Ownership Limit Exemption 33   4.19 Waiver and Termination of Related Party Fees
and Obligations. 33   4.20 Secretary’s Certificate. 33         5. Conditions of
the Company’s Obligations at Closing. 34   5.1 Representations and Warranties.
34   5.2 Performance. 34   5.3 No Litigation. 34   5.4 Qualifications. 34   5.5
Shareholder Vote. 35      

 

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TABLE OF CONTENTS

(continued)

 

 

6. Covenants. 35   6.1 Affirmative Covenants. 35   6.2 Negative Covenants. 36  
6.3 Access. 39   6.4 Cooperation; Other Approvals. 40   6.5 Public
Announcements. 41   6.6 Update of Schedules; Knowledge of Breach. 41   6.7
Regulatory Matters. 42   6.8 Shareholders Meeting. 43   6.9 Reservation of
Common Stock. 43   6.10 No-Shop. 43   6.11 Directors’ and Officers’
Indemnification and Insurance. 46   6.12 Repayment of North Springs, Bradley
Park and Highway 20 Loans. 47   6.13 Escrow of Purchaser Funds. 48   6.14 Update
to Closing Date Net Asset Value Exhibit. 48       7. Post-Closing Covenants. 49
  7.1 Securities Laws Compliance. 49   7.2 Reincorporation and Name Change. 49  
7.3 Proxy Statement and Reverse Stock Split. 49   7.4 Post-Closing Transition
Services. 49       8. Termination. 49   8.1 Events of Termination. 49   8.2
Termination Fees. 51       9. Miscellaneous. 52   9.1 Further Assurances. 52  
9.2 Non-survival of Representations, Warranties and Agreements. 53   9.3
Successors and Assigns. 53   9.4 Governing Law. 53   9.5 Counterparts. 53   9.6
Titles, Subtitles and Interpretation. 53   9.7 Notices. 53   9.8 No Finder’s
Fees. 54   9.9 Attorneys’ Fees. 54   9.10 Amendments and Waivers. 54   9.11
Severability. 54   9.12 Delays or Omissions. 55   9.13 Entire Agreement. 55  
9.14 Waiver of Jury Trial. 55

 

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TABLE OF CONTENTS

(continued)

 

 

Exhibit A - CLOSING DATE NET ASSET VALUE     Exhibit B - FORM OF EMPLOYMENT
AGREEMENT     Exhibit C - FORM OF GOVERNANCE AND VOTING AGREEMENT     Exhibit D
- FORM OF MANAGEMENT AGREEMENT     Exhibit E - FORM OF REGISTRATION RIGHTS
AGREEMENT     Exhibit F - FORM OF TAX PROTECTION AGREEMENT     Exhibit G -
DISCLOSURE SCHEDULE     Exhibit H - FORM OF COMPLIANCE CERTIFICATE     Exhibit I
- FORM OF WARRANT AGREEMENT     Exhibit J-1 - FORM OF DIRECTOR RESIGNATION AND
RELEASE     Exhibit J-2 -   FORM OF OFFICER AND EMPLOYEE RESIGNATION AND RELEASE
    Exhibit K - FORM OF ESCROW AGREEMENT

 

iv

 

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of the 19th day of
November, 2014 (the “Effective Date”) by and among Roberts Realty Investors,
Inc., a Georgia corporation (the “Company”), Roberts Properties Residential,
L.P., a Georgia limited partnership (the “Operating Partnership”), and A-III
Investment Partners LLC, a Delaware limited liability company (the “Purchaser”).

In consideration of the respective representations, warranties and covenants set
forth in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

1.                  Purchase and Sale of Common Stock.

1.1              Issuance and Sale of Common Stock.

Subject to the terms and conditions of this Agreement, the Purchaser agrees to
purchase at the Closing and the Company agrees to issue and sell to the
Purchaser at the Closing the number of shares of common stock, $.01 par value
per share, of the Company (the “Common Stock”) equal to $12,000,000 (the “Gross
Proceeds”) divided by the Purchase Price Per Share (as defined below), subject
to adjustment pursuant to Section 6.2(c) hereof and the post-Closing adjustment
pursuant to Section 1.3 hereof. The shares of Common Stock issued to the
Purchaser pursuant to this Agreement shall be referred to in this Agreement as
the “Shares.”

1.2              Closing; Delivery.

(a)                The purchase and sale of the Shares (the “Closing”) shall
take place remotely via the exchange of documents and signatures, at 10:30 a.m.
(Eastern), on the Closing Date.

(b)               At the Closing, the Company shall deliver, or cause to be
delivered, the Shares through the facilities of the Depositary Trust Company for
the account of the Purchaser, against payment by the Purchaser of the Gross
Proceeds therefor by wire transfer of immediately available funds to a bank
account designated by the Company.

1.3              Post-Closing Adjustment.

Within ten (10) Business Days after the closing of the last Property Disposition
(the “Adjustment Date”), the Manager shall recalculate the Closing Date Net
Asset Value (the “Post-Closing Net Asset Value”) using the same accounting
methods, practices, principles, policies and procedures, with consistent
classifications, judgments and estimation methodologies that were used in the
preparation of the Closing Date Net Asset Value, but as adjusted to reflect (i)
the actual net sale proceeds received by the Company (gross sale proceeds less
all actual Selling Costs) in the Property Dispositions instead of the agreed
property values less budgeted Selling Costs included in the Closing Date Net
Asset Value, (ii) any changes in the Liabilities of the Company calculated in
accordance with GAAP that arose on or prior to the Closing Date that are
discovered after the Closing Date and on or prior to the Adjustment Date and
(iii) any costs that were not reflected in the Closing Date Net Asset Value that
are incurred by the Company, whether incurred before or after the Closing, in
connection with (a) any restatement, recharacterization or correction of the
Company’s financial statements or related amendment to any Company Exchange Act
Report required as a result of the Company’s loss of its REIT status for the
2009 fiscal year and subsequent periods or (b) the Company’s satisfaction of the
requirements of any Listing Compliance Plan. Upon completion of the calculation
by the Manager of the Post-Closing Net Asset Value, the Manager will provide a
copy of such calculation to Mr. Roberts for his review and comment. Mr. Roberts
will have five (5) Business Days to notify the Manager of any comments on such
calculation. The Manager will consider in good faith any comments provided by
Mr. Roberts and will make any adjustments to the calculation that it deems
appropriate in its reasonable discretion. The Manager will then provide a copy
of the Post-Closing Net Asset Value calculation to the Company’s registered
independent public accounting firm for review. After making any final
adjustments to the calculation based on any comments provided by the Company’s
registered independent public accounting firm, the Manager will report the final
calculation to the Audit Committee of the Board of Directors. Within five (5)
Business Days after the final determination of the Post-Closing Net Asset Value,
the Company shall issue to the Purchaser in a private placement an amount of
additional shares of Common Stock equal to the difference, if any, between (A)
the Gross Proceeds divided by the Adjustment Date Purchase Price Per Share and
(B) the number of Shares issued to the Purchaser at the Closing (the
“Post-Closing Issuance”). The Post-Closing Issuance, if any, shall be effected
through the same closing and delivery mechanics for the Shares as provided in
this Agreement and, for federal income tax purposes, the parties shall treat the
Post-Closing Issuance as an adjustment to the Purchase Price Per Share with
respect to the issuance and sale of Common Stock pursuant to Section 1.1 hereof.

 

 

1.4              Defined Terms Used in this Agreement.

In addition to the terms defined above or elsewhere in this Agreement, the
following terms used in this Agreement shall be construed to have the meanings
set forth or referenced below.

“Acquisition Agreement” has the meaning set forth in Section 6.10(a).

“Acquisition Proposal” has the meaning set forth in Section 6.10(a).

“Adjustment Date” has the meaning set forth in Section 1.3.

“Adjustment Date Purchase Price Per Share” means the Post-Closing Net Asset
Value divided by the sum of (x) the number of shares of Common Stock issued and
outstanding immediately prior to the Closing Date and (y) the number of shares
of Common Stock for which the number of OP Units issued and outstanding
immediately prior to the Closing Date may be redeemed in accordance with the
terms of the Partnership Agreement (in each case excluding from such calculation
shares of Common Stock and OP units owned by the Company and shares of Common
Stock owned by the Operating Partnership immediately prior to the Closing Date).

“Affiliate” means, with respect to any specified Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with such Person, including, without limitation, any general partner, managing
member, officer or director of such Person.

2

 

“Agreement” has the meaning set forth in the Preamble.

“Agreements and Instruments” has the meaning set forth in Section 2.13.

“articles of incorporation” means the articles of incorporation of the Company
or any subsidiary, as the case may be, as amended and restated as of the date of
this Agreement.

“Board Confidential Matters” has the meaning set forth in Section 6.3(c).

“Board of Directors” means the board of directors of the Company.

“Board Recommendation” has the meaning set forth in Section 6.8.

“Business Days” means each day other than a Saturday, Sunday or other day on
which banks in New York, New York are not required by Law to be open.

“bylaws” means the amended and restated bylaws of the Company or any subsidiary,
as the case may be.

“Charter Amendment” means the amendment to the Company’s articles of
incorporation pursuant to Section 5.10 thereof in order to amend the definition
of “Restriction Termination Date” in Section 5.1 thereof to make “Restriction
Termination Date” mean the Closing Date.

“Closing” has the meaning set forth in Section 1.2(a).

“Closing Date” means the date the Closing occurs, which shall be (i) the date
that is three (3) Business Days after satisfaction of the conditions set forth
in Section 4 and Section 5 of the Agreement (or waiver thereof in writing by the
party benefited by the condition being waived), excluding those conditions that
by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions, or (ii) such other date on which the
parties hereto may mutually agree in writing.

“Closing Date Net Asset Value” is as set forth on Exhibit A hereto as of the
Effective Date, subject to updating such Exhibit A in connection with the
Closing in accordance with the requirements of Section 6.14.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company Adverse Recommendation Change” has the meaning set forth in
Section 6.10(d).

“Company Exchange Act Report” means each final registration statement,
prospectus, report, schedule and definitive proxy statement filed with or
furnished to the SEC by the Company pursuant to the Securities Act or the
Exchange Act (collectively, the “Company Exchange Act Reports”).

3

 

“Company Intellectual Property” means all patents, patent applications,
trademarks, trademark applications, service marks, service mark applications,
trade names, copyrights, trade secrets, domain names, mask works, information
and proprietary rights and processes, similar or other intellectual property
rights, subject matter of any of the foregoing, tangible embodiments of any of
the foregoing, licenses in, to, and under any of the foregoing, that are owned
or used by the Company in the conduct of the Company’s business as now
conducted.

“Company Proxy Statement” has the meaning set forth in Section 2.13.

“Contract” means any contract, agreement, option, right to acquire, preferential
purchase right, preemptive right, warrant, indenture, debenture, note, bond,
loan, loan agreement, collective bargaining agreement, lease, mortgage,
franchise, license, purchase order, bid, commitment, letter of credit, guaranty,
surety or any other legally binding arrangement, whether oral or written.

“Credit Facility” has the meaning set forth in Section 6.12.

“Director and Officer Indemnification Agreements” has the meaning set forth in
Section 6.11(a).

“Employment Agreement” means the agreement between the Company and Charles S.
Roberts, dated as of the Closing, in the form of Exhibit B attached to this
Agreement.

“Environmental Laws” has the meaning set forth in Section 2.27.

“ERISA” has the meaning set forth in Section 2.18.

“Escrow Agent” has the meaning set forth in Section 6.13.

“Escrow Agreement” has the meaning set forth in Section 6.13.

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

“Expense Reimbursement” has the meaning set forth in Section 8.2(c).

“FCPA” has the meaning set forth in Section 2.29.

“GAAP” has the meaning set forth in Section 2.14.

“Governance and Voting Agreement” means the agreement among the Company, the
Purchaser and Charles S. Roberts, dated as of the date of the Closing, in the
form of Exhibit C attached to this Agreement.

“Governmental Entity” means any United States, federal, state, regional, local
or municipal or other governmental department, commission, board, bureau,
agency, taxing authority or instrumentality, or any court, in each case having
jurisdiction over the applicable matter and whether of the United States,
another country or supranational organization.

4

 

“Governmental Licenses” has the meaning set forth in Section 2.20.

“Gross Proceeds” shall have the meaning set forth in Section 1.1.

“Hazardous Materials” has the meaning set forth in Section 2.27.

“Indemnified Party” has the meaning set forth in Section 6.11(a).

“knowledge,” means (i) with respect to the Company, the actual knowledge or
awareness of any director, officer or employee of the Company, the Operating
Partnership or any Subsidiary and (ii) with respect to the Purchaser, the actual
knowledge or awareness of Edward Gellert or Gregory Simon or any director,
officer or employee of the Purchaser.

“Law” means any U.S. federal, U.S. state, national, local, foreign or other
statute, law, treaty, rule, code, regulation, ordinance or other requirement of
any kind of any Governmental Entity, including the common law.

“Legal Action” means claim, action, suit, proceeding, arbitration, complaint,
charge or investigation.

“Liability” means any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
but not limited to any legal fees or expenses, court fees, damages, settlement
costs, Taxes or other costs.

“License Agreement” has the meaning set forth in Section 2.10.

“Listing Compliance Plan” has the meaning set forth in Section 4.8.

“Management Agreement” means the agreement among the Company, the Operating
Partnership and the Manager, dated as of the date of the Closing, in the form of
Exhibit D attached to this Agreement.

“Manager” is identified in the form of the Management Agreement attached to this
Agreement as Exhibit D.

“Material Adverse Effect” means a material adverse change or any development
that could reasonably be expected to result in a material adverse change in
(A) the business, assets (including intangible assets), liabilities, financial
condition, property, or results of operations of the Company and its
subsidiaries, considered as one enterprise or (B) the ability of the Company to
enter into and perform any of its obligations under, or to consummate any of the
transactions contemplated by this Agreement or any Transaction Agreement, other
than changes or developments in economic conditions or the Company’s industry
generally.

“Material Contracts” has the meaning set forth in Section 2.35.

“Money Laundering Laws” has the meaning set forth in Section 2.30.

5

 

“New Directors” has the meaning set forth in Section 4.9.

“Notice Period” has the meaning set forth in Section 6.10(d).

“NYSE MKT Exchange” has the meaning set forth in Section 4.8.

“OP Exchanges” the issuance of OP Units in exchange for shares of Common Stock
in the manner approved by the Board of Directors in 2013.

“OP Redemptions” means the redemption by the Operating Partnership of OP Units
in exchange for shares of Common Stock in accordance with the Partnership
Agreement.

“OP Units” means limited partnership interests of the Operating Partnership.

“Order” means a judgment, order, writ, decree, injunction, award or ruling by a
Governmental Entity (excluding routine zoning rulings and orders that do not
materially and adversely affect the value or use of the Company’s Properties).

“Organizational Documents” means the articles of incorporation, bylaws,
agreement of limited partnership, limited liability company operating agreement,
declaration of trust or other similar organizational documents of the Company,
the Operating Partnership or any Subsidiary, or of the Purchaser, as applicable.

“Partnership Agreement” means the First Amended and Restated Partnership
Agreement of the Operating Partnership, as amended.

“Person” means any individual, corporation, partnership, trust, limited
liability company, association or other entity.

“Personal Information” has the meaning set forth in Section 2.28.

“Plan” has the meaning set forth in Section 2.18.

“Post-Closing Issuance” has the meaning set forth in Section 1.3.

“Post-Closing Net Asset Value” has the meaning set forth in Section 1.3.

“Preapproved Loan” means (a) any refinancing of any recourse mortgage
indebtedness secured by the North Springs, Bradley Park and Highway 20
properties on terms that are similar to the current terms of such existing
indebtedness (provided that the interest rate may be up to 1% per annum higher
and the maturity date of any such refinanced or extended indebtedness shall not
be later than May 1, 2015), and (b) any loan or loans of up to $2,000,000 in
aggregate principal amount secured by one or more of the Company’s properties
that are on terms that are commercially reasonable for a loan of that nature;
provided, however, that, prior to closing any loan under this clause (b), the
Company shall first consult with the Purchaser regarding the terms and
conditions of such loan and request the prior written consent of the Purchaser
of such loan.

“Preferred Stock” has the meaning set forth in Section 2.4(a).

6

 

“Property Dispositions” means the sale of the properties set forth on
Schedule 1.4 of the Disclosure Schedule and the pay-off of all indebtedness
secured by such properties to the extent such indebtedness has not previously
been paid off by the Company.

“Purchase Price Per Share” means the Closing Date Net Asset Value divided by the
sum of (x) the number of shares of Common Stock issued and outstanding
immediately prior to the Closing Date and (y) the number of shares of Common
Stock for which the number of OP Units issued and outstanding immediately prior
to the Closing Date may be redeemed in accordance with the terms of the
Partnership Agreement (in each case excluding from such calculation shares of
Common Stock and OP units owned by the Company and shares of Common Stock owned
by the Operating Partnership immediately prior to the Closing Date).

“Purchaser Proxy Information” has the meaning set forth in Section 3.8.

“Registration Rights Agreement” means the agreement between the Company and the
Purchaser dated as of the date of the Closing, in the form of Exhibit E attached
to this Agreement.

“REIT” means a real estate investment trust within the meaning of Section 856 of
the Code.

“Requisite Company Vote” means (a) for the approval of this Agreement, the
issuance of the Shares, the warrants pursuant to the Warrant Agreement and the
shares of Common Stock issuable upon any exercise of such warrants, and the
other transactions contemplated herein and in the other Transaction Agreements
(other than the Charter Amendment) – the affirmative vote of the holders of a
majority of the votes cast at the Shareholders Meeting and (b) for the approval
of the Charter Amendment – the affirmative vote of the holders of a majority of
the votes entitled to be cast on the Charter Amendment.

“Reverse Termination Fee” has the meaning set forth in Section 8.2(b).

“Roberts Companies” has the meaning set forth in Section 2.11(b).

“Sanctions” has the meaning set forth in Section 2.31.

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

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Selling Costs” means (i) sales commissions, (ii) all costs and expenses paid,
incurred or reimbursed by the Company in connection with the employment by the
Company of Mr. Roberts under the Employment Agreement or the performance of Mr.
Roberts’ duties under the Employment Agreement, and (iii) all other costs and
expenses incurred, paid or reimbursed by the Company in connection with or
relating to the Property Dispositions, including but not limited to (A) costs
incurred, paid or reimbursed by the Company in connection with or as a result of
the engagement of any service provider, vendor, legal counsel, consultant, civil
engineer, environmental consultant, architect, land planner, broker, surveyor,
photographer, marketing firm, website designer or developer or other third
party, (B) transfer taxes, (C) all costs incurred by the Company in connection
with the services of employees of the Roberts Companies to assist with the
Property Dispositions and (D) all other miscellaneous sales and closing costs
incurred by the Company in connection with or related to the Property
Dispositions.

7

 

“Shareholders Meeting” has the meaning set forth in Section 6.8.

“Stock Plan” means the 2006 Roberts Realty Investors, Inc. Restricted Stock
Plan, as amended effective January 27, 2009.

“Subsidiary” or “Subsidiaries” has the meaning set forth in Section 2.5.

“Superior Proposal” has the meaning set forth in Section 6.10(b).

“Tax” or “Taxes” means any federal, state, local or foreign income, gross
receipts, license, payroll, employment-related, excise, goods and services,
harmonized sales, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, franchise, profits, withholding,
social security, unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.

“Tax Protection Agreement” means the agreement among the Company, the Operating
Partnership, the Purchaser and the Manager, dated as of the date of the Closing,
in the form of Exhibit F attached to this Agreement.

“Tax Returns” means any return, declaration, report, claim for refund, or
information return or statement related to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

“Termination Fee” has the meaning set forth in Section 8.2(a).

“Transaction Agreements” means this Agreement, the Employment Agreement, the
Management Agreement, the Registration Rights Agreement, the Tax Protection
Agreement, the Warrant Agreement and the Governance and Voting Agreement.

“Warrant Agreement” means the agreement between the Company and the Purchaser,
dated as of the date of the Closing, in the form of Exhibit I attached to this
Agreement, pursuant to which the Purchaser or one or more of its Affiliates
shall have the right, for a term of three years, to purchase up to $38 million
of additional shares of Common Stock at an exercise price in cash equal to the
Purchase Price Per Share, as adjusted based on the Post Closing Net Asset Value
pursuant to Section 1.3.

2.                  Representations and Warranties of the Company and the
Operating Partnership.

The Company and the Operating Partnership hereby represent and warrant to the
Purchaser, on a joint and several basis, that, except as (i) set forth on the
Disclosure Schedule attached as Exhibit G to this Agreement or (ii) as disclosed
in any Company Exchange Act Report publicly available prior to the Effective
Date, including the exhibits and schedules thereto but excluding disclosures
made in the “Risk Factors” or “Forward Looking Statements” sections thereof or
any other disclosure included in such Company Exchange Act Reports that is
cautionary, predictive or forward looking in nature, which exceptions shall be
deemed to be part of the representations and warranties made hereunder, the
following representations are true and complete as of the date hereof and as of
the Closing. Section headings in the Disclosure Schedule correspond to the
sections of this Agreement, but information provided in any section of the
Disclosure Schedule and any disclosure included in such Company Exchange Act
Reports, including the exhibits and schedules thereto but excluding disclosures
made in the “Risk Factors” or “Forward Looking Statements” sections thereof or
any other disclosure included in such Company Exchange Act Reports that is
cautionary, predictive or forward looking in nature, shall constitute disclosure
for purposes of each section of this Agreement where such information is
relevant.

8

 

2.1              Organization of the Company.

The Company is validly existing and in good standing as a corporation under the
laws of the State of Georgia. The Company has full power and authority to carry
on its business as it is currently being conducted and to own, operate and hold
under lease its assets and properties as, and in the places where, such assets
and properties are currently owned, operated or held. The Company is duly
qualified as a foreign corporation to transact business and is in good standing
in each other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business in all
material respects.

2.2              Organization of the Operating Partnership.

The Operating Partnership has been duly formed and is validly existing as a
limited partnership in good standing under the laws of the State of Georgia and
has partnership power and authority to own or lease, as the case may be, and to
operate its properties and to conduct its business and to enter into and perform
its obligations under this Agreement; and the Operating Partnership is duly
qualified as a foreign partnership to transact business and is in good standing
in each other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business in all
material respects. The Company is the sole general partner of the Operating
Partnership. The aggregate percentage ownership interest of the Company in the
Operating Partnership is, and at the Closing, will be (except for the effect of
OP Redemptions and OP Exchanges, if any, that occur between the Effective Date
and the Closing Date), as set forth on Schedule 2.2 of the Disclosure Schedule.
Each of the holders of OP Units (other than the Company) issued and outstanding
as of the date of this Agreement are, and at the Closing will be (except for the
effect of OP Redemptions and OP Exchanges, if any, that occur between the
Effective Date and the Closing Date), as set forth on the records of the
Company’s transfer agent, a true and correct copy of which records has been
provided to the Purchaser. The Partnership Agreement has been duly and validly
authorized, executed and delivered by or on behalf of the Company and
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors’ rights and remedies generally, and subject, as to
enforceability, to general principles of equity and, with respect to rights to
indemnity and contribution thereunder, except as such rights may be limited by
applicable Law or policies underlying such Law.

9

 

2.3              Authorization; Enforceability.

(a)                Each of the Company and the Operating Partnership has full
power and authority to enter into the Transaction Agreements to which it is a
party. The Board of Directors has unanimously determined that the issuance of
the Shares, on the terms and conditions set forth in this Agreement, is
advisable and in the best interests of the Company and its shareholders and has
directed that this Agreement, the issuance of the Shares and the other
transactions contemplated hereby be submitted to the Company’s shareholders for
approval at a meeting of such shareholders and has adopted a resolution to the
foregoing effect.

(b)               Each of the Transaction Agreements to which the Company is a
party, when executed and delivered by the Company, will constitute a valid and
legally binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and any other
laws of general application affecting enforcement of creditors’ rights
generally, and as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.

(c)                Each of the Transaction Agreements to which the Operating
Partnership is a party, when executed and delivered by the Operating
Partnership, will constitute a valid and legally binding obligation of the
Operating Partnership, enforceable against the Operating Partnership in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and any other
laws of general application affecting enforcement of creditors’ rights
generally, and as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.

2.4              Capitalization.

(a)                The authorized capital of the Company consists, as of the
date hereof and immediately prior to the Closing (subject to the effect of OP
Redemptions and OP Exchanges, if any, that occur between the date hereof and the
Closing Date), of:

(i)                 100,000,000 shares of Common Stock, 10,724,009 shares of
which are issued and 10,066,907 of which are outstanding. All of the outstanding
shares of Common Stock have been duly authorized, are fully paid and
nonassessable and were issued in compliance with all applicable federal and
state securities Laws.

(ii)               20,000,000 shares of preferred stock, $0.01 par value per
share, of the Company (“Preferred Stock”), none of which are issued and
outstanding. The rights, privileges and preferences of the Preferred Stock are
as stated in the Company’s articles of incorporation and as provided by the
Georgia Business Corporation Code.

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(b)               The Stock Plan has been duly adopted by the Board of Directors
and approved by the Company’s shareholders. 139,038 shares have been issued
under the Stock Plan pursuant to restricted stock award agreements and all such
grants have fully vested. No options to purchase shares have been granted under
the Stock Plan, no other awards or grants have been promised by the Company or
approved by the Board of Directors, and 514,962 shares of Common Stock remain
available for future issuance under the Stock Plan to officers, directors,
employees and consultants. The Company has furnished to the Purchaser complete
and accurate copies of the Stock Plan and forms of agreements used thereunder.

(c)                Other than the provisions of the Partnership Agreement
governing OP Redemptions and the offering materials related to the OP Exchanges,
there are no outstanding options, warrants, rights (including conversion or
preemptive rights and rights of first refusal or similar rights) or agreements,
orally or in writing, to purchase or acquire from the Company any shares of
Common Stock or Preferred Stock, or from the Operating Partnership any OP Units
or any securities convertible into or exchangeable for shares of Common Stock or
Preferred Stock.

(d)               The Company’s restricted stock agreements contain a provision
for acceleration of vesting or other changes in the vesting provisions or other
terms of such agreement or understanding upon the occurrence of any event or
combination of events, but there are no unvested shares of restricted stock
outstanding. The Company has never granted any stock options.

(e)                The OP Units issued and outstanding prior to the Effective
Date were issued in accordance with the Partnership Agreement and in compliance
with applicable securities Laws and were not issued in violation of any
preemptive or similar rights. Other than the provisions of the Partnership
Agreement governing OP Redemptions and the offering materials related to the OP
Exchanges, no options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or exchange any
securities for, OP Units of or ownership interests in the Operating Partnership
are or will be outstanding at the Closing.

2.5              Subsidiaries.

The only direct and indirect subsidiaries of the Company are the Operating
Partnership and Northridge Parkway, LLC (each a “Subsidiary” and, together, the
“Subsidiaries”). Each Subsidiary has been duly organized or formed and is
validly existing in good standing under the Laws of the State of Georgia, has
the power and authority as a limited partnership or limited liability company,
as applicable, to own, lease and operate its properties and to conduct its
business and is not required to qualify to transact business and be in good
standing in any other jurisdiction, whether by reason of the ownership or
leasing of property or the conduct of its business in all material respects. All
of the issued and outstanding equity interests of each Subsidiary were duly
authorized and were issued in accordance with its Organizational Documents.
Other than outstanding OP Units held by Persons other than the Company, all of
the issued and outstanding equity interests of each Subsidiary are owned by the
Company or the Operating Partnership, directly or through a Subsidiary, free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity. None of the outstanding equity interests of either Subsidiary were
issued in violation of the preemptive or similar rights of any securityholder of
such Subsidiary.

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2.6              Valid Issuance of Shares.

The Shares, when issued, sold and delivered in accordance with the terms and for
the consideration set forth in this Agreement, will be validly issued, fully
paid and nonassessable and free of restrictions on transfer other than
restrictions on transfer under the Transaction Agreements, applicable state and
federal securities Laws and liens or encumbrances created by or imposed by the
Purchaser. Assuming the accuracy of the representations of the Purchaser in
Section 3.4 and Section 3.5 of this Agreement and, subject to the filings
described in Section 2.8 below, the Shares will be issued in compliance with all
applicable federal and state securities Laws.

2.7              Brokers.

The Company has not retained any broker or finder in connection with any of the
transactions contemplated by this Agreement, and the Company has not incurred or
agreed to pay, or taken any other action that would entitle any Person to
receive, any brokerage fee, finder’s fee or other similar fee or commission with
respect to any of the transactions contemplated by this Agreement.

2.8              Governmental Consents and Filings.

Except as set forth on Schedule 2.8 of the Disclosure Schedule, and assuming the
accuracy of the representations made by the Purchaser in Section 3.4 and
Section 3.5 of this Agreement, no consent, approval, Order or authorization of,
or registration, qualification, designation, declaration or filing with, any
Governmental Entity is required on the part of the Company and the Operating
Partnership in connection with the consummation of the transactions contemplated
by this Agreement, except for filings pursuant to Regulation D of the Securities
Act and applicable state securities laws, which have been made or will be made
in a timely manner.

2.9              Legal Actions.

Except as set forth on Schedule 2.9 of the Disclosure Schedule, there is no
Legal Action pending or, to the Company’s knowledge, currently threatened (i)
against the Company, the Operating Partnership or any Subsidiary; (ii) to the
Company’s knowledge, against any officer, director or employee of the Company,
the Operating Partnership or any Subsidiary arising out of their employment or
board relationship with the Company, the Operating Partnership or any
Subsidiary; or (iii) that questions the validity of the Transaction Agreements
or the right of the Company or the Operating Partnership to enter into them or
to consummate the transactions contemplated by the Transaction Agreements.
Neither the Company, the Operating Partnership nor any Subsidiary nor, to the
Company’s knowledge, any of their respective officers, directors or employees is
a party or is named as subject to the provisions of any Order of any
Governmental Entity (in the case of officers, directors or employees, such as
would affect the Company). There is no Legal Action by the Company, the
Operating Partnership or any Subsidiary pending or that the Company, the
Operating Partnership or any Subsidiary intends to initiate. The foregoing
includes, without limitation, Legal Actions pending or, to the Company’s
knowledge, threatened involving the prior employment of any of the Company’s,
the Operating Partnership’s or any Subsidiaries’ employees, their services
provided in connection with the Company’s business, or any information or
techniques allegedly proprietary to any of their former employers, or their
obligations under any agreements with prior employers.

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2.10          Possession of Intellectual Property.

The Company and its Subsidiaries own or possess or have the right to use on
reasonable terms all Company Intellectual Property necessary to carry on their
respective businesses as currently conducted; the only such Company Intellectual
Property is commercially available software licensed by the Company on terms
typically available to entities like the Company; and neither the Company nor
any of its Subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to any
Company Intellectual Property or of any facts or circumstances which would
render any Company Intellectual Property invalid or inadequate to protect the
interests of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, individually or in the aggregate, could be
material to the Company. Given the nature of the Company Intellectual Property,
the Company has not required former and current employees of the Company or any
of its Subsidiaries (or other agents, consultants and contractors of the Company
or any of its subsidiaries) to execute written Contracts that assign to the
Company all rights to any inventions, improvements, discoveries or information
relating to the business of the Company and its subsidiaries. To the knowledge
of the Company, there is no unauthorized use, infringement or misappropriation
of any of the Company Intellectual Property by any third party, employee or
former employee. Each agreement and instrument (each, a “License Agreement”)
pursuant to which any Company Intellectual Property is licensed to the Company
or any of its subsidiaries is in full force and effect, has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
the Company or the applicable subsidiary, as the case may be, enforceable
against the Company or such subsidiary in accordance with its terms, except as
enforcement thereof may be subject to bankruptcy, insolvency or other similar
laws relating to or affecting creditors’ rights generally or by general
equitable principles; the Company and its Subsidiaries are in compliance with
their respective obligations under all License Agreements and, to the knowledge
of the Company, all other parties to any of the License Agreements are in
compliance with all of their respective obligations thereunder, no event or
condition has occurred or exists that gives or would give any party to any
License Agreement the right, either immediately or with notice or passage of
time or both, to terminate or limit (in whole or in part) any such License
Agreement or any rights of the Company or any of its Subsidiaries thereunder to
exercise any of such party’s remedies thereunder, or to take any action that
would adversely affect any rights of the Company or any of its Subsidiaries
thereunder or that might have a Material Adverse Effect, and the Company is not
aware of any facts or circumstances that would result in any of the foregoing or
give any party to any License Agreement any such right; and neither the Company
nor any of its subsidiaries has received any notice of default, breach or
noncompliance under any License Agreement.

2.11          Certain Transactions.

(a)                Except as set forth on Schedule 2.11 of the Disclosure
Schedule, other than (i) standard employee benefits generally made available to
all employees, (ii) standard director and officer indemnification agreements
approved by the Board of Directors, (iii) transactions and compensation
described in or referred to in the Company Exchange Act Reports, and (iv) the
transactions described in the Transaction Documents, there are no agreements or
understandings between the Company and any of its officers, directors,
employees, or any Affiliate thereof that are currently in effect or that are
proposed to take effect between the date hereof and the Closing.

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(b)               None of the Company, the Operating Partnership or any
Subsidiary is indebted, directly or indirectly, to any of its respective
directors, officers or employees or to their respective spouses or children or
to any Affiliate of any of the foregoing, other than in connection with (i)
expenses or advances of expenses incurred in the ordinary course of business and
for other customary employee benefits made generally available to all employees,
(ii) the reimbursement arrangement for services to the Company provided by
Roberts Properties, Inc. and Roberts Properties Construction, Inc. (the “Roberts
Companies”), and (iii) payments owed to the Roberts Companies for services owed
to those companies under existing Contracts with them. None of the Company’s
directors, officers or employees, or any members of their immediate families, or
any Affiliate of the foregoing are, directly or indirectly, indebted to the
Company, the Operating Partnership or any Subsidiary.

2.12          Rights of Registration and Voting Rights.

Except as provided in the Registration Rights Agreement and in Section 6.7(e) of
the Partnership Agreement, the Company is not under any obligation to register
or seek to register under the Securities Act any of its currently outstanding
securities or any securities issuable upon exercise, conversion or redemption of
the currently outstanding securities of the Company or of the Operating
Partnership. To the Company’s knowledge, except pursuant to the Governance and
Voting Agreement, no shareholder of the Company has entered into any agreement
with respect to the voting of capital stock of the Company.

2.13          Absence of Violation, Defaults and Conflicts.

(a)                Neither the Company, the Operating Partnership, nor any of
the Subsidiaries is (A) in violation of its Organizational Documents, or (B) in
default in any material respect in the performance or observance of any Material
Contract to which the Company, the Operating Partnership or any Subsidiary is a
party or by which it or any of them may be bound or to which any of the
properties or assets of the Company, the Operating Partnership or any Subsidiary
is subject (collectively, “Agreements and Instruments”).

(b)               Except for the recourse mortgage indebtedness of the Company
and the Operating Partnership described in Section 6.12, which indebtedness
shall be repaid in full on the Closing Date, the execution, delivery and
performance of this Agreement and the other Transaction Agreements and the
consummation of the transactions contemplated herein and therein (including the
approval of this Agreement and the transactions contemplated hereby, including
the Charter Amendment, by the Requisite Company Vote and the filing with the SEC
of a proxy statement in definitive form relating to the meeting of the Company’s
shareholders to be held in connection with this Agreement and the transactions
contemplated hereby (including any amendments or supplements thereto, the
“Company Proxy Statement”) and the issuance and sale of the Shares) and
compliance by the Company with its obligations hereunder do not and will not,
whether with or without the giving of notice or passage of time or both, (A)
conflict with, or constitute a breach of or default under, any Agreements and
Instruments, (B)  result in the creation or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company, the Operating
Partnership or any Subsidiary pursuant to any of the Agreements and Instruments,
(C) give any party to any of the Agreements and Instruments any right of
termination, cancellation, acceleration or modification thereunder, (D) result
in the termination or nonrenewal of any material permit or license applicable to
the Company and the Operating Partnership, or (E) result in any violation of (i)
the provisions of the Organizational Documents of the Company, the Operating
Partnership or any Subsidiary; or (ii) any Law or Order applicable to the
Company, the Operating Partnership or any Subsidiary or any of their respective
properties or other assets.

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2.14          Financial Statements; Non-GAAP Financial Measures.

The financial statements included in the Company Exchange Act Reports filed with
the SEC since December 31, 2010, together with the related schedules and notes,
presented fairly in all material respects the financial position of the Company
and its Subsidiaries at the dates indicated and the statement of operations,
shareholders’ equity and cash flows of the Company and its Subsidiaries for the
periods specified, subject, in the case of unaudited interim financial
statements, to normal and year-end audit adjustments as permitted by (i) U.S.
generally accepted accounting principles (“GAAP”) applied on a consistent basis
throughout the periods involved and (ii) the applicable rules and regulations of
the SEC; and said financial statements have been prepared in conformity with
GAAP applied on a consistent basis throughout the periods involved. The
supporting schedules, if any, presented fairly in accordance with GAAP the
information required to be stated therein. Except as included therein, no
historical or pro forma financial statements or supporting schedules were
required to be included in the Company Exchange Act Reports filed with the SEC
since December 31, 2010. To the knowledge of the Company, all disclosures
contained in the Company Exchange Act Reports filed with the SEC since December
31, 2010 regarding “non-GAAP financial measures” (as such term is defined by the
rules and regulations of the SEC) complied in all material respects with
Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Securities
Act, to the extent applicable. To the knowledge of the Company, the interactive
data in extensible Business Reporting Language included in the Company Exchange
Act Reports filed with the SEC since December 31, 2010 fairly presented the
information called for in all material respects and has been prepared in
accordance with the SEC’s rules and guidelines applicable thereto. Except as
would not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect, neither the Company, the Operating
Partnership nor any of its Subsidiaries has any Liability of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether due
or to become due), except for those Liabilities that are reflected or reserved
against on the consolidated balance sheet of the Company included in its
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2014
(including any notes thereto) and for Liabilities incurred in the ordinary
course of business or in connection with this Agreement and the transactions
contemplated hereby. Schedule 2.33 of the Disclosure Schedule applies to this
Section 2.14.

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2.15          Compliance with Laws and Orders.

To the knowledge of the Company, each of the Company, the Operating Partnership
and each Subsidiary is, and has been at all times during the past five (5)
years, in compliance in all material respects with all Laws related to its
business or operations or ownership or the use of any property. There is no
Order of any Governmental Entity having jurisdiction over, and applicable to,
the Company, the Operating Partnership or any Subsidiary or any of their
respective properties, assets or operations that has had or could reasonably be
expected to have a Material Adverse Effect or to materially affect the value of
any of the Company’s properties. Neither the Company, the Operating Partnership
nor any Subsidiary has received, at any time during the past five (5) years, any
written notice of any alleged or threatened Legal Action, violation of,
liability under or potential responsibility under any Laws or Orders relating to
its business or to the use, ownership and operation of its properties, which
Legal Action, violation, liability or responsibility has had or could reasonably
be expected to have a Material Adverse Effect or could reasonably be expected to
materially affect the value of any of the Company’s properties.

2.16          Changes.

Since June 30, 2014, there has not been:

(a)                any material change in the assets, Liabilities, financial
condition or operating results of the Company, other than (i) a reduction in the
Company’s cash balance as a result of expenditures made by the Company in the
ordinary course of business, subject to the terms and conditions of this
Agreement, and (ii) in connection with this Agreement and the transactions
contemplated hereby and the Company’s performance of its obligations under this
Agreement in accordance with the terms and conditions hereof;

(b)               any material damage, destruction or loss, whether or not
covered by insurance;

(c)                any waiver or compromise by the Company of a valuable right
or of a material debt owed to it;

(d)               any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business;

(e)                any material change to a Contract by which the Company or any
of its assets is bound or subject; provided, however, that the parties hereto
agree that, for purposes of this Section 2.16(e) only, a “material change to a
Contract by which the Company or any of its assets is bound or subject” shall
mean a material change to a Contract by which the Company or any of its assets
is bound or subject that the Company would have had or has an affirmative
obligation to disclose in a Company Exchange Act Report pursuant to the Exchange
Act;

(f)                any new, or material change in any existing, compensation
arrangement or agreement with any employee, officer, director or shareholder;

16

 

(g)               any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company, with respect to any of its properties or assets,
except liens for taxes not yet due or payable and liens that arise in the
ordinary course of business and do not materially impair the Company’s ownership
or use of such property or assets;

(h)               any loans or guarantees made by the Company to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;

(i)                 any declaration, setting aside or payment or other
distribution in respect of any of the Company’s capital stock (excluding OP
Redemptions), or any direct or indirect redemption, purchase, or other
acquisition of any of such stock by the Company (other than OP Exchanges);

(j)                 any sale, assignment or transfer of any material Company
Intellectual Property;

(k)               to the Company’s knowledge, any other event or condition of
any character that could reasonably be expected to result in a Material Adverse
Effect; or

(l)                 any arrangement or commitment by the Company to do any of
the things described in this Section 2.16.

2.17          Employee Matters.

(a)                Schedule 2.17 of the Disclosure Schedule sets forth a
description of all compensation, including salary, bonus, severance obligations
and deferred compensation paid or payable for each officer, employee, consultant
and independent contractor of the Company for the fiscal year ended December 31,
2013 and for the fiscal year ending December 31, 2014, including any such
compensation that would be triggered by the transactions under this Agreement.

(b)               To the Company’s knowledge, none of its employees is obligated
under any Contract (including licenses, covenants or commitments of any nature)
or is subject to any Order of any Governmental Entity, that would materially
interfere with such employee’s ability to promote the interest of the Company or
that would conflict with the Company’s business. Neither the execution or
delivery of the Transaction Agreements, nor the carrying on of the Company’s
business by the employees of the Company, nor the conduct of the Company’s
business as now conducted, will, to the Company’s knowledge, conflict with or
result in a breach of the terms, conditions, or provisions of, or constitute a
default under, any Contract under which any such employee is now obligated.

(c)                The Company is not delinquent in payments to any of its
employees, consultants, or independent contractors for any wages, salaries,
commissions, bonuses, or other direct compensation for any service performed for
it to the date hereof or amounts required to be reimbursed to such employees,
consultants, or independent contractors. The Company has complied and is in
compliance in all material respects with all applicable state and federal equal
employment opportunity laws and with other laws related to employment, including
those related to wages, hours, worker classification, and collective bargaining.
The Company has withheld and paid to the appropriate Governmental Entity or is
holding for payment not yet due to such Governmental Entity all amounts required
to be withheld from employees of the Company and is not liable for any arrears
of wages, taxes, penalties, or other sums for failure to comply with any of the
foregoing.

17

 

(d)               The employment of each officer and employee of the Company is
terminable at the will of the Company. Except as set forth in Schedule 2.17 of
the Disclosure Schedule or as required by Law, upon termination of the
employment of any such officer or employee, no severance or other payments will
become due. Except as set forth in Schedule 2.17 of the Disclosure Schedule, the
Company has no policy, practice, plan, or program of paying severance pay or any
form of severance compensation in connection with the termination of employment
services.

(e)                The Company has not made any representations regarding equity
incentives to any officer, employee, director or consultant that are
inconsistent with the share amounts and terms set forth in the minutes of
meetings of the Company’s Board of Directors.

(f)                To the Company’s knowledge, none of the Company’s current
officers, employees or directors has been (a) except as described in the Company
Exchange Act Reports filed with the SEC since December 31, 2010, subject to
voluntary or involuntary petition under the federal bankruptcy laws or any state
insolvency Law or the appointment of a receiver, fiscal agent or similar officer
by a court for his business or property; (b) convicted in a criminal proceeding
or named as a subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses); (c) subject to any Order (not subsequently
reversed, suspended, or vacated) of any court of competent jurisdiction
permanently or temporarily enjoining him from engaging, or otherwise imposing
limits or conditions on his engagement in any securities, investment advisory,
banking, insurance, or other type of business or acting as an officer or
director of a public company; or (d) found by a court of competent jurisdiction
in a civil action or by the SEC or the Commodity Futures Trading Commission to
have violated any federal or state securities, commodities, or unfair trade
practices Law, which such judgment or finding has not been subsequently
reversed, suspended, or vacated.

2.18          ERISA.

(i) Each “employee benefit plan” (within the meaning of Section 3(3) of the
Employee Retirement Security Act of 1974, as amended (“ERISA”)), for which the
Company or any member of its “Controlled Group” (defined as an organization
which is a member of a controlled group of corporations within the meaning of
Section 414 of the Code) would have any liability (each a “Plan”) has been
maintained in compliance with its terms and with the requirements of all
applicable statutes, rules and regulations including ERISA and the Code; (ii)
with respect to each Plan subject to Title IV of ERISA (a) no “reportable event”
(within the meaning of Section 4043(c) of ERISA) has occurred or is reasonably
expected to occur, (b) no “accumulated funding deficiency” (within the meaning
of Section 302 of ERISA or Section 412 of the Code), whether or not waived, has
occurred or is reasonably expected to occur, (c) the fair market value of the
assets under each Plan exceeds the present value of all benefits accrued under
such Plan (determined based on those assumptions used to fund such Plan) and (d)
neither the Company or any member of its Controlled Group has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA (other than
contributions to the Plan or premiums to the Pension Benefit Guaranty
Corporation in the ordinary course of business and without default) in respect
of a Plan (including a “multiemployer plan,” within the meaning of
Section 4001(c)(3) of ERISA); and (iii) each Plan that is intended to be
qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.

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2.19          Transfer Taxes.

Under the Laws of the State of Georgia, there are no stock or other transfer
taxes, stamp duties, capital duties or other similar duties, taxes or charges
payable in connection with the execution or delivery of this Agreement by the
Company or the issuance or sale by the Company of the Shares to be sold by the
Company to the Purchaser hereunder.

2.20          Permits.

The Company and its Subsidiaries possess such permits, licenses, approvals,
consents and other authorizations (collectively, “Governmental Licenses”) issued
by the appropriate Governmental Entities necessary to conduct the business now
operated by them, except where the failure so to possess would not, singly or in
the aggregate, result in a Material Adverse Effect. The Company and its
Subsidiaries are in compliance with the terms and conditions of all Governmental
Licenses, except where the failure so to comply would not, singly or in the
aggregate, result in a Material Adverse Effect. All of the Governmental Licenses
that the Company, the Operating Partnership or any Subsidiary currently possess
are valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in full
force and effect would not, singly or in the aggregate, result in a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has received any
notice of proceedings relating to the revocation or modification of any
Governmental Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.

2.21          Title to Property.

All of the real property or investments in real property by the Company, the
Operating Partnership and each Subsidiary are accurately described in the
Company Exchange Act Reports or in Schedule 2.21 of the Disclosure Schedule. The
Company, the Operating Partnership and the Subsidiaries have good and marketable
title to all real property owned by them and good title to all other properties
owned by them, in each case, free and clear of all mortgages, pledges, liens,
security interests, claims, restrictions or encumbrances of any kind except such
as (A) are described in the Company’s Exchange Act Reports or in Schedule 2.21
of the Disclosure Schedule or (B) do not, singly or in the aggregate, materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company, the Operating Partnership
or any of its Subsidiaries as described in the Company Exchange Act Reports
filed with the SEC since December 31, 2010. The Company has provided to the
Purchaser true, correct and complete copies of title reports and surveys
relating to the Company’s Properties. All of the leases and subleases material
to the business of the Company, the Operating Partnership and its Subsidiaries,
considered as one enterprise, and under which the Company, the Operating
Partnership or any of its Subsidiaries holds properties described in the
Company’s Exchange Act reports, are in full force and effect, and neither the
Company, the Operating Partnership nor any such Subsidiary has any notice of any
material claim of any sort that has been asserted by anyone adverse to the
rights of the Company, the Operating Partnership or any Subsidiary under any of
the leases or subleases mentioned above, or affecting or questioning the rights
of the Company, the Operating Partnership or such Subsidiary to the continued
possession of the leased or subleased premises under any such lease or sublease.

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2.22          Accounting Controls and Disclosure Controls.

The Company, the Operating Partnership and each of its Subsidiaries maintain
effective internal control over financial reporting (as defined under Rule
13a-15(f) and 15d-15(f) under the Exchange Act) and a system of internal
accounting controls sufficient to provide reasonable assurances that
(A) transactions are executed in accordance with management’s general or
specific authorization; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets; (C) access to assets is permitted only in accordance
with management’s general or specific authorization; (D) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences; and
(E) the interactive data in eXtensible Business Reporting Language included in
the Company’s Exchange Act Reports filed with the SEC since December 31, 2010
fairly present the information called for in all material respects and are
prepared in accordance with the SEC’s rules and guidelines applicable thereto.
Except as described in the Company’s Exchange Act Reports, since December 31,
2013, there has been (1) no material weakness in the Company’s, the Operating
Partnership’s and the Subsidiaries internal control over financial reporting
(whether or not remediated) and (2) no change in the Company’s, the Operating
Partnership’s or the Subsidiaries’ internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting. The Company, the Operating
Partnership and each of its Subsidiaries maintain an effective system of
disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule
15d-15(e) under the Exchange Act) that are designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the SEC’s rules and forms, and is accumulated and
communicated to the Company’s management, including its principal executive
officer or officers and principal financial officer or officers, as appropriate,
to allow timely decisions regarding disclosure. Schedule 2.33 of the Disclosure
Schedule applies to this Section 2.22.

2.23          Compliance with the Sarbanes-Oxley Act.

Since December 31, 2010, there is and has been no failure on the part of the
Company or any of the Company’s directors or officers, in their capacities as
such, to comply in all material respects with any provision of the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith (the “Sarbanes-Oxley Act”), including Section 402 related
to loans and Sections 302 and 906 related to certifications.

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2.24          Investment Company Act.

The Company is not required to register as an “investment company” under the
Investment Company Act of 1940, as amended. Neither the Operating Partnership
nor any of the Subsidiaries is an “investment company” as defined in the
Investment Company Act of 1940, as amended.

2.25          Insurance.

The Company, the Operating Partnership and the Subsidiaries carry or are
entitled to the benefits of insurance, with financially sound and reputable
insurers, in such amounts and covering such risks as is generally maintained by
companies of established repute engaged in the same or similar business, and all
such insurance is in full force and effect. The Company and the Operating
Partnership have no reason to believe that they or any of the Subsidiaries will
not be able (A) to renew its existing insurance coverage as and when such
policies expire or (B) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct its business as now conducted and
at a cost that would not result in a Material Adverse Effect. Neither of the
Company nor any of its Subsidiaries has been denied any insurance coverage that
it has sought or for which it has applied.

2.26          Organizational Documents.

The Organizational Documents of the Company, the Operating Partnership and each
Subsidiary are in the form provided to the Purchaser. The copy of the minute
books of the Company provided to the Purchaser contains minutes of all meetings
of directors and shareholders and all actions by written consent without a
meeting by the directors and shareholders from December 31, 2010 through
September 22, 2014 and accurately reflects in all material respects all actions
by the directors (and any committee of directors) and shareholders with respect
to all transactions referred to in such minutes (excluding matters that have
been redacted (a) to preserve the attorney-client privilege with respect to the
matters referenced in Item 9A in the Company’s Annual Report on Form 10-K filed
with the SEC on April 1, 2013 or (b) to conceal the identity of other parties
to, and the specific terms of, potential strategic transactions contemplated by
the Company prior to June 3, 2014).

2.27          Environmental and Safety Laws.

(A) To the knowledge of the Company, neither the Company, the Operating
Partnership nor any of the Subsidiaries is in violation of any Law, or any
judicial or administrative interpretation thereof, including any judicial or
administrative Order, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, Laws relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products, asbestos-containing materials or mold
(collectively, “Hazardous Materials”) or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, “Environmental Laws”) that could reasonably
be expected to have a Material Adverse Effect or to materially affect the value
of any of the Company’s current properties, (B) to the knowledge of the Company,
the Company, the Operating Partnership and the Subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance in all material respects with their requirements, (C)
there are no pending or, to the knowledge of the Company, threatened
administrative, regulatory or judicial Legal Actions, demands, demand letters,
liens, notices of noncompliance or violation relating to any Environmental Law
against the Company, the Operating Partnership or any of the Subsidiaries that
could reasonably be expected to have a Material Adverse Effect or to materially
affect the value of any of the Company’s properties and (D) to the knowledge of
the Company, there are no events or circumstances that would reasonably be
expected to form the basis of an Order for clean-up or remediation, or a Legal
Action by any private party or Governmental Entity, against or affecting the
Company, the Operating Partnership or any of the Subsidiaries or properties of
the Company relating to Hazardous Materials or any Environmental Laws. To the
knowledge of the Company, except as disclosed in Schedule 2.27 of the Disclosure
Schedule, there have been no and are no (i) aboveground or underground storage
tanks, (ii) polychlorinated biphenyls (“PCBs”) or PCB-containing equipment,
(iii) asbestos or asbestos containing materials, (iv) lead based paints, (v)
dry-cleaning facilities, or (vi) wet lands, in each case in, on, under, or
adjacent to any currently owned property or other assets currently owned by the
Company, the Operating Partnership or the Subsidiaries.

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2.28          Data Privacy.

In connection with its collection, storage, transfer (including without
limitation, any transfer across national borders) and/or use of any personally
identifiable information from any individuals, including, without limitation,
any customers, prospective customers, employees and/or other third parties
(collectively, “Personal Information”), the Company is and has been in
compliance with all applicable Laws, the Company’s privacy policies, and the
requirements of any Contract or codes of conduct to which the Company is a
party. The Company has commercially reasonable physical, technical,
organizational and administrative security measures and policies in place to
protect all Personal Information collected by it or on its behalf from and
against unauthorized access, use and/or disclosure. The Company is and has been
in compliance in all material respects with all Federal and state laws relating
to data loss, theft and breach of security notification obligations.

2.29          Foreign Corrupt Practices Act.

None of the Company, the Operating Partnership nor any of its Subsidiaries or,
to the knowledge of the Company, any director, officer, agent, employee,
Affiliate or other Person acting on behalf of the Company or any of its
subsidiaries is aware of or has taken any action, directly or indirectly, that
would result in a violation by such persons of the Foreign Corrupt Practices Act
of 1977, as amended, and the rules and regulations thereunder (the “FCPA”),
including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer,
payment, promise to pay or authorization of the payment of any money, or other
property, gift, promise to give, or authorization of the giving of anything of
value to any “foreign official” (as such term is defined in the FCPA) or any
foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA, and the Company and, to the
knowledge of the Company, its Affiliates have conducted their businesses in
compliance with the FCPA and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to continue to
ensure, continued compliance therewith.

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2.30          Money Laundering Laws.

The operations of the Company and the Operating Partnership and its Subsidiaries
are and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by
any Governmental Entity (collectively, the “Money Laundering Laws”); and no
action, suit or proceeding by or before any Governmental Entity involving the
Company or any of its subsidiaries with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company, threatened.

2.31          OFAC.

None of the Company, the Operating Partnership, any of the Subsidiaries or, to
the knowledge of the Company, any director, officer, agent, employee, affiliate
or representative of the Company or any of the Subsidiaries is an individual or
entity currently the subject or target of any sanctions administered or enforced
by the United States Government, including, without limitation, the U.S.
Department of the Treasury’s Office of Foreign Assets Control, the United
Nations Security Council, the European Union, Her Majesty’s Treasury, or other
relevant sanctions authority (collectively, “Sanctions”), nor is the Company
located, organized or resident in a country or territory that is the subject of
Sanctions; and the Company will not directly or indirectly use the proceeds of
the sale of the Shares, or lend, contribute or otherwise make available such
proceeds to any subsidiaries, joint venture partners or other Person, to fund
any activities of or business with any Person, or in any country or territory,
that, at the time of such funding, is the subject of Sanctions or in any other
manner that will result in a violation by any of Sanctions.

2.32          Shell Company.

The Company is not, and has not been at any time previously, an issuer described
in Rule 144(i)(1)(i) under the Securities Act.

2.33          SEC Reports.

As of their respective filing dates (or, if amended or superseded by a
subsequent filing made prior to the date of this Agreement, as of the date of
the last such amendment or superseding filing prior to the date hereof), except
as disclosed on Schedule 2.33 of the Disclosure Schedule, no Company Exchange
Act Report filed with the SEC since December 31, 2010 (and, in the case of
registration statements and proxy statements, on the dates of effectiveness and
the dates of the relevant meetings, respectively, since December 31, 2010)
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading. As of their respective dates, all Company Exchange Act Reports filed
under the Securities Act and the Exchange Act with the SEC since December 31,
2010 complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto. As of the date of this Agreement,
no executive officer of the Company has failed in any respect to make the
certifications required of him or her under Section 302 or 906 of the
Sarbanes-Oxley Act. As of the date of this Agreement, there are no outstanding
comments from or unresolved issues raised by the SEC with respect to any of the
Company Exchange Act Reports. Except as disclosed on Schedule 2.33 of the
Disclosure Schedule, the Company has timely filed all reports, registrations and
statements, together with any amendments required to be made with respect
thereto, that it was required to file since December 31, 2010 with the SEC, and
has paid all fees and assessments due and payable in connection therewith.

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2.34          Company Proxy Statement.

None of the information with respect to the Company that the Company furnishes
for use in the Company Proxy Statement (which expressly excludes the Purchaser
Proxy Information), will, at the date such Company Proxy Statement is first
mailed to the Company’s shareholders or at the time of the Shareholders Meeting
or at the time of any amendment or supplement thereof, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.

2.35          Material Contracts.

Schedule 2.35 of the Disclosure Schedule sets forth a list of all Contracts
meeting the following descriptions (“Material Contracts”) that (i) are currently
in effect or (ii) were previously in effect and have been terminated or expired
but have continuing material obligations on the part of the Company, the
Operating Partnership or any Subsidiary, true and complete copies of which
(including all amendments, modifications, extensions, renewals, and other
agreements with respect thereto) have been provided or made available to
Purchaser:

(a)                each Contract whereby the Company, the Operating Partnership
or any Subsidiary has an obligation to make an investment in or loan to any
Person;

(b)               each Contract that constitutes a lease of any real or personal
property with (A) aggregate rental payments in excess of $50,000.00 or (B) the
remaining term in excess of one year and which is non-cancelable without penalty
and aggregate annual rental payments in excess of $10,000.00 or (C) the loss of
which would be material to the operation of the business of the Company;

(c)                each Contract that involves performance of services, delivery
of goods or materials or payments by the Company of an amount or value in excess
of $25,000.00;

(d)               each Contract that was not entered into in the ordinary course
of business;

(e)                each Contract affecting the ownership of, leasing of, title
to, use of, or any leasehold or other interest in, any real or personal property
(except personal property leases having a value per item or aggregate payments
of less than $25,000.00);

24

 

(f)                each Contract with respect to Company Intellectual Property
(excluding standard commercial software licenses);

(g)               each Contract that constitutes an agreement to purchase or
sell a capital asset for a price in excess of $25,000.00;

(h)               each Contract that constitutes or amends any employment,
consulting, management, severance, change in control or indemnification
arrangement, agreement or understanding between the Company or the Operating
Partnership, on the one hand, and any directors, officers, or other employees,
on the other hand, that make in excess of $25,000.00 per year;

(i)                 each Contract pursuant to which the Company has granted a
power of attorney or other similar grant of agency;

(j)                 each Contract with any labor union or association
representing any employee;

(k)               each Contract that constitutes a bonus, pension, profit
sharing, retirement or other form of deferred compensation plan;

(l)                 each Contract that prohibits the Company or the Operating
Partnership from freely engaging in business anywhere in the world or concerning
confidentiality (except that the Company is permitted to redact certain
confidentiality agreements executed by Persons that previously expressed
interest in a strategic transaction with the Company in order to conceal the
identity of such Persons);

(m)             each Contract, including any joint venture, partnership, or
limited liability company agreement, involving a sharing of profits, losses,
costs, taxes, or other liabilities by the Company or the Operating Partnership
with any other Person;

(n)               each Contract under which the Company or the Operating
Partnership has created, incurred, assumed or guaranteed debt obligations in
excess of $25,000.00;

(o)               each Contract relating to a sales broker, sales agency,
advertising agency or finder’s relationship with the Company;

(p)               each Contract that is a settlement, conciliation or similar
agreement with any Governmental Entity or pursuant to which the Company will be
required to pay in excess of $25,000.00 after the date of this Agreement;

(q)               each Contract pursuant to which the Company has obligations to
indemnify another Person (other than (x) Contracts entered into in the ordinary
course of business and (y) agreements and other documents the Company entered
into in connection with secured loans to the Company that provided for
environmental indemnities); and

(r)                 each Contract relating to any surety bond or letter of
credit.

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All of the Material Contracts set forth (or required to be set forth) on
Schedule 2.35 of the Disclosure Schedule are valid, binding and enforceable and,
to the knowledge of the Company, the other parties thereto, in accordance with
their respective terms, except as such enforceability may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors’ rights or remedies generally as from
time to time in effect or (ii) principles of equity, whether considered at law
or in equity. The Company has not received written notice that any party to any
such Material Contract intends to cancel or terminate such Material Contract
before the end of its stated term, and to the knowledge of the Company, no party
to any such Material Contract otherwise intends to exercise any right of
cancellation or termination before the end of its stated term. The Company and
the Operating Partnership have not made any prior assignment of any Material
Contract or any of their rights or obligations thereunder other than in
connection with the typical documents evidencing or securing a loan secured by
real estate.

With respect to any non-disclosure or confidentiality agreement previously
entered into by the Company or its affiliates with any third party that is a
publicly traded entity wherein the Company agreed to keep confidential
information relating to such third party, to the Company’s knowledge, the
Company is not currently in possession of any material non-public information
relating to any such third party.

2.36          Loans and Guarantees.

(a)                All of the indebtedness of the Company, the Operating
Partnership and each Subsidiary, whether recourse or non-recourse, in excess of
$25,000.00 is accurately described in the Company Exchange Act Reports or in
Schedule 2.36 of the Disclosure Schedule.

(b)               Except as set forth on Schedule 2.36 of the Disclosure
Schedule, there are no outstanding loans by the Company, the Operating
Partnership or any Subsidiary nor has any of them loaned any money to any Person
that has not been repaid, and there are no debts owing to any of the Company,
the Operating Partnership or any Subsidiary other than as set forth in the
Financial Statements.

(c)                Except as set forth on Schedule 2.36 of the Disclosure
Schedule, neither the Company, the Operating Partnership nor any Subsidiary has
given or entered into any guarantee, mortgage, pledge, lien, assignment or other
security agreement or arrangement or is responsible for the indebtedness, or for
the default in the performance of any obligation, of any other Person.

(d)               Except as set forth on Schedule 2.36 of the Disclosure
Schedule, there are no bonds, guarantees or other forms of credit support or
similar arrangements provided by any Affiliates of the Company for the benefit
of any of the Company, the Operating Partnership or any Subsidiary.

2.37          Taxes.

The Company makes the following representations and warranties with respect to
tax matters:

26

 

(a)                To the knowledge of the Company, it qualified to be taxed as
a REIT under the Code for its taxable years ended December 31, 2005 through
December 31, 2008. No challenge by the Internal Revenue Service to the Company’s
status as a REIT for those taxable years is pending or, to the knowledge of the
Company, has been threatened. To the knowledge of the Company, (i) it has not
taken any actions that could cause it to fail to qualify as a REIT for its
taxable years ended December 31, 2005 through December 31, 2008, and (ii) it has
not failed to take any actions that could cause it to qualify as a REIT for its
taxable years ended December 31, 2005 through December 31, 2008. To the
knowledge of the Company, it will be eligible to elect to be taxed as a REIT no
later than its taxable year ending December 31, 2015.

(b)               All Tax Returns required to have been filed by or with respect
to the Company have been timely filed (taking into account any extension of time
to file granted or obtained), and such Tax Returns have been duly and accurately
prepared in all material respects (except that the Company’s federal income tax
returns for its taxable years ended December 31, 2009 through December 31, 2013
incorrectly reported that the Company qualified to be taxed as a REIT for those
years). After taking into account the use of the Company’s net operating losses
and net capital losses, the Company will have no Liability for federal, state or
local income taxes for its taxable years ended December 31, 2009 through
December 31, 2013 as a result of being taxed as a C corporation for federal
income tax purposes for such years, and it will have no such Liability as a
result of the Company’s operations from January 1, 2014 through the Closing.

(c)                Prior to the Closing, neither the Company nor any of its
Subsidiaries has experienced any event that imposed a material limitation on the
utilization of net operating loss carryforwards, capital loss carryforwards,
built-in losses, tax credits or similar items of the Company or any of its
Subsidiaries under Sections 269, 382, 383, 384 or 1502 of the Code, and the
Treasury Regulations thereunder and comparable provisions of state, local or
foreign law.

2.38          Certificates.

Any certificate signed by any officer of the Company, the Operating Partnership
or any of the Subsidiaries in such capacity and delivered to the representatives
of the Purchaser or to its counsel pursuant to this Agreement shall be deemed a
representation and warranty by the Company, the Operating Partnership or the
Subsidiaries as the case may be, to the Purchaser as to the matters covered
thereby.

3.                  Representations and Warranties of the Purchaser.

The Purchaser hereby represents and warrants to the Company and the Operating
Partnership that:

3.1              Organization.

The Purchaser is validly existing and in good standing as a limited liability
company under the laws of the State of Delaware. The Purchaser has full limited
liability company power and authority to carry on its business as it is
currently being conducted and to own, operate and hold under lease its assets
and properties as, and in the places where, such assets and properties are
currently owned, operated or held.

27

 

3.2              Authorization; Enforceability.

The Purchaser has full power and authority to enter into the Transaction
Agreements. Each of the Transaction Agreements to which the Purchaser is a
party, when executed and delivered by the Purchaser, will constitute valid and
legally binding obligation of the Purchaser, enforceable against the Purchaser
in accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and any other
laws of general application affecting enforcement of creditors’ rights
generally, and as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.

3.3              No Violation of Conflict; No Consents.

The execution, delivery and performance of this Agreement, and the other
agreements, documents and instruments required hereby to which the Purchaser is
a party, do not and will not (a) conflict with, or result in any violation of,
or default (with or without notice or lapse of time, or both) under (i) the
Organizational Documents of the Purchaser, (ii) any Law or Order binding on the
Purchaser or (iii) any Contract to which the Purchaser is a party or by which
the Purchaser is bound, or (b) give any party to any Contract to which the
Purchaser is a party or by which the Purchaser is bound any right of
termination, cancellation, acceleration or modification thereunder.

3.4              Purchase Entirely for Own Account.

This Agreement is made with the Purchaser in reliance upon the Purchaser’s
representation to the Company, which by the Purchaser’s execution of this
Agreement, the Purchaser hereby confirms, that the Shares to be acquired by the
Purchaser will be acquired for investment for the Purchaser’s own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that the Purchaser has no present intention of selling,
granting any participation in, or otherwise distributing the same; provided,
however, that the Purchaser shall have the right to admit a joint venture
partner as a new member of the Purchaser at or prior to the Closing as
previously disclosed by the Purchaser to the Company. By executing this
Agreement, the Purchaser further represents that the Purchaser does not
presently have any Contract or undertaking to sell, transfer or grant
participations to any Person who is not an Affiliate of the Purchaser with
respect to any of the Shares, except that the Purchaser shall have the right to
admit a joint venture partner as a new member of the Purchaser at or prior to
the Closing as previously disclosed by the Purchaser to the Company.

3.5              Accredited Investor.

The Purchaser is, or each beneficial owner of equity interests in the Purchaser
is, an accredited investor as defined in Rule 501(a) of Regulation D promulgated
under the Securities Act.

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3.6              Brokers.

Other than the engagement of The CenterCap Group LLC, the Purchaser has not
retained any broker or finder in connection with any of the transactions
contemplated by this Agreement, and Purchaser has not incurred or agreed to pay,
or taken any other action that would entitle any Person to receive, any
brokerage fee, finder’s fee or other similar fee or commission with respect to
any of the transactions contemplated by this Agreement. The Purchaser, and
expressly not the Company or any of its Affiliates, is responsible for any
payment to which The CenterCap Group LLC is or may be entitled in connection
with any of the transactions contemplated by this Agreement.

3.7              Governmental Consents and Filings.

No consent, approval, Order or authorization of, or registration, qualification,
designation, declaration or filing with, any Governmental Entity is required on
the part of the Purchaser in connection with the consummation of the
transactions contemplated by this Agreement, except for filings pursuant to
Regulation D of the Securities Act and applicable state securities laws for
which the Company is responsible.

3.8              Company Proxy Statement.

None of the information with respect to the Purchaser, the directors proposed to
be added to the Board of Directors on the Closing Date, the description of the
Management Agreement and any other information (the “Purchaser Proxy
Information”) that the Purchaser furnishes in writing to the Company expressly
for use in the Company Proxy Statement, will, at the date such Company Proxy
Statement is first mailed to the Company’s shareholders or at the time of the
Shareholders Meeting or at the time of any amendment or supplement thereof,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.

3.9              Financial Capability.

The Purchaser has or will have, on the Closing Date, sufficient funds to pay the
Gross Proceeds and to perform the other obligations of the Purchaser
contemplated by this Agreement.

3.10          Legal Actions.

As of the date hereof, there is no pending or, to the knowledge of the
Purchaser, threatened, Legal Action against the Purchaser or any of its
Affiliates, nor is there any Order imposed upon the Purchaser, in each case, by
or before any Governmental Entity, that would, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the Purchaser’s
ability to consummate the transactions contemplated by this Agreement.

4.                  Conditions to the Purchaser’s Obligations at Closing.

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The obligations of the Purchaser to purchase the Shares at the Closing are
subject to the fulfillment, on or before such Closing, of each of the following
conditions, unless otherwise waived:

4.1              Representations and Warranties.

Each of the representations and warranties of the Company and the Operating
Partnership contained in this Agreement (or in any of the other documents or
instruments to be delivered in connection herewith), to the extent qualified by
Material Adverse Effect or other materiality qualification contained in any such
representation or warranty, shall (except for representations and warranties
made as of a specific date, which shall have been complete and accurate as of
such date) have been complete and accurate as of the Effective Date and shall be
complete and accurate as of the Closing Date as if made as of the Closing Date,
and, to the extent not qualified by any Material Adverse Effect or other
materiality (or equivalent) qualification contained in any such representation
or warranty, shall (except for representations and warranties made as of a
specific date, which shall have been complete and accurate in all material
respects as of such date) have been complete and accurate in all material
respects as of the date of this Agreement and shall be complete and accurate in
all material respects as of the Closing as if made as of the Closing; provided
that the representations and warranties set forth in Sections 2.1, 2.2, 2.3, 2.4
(other than any de minimis discrepancy in the aggregate number of issued and
outstanding shares of Common Stock and OP Units), 2.5 and 2.6 shall be complete
and accurate in all respects.

4.2              Performance.

The Company and the Operating Partnership shall have (A) delivered all documents
and other items required of the Company or the Operating Partnership, as
applicable, pursuant to this Section 4 and (B) performed and complied in all
material respects with all covenants, agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied with
by the Company or the Operating Partnership on or before the Closing.

4.3              No Litigation.

No investigation, suit, action or other proceeding shall be (i) threatened in
writing or pending by a Governmental Entity that seeks restraint, prohibition,
damages, monetary relief or other relief in connection with this Agreement or
the consummation of the transactions contemplated hereby, (ii) pending before
any Governmental Entity by a non-Governmental Entity that seeks restraint or
prohibition in connection with this Agreement and that the Purchaser reasonably
determines to be reasonably likely to result in the incurrence by the Company or
the Purchaser of any Liability in excess of $100,000, and there shall be no
effective injunction, writ or restraint in place concerning any of the
foregoing, or (iii) threatened in writing or pending before any Governmental
Entity in which a Governmental Entity is a party that would or is reasonably
likely to result in a governmental investigation or material governmental
damages being imposed on the Purchaser or the Company or any of their respective
Affiliates. There shall not have been any change in any Law that would prohibit
the consummation of the transactions contemplated by this Agreement.

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4.4              Compliance Certificate.

The President and Chief Financial Officer of the Company and the General Partner
of the Operating Partnership shall deliver to the Purchaser at the Closing a
certificate in the form of Exhibit H attached hereto certifying:

(a)                as to the matters set forth in Sections 4.1, 4.2, 4.3, 4.7,
4.8, 4.15, 4.16 and 4.19; and

(b)               that, subsequent to the Effective Date, there has not been (A)
any change, or any development or event that reasonably could be expected to
result in a change, that has or reasonably could be expected to have a Material
Adverse Effect, (B) any increase in the aggregate outstanding consolidated
indebtedness of the Company and the Subsidiaries (other than a Preapproved Loan)
to which the Purchaser has not consented in accordance with Section 6 hereof,
(C) any dividend or distribution of any kind declared, paid or made on the
capital stock or other equity interests of the Company or any of the
Subsidiaries (other than OP Redemptions and OP Exchanges), or (D) any loss or
damage (whether or not insured) to any of the current properties of the Company
or any of the Subsidiaries that has been sustained or is expected to be
sustained that has or could reasonably be expected to have a Material Adverse
Effect.

4.5              Opinion of the Company Counsel.

The Purchaser shall have received from Nelson, Mullins, Riley & Scarborough LLP,
counsel for the Company and the Operating Partnership, an opinion, dated as of
the Closing, in a form approved by the Purchaser.

4.6              REIT Tax Certificate

The Purchaser shall receive from Mr. Roberts an officer’s certificate regarding
REIT qualification in a form approved by the Purchaser addressing the Company’s
satisfaction of the requirements to be taxed as a REIT for its taxable years
ended December 31, 2005 through December 31, 2008 and its sources of income
during its taxable year ended December 31, 2009. Mr. Roberts shall review the
REIT qualification tax certificate with counsel to the Purchaser prior to its
execution and delivery to the Purchaser.

4.7              No Shell Company Status.

The Company shall not be deemed to be an issuer described in Rule 144(i)(1)(i)
under the Securities Act.

4.8              No Suspension in Trading or De-Listing of Common Stock.

Trading in the Common Stock on the NYSE MKT exchange (the “NYSE MKT Exchange”)
shall not be suspended, the shares of the Common Stock shall not have been
de-listed from the NYSE MKT Exchange nor shall any such suspension of trading or
de-listing be pending or threatened by the NYSE MKT Exchange. In addition, the
Company shall have received a letter from the NYSE MKT Exchange confirming that
the Company’s late filing of its Quarterly Report on Form 10-Q for the quarter
ended September 30, 2014 shall not result in a de-listing of the Company’s
Common Stock. Notwithstanding the foregoing, if the Company has received a
notification of non-compliance from the NYSE MKT Exchange relating to the
Company’s late filing of its Quarterly Report on Form 10-Q for the quarter ended
September 30, 2014 and for any other reason, the conditions in this Section 4.8
shall be deemed satisfied if (i) the Company has submitted a written compliance
plan to the NYSE MKT Exchange that has been approved in writing by the Purchaser
setting forth a plan to correct all of the instances of non-compliance set forth
in such notification of non-compliance in accordance with applicable NYSE MKT
rules and regulations (a “Listing Compliance Plan”), (ii) the NYSE MKT Exchange
has accepted such Listing Compliance Plan in a written letter that states that
the Common Stock shall not be de-listed from the NYSE MKT Exchange if the
Company satisfies the terms and conditions set forth in the Listing Compliance
Plan, (iii) the Company has satisfied or is in the process of satisfying the
terms and conditions set forth in the Listing Compliance Plan in accordance with
the terms thereof and (iv) there is no other outstanding notice of
non-compliance from the NYSE MKT Exchange that has not been addressed in the
Listing Compliance Plan and there is no other pending or threatened suspension
in trading or delisting of the Company’s Common Stock by the NYSE MKT Exchange.

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4.9              Board of Directors.

As of the Closing, the Company shall have an authorized Board of Directors of
seven (7), and the Board of Directors shall be comprised of the Persons
designated pursuant to the terms of the Governance and Voting Agreement, six (6)
of whom shall not have previously served on the Board of Directors (the “New
Directors”).

4.10          Governance and Voting Agreement.

The Company, the Purchaser and the shareholder of the Company named as a party
thereto shall have executed and delivered the Governance and Voting Agreement.

4.11          Management Agreement.

The Company, the Operating Partnership and the Manager shall have executed and
delivered the Management Agreement.

4.12          Registration Rights Agreement.

The Company and the Purchaser shall have executed and delivered the Registration
Rights Agreement.

4.13          Tax Protection Agreement.

The Company, the Operating Partnership, the Purchaser and the Manager shall have
executed and delivered the Tax Protection Agreement.

4.14          Warrant Agreement.

The Company and the Purchaser shall have executed and delivered the Warrant
Agreement.

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4.15          Shareholder Vote.

The Requisite Company Vote shall have been obtained.

4.16          Resignation of Employees, Officers and Directors.

The Company shall have received duly executed resignation and release letters of
each member of the Board of Directors in the form of Exhibit J-1, as well as all
officers and employees of the Company in the form set forth in Exhibit J-2 to
this Agreement.

4.17          Employment Agreement.

The Company and Charles S. Roberts shall have executed and delivered the
Employment Agreement.

4.18          Ownership Limit Exemption

The Board of Directors of the Company shall have recommended the Charter
Amendment to the Company’s shareholders, the Requisite Shareholder Vote for the
Charter Amendment shall have been obtained and the Charter Amendment shall have
been duly authorized and filed with the Secretary of State of the State of
Georgia effective as of the Closing Date.

4.19          Waiver and Termination of Related Party Fees and Obligations.

The Company shall have received a written waiver from the Roberts Companies in
form and substance reasonably acceptable to the Purchaser, and in recordable
form if deemed necessary by the Purchaser in its reasonable discretion, pursuant
to which the Roberts Companies waive (a) any covenant on any of the Company’s
properties and any special rights that entitle the Roberts Companies to receive
any compensation or provide any right to participate in the development or
construction of any property and any related reimbursement, and (b) any other
Contract to participate in the development or construction of any property and
any related reimbursement. Such waiver shall exclude any rights of the Roberts
Companies to receive post-Closing compensation for work provided under Section
7.4 and under the Employment Agreement.

4.20          Secretary’s Certificate.

The Secretary of the Company shall have delivered to the Purchaser at the
Closing a certificate certifying (i) the Organizational Documents of the
Company, (ii) resolutions of the Board of Directors approving the Transaction
Agreements and the transactions contemplated under the Transaction Agreements
(including the Charter Amendment), and (iii) the certificate of the inspector of
election regarding the results of the Shareholders Meeting.

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5.                  Conditions of the Company’s Obligations at Closing.

The obligations of the Company to sell Shares to the Purchaser at the Closing
are subject to the fulfillment, on or before the Closing, of each of the
following conditions, unless otherwise waived:

5.1              Representations and Warranties.

Each of the representations and warranties of the Purchaser contained in this
Agreement (or in any of the other documents or instruments to be delivered in
connection herewith), to the extent qualified by a materiality qualification
contained in any such representation or warranty, shall (except for
representations and warranties made as of a specific date, which shall have been
complete and accurate as of such date) have been complete and accurate as of the
Effective Date and shall be complete and accurate as of the Closing Date as if
made as of the Closing Date, and, to the extent not qualified by any materiality
(or equivalent) qualification contained in any such representation or warranty,
shall (except for representations and warranties made as of a specific date,
which shall have been complete and accurate in all material respects as of such
date) have been complete and accurate in all material respects as of the date of
this Agreement and shall be complete and accurate in all material respects as of
the Closing as if made as of the Closing; provided that the representations and
warranties set forth in Sections 3.1, 3.2 and 3.3 shall be complete and accurate
in all respects.

5.2              Performance.

The Purchaser shall have (A) delivered all documents and other items required of
the Purchaser pursuant to this Section 5 and (B) performed and complied in all
material respects with all covenants, agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied with
by the Purchaser on or before the Closing.

5.3              No Litigation.

No investigation, suit, action or other proceeding shall be threatened in
writing or pending (i) by a Governmental Entity that seeks restraint,
prohibition, damages, monetary relief or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby or (ii)
before any Governmental Entity in which a Governmental Entity is a party that
would or is reasonably likely to result in a governmental investigation or
material governmental damages being imposed on the Company or any of its
Affiliates. There shall not have been any change in any Law that would
reasonably be expected to prevent the consummation of the transactions
contemplated by this Agreement.

5.4              Qualifications.

All authorizations, approvals or permits, if any, of any Governmental Entity of
the United States or of any state that are required in connection with the
lawful issuance and sale of the Shares pursuant to this Agreement shall be
obtained and effective as of the Closing.

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5.5              Shareholder Vote.

The Requisite Company Vote shall have been obtained.

6.                  Covenants.

6.1              Affirmative Covenants.

From the date hereof through the Closing Date, except as otherwise expressly
contemplated or prohibited by this Agreement or as consented to by the Purchaser
in writing, the Company and the Operating Partnership, as applicable, shall:

(a)                conduct its business in the ordinary course of business;

(b)               keep full, complete and accurate books and records in
accordance with past practice;

(c)                maintain its existence and good standing in its jurisdiction
of organization and in each jurisdiction in which the ownership or leasing of
its property or the conduct of its business requires such qualification;

(d)               duly and timely file or cause to be filed Tax Returns and all
other material reports and returns required to be filed with any Governmental
Entity and promptly pay or cause to be paid when due all Taxes and other
material assessments and governmental charges, including interest and penalties
levied or assessed, unless diligently contested in good faith by appropriate
proceedings;

(e)                as soon as reasonably practicable following the written
request of the Purchaser, the Company will use its commercially reasonable
efforts to file amended federal, state and local income tax returns for its
taxable years ended December 31, 2009 through December 31, 2013 reporting that
the Company was taxed as a C corporation for federal income tax purposes, unless
the filing of such amended federal, state and local income tax returns is
prohibited under the Code and the rules and regulations thereunder;

(f)                take such commercially reasonable action as may be necessary
to (i) preserve intact the current business organization of the Company, (ii)
preserve the tangible and intangible assets of the Company in good condition and
repair, casualty and normal wear and tear excepted, (iii) keep available the
services of the current officers, employees and agents of the Company, (iv)
maintain the relations and goodwill with suppliers, landlords, creditors,
regulators, employees and agents of, and others having business relationships
with the Company and (v) maintain all insurance policies in effect as of the
Effective Date;

(g)               continue its cash management practices in the ordinary course
of business;

(h)               comply in all material respects with all obligations under the
Material Contracts, except for such failures to comply as could not reasonably
be expected to result, individually or in the aggregate, in the incurrence by
the Company of any Liability in an amount in excess of $100,000;

35

 

(i)                 comply in all material respects with all Laws applicable to
the Company in the conduct of its business;

(j)                 continue to timely file (i) all necessary filings under the
Exchange Act (excluding periodic reports that cannot be filed until the reports
referenced in clause (ii) are filed); and (ii) any necessary amendments to
Company Exchange Act Reports relating to or arising out of the Company’s loss of
its REIT status for the 2009 fiscal year or subsequent periods as determined
after consultation with and as approved by the Purchaser, including to the
extent required under any Listing Compliance Plan that has been accepted by the
NYSE MKT Exchange as described in Section 4.8;

(k)               take no action that would cause it to be characterized as a
“shell company” or a company that has ceased operations under applicable SEC or
NYSE MKT rules;

(l)                 take no action which materially adversely affects the
ability of any party to (i) obtain the Requisite Company Vote and continued
listing on the NYSE MKT, or (ii) perform its covenants and agreements under this
Agreement; and

(m)             take no action which materially adversely affects the ability of
any party to perform its covenants and agreements under this Agreement.

6.2              Negative Covenants.

From the date hereof through the Closing, except as consented to by Purchaser in
writing and except for the execution, delivery and performance of the
Transaction Agreements and the filing of the Charter Amendment pursuant to this
Agreement, the Company and the Operating Partnership, as applicable, shall not:

(a)                (i) take any affirmative action that would result, or would
reasonably be expected to result, (x) in the occurrence of any of the changes or
events listed in Section 2.13 or (y) in a material change in the Company’s cash
management practices, or (ii) fail to take any reasonable action within their
control that would avoid such a result;

(b)               authorize for issuance or issue any additional shares of its
capital stock (including any OP Units) or securities convertible into or
exchangeable for shares of its capital stock, or issue or grant any right,
option or other commitment for the issuance of shares of its capital stock or of
such securities, or split, combine or reclassify any shares of its capital
stock; provided, however, that OP Redemptions and OP Exchanges shall not be
deemed to breach this covenant so long as such OP Redemptions result in the
issuance of Common Stock only and OP Exchanges result in the issuance of OP
Units only;

(c)                declare or pay any dividends or other distributions with
respect to any shares in its capital or redeem or purchase, directly or
indirectly, any shares of its capital stock (except as provided in
subsection (b) above), any options or any other rights to acquire any of its
equity interests, it being agreed and understood that the Closing Date Net Asset
Value will be reduced by an amount equal to the amount of any dividends or
distributions with respect to the shares of capital stock of the Company that
are consented to by the Purchaser and that are not for the benefit of the
Purchaser;

36

 

(d)               amend or modify the Organizational Documents of the Company,
the Operating Partnership or any Subsidiary;

(e)                create any subsidiary to acquire any shares or other equity
securities of any corporation or acquire any equity or ownership interest in any
business or entity (except as provided in subsection (b) above);

(f)                dispose of or permit to lapse any right to the use of any
material patent, trademark, trade name, service mark, license or copyright
(including any of the Company Intellectual Property), or dispose of or disclose
to any Person (other than customers, licensors and suppliers in the ordinary
course of business that are contractually bound to maintain the confidentiality
thereof), any trade secret, formula, process, technology or know-how of the
Company not heretofore a matter of public knowledge; or

(g)               (1) create, incur or assume any indebtedness (other than any
Preapproved Loan), (2) grant, create or incur any lien, or suffer to exist any
lien on any asset of any the Company that did not exist on the date hereof
(other than liens securing any Preapproved Loan), (3) incur any Liability or
obligation (absolute, accrued or contingent) in an amount that exceeds,
individually or in the aggregate with other Liabilities incurred, $100,000
(other than any Preapproved Loan), (4) write-off any guaranteed check, note or
account receivable, except in the ordinary course of business, (5) write-down
the value of any material asset or investment on the books or records of the
Company except for depreciation and amortization in the ordinary course of
business and for impairment losses as required or appropriate under the
Company’s critical accounting policies as described in the Company Exchange Act
Reports (any such impairment losses to be reflected in the Closing Date Net
Asset Value), (6) cancel any material debt (other than in connection with a
refinancing effected with a Preapproved Loan) or waive any material claim or
right, (7) make any commitment for any capital expenditure to be made on or
following the date hereof;

(h)               acquire or dispose of any investment in any real property or
any other asset in an amount in excess of $10,000 or enter into any agreement to
do the same;

(i)                 increase in any manner the base compensation of, or enter
into any new bonus, incentive or other compensation agreement or arrangement
with, any of its employees, officers, directors, third party contractors or
consultants, except as set forth in Schedule 2.11 or Schedule 2.17 of the
Disclosure Schedule;

(j)                 other than vesting eligibility requirements that change or
come into effect with the passage of time pursuant to the terms of Stock Plan,
pay or agree to pay any additional pension, retirement allowance or other
employee benefit under any benefit plan to any of its employees or consultants,
whether past or present, except as may be required by the terms of any
applicable plan or agreement in effect prior to the date hereof or except as
required by applicable Law;

37

 

(k)               adopt, amend or terminate any benefit plan applicable to and
relating to the Company resulting in additional payments or benefits provided by
the Company or materially increase the benefits provided under any Company
Benefit Plan applicable to and having a material effect on the Company, or
promise or commit to undertake any of the foregoing in the future;

(l)                 amend any existing employment agreement or enter into any
new employment agreement or pay any bonus, severance payment (except as set
forth in Schedule 2.17 of the Disclosure Schedule) or other compensation other
than current base salaries for officers and employees;

(m)             other than as provided in Section 6.1(d) and Section 6.1(e)or as
related to item 1 of Schedule 2.33 of the Disclosure Schedule, with respect to
Taxes, make or change any election, change an annual accounting period, adopt or
change any material accounting method, file any amended Tax Return, enter into
any closing agreement, settle Tax claims or assessments, surrender rights to
claim a refund of Taxes, consent to any extension or waiver of the limitation
period applicable to any Tax claim or assessment or appeal any real property Tax
assessment;

(n)               fail to perform in all material respects all of its
obligations, or default or suffer to exist any event or condition that with
notice or lapse of time or both could constitute a default, under any Material
Contract, except for such failures as could not reasonably be expected to
result, individually or in the aggregate, in the incurrence by the Company of
any Liability in excess of $100,000;

(o)               pay, discharge or satisfy any claim, liability or obligation
(absolute, contingent or otherwise) other than the payment, discharge or
satisfaction in the ordinary course of business of claims, liabilities and
obligations reflected or reserved against in the financial statements or
incurred in the ordinary course of business;

(p)               (i) take any action that could prevent the Company from
electing to be taxed as a REIT for its taxable year ending December 31, 2015, or
(ii) fail to take any reasonable action within their control that would enable
the Company to elect to be taxed as a REIT for its taxable year ending December
31, 2015;

(q)               erect any improvements, or make any modifications thereto, on
any leased real property of the Company;

(r)                 enter into any agreement that would be a Material Contract;
provided, however, that (i) the Purchaser acknowledges that the Company has
negotiated the terms and conditions of a proposed sale of the Bradley Park
property to an Affiliate of Roberts Properties, Inc., which terms and conditions
are set forth in a non-binding letter of intent dated as of October 27, 2014, a
true and correct copy of which has been provided by the Company to the
Purchaser, and the Purchaser hereby consents in writing to the execution and
delivery by the Company of a definitive purchase and sale contract with respect
to the sale of the Bradley Park property to an Affiliate of Roberts Properties,
Inc. that is in all material respects consistent with the form of definitive
purchase and sale contract provided by the Company to the Purchaser on October
27, 2014, which reflects the material terms and conditions set forth in such
non-binding letter of intent and (ii) the Company shall not commence any
construction on or other improvements to the Bradley Park property or incur
expenses in excess of $10,000 in the aggregate pursuant to the Reciprocal
Easements Agreement by and between Highway Nine Investors, LLC and Roberts
Properties Residential, L.P. dated November 3, 2014, which agreement is
identified on Schedule 2.21 of the Disclosure Schedule, without the prior
written consent of the Purchaser (it being agreed that any expenses incurred by
the Company pursuant to such Reciprocal Easement Agreement shall be reimbursed
by the purchaser of the Bradley Park property upon closing of the sale of the
Bradley Park property or, if not so reimbursed, deducted from the Closing Date
Net Asset Value); or

38

 

(s)                modify, amend, or terminate, or waive, release, compromise or
assign any rights or claims under, any Material Contract.

6.3              Access.

(a)                From the date hereof through the earlier to occur of the
Closing or the termination of this Agreement, the Company shall provide to the
Purchaser and such Purchaser’s authorized agents, Affiliates, officers and
representatives (including financing sources and their respective
representatives) (a) reasonable access to the books and records, customers,
properties, directors, managers and officers of the Company, including copies of
minutes of all meetings of directors and shareholders (and all actions by
written consent) from September 22, 2014 through the Closing; provided, however,
that such examinations and investigations shall be conducted during the
Company’s normal business hours and in the presence of a designated
representative of the Company and shall not unreasonably interfere with the
operations and activities of the Company; (b) copies of all Contracts, books and
records, documents relating to the terms of employment or any other matter
relating to any officer, director, manager or employee of any of the Company and
other existing documents and data as such Purchaser may reasonably request; and
(c) such additional financial, operating and other data and information as such
Purchaser may reasonably request.

(b)               Without limiting the foregoing, but subject to the other terms
of this Section 6.3, the Company shall consult with the Purchaser, and allow the
Purchaser the opportunity to reasonably participate in, at the Purchaser’s cost,
and keep the Purchaser reasonably informed with respect to, any Legal Action
brought by any shareholder of the Company against the Company or any of its
directors or officers. The Company shall also provide the officers of the
Purchaser with access to the personnel of the Company relating to
responsibilities and/or potential contractual arrangements of the Company to be
effective on or after the Closing. Neither the Company, the Purchaser, nor any
of their respective subsidiaries, shall be required to provide access to or to
disclose information (i) where such access or disclosure would jeopardize the
attorney-client privilege of such party or its subsidiaries or contravene any
Law, Order, fiduciary duty or binding agreement entered into prior to the date
of this Agreement or (ii) relating to its board’s officers’, employees’,
agents’, or financial advisers’ consideration or deliberation of the
transactions contemplated hereby. The parties hereto shall make appropriate
substitute disclosure arrangements under circumstances in which the restrictions
of part (i) of the preceding sentence apply.

39

 

(c)                A designee of the Purchaser shall be invited and entitled to
attend all meetings of the Board of Directors; provided, however, such
individuals (i) will attend such meetings in an observational capacity only and
shall not participate in any deliberations or decisions of such boards or
committees, (ii) shall be excluded from any portions of such meetings involving
(A) discussion relating to the transactions contemplated by this Agreement, (B)
matters for which the inclusion of such individuals would or could reasonably be
expected to violate applicable Law or Orders of a Governmental Entity, or (C)
discussions relating to matters which are otherwise reasonably deemed by the
Board of Directors to be confidential (together, “Board Confidential Matters”).
Board packages and notices shall be submitted by the Company to the Purchaser
for distribution to the Purchaser’s designated attendee simultaneously with
their submission to board members; provided that information relating to Board
Confidential Matters may be excluded therefrom. All information and materials
provided pursuant to this Agreement shall be subject to the provisions of the
Amended Mutual Non-Disclosure Agreement entered into between Avenue Investments,
L.P. and the Company as of January 9, 2014.

(d)               This Section 6.3 shall not affect or otherwise diminish or
obviate in any respect, or affect the Purchaser’s right to rely upon, any of the
representations, warranties or covenants contained in this Agreement.

6.4              Cooperation; Other Approvals.

(a)                Subject to the terms and conditions herein provided, each of
the parties hereto agrees to use commercially reasonable efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper and advisable under applicable Law, to consummate the
transactions contemplated by this Agreement as promptly as practicable.

(b)               Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties hereto agrees to use commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper, or advisable to consummate and make effective, the
transactions contemplated by this Agreement, including the obtaining of all
necessary actions or non-actions, waivers, consents and approvals from
Governmental Entities. Each of the Purchaser and the Company shall, upon request
by the other, furnish the other party with such necessary information and
reasonable assistance as such other party and its Affiliates may reasonably
request in connection with their preparation of necessary filings,
registrations, or submissions of information to any Governmental Entity in
connection with this Agreement and the transactions contemplated hereby.

(c)                Upon request by the Purchaser, the Company shall, and will
cause its counsel, financial advisors, accountants, agents and other authorized
representatives to, fully cooperate and promptly furnish to the Purchaser all
such information required to effectuate the timely filing with the SEC of all
reports, documents, consents or amendments thereto contemplated under this
Agreement or required under the Securities Act or Exchange Act, as applicable,
and the rules and regulations thereunder, as a result of or in connection with
the transactions contemplated under this Agreement.

40

 

6.5              Public Announcements.

The Company and the Purchaser shall cooperate and consult with each other prior
to issuing any press release or making any other public statement, announcement
or SEC filing with respect to this Agreement or the Transaction Agreements, and
shall not issue any such press release, public statement or announcement or make
any such SEC filing prior to review and approval (such approval not to be
unreasonably withheld or delayed) by the other; provided, however, that, with
respect to the Current Report on Form 8-K that the Company will be required to
file with the SEC within four (4) Business Days after the Effective Date
regarding this Agreement and the transactions contemplated hereby, the Company
shall provide the Purchaser with a draft of such Current Report on Form 8-K by
no later than 5:00 pm Eastern time on the second Business Day immediately
following the Effective Date and the Purchaser shall provide any written
comments it has on such draft Current Report on Form 8-K within one (1) Business
Day after the Purchaser receives such draft. The Company shall consider in good
faith and shall use its commercially reasonable best efforts to address any
comments provided by the Purchaser with respect to such Current Report on Form
8-K in a manner that is mutually acceptable to the Company and the Purchaser
before filing such Current Report on Form 8-K; provided, however, that, so long
as the information relating to the Purchaser and its Affiliates and contemplated
members contained in such Current Report on Form 8-K is consistent in all
material respects with any information with respect to the Current Report on
Form 8-K furnished by the Purchaser for inclusion therein, the Company shall not
be required under this Section 6.5 to delay filing such Current Report on Form
8-K beyond its due date in accordance with the requirements of Form 8-K under
the Exchange Act.

6.6              Update of Schedules; Knowledge of Breach.

From time to time up to the Closing, the Company shall promptly supplement or
amend any Disclosure Schedule that it has delivered in response to Section 2
with respect to (a) any matter first existing or occurring following the date
hereof that (i) if existing or occurring at or prior to the date hereof would
have been required to be set forth or described in the schedule or (ii) is
necessary to correct any information in the Disclosure Schedule that has been
rendered inaccurate thereby or (b) any matter that first is existing or
occurring prior to the date of this Agreement that was not previously set forth
in the Disclosure Schedule. No supplement or amendment to any Disclosure
Schedule shall have any effect for the purpose of determining satisfaction of
the conditions set forth in Section 5. No supplement or amendment to any
schedule delivered pursuant to the preceding sentence shall in any way limit the
ability of the Purchaser from making a claim for breach of this Agreement
(subject to Section 8.2(d)). Any supplement or amendment to any Disclosure
Schedule shall be deemed to have been delivered solely for informational
purposes and shall not be deemed to update the Disclosure Schedule or cure any
breach of any representation, warranty, covenant or other agreement for any
purpose under this Agreement or to prejudice any rights of the Purchaser under
this Agreement, including the right to claim that the representations and
warranties of the Company, when made on the date of this Agreement, were untrue.

41

 

6.7              Regulatory Matters.

As promptly as practicable following the Effective Date, the Company shall
prepare and file with the SEC the Company Proxy Statement. The Purchaser and the
Company will cooperate and consult with each other in the preparation of the
Company Proxy Statement. Without limiting the generality of the foregoing, the
Purchaser will use its commercially reasonable efforts to furnish the Company
with the information relating to it (and to the New Directors) required by the
Exchange Act and the rules and regulations promulgated thereunder to be set
forth in the Company Proxy Statement three (3) Business Days after the Effective
Date. At least five (5) Business Days prior to the filing of the Company Proxy
Statement, the Company shall provide a draft of the Company Proxy Statement to
the Purchaser for review. No filing of the Company Proxy Statement with the SEC
shall occur without the written approval of the Purchaser or its counsel, which
approval shall not be unreasonably withheld, delayed or conditioned. The Company
shall consider in good faith and shall use its commercially reasonable best
efforts to address any comments provided by the Purchaser with respect to such
draft of the Company Proxy Statement in a manner that is mutually acceptable to
the Company and the Purchaser before filing it with the SEC. Notwithstanding the
foregoing, if the Company has given the Purchaser a draft of the Company Proxy
Statement for review as provided above and the Purchaser or its counsel shall
not have provided written comments on such draft of the Company Proxy Statement
within five (5) Business Days thereafter, the Company may assume that the
Purchaser has approved of such draft and may proceed to file the Company Proxy
Statement with the SEC without being deemed to have breached this Section 6.7
(but only if the information relating to the Purchaser and its Affiliates and
contemplated members and to the New Directors is consistent in all material
respects with any information furnished by the Purchaser). The Company shall use
its commercially reasonable best efforts to respond as promptly as practicable
to and resolve any written or oral comments from the SEC as promptly as
practicable after such filing and to file the Company Proxy Statement in
definitive form as soon as practicable thereafter, and each party agrees to
consult and cooperate with the other party in that regard. Upon filing of the
Company Proxy Statement in definitive form with the SEC, the Company shall
thereafter mail or deliver the Company Proxy Statement to its shareholders. If
at any time prior to the Closing any event occurs or information relating to the
Company, or any of its affiliates, directors or officers, or the Purchaser or
any of its Affiliates, officers, or the New Directors, should be discovered by
the Company or the Purchaser that should be set forth in an amendment or
supplement to the Company Proxy Statement, so that such document would not
include any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, the applicable party shall promptly
disclose the same to the other, and the Company shall as soon as practicable
file an appropriate amendment or supplement describing such information and, to
the extent required by applicable Law, cause the same to be disseminated to the
Company’s shareholders. No amendment or supplement to the Company Proxy
Statement shall be filed without the approval of the Purchaser, which approval
shall not be unreasonably withheld, delayed or conditioned.

42

 

6.8              Shareholders Meeting.

The Company shall, and shall cause its Board of Directors to, (i) take all
action in accordance with the federal securities laws, applicable state Law, the
Company’s articles of incorporation and the Company’s bylaws necessary to call
and give notice of a special meeting of its shareholders (the “Shareholders
Meeting”) for the purpose of obtaining the Requisite Company Vote within
thirty-four (34) days following the date of the filing date of the definitive
Company Proxy Statement; (ii) use its commercially reasonable best efforts (x)
to cause the Shareholders Meeting to be convened and held on the scheduled date,
and (y) to obtain the Requisite Company Vote; and (iii) subject to Section 6.10,
include in the Company Proxy Statement the recommendation of the Board of
Directors that the Company’s shareholders approve this Agreement, the issuance
of the Shares, the warrants pursuant to the Warrant Agreement and the shares of
Common Stock issuable upon any exercise of such warrants, the Charter Amendment,
and the other transactions contemplated herein and in the other Transaction
Agreements (the “Board Recommendation”). Notwithstanding anything to the
contrary contained in this Agreement, the Company shall not be required to hold
the Shareholders Meeting if this Agreement is terminated pursuant to Section 8
prior to the scheduled time of the Shareholders Meeting.

6.9              Reservation of Common Stock.

The Company agrees at all times from the Effective Date until the Closing and
the issuance of the Shares to reserve a sufficient number of shares of Common
Stock to fulfill its obligations under this Agreement.

6.10          No-Shop.

(a)                Except as expressly set forth in this Section 6.10, prior to
the Closing or termination of this Agreement, the Company will not, and will
cause its Subsidiaries not to, and will not authorize, encourage, permit or
instruct any of its representatives or Affiliates to, directly or indirectly,
(a) solicit, initiate or encourage or assist in the making, submission or
announcement of, or take any action that could reasonably be expected to lead
to, any proposal by a third party (other than the Purchaser) to acquire any
assets or capital stock of the Company (i) through any form of recapitalization
transaction or any sale, merger, consolidation, business combination, tender or
exchange offer, spin-off or liquidation, (ii) through a purchase of the assets
of the Company, (iii) through a purchase of any shares of any class or series of
capital stock or limited partnership interests in the Operating Partnership, or
(iv) through any other transaction designed to acquire the business of the
Company, any assets or any part thereof or any capital stock of the Company
(each, an “Acquisition Proposal”), (b) engage, continue or participate in any
discussions or negotiations, or provide any information to any Person (other
than the Purchaser or the Purchaser’s representatives), regarding any
Acquisition Proposal; or (c) agree to, approve, execute, enter into or become
bound by any letter of intent or other contract or understanding between or
among the Company or any of its subsidiaries and any Person that is related to
or provides for any Acquisition Proposal (each, an “Acquisition Agreement”).
(The marketing of one of more of the Company’s existing properties for sale, and
the negotiation of terms of any such sale, shall not be deemed to be soliciting,
initiating, encouraging or assisting in an Acquisition Proposal, nor shall any
agreement for the sale thereof be deemed to be an Acquisition Agreement.) The
Company shall, and shall direct its Affiliates and representatives to,
immediately cease any solicitations, discussions or negotiations with any Person
(other than the Purchaser) that has made or indicated an intention to make an
Acquisition Proposal and request that each such Person destroy any information
in connection therewith.

43

 

(b)               Notwithstanding Section 6.10(a), before the receipt of the
Requisite Company Vote, the Company, directly or indirectly through any
representative, may, subject to Section 6.10(c) and (d), (i) participate in
negotiations or discussions with any third party that has made after the date
hereof (and not withdrawn) a bona fide Acquisition Proposal in writing that is
not the result of a breach of Section 6.10(a) and that the Board of Directors
believes in good faith, after consultation with outside legal counsel and the
Company’s financial advisor (if any), constitutes or would reasonably be
expected to result in a Superior Proposal (as defined below) and (ii) thereafter
furnish to such third party non-public information relating to the Company or
any of its Subsidiaries pursuant to an executed confidentiality agreement (a
copy of which shall be provided to the Purchaser) on terms no less favorable to
the Company than the confidentiality agreement between the Company and the
Purchaser, provided that, in each case referred to in the foregoing clauses (i)
and (ii), only if the Board of Directors determines in good faith, after
consultation with outside legal counsel, that the failure to take such action
would reasonably be expected to cause the Board of Directors to be in breach of
its fiduciary duties under applicable Law. Nothing contained herein shall
prevent the Company from disclosing to the Company’s shareholders a position
contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act
with regard to an Acquisition Proposal, if the Company determines, after
consultation with outside legal counsel, that failure to disclose such position
would constitute a violation of applicable Law (provided that any such
disclosure that constitutes a Company Adverse Recommendation Change must be made
in accordance with this Section 6.10). “Superior Proposal” means a bona fide
written Acquisition Proposal received after the date of this Agreement and not
in violation of this Section 6.10 that the Board of Directors determines in good
faith (after consultation with outside legal counsel and the Company’s financial
advisor, if any) is more favorable from a financial point of view to the holders
of the Common Stock than the transactions contemplated by this Agreement, taking
into account (a) all financial considerations (including the obligation to pay
any Termination Fee the Company may incur as a result of terminating this
Agreement pursuant to Section 8), (b) the identity of the third party making
such Acquisition Proposal, (c) the anticipated timing, conditions (including any
financing condition or the reliability of any debt or equity funding
commitments) and prospects for completion of such Acquisition Proposal, (d) the
other terms and conditions of such Acquisition Proposal and the implications
thereof on the Company, including relevant legal, regulatory and other aspects
of such Acquisition Proposal deemed relevant by the Board of Directors and (e)
if applicable, any revisions to the terms of this Agreement proposed by the
Purchaser during the Notice Period set forth in Section 6.10(d).

(c)                The Board of Directors shall not take any of the actions
referred to in clauses (i) or (ii) of Section 6.10(b) unless the Company shall
have delivered to the Purchaser a prior written notice advising the Purchaser
that it intends to take such action. The Company shall notify the Purchaser
promptly (but in no event later than twenty-four (24) hours) after it obtains
Knowledge of the receipt by the Company of any Acquisition Proposal or any
inquiry or request that would reasonably be expected to lead to an Acquisition
Proposal. In such notice, the Company shall identify the third party making, and
details of the material terms and conditions of, any such Acquisition Proposal,
inquiry or request. The Company shall keep the Purchaser reasonably informed, on
a reasonably current basis, of the status and material terms of any such
Acquisition Proposal, inquiry or request, including any material amendments or
proposed amendments as to price or other material terms thereof. The Company
shall provide the Purchaser with at least forty-eight (48) hours prior notice of
any meeting of the Board of Directors (or such lesser notice as is provided to
the members of the Board of Directors) at which the Board of Directors is
reasonably expected to consider any Acquisition Proposal. The Company shall
promptly provide the Purchaser with all non-public information concerning the
Company or its Subsidiaries provided to any third party in connection with an
Acquisition Proposal to the extent such information has not been previously
provided to the Purchaser.

44

 

(d)               Except as expressly set forth in this Section 6.10(d), the
Board of Directors shall not (1) recommend an Acquisition Proposal, (2) fail to
make the Board Recommendation, (3) withdraw, amend, modify or qualify, in a
manner adverse to the Purchaser, the Board Recommendation, or (4) resolve or
agree to take any of the foregoing actions (any of the foregoing, a “Company
Adverse Recommendation Change”). Notwithstanding anything to the contrary in
this Section 6.10, if at any time prior to the receipt of the Requisite Company
Vote, the Board of Directors shall have determined in good faith that an
Acquisition Proposal constitutes a Superior Proposal, the Board of Directors may
(x) make a Company Adverse Recommendation Change or (y) authorize the Company to
enter into an Acquisition Agreement and terminate this Agreement pursuant to
Section 8.1(d)(iii), in each case, with respect to such Superior Proposal if:
(i) the Company notifies the Purchaser, in writing, at least three (3) Business
Days (the “Notice Period”) before taking such action, which notice shall state
expressly that the Company has received an Acquisition Proposal that the Board
of Directors intends to declare a Superior Proposal and that the Board of
Directors intends to make a Company Adverse Recommendation Change and/or the
Company intends to terminate this Agreement and enter into an Acquisition
Agreement with respect to such Superior Proposal; (ii) the Company describes the
material terms of such Acquisition Proposal in such notice, attaches to such
notice the most current version of the proposed agreement (which version shall
be updated on a prompt basis) and the identifies the third party making such
Superior Proposal; (iii) the Company shall, and shall cause its Subsidiaries to,
and shall use its reasonable best efforts to cause its and its Subsidiaries’
representatives to, during the Notice Period, negotiate exclusively with the
Purchaser in good faith to make such adjustments in the terms and conditions of
this Agreement so that such Acquisition Proposal ceases to constitute a Superior
Proposal, if the Purchaser, in its discretion, proposes to make such
adjustments; and (iv) the Board of Directors determines in good faith, after
consulting with outside legal counsel and the Company’s financial advisor (if
any), that (A) such Acquisition Proposal continues to constitute a Superior
Proposal after taking into account any adjustments agreed to by the Purchaser
during the Notice Period in the terms and conditions of this Agreement (the
Company shall consider any Termination Fee payable pursuant to Section 8 when
evaluating any adjustments made by the Purchaser to any terms and conditions of
this Agreement) and (B) that the failure of the Board of Directors to make such
Company Adverse Recommendation Change and/or cause the Company to enter into
such Acquisition Agreement with respect to such Superior Proposal would
reasonably be expected to cause the Board of Directors to be in breach of its
fiduciary duties under applicable Law. A subsequent amendment to any financial
or other material term in connection with any Acquisition Proposal shall require
the Company to comply again with the procedures set forth in this
Section 6.10(d).

45

 

(e)                The Company agrees that any violations of or the taking of
any actions that are inconsistent with the provisions of this Section 6.10 by
any of the Company’s Representatives shall be deemed to be a breach of this
Section 6.10 by the Company. Unless this Agreement shall have been terminated in
accordance with Section 8.1, the obligation of the Company to call, give notice
of, convene and hold the Shareholders Meeting, to mail the Company Proxy
Statement and to solicit from the Company’s shareholders proxies in respect of
the approval of this Agreement, the issuance of the Shares and the other
transactions contemplated hereby shall not be affected by a Company Adverse
Recommendation Change or the receipt of an Acquisition Proposal.

6.11          Directors’ and Officers’ Indemnification and Insurance.

(a)                The Company agrees that all rights to indemnification,
advancement of expenses and exculpation by the Company now existing in favor of
each Person who is now, or has been at any time prior to the date hereof or who
becomes prior to the Effective Time an officer or director (or manager) of the
Company and its Subsidiaries (each an “Indemnified Party”) as provided in the
Organizational Documents of the Company and its Subsidiaries, in each case as in
effect on the date of this Agreement, and pursuant to the indemnification
agreements between the Company and each of its officers and directors listed in
subsection (h) of Schedule 2.35 of the Disclosure Schedule (the “Director and
Officer Indemnification Agreements”), each as in effect on the date hereof,
shall continue in effect in accordance with their terms, without further action,
and shall survive the transactions contemplated hereby after the Closing Date,
and, if any proceeding is pending or asserted or any claim made during such
period, until the final disposition of such proceeding or claim.

(b)               For six (6) years after the Closing Date, to the fullest
extent permitted under applicable Law, the applicable Organizational Documents
in effect on the Closing Date and the Director and Officer Indemnification
Agreements, the Company shall indemnify, defend and hold harmless each
Indemnified Party against all losses, claims, damages, liabilities, fees,
expenses, judgments and fines arising in whole or in part out of actions or
omissions in their capacity as such occurring at or prior to the Closing Date
(and for Charles S. Roberts thereafter through the date on which he ceases to be
an officer or director of the Company), including in connection with the
transactions contemplated by this Agreement, and shall reimburse each
Indemnified Party for any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such losses,
claims, damages, liabilities, fees, expenses, judgments and fines as such
expenses are incurred, subject to the Company’s receipt of an undertaking by
such Indemnified Party to repay such legal and other fees and expenses paid in
advance if it is ultimately determined in a final and non-appealable judgment of
a court of competent jurisdiction that such Indemnified Party is not entitled to
be indemnified under applicable Law; provided, however, that the Company will
not be liable for any settlement effected without the Company’s prior written
consent (which consent shall not be unreasonably withheld or delayed).

(c)                The Company shall (i) maintain in effect for a period of six
(6) years after the Closing Date, if available, the current policies of
directors’ and officers’ liability insurance maintained by the Company
immediately prior to the Closing Date (provided that the Company may substitute
therefor policies, of at least the same coverage and amounts and containing
terms and conditions that are not less advantageous in the aggregate to the
directors and officers of the Company and its Subsidiaries when compared to the
insurance maintained by the Company as of the date hereof), or (ii) obtain as of
the Closing Date “tail” insurance policies with a claims period of six (6) years
from the Closing Date with at least the same coverage and amounts and containing
terms and conditions that are not less advantageous in the aggregate to the
directors and officers of the Company and its Subsidiaries, in each case with
respect to claims arising out of or relating to events which occurred before or
at the Closing Date (including in connection with the transactions contemplated
by this Agreement). Notwithstanding the foregoing, if the coverage described in
this Section 6.11(c) cannot be obtained, or can only be obtained by paying
aggregate premiums in excess of 250% of the annual amount currently paid by the
Company for such coverage, the Company shall only be required to provide as much
coverage as can be obtained by paying aggregate premiums equal to 250% of the
aggregate annual amount currently paid by the Company for such coverage.

46

 

(d)               The obligations of the Company under this Section 6.11 shall
survive the consummation of the transactions contemplated by this Agreement and
shall not be terminated or modified in such a manner as to adversely affect any
Indemnified Party to whom this Section 6.11 applies without the consent of such
affected Indemnified Party (it being expressly agreed that the Indemnified
Parties to whom this Section 6.11 applies shall, from and after the Closing, be
third party beneficiaries of this Section 6.11, each of whom may enforce the
provisions of this Section 6.11).

(e)                If the Company or any of its successors or assigns
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger
(including but not limited to pursuant to Section 7.2 below) or (ii) transfers
all or substantially all of its properties and assets to any Person, then, and
in either such case, proper provision shall be made so that the successors and
assigns of the Company shall assume all of the obligations of the Company set
forth in this Section 6.11. The agreements and covenants contained herein shall
not be deemed to be exclusive of any other rights to which any Indemnified Party
is entitled, whether pursuant to Law, Contract or otherwise. Nothing in this
Agreement is intended to, shall be construed to or shall release, waive or
impair any rights to directors’ and officers’ insurance claims under any policy
that is or has been in existence with respect to the Company or its officers or
directors, it being understood and agreed that the indemnification provided for
in this Section 6.11 is not prior to, or in substitution for, any such claims
under any such policies.

(f)                Notwithstanding anything in this Agreement to the contrary,
the covenants and obligations set forth in this Section 6.11 are those of the
Company, and neither the Purchaser nor any of its Affiliates (other than, after
the Closing, the Company) shall have any liability to the Company, any
Indemnified Party or any other Person arising out of or with respect to this
Section 6.11.

6.12          Repayment of North Springs, Bradley Park and Highway 20 Loans.

The Purchaser agrees that, contingent upon the occurrence of the Closing, the
Company will, promptly upon the Closing, pay off in full the outstanding
principal and accrued interest and other amounts owing to the lenders with
respect to the recourse mortgage indebtedness on the North Springs, Bradley Park
and Highway 20 properties. Such indebtedness will be repaid with a portion of
the Gross Proceeds unless the Purchaser elects, in its discretion, to assist the
Company in obtaining a new credit facility (the “Credit Facility”) and the
parties are able to obtain such Credit Facility effective as of the Closing, in
which case the Purchaser may elect, in its discretion, to use borrowings under
the Credit Facility to pay off all or a portion of the recourse mortgage
indebtedness on the North Springs, Bradley Park and Highway 20 properties in
lieu of using a portion of the Gross Proceeds. Any such Credit Facility will be
on commercially reasonable terms that are mutually acceptable to the Purchaser
and the Company. In the event the Purchaser elects to assist the Company in
obtaining such Credit Facility, the Company agrees to use commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the Purchaser in doing, all
things reasonably necessary, proper, or advisable to assist in the process of
obtaining the Credit Facility. The Purchaser shall have no obligation to obtain
or to assist the Company in obtaining a Credit Facility.

47

 

6.13          Escrow of Purchaser Funds.

On the date of the execution and delivery of this Agreement by all of the
parties, the Purchaser agrees to deposit in an escrow account with New York Land
Title Company, a division of Commonwealth Land Title Insurance Company (the
“Escrow Agent”), subject to the terms of an escrow agreement among the
Purchaser, the Company and the Escrow Agent in the form attached hereto as
Exhibit K (the “Escrow Agreement”) the sum of $750,000 as security for its
obligation to pay the Reverse Termination Fee and the Expense Reimbursement if
the Purchaser becomes required to pay the Reverse Termination Fee pursuant to
Section 8.2(b) hereof and the Expense Reimbursement pursuant to Section 8.2(b)
hereof.

6.14          Update to Closing Date Net Asset Value Exhibit.

Not fewer than three (3) Business Days before the Closing Date, the Company
shall prepare and deliver to the Purchaser an updated calculation of the Closing
Date Net Asset Value set forth on Exhibit A, which update shall reflect the same
(i) aggregate estimated market value of the properties to be sold in the
Property Dispositions, (ii) estimated Selling Costs, and (iii) the value
attributed to the Company’s public status, each as shown on Exhibit A hereto as
of the Effective Date, and shall reflect the actual cash, restricted cash, note
receivable and Liabilities of the Company, calculated in accordance with GAAP,
as of the Closing Date. The Purchaser shall have the right to review and comment
on such updated calculation of the Closing Date Net Asset Value, and, upon the
mutual agreement of the Company and the Purchaser regarding such updated
calculation of the Closing Date Net Asset Value, such updated calculation shall
be substituted on Exhibit A for the calculation of the Closing Date Net Asset
Value that is set forth on Exhibit A hereto as of the Effective Date.

48

 

7.                  Post-Closing Covenants.

7.1              Securities Laws Compliance.

Following the Closing, the Company shall make any filings required to be filed
by the Company by the federal securities laws or the securities or blue sky laws
of any other applicable jurisdiction.

7.2              Reincorporation and Name Change.

The Company agrees to use its commercially reasonable best efforts to
reincorporate as a Maryland corporation at such time as the Manager recommends,
and to change the name of the Company in connection with such reincorporation to
a new name that is acceptable to the Manager. Immediately upon the completion of
the Closing, the Company shall change its corporate name, and shall cause each
Subsidiary to change its corporate or entity name, to a name that the Purchaser
has approved and that does not include the word “Roberts” or any derivative
thereof.

7.3              Proxy Statement and Reverse Stock Split.

As soon as practicable after the Closing, the Company shall file a proxy
statement with the SEC requesting the shareholders of the Company to approve an
amendment to the Company’s articles of incorporation providing for an increase
in the authorized number of shares of Common Stock to 100,000,000 (after giving
effect to the reverse stock split referenced later in this sentence) and a
reverse stock split with a ratio of approximately 1-for-10, the exact ratio (or
range to be approved by the shareholders so that the Board of Directors will
have discretion to select a ratio within that range) to be determined at the
discretion of the Board of Directors.

7.4              Post-Closing Transition Services.

For a period of 180 days after the Closing Date, the Company shall have the
right to request the reasonable assistance of employees of Roberts Properties,
Inc. with respect to transition issues and questions relating to the Company’s
properties and operations, and such employees shall use commercially reasonable
efforts to assist the Company with such requests during normal business hours on
a consulting basis in accordance with the terms and conditions of the
reimbursement arrangements between the Company and the Roberts Companies as
described in the Company Exchange Act Reports and in Exhibits 10.8.1, 10.8.2 and
10.8.3 to the Company’s Annual Report on Form 10-K for the Fiscal Year Ended
December 31, 2013.

8.                  Termination.

8.1              Events of Termination.

This Agreement may be terminated prior to the Closing as follows:

(a)                by mutual consent of the Company and the Purchaser
(notwithstanding any approval of this Agreement by the shareholders of the
Company);

49

 

(b)               by the Company or the Purchaser (notwithstanding any approval
of this Agreement by the shareholders of the Company), upon notice to the other
party, if:

(i)                 there shall be in effect a final nonappealable Order of a
Governmental Entity of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement; provided, however, that the right to terminate this Agreement
pursuant to this Section 8.1(b)(i) shall not be available to any party whose
breach of any representation, warranty, covenant or agreement set forth in this
Agreement has been the cause of, or resulted in, the issuance, promulgation,
enforcement or entry of any such Order;

(ii)               the transactions contemplated by this Agreement have not been
consummated on or prior to the later of (A) the 35th day after the date on which
the definitive Company Proxy Statement is first mailed to the Company’s
shareholders and (B) seven (7) days after (x) the Company’s receipt of a notice
under Section 8.1(c)(ii) or (iii) for a breach that is capable of being cured or
(y) the Purchaser’s receipt of a notice under Section 8.1(d)(i) or (ii) for a
breach that is capable of being cured; provided, however, that the right to
terminate this Agreement pursuant to this Section 8.1(b)(ii) shall not be
available to any party (x) whose breach of any representation, warranty,
covenant or agreement set forth in this Agreement has been the cause of, or
resulted in, the failure of the transactions contemplated by this Agreement to
be consummated on or before such date or (y) who has received a notice referred
to in clause (B) of this Section 8.1(b)(ii) and who has not cured such breach to
the reasonable satisfaction of the party who provided such notice; or

(iii)             this Agreement has been submitted to the shareholders of the
Company for adoption at a duly convened Shareholders Meeting and the Requisite
Company Vote shall not have been obtained at such meeting (including any
adjournment or postponement thereof);

(c)                by the Purchaser if:

(i)                 (A) a Company Adverse Recommendation Change shall have
occurred, or (B) the Company shall have authorized, entered into, or announced
its intention to enter into, an Acquisition Agreement;

(ii)               there shall have been a breach of any representation or
warranty on the part of the Company set forth in this Agreement such that the
condition to the Closing of the transactions contemplated by this Agreement set
forth in Section 4.1 would not be satisfied; provided that, if capable of being
cured, such failure to be complete and accurate is not cured to the reasonable
satisfaction of the Purchaser within seven (7) days after the receipt by the
Company of written notice of such failure;

(iii)             there shall have been a breach of any covenant or agreement on
the part of the Company or the Operating Partnership set forth in this Agreement
such that the condition to the Closing of the transactions contemplated by this
Agreement set forth in Section 4.2 would not be satisfied, which failure to
perform, if capable of being cured, has not been cured to the reasonable
satisfaction of the Purchaser within seven (7) days following receipt by the
Company of written notice of such failure to perform; or

50

 

(iv)             the Company incurred any indebtedness constituting a
Preapproved Loan pursuant to clause (b) under the definition of Preapproved Loan
without obtaining the prior written consent of the Purchaser;

(d)               by the Company if:

(i)                 there shall have been a breach of any representation or
warranty on the part of the Purchaser set forth in this Agreement such that the
condition to the Closing of the transactions contemplated by this Agreement set
forth in Section 5.1 would not be satisfied; provided that, if capable of being
cured, such failure to be complete and accurate is not cured to the reasonable
satisfaction of the Company within seven (7) days after the receipt by the
Purchaser of written notice of such failure;

(ii)               there shall have been a breach of any covenant or agreement
on the part of the Purchaser set forth in this Agreement such that the condition
to the Closing of the transactions contemplated by this Agreement set forth in
Section 5.2 would not be satisfied, which, if capable of being cured, failure to
perform has not been cured to the reasonable satisfaction of the Company within
seven (7) days following receipt by the Purchaser of written notice of such
failure to perform;

(iii)             prior to the receipt of the Requisite Company Vote, the Board
of Directors authorizes the Company to enter into an Acquisition Agreement in
respect of a Superior Proposal in accordance with Section 6.10(d); provided that
the Company shall have paid any amounts due to the Purchaser pursuant to
Section 8.2, in accordance with the terms, and at the times, specified therein.

8.2              Termination Fees.

(a)                If (i) the Purchaser terminates this Agreement pursuant to
Section 8.1(c)(ii) due to an Intentional Breach (as defined below) of any
representation or warranty by the Company, or (ii) the Purchaser terminates this
Agreement pursuant to Section 8.1(c)(iii), and the Company does not then have
the right to terminate this Agreement pursuant to Section 8.1(d)(i) or Section
8.1(d)(ii), then the Company shall pay, by wire transfer of immediately
available funds to an account designated in writing by the Purchaser, a
termination fee in an amount equal to five hundred thousand dollars ($500,000).
If the Purchaser terminates this Agreement pursuant to Section 8.1(c)(i) or the
Company terminates this Agreement pursuant to Section 8.1(d)(iii), then the
Company will pay, by wire transfer of immediately available funds to an account
designated in writing by the Purchaser, a termination fee in an amount equal to
seven hundred fifty thousand dollars ($750,000) (in each case, the “Termination
Fee”);

For purposes of this Section 8.2, “Intentional Breach” shall mean, with respect
to any breach of a representation or warranty contained in this Agreement, a
breach of such representation or warranty that has been made with the Knowledge
of the breaching Party.

51

 

(b)               If (i) the Company terminates this Agreement pursuant to
Section 8.1(d)(i) due to an Intentional Breach of any representation or warranty
by the Purchaser or (ii) the Company terminates this Agreement pursuant to
Section 8.1(d)(ii) (other than as a result of the failure by the Purchaser to
perform its obligation set forth in the third sentence of Section 6.7), and the
Purchaser does not then have the right to terminate this Agreement pursuant to
Section 8.1(c)(ii) or Section 8.1(c)(iii), then the Purchaser shall pay, by wire
transfer of immediately available funds to an account designated in writing by
the Company, a termination fee in an amount equal to five hundred thousand
($500,000) (the “Reverse Termination Fee”); provided, however, that the Company
shall only be entitled to the Reverse Termination Fee if the Purchaser is not
entitled to terminate this Agreement under Section 8.

(c)                In no event shall (i) a Termination Fee be payable more than
once or (ii) a Reverse Termination Fee be payable more than once. If the Company
or the Purchaser is obligated to pay a Termination Fee or Reverse Termination
Fee, as applicable, then the applicable party shall also pay, by wire transfer
of immediately available funds to an account designated in writing by the
applicable party, $250,000 (the “Expense Reimbursement”) to the party that is
entitled to receive the Termination Fee or Reverse Termination Fee, as
applicable, as reimbursement for the out-of-pocket expenses, including but not
limited to legal fees, incurred by the party entitled to receive the Termination
Fee or Reverse Termination Fee, as applicable.

(d)               If the Purchaser terminates this Agreement pursuant to Section
8.1(c)(iv), then the Purchaser shall be entitled to the immediate return and
release of its deposit with the Escrow Agent as referenced in Section 6.13. For
the avoidance of doubt, the Company shall not be entitled to any Reverse
Termination Fee or Expense Reimbursement in the event the Purchaser terminates
this Agreement pursuant to Section 8.1(c)(iv).

(e)                Notwithstanding anything to the contrary contained in this
Agreement, nothing in this Agreement shall establish a right on the part of any
party hereto to seek or pursue any claim, damages or other remedy for a default
or breach by another party hereto of its obligations hereunder other than to
exercise the termination right set forth in Section 8.1 hereof and the
accompanying right to be paid a Termination Fee or Reverse Termination Fee, as
applicable, by the non-terminating party as set forth in Section 8.2(a) and
Section 8.2(b) hereof and the right to receive the Expense Reimbursement from
the non-terminating party as set forth in Section 8.2(c) hereof.

9.                  Miscellaneous.

9.1              Further Assurances.

In case at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, each party to this
Agreement shall take all such reasonably necessary action to (a) execute and
deliver to each other such other documents and (b) do such other acts and things
as a party may reasonably request for the purpose of carrying out the intent of
this Agreement and the documents referred to in this Agreement.

52

 

9.2              Non-survival of Representations, Warranties and Agreements.

None of the representations, warranties, covenants and agreements set forth in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Closing, except for those covenants and agreements contained in this
Agreement that expressly by their terms apply or are to be performed in whole or
in part after the Closing.

9.3              Successors and Assigns.

The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Neither party
may assign its rights or obligations hereunder without the prior written consent
of the other party, which consent shall not be unreasonably withheld or delayed.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. No assignment shall
relieve the assigning party of any of its obligations hereunder.

9.4              Governing Law.

This Agreement shall be governed by the laws of the State of Georgia.

9.5              Counterparts.

This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument. Counterparts may be delivered via facsimile, electronic mail
(including pdf) or other transmission method and any counterpart so delivered
shall be deemed to have been duly and validly delivered and be valid and
effective for all purposes.

9.6              Titles, Subtitles and Interpretation.

The titles and subtitles used in this Agreement are used for convenience only
and are not to be considered in construing or interpreting this Agreement.
Whenever the words “include,” “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation.” A reference in this Agreement to $ or dollars is to U.S. dollars.
The words “hereof,” “herein” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.

9.7              Notices.

All notices and other communications given or made pursuant to this Agreement
shall be in writing and shall be deemed effectively given upon the earlier of
actual receipt or: (a) personal delivery to the party to be notified, (b) when
sent, if sent by electronic mail during normal business hours of the recipient,
and if not sent during normal business hours, then on the recipient’s next
business day, (c) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one (1)
business day after deposit with a nationally recognized overnight courier,
freight prepaid, specifying next business day delivery, with written
verification of receipt. All communications shall be sent to the respective
parties at their address or email address as set forth on the signature page
hereto, or to such other address or email address as subsequently modified by
written notice given in accordance with this Section 9.7.

53

 

9.8              No Finder’s Fees.

Each party represents that it neither is nor will be obligated for any finder’s
fee or commission in connection with this transaction except for the Purchaser’s
obligation to pay The CenterCap Group LLC, which shall not be a deduction from
the Gross Proceeds. The Purchaser agrees to indemnify and to hold harmless the
Company from any liability for any commission or compensation in the nature of a
finder’s or broker’s fee arising out of this transaction (and the costs and
expenses of defending against such liability or asserted liability) for which
the Purchaser or any of its officers, employees, or representatives is
responsible. The Company agrees to indemnify and hold harmless the Purchaser
from any liability for any commission or compensation in the nature of a
finder’s or broker’s fee arising out of this transaction (and the costs and
expenses of defending against such liability or asserted liability) for which
the Company or any of its officers, employees or representatives is responsible.

9.9              Attorneys’ Fees.

If any action at law or in equity (including arbitration) is necessary to
enforce or interpret the terms of any of the Transaction Agreements, the
prevailing party shall be entitled to reasonable attorneys’ fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.

9.10          Amendments and Waivers.

At any time prior to the Effective Date, this Agreement may be amended or
supplemented in any and all respects, whether before or after receipt of the
Requisite Company Vote, by written agreement signed by each of the parties
hereto; provided, however, that following the receipt of the Requisite Company
Vote, there shall be no amendment or supplement to the provisions of this
Agreement which by Law or in accordance with the rules of any relevant
self-regulatory organization would require further approval by the holders of
the Common Stock without such approval. Any amendment or waiver effected in
accordance with this Section 9.10 shall be binding upon the Purchaser and each
transferee of the Shares (or the Common Stock issuable upon conversion thereof),
each future holder of all such securities, and the Company.

9.11          Severability.

The invalidity or unenforceability of any provision hereof shall in no way
affect the validity or enforceability of any other provision.

54

 

9.12          Delays or Omissions.

No delay or omission to exercise any right, power or remedy accruing to any
party under this Agreement, upon any breach or default of any other party under
this Agreement, shall impair any such right, power or remedy of such
non-breaching or non-defaulting party nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any party of any breach or default under
this Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by Law or otherwise afforded to any party, shall be cumulative
and not alternative.

9.13          Entire Agreement.

This Agreement (including the Exhibits hereto) and the other Transaction
Agreements constitute the full and entire understanding and agreement between
the parties with respect to the subject matter hereof, and any other written or
oral agreement relating to the subject matter hereof existing between the
parties are expressly canceled.

9.14          Waiver of Jury Trial.

EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION
AGREEMENTS, THE SHARES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING
NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND
THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY
FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH
ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

[Signatures on following page]

55

 

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

  ROBERTS REALTY INVESTORS, INC.                 By:   /s/ Charles S. Roberts   
  Name:    Charles S. Roberts        (print)     Title: President   

 

  Address:   375 Northridge Road       Suite 330       Atlanta, GA  30350      
Attention:  Charles S. Roberts       Telephone:  770-394-6000      
Email:  cr@robertsproperties.com  

 

 

  ROBERTS PROPERTIES RESIDENTIAL, L.P.     By: Roberts Realty Investors, Inc.,
its G.P.                 By:   /s/ Charles S. Roberts      Name:    Charles S.
Roberts       (print)             Title: President   

 

  Address:   375 Northridge Road       Suite 330       Atlanta, GA  30350      
Attention:  Charles S. Roberts       Telephone:  770-394-6000      
Email:  cr@robertsproperties.com  

 

 

 

 

 

  A-III INVESTMENT PARTNERS LLC                 By:   /s/ Edward Gellert     
Name: Edward Gellert        (print)             Title: Authorized Signatory   

 

  Address:       c/o Avenue Capital Group       399 Park Avenue       New York,
New York 10022       Attention:  Edward Gellert       Telephone:  212-850-7534  
    Email:  egellert@avenuecapital.com    

 

 

 

Exhibit A

CLOSING DATE NET ASSET VALUE

 

    TOTALS Land value   $ 24,438,000   Add: Prepaid sewer tap fees   $ 1,825,000
  Add: Reimbursable development costs   $ 400,000   Total value of real estate
assets   $ 26,663,000   Less: Mortgage loans outstanding   ($ 10,280,000 ) Net
Asset Value of Real Estate Assets   $ 16,383,000   Add: Cash balance   $ 585,884
  Add: Restricted cash   $ 164,901   Add: Prepaid items related to post-Closing
periods     $104,975 (1) Add: Note receivable   $ 15,000   Add: Public entity
value   $ 3,000,000   Less: Other Liabilities / Company's estimated use of cash
through the Closing Date   ($ 1,607,465 )(2) Less: Estimated "Selling Costs" (as
defined in the Purchase Agreement)   ($ 1,079,487 ) NET ASSET VALUE   $
17,566,808   TOTAL SHARES AND UNITS OUTSTANDING     12,547,720   NET ASSET VALUE
PER SHARE   $ 1.40  

 

NOTES:

 

  (1) Includes the following prepaid expenses for post-Closing period, subject
to adjustment based on actual Closing Date:

 

Prepaid Expenses   Amount Prepaid insurance   $ 56,750   Prepaid rent   $ 2,648
  Lease deposit   $ 20,577   NYSE MKT listing fee   $ 25,000   Total Prepaid
Expenses   $ 104,975  

 

  (2) Excludes the following Liabilities that will be accrued as of the Closing
Date that relate to the post-Closing period, subject to adjustment based on
actual Closing Date:

 

Excluded Accrued Liabilities   Amount 2015 Annual Report and Meeting   $ 52,500
  Annual SOX Compliance Testing   $ 19,707   Annual SEC Reporting   $ 20,613  
Annual Audit and Tax fees   $ 115,166   Accrued Legal for SEC Reporting   $
59,166   Total Excluded Accrued Liabilities   $ 267,152  

 

 

EXHIBIT B

FORM OF EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and effective as of the ___
day of ___________, 20___, by and between ROBERTS REALTY INVESTORS, INC., a
Georgia corporation (the “Company”) and CHARLES S. ROBERTS (“Employee”).

 

WHEREAS, the Company, Roberts Properties Residential, L.P, a Georgia limited
partnership (together with the Company, the “Seller Parties”) and A-III
Investment Partners LLC, a Delaware limited liability company (the “Purchaser”)
have entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”),
dated as of November 19, 2014, pursuant to which, among other things, (i) on the
date hereof, the Purchaser has purchased from the Company, and the Company has
issued and sold to the Purchaser, ____________ shares (the “Closing Shares”) of
common stock, $.01 par value per share, of the Company, (ii) the Company has
agreed, in general terms and subject to the terms and conditions of the Stock
Purchase Agreement (including Section 1.3 thereof), to issue additional shares
of Common Stock to the Purchaser if, as a result of a post-closing true-up that
takes into account, among other things, the actual aggregate net sale proceeds
received by the Company for its four Legacy Properties, the adjusted net asset
value of the Company is less than the estimated aggregate net asset value
determined as of the Closing Date (the “True-up”), and (iii) the Company will
grant to Purchaser a warrant to purchase up to $38 million of additional shares
of Common Stock at a purchase price per share that is determined after giving
effect to the True-Up; and

WHEREAS, as an essential element of the willingness of the Seller Parties to
agree to the True-up, the Stock Purchase Agreement provides that the Company and
Employee shall enter into this Agreement to provide that Employee shall
supervise the disposition by the Seller Parties of the Legacy Properties,
subject to the terms and conditions of this Agreement; and

WHEREAS, Employee is willing to assume the duties provided below to achieve the
business goals of the Seller Parties and the Purchaser as reflected in the
True-up if and only if he has the broad authority described below;

NOW, THEREFORE, in consideration of the respective representations, warranties,
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereto agree as follows:

 1. Condition of Employment; Title, Duties and Authority.

  (a) The Company agrees to employ Employee, and Employee accepts such
employment, subject to the terms and condition of this Agreement. Employee shall
be an officer of the Company and shall have the title of Executive Vice
President. Employee shall conduct a marketing process (which may, but shall not
be required in all cases to, include the use of third party commercial real
estate brokers) with respect to the sale of the following properties that are
currently owned by the Company (the “Legacy Properties”): North Springs,
Northridge, Highway 20 and Bradley Park. Employee shall be responsible for the
marketing process, including positioning the properties for sale, identifying
buyers, and negotiating terms of sale that are customary for similarly situated
properties. All sales shall be subject to approval by the Board of Directors of
the Company, including by a majority of the independent members of the Board of
Directors of the Company, which approval shall not be unreasonably withheld or
delayed, subject to their fiduciary duties. The Company acknowledges that
Employee shall not be required to, and in fact will not, devote his full-time
business attention to his duties and responsibilities hereunder.

 

 

  (b) Employee shall keep the Company’s Chief Executive Officer informed,
through telephone calls and emails, on a regular basis (and in any event no less
frequently than bi-weekly), of the status of the marketing process with respect
to the Legacy Properties. Employee shall provide copies to the Chief Executive
Officer (and any other officer of the Company designated by the Chief Executive
Officer) of the following written communications to the extent that Employee
deems them to be material: term sheets, letters of intent, indications of
interest, offers, due diligence requests, responses to due diligence requests
and other material written communications with potential purchasers.

  (c) Without the express prior written consent of the Chief Executive Officer
and, if applicable, the prior approval of the Board of Directors, which consent
or approval shall not be unreasonably withheld or delayed, subject to their
fiduciary duties, Employee shall not be authorized to enter into, on behalf of
the Company or any of its affiliates, any agreement, contract, term sheet,
letter of intent, indication of interest or other binding or non-binding
agreement with a potential buyer of a Legacy Property with respect to any
potential sale of a Legacy Property, and Employee shall promptly provide the
Chief Executive Officer copies of all such documents once they are signed by
Employee on behalf of the Company.

  (d) Employee is expressly authorized, without the prior written consent of the
Chief Executive Officer or the prior approval of the Board of Directors, to
engage, on behalf of the Company or any of its affiliates, any service provider,
vendor, legal counsel, consultant, civil engineer, environmental consultant,
architect, land planner, broker, surveyor, photographer, marketing firm, website
designer or developer or other third party as Employee deems appropriate,
necessary or helpful in selling the Legacy Properties, so long as such
engagements are on terms that are commercially reasonable and do not, when taken
together with all other Selling Costs (as such term is defined on Exhibit A
hereto), cause the aggregate Selling Costs to exceed $810,362 (the “Budgeted
Selling Costs”). In that regard, Employee is authorized to retain, on behalf of
the Company or any of its affiliates, without the need for any further approval
by the Chief Executive Officer, the services of employees of Roberts Properties,
Inc. and Roberts Properties Construction, Inc. (the “Roberts Companies”) to
assist with the sale of the Legacy Properties, including assisting Employee in
negotiating letters of intent and sales contracts in that regard, providing
potential buyers with due diligence materials, responding to requests by
potential buyers, reviewing the closing documents, closing the sales and other
related matters. The Company shall pay for such services of employees of the
Roberts Companies in accordance with the Company’s current reimbursement
arrangement with the Roberts Companies, and such reimbursements shall be part of
the Selling Costs. Employee shall promptly provide the Chief Executive Officer
copies of all agreements engaging third parties as described in this Section
1(d) once they are signed by Employee on behalf of the Company.

2

 

  (e) Employee shall provide to the Company monthly statements of payment and
reimbursement obligations and other Selling Costs incurred by Employee on behalf
of the Company in accordance with this Agreement, together with copies of
invoices, receipts and other reasonable documentation, and the Company shall pay
or reimburse such amounts within 30 days after Employee provides such
documentation to the Company. For the avoidance of doubt, Employee shall not
have the right to bind the Company under any of the contractual arrangements
referenced in Section 1(d) above or otherwise, to incur any costs or to obligate
the Company to pay any amounts if and to the extent that any such contractual
arrangements, costs or amounts, when taken together with all other Selling
Costs, cause the aggregate Selling Costs to exceed the Budgeted Selling Costs.

  (f) The Company acknowledges that Employee’s business location shall be
metropolitan Atlanta and, although Employee may be required to travel from time
to time in the course of performing his duties for the Company, Employee shall
not be required to relocate his residence or his place of business outside of
the metropolitan Atlanta area.

  2. Term and Termination.

  (a) Term; Termination. The term of this Agreement shall commence on the date
hereof and, unless sooner terminated as hereinafter provided, shall continue
until the first (1st) anniversary of the date hereof (the “Term”).
Notwithstanding the foregoing, this Agreement shall terminate earlier than the
first (1st) anniversary of the date hereof in the event any of the following
occurs prior to such first (1st) anniversary: (i) the death of Employee or
long-term disability of Employee; (ii) termination of this Agreement by the
Company for Cause in accordance with Section 2(b) below; or (iii) the closing of
the sale of all of the Legacy Properties. Even if all of the Legacy Properties
have not been sold by the first (1st) anniversary of the date hereof, this
Agreement and Employee’s employment with the Company shall nonetheless terminate
on the first (1st) anniversary of the date hereof, and the Company’s other
officers shall immediately assume responsibility for the disposition of any
remaining Legacy Properties.

 

  (b) Termination for Cause. The Company shall have the right to terminate
Employee’s employment at any time prior to expiration of the Term upon delivery
of written notice of termination for Cause (as defined below) to Employee (which
notice shall specify in reasonable detail the basis upon which such termination
is made), such employment to terminate immediately upon delivery of such notice
(provided that Employee has received any prior notice and opportunity to cure
required by this Section 2(b)), unless otherwise specified by the Board of
Directors of the Company, if a majority of the independent members of the Board
of Directors determines that Employee’s employment hereunder shall be terminated
for Cause. “Cause” shall be deemed to have occurred if Employee: (i) has
misappropriated, stolen or embezzled funds or property from the Company or an
affiliate of the Company, (ii) has been convicted of or entered a plea of “nolo
contendere” for a felony which, in the reasonable opinion of a majority of the
independent members of the Board of Directors, brings Employee or the Company
into disrepute or is likely to cause material harm to the Company’s (or any
affiliate of the Company) business, financial condition or prospects, (iii) has
materially violated or breached any material provision of this Agreement and
failed to cure such breach or violation to the reasonable satisfaction of the
Board of Directors within 30 days after receipt of written notice of such breach
or violation, or (iv) has violated any material law or regulation.

 

3

 

  (c) Effects of Termination. Upon the expiration of the Term or the earlier
termination of Employee’s employment hereunder, all rights and obligations of
the parties arising under this Agreement shall immediately cease, except as
follows:

 

  (i) if this Agreement is terminated prior to expiration of the one-year Term
because of (1) the death of Employee or long-term disability of Employee; or (2)
the earlier closing of the sale of all of the Legacy Properties, the Company
shall (A) remain obligated to continue to pay the remaining amount of Employee’s
Base Salary (as defined in Section 3(a) below) to Employee or Employee’s estate,
as applicable, as if he had been employed through the first (1st) anniversary of
the date hereof, which amount shall be paid to Employee or his estate, as
applicable, in a lump sum not later than thirty (30) days after the termination
of this Agreement, (B) promptly reimburse Employee under Section 3(b) below for
all reasonable business expenses incurred through the date of termination of
this Agreement and (C) promptly reimburse the Roberts Companies for all amounts
that were incurred under, and in accordance with the terms and conditions of,
Section 1(d) above through the date of termination of this Agreement; and

 

  (ii) Sections 4, 5, 6, 7 and 8 of this Agreement shall survive its termination
or expiration.

 

  3. Compensation and Expenses.

  (a) Base Salary. During the Term, the Company shall pay Employee a base salary
at the rate of $250,000 per annum (the “Base Salary”), payable on a monthly
basis in equal monthly installments in accordance with customary payroll
policies and procedures, including withholding requirements.

  (b) Business Expenses. During the Term, Employee shall be authorized to incur,
and shall be reimbursed for, all reasonable out-of-pocket business expenses
incurred by Employee in connection with the performance of his duties and
responsibilities under this Agreement. “Reasonable” is defined as that which
enables Employee to perform his duties for the Company (including meals and
travel) comfortably but not extravagantly. Employee shall provide to the Company
receipts or other reasonable documentation of such expenses for any individual
expenditure over $25, and the Company shall reimburse Employee for such expenses
promptly and in any event not later than 30 days after Employee provides such
documentation to the Company. Employee shall provide the Chief Executive Officer
with a monthly written summary of all reimbursable business expenses incurred by
Employee.

4

 

  (c) Employee Compensation and Related Expenses Not Part of Budgeted Selling
Costs. Employee and the Company acknowledge that the Base Salary and related
employment expenses incurred by the Company in connection with the employment of
the Employee under this Agreement, and all business expenses incurred personally
by Employee that are payable or reimbursable by the Company under this
Agreement, shall not be Selling Costs that count towards the aggregate Budgeted
Selling Costs under this Agreement, but such costs and expenses shall be deemed
to be Selling Costs for purposes of the True-Up under the Stock Purchase
Agreement. (Payments to the Roberts Companies shall not be deemed to be business
expenses incurred personally by Employee.)

 4. Severability. In the event that any portion of this Agreement is determined
    to be invalid or unenforceable for any reason, such determination shall in
    no way affect the enforceability of other portions of the Agreement, which
    shall remain in full force and effect. To the extent that a court or other
    body construing this Agreement can render it enforceable by modifying any
    clause, while continuing to preserve the intent of the parties to protect
    their legitimate business interests, then the parties intend that the court
    or other body shall do so.
 5. Assignment. The rights and obligations of the Company under this Agreement
    shall inure to the benefit of the successors and permitted assigns of the
    Company. Neither party may assign its rights or obligations under this
    Agreement without the prior written consent of the other party; provided,
    however, that the Company may assign its rights and obligations hereunder to
    any successor in connection with any sale, transfer or other disposition of
    all or substantially all of the Company’s assets, stock, or business,
    whether by merger, share exchange, asset sale, consolidation or otherwise.
 6. Governing Law. The validity and effect of this Agreement and the rights and
    obligations of the parties hereto shall be construed and determined in
    accordance with Georgia law excluding the “conflicts of law” rules thereof.
    Each party hereby expressly consents to the exclusive jurisdiction and venue
    of the state and federal courts located in Atlanta, Georgia for any lawsuit
    filed by either party arising from or relating to this Agreement.
 7. Waiver of Jury Trial. The parties waive any right to a trial by jury in any
    action or proceeding to enforce or defend any rights under this Agreement or
    under any instrument, document or agreement delivered in connection herewith
    or hereafter and agree that any such action or proceeding shall be tried
    before a court and not before a jury.

5

 

 8.  Entire Agreement. This Agreement contains the entire agreement of the
     parties with respect to the subject matter hereof and supersedes and merges
     all prior agreements and discussions between the parties in that regard.
     This Agreement may not be changed or amended orally but only by an
     agreement in writing signed by both the parties.
 9.  Opportunity to Consult Counsel. Employee acknowledges receipt of a copy of
     this Agreement prior to the date hereof and also acknowledges having had
     ample time to consult counsel of Employee’s choice concerning the terms and
     conditions of this Agreement.
 10. Counterparts. This Agreement may be executed in one or more counterparts,
     all of which shall be considered one and the same agreement, and shall
     become effective when one or more counterparts have been signed by each
     party and delivered to each other party. Copies of executed counterparts
     transmitted by telecopy, telefax or other electronic means shall be
     considered original executed counterparts for purposes of this Section,
     provided that receipt of copies of such counterparts is confirmed.

[Signatures are on the following page]

 

6

 

IN WITNESS WHEREOF, the Company and Employee have duly executed this Agreement
as of the day and year first written above.

 

THE COMPANY:

 

ROBERTS REALTY INVESTORS, INC.

 

 

 

By:       

Name:

Title:

 

Address for Notices:

c/o Avenue Capital Group

399 Park Avenue

New York, New York 10022

Attention: Edward Gellert

Telephone: 212-850-7534

Email: egellert@avenuecapital.com

 

 

EMPLOYEE:

 

CHARLES S. ROBERTS

 

 

 

     

 Signature

 

 

Address for Notices:

Charles S. Roberts

375 Northridge Road

Suite 330

Atlanta, Georgia 30350

Telephone: (770) 394-6000

Email: cr@robertsproperties.com

 

 

7

 

Exhibit A

SELLING COSTS

 

Defined terms used in this Exhibit A and not defined shall have the meanings set
forth in the Employment Agreement to which it is attached.

For purposes of this Exhibit A and the Employment Agreement, “Selling Costs”
means (i) sales commissions, and (ii) all costs incurred by the Company or by
Employee on behalf of the Company in connection with the performance of
Employee’s duties under the Employment Agreement and the marketing and sale of
the Legacy Properties (excluding Base Salary, reimbursable business expenses
incurred by Employee, and other employment expenses incurred by the Company in
connection with the employment of Employee), including but not limited to
(A) costs incurred in connection with the engagement of any service provider,
vendor, legal counsel, consultant, civil engineer, environmental consultant,
architect, land planner, broker, surveyor, photographer, marketing firm, website
designer or developer or other third party, (B) transfer taxes, (C) all costs
incurred by the Company in connection with the services of employees of the
Roberts Companies to assist with the sale of the Legacy Properties and
(D) miscellaneous sales and closing costs.

 

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EXHIBIT C

FORM OF GOVERNANCE AND VOTING AGREEMENT

 

THIS GOVERNANCE AND VOTING AGREEMENT (this “Agreement”) is made as of the ____
day of ___________, 20___ by and among Roberts Realty Investors, Inc., a Georgia
corporation (the “Company”), A-III Investment Partners LLC, a Delaware limited
liability company (the “Purchaser”), and Charles S. Roberts, an individual
(“Roberts” and, together with the Company and the Purchaser, the “Parties” and
each a “Party”).

WHEREAS, the Company, Roberts Properties Residential, L.P, a Georgia limited
partnership, and the Purchaser have entered into a Stock Purchase Agreement (the
“Stock Purchase Agreement”), dated the 19th day of November, 2014, pursuant to
which, among other things, the Purchaser has agreed to purchase from the
Company, and the Company has agreed to issue and sell to the Purchaser,
_______________ shares of common stock, $.01 par value per share, of the Company
(the “Common Stock”) on the terms and subject to the conditions set forth in the
Stock Purchase Agreement; and

WHEREAS, upon the closing of the transactions contemplated by the Stock Purchase
Agreement (the “Closing”), the Purchaser and Roberts will each beneficially own
and have the power to direct the voting or disposition of certain shares of the
Company’s capital stock; and

WHEREAS, the Parties desire to enter into this Agreement to provide for the
composition of the Board of Directors of the Company (the “Board”) immediately
following the Closing and to provide for certain other rights and obligations of
the Purchaser, the Company and Roberts with respect to certain shares of the
Company’s capital stock beneficially owned by the Purchaser and Roberts, all in
accordance with the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the respective representations, warranties,
covenants and agreements set forth in the Stock Purchase Agreement and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:

1.                  Initial Board Composition and Representation. In connection
with the Closing, the Company agrees to take all Necessary Actions (as defined
below) to effectuate the following results:

(a)                At the Closing, the existing Board shall take all Necessary
Actions to increase the number of directors on the Board from five to seven
effective upon the Closing, thereby creating two vacancies on the Board. In
accordance with the provisions of the Georgia Business Corporation Code, the
increase or decrease in the number of directors shall be so apportioned among
the classes as to make all classes as nearly equal in number as possible. In
that regard, the class of 2015 shall have two directors, the class of 2016 shall
have three directors and the class of 2017 shall have two directors. Each of the
seven directors shall be appointed into a particular class as described in
Sections 1(b) through 1(f) below.

(b)               Prior to the Closing, all five directors serving on the Board
immediately prior to the Closing (including Roberts, subject to Section 1(f)
below) shall deliver letters of resignation and release to the Company, and the
Company shall deliver copies of such letters to the Purchaser in accordance with
the requirements of the Stock Purchase Agreement. Such resignations shall be
effective only if the Closing occurs and otherwise at the times and in the
sequence described in Sections 1(c) through 1(f) below.

 

1

 

(c)                At or immediately following the Closing, the resignations of
Weldon R. Humphries and Wm. Jarell Jones shall become effective, and the members
of the Board at that time shall appoint ___________ and _____________ (the
“Purchaser Directors”) to fill two of the vacancies in the class of 2017.
Neither of the Purchaser Directors (or any replacement) shall be required to
qualify as an Independent Director (as defined below).

(d)               Immediately after the events described in the preceding
Section 1(c), the resignations of John L. Davis and Charles R. Elliott shall
become effective, and the members of the Board at that time shall appoint
______________ and ______________, each qualifying as an “Independent Director”
as defined below as of the Closing Date (each a “New Independent Director”), to
fill the two vacancies in the class of 2016. If either such person is unable or
unwilling to serve, another person designated in writing by the Purchaser and
qualifying as an “Independent Director” as defined below shall be appointed to
the class of 2016.

(e)                Immediately after the events described in the preceding
Sections 1(c) and 1(d) above, the resignation of Roberts (in which he shall
resign as a director and as an officer of the Company and its Affiliates (as
defined below)) shall become effective, and the members of the Board at that
time shall appoint ______________ and ______________, each qualifying as an
“Independent Director” as defined below as of the Closing Date (each a “New
Independent Director”), to fill the two newly created vacancies in the class of
2015. If either such person is unable or unwilling to serve, another person
designated in writing by the Purchaser and qualifying as an “Independent
Director” as defined below shall be appointed to the class of 2015. The two (2)
New Independent Directors in the class of 2015, together with the two (2) New
Independent Directors in the class of 2016, shall, collectively, be the “New
Independent Directors.”

(f)                Immediately after the events described in the preceding
Sections 1(c), 1(d) and 1(e) above, Roberts shall immediately thereafter be
re-appointed as a director of the Company (but not as the Chairman of the Board)
in the Class of 2016 and re-appointed and employed as an officer of the Company
in accordance with that certain Employment Agreement between the Company and
Roberts dated as of the Closing Date (the “Employment Agreement”).

(g)               For purposes of this Agreement, a Person shall be deemed to be
an “Independent Director” if he or she satisfies the independence standards of
both (1) the Company’s articles of incorporation and bylaws, as in effect on the
date hereof and as of the Closing Date, and (2) the NYSE MKT or such other
national securities exchange or quotation system on which the Company’s
securities may become listed for trading or quotation (each an “Independent
Director”). Each New Independent Director must qualify as an Independent
Director throughout his or her term as a director. If at any time, the Board
determines that any Company director (other than Roberts and the Purchaser
Directors), does not qualify as an Independent Director, the Company shall give
prompt written notice to the Parties of such determination and the basis
therefor. Upon making such determination, or receiving notice thereof, the
Purchaser shall designate a replacement director, and the Company shall take
such actions as are necessary to cause such existing director to resign from the
Board, and the qualifying replacement director to be appointed or elected to the
Board, as soon as reasonably practical. To effectuate such requirement, each of
the New Independent Directors shall execute and deliver to the Company on the
Closing Date, and any replacement director therefor shall execute and deliver to
the Company on the date of his or her designation, a letter of resignation, in
the form attached as Exhibit A hereto, which resignation shall automatically
take effect upon a determination by the Board that such director has ceased to
qualify as an “Independent Director.”

 

2

 

(h)               For purposes of this Agreement, “Necessary Actions” shall
mean, with respect to a specified result, all actions that are permitted by
applicable law and applicable stock exchange rules as shall be necessary to
cause such result. Such actions shall include, but are not limited to: (i)
adoption by the Board of resolutions or other similar action by the Board as
shall be required in order to increase the number of directors on the Board as
described in this Agreement, including but not limited to approving an amendment
to the Company’s bylaws; (ii) appointment by the Board of the individuals
identified under this Agreement to fill vacancies on the Board; (iii) including
individuals identified under this Agreement in the slate of nominees to the
Board recommended to the shareholders of the Company for election as directors;
(iv) soliciting proxies or consents in favor of the election of individuals
nominated for election to the Board; (v) voting (whether at an annual or special
meeting) or providing a written consent or proxy with respect to shares of
Common Stock; (vi) calling or attending meetings in person or by proxy for the
purposes of obtaining a quorum and causing the adoption of shareholders’
resolutions and amendments to the organizational documents of the Company; (vii)
causing members of the Board to act in a certain manner or causing them to be
removed if they do not act in such a manner; (viii) executing agreements and
instruments; and (ix) making or causing to be made, with governmental,
administrative or regulatory authorities, all filings, registrations or similar
actions that are required to achieve such result.

(i)                 For purposes of this Agreement, “Affiliate” shall mean, with
respect to any specified person, any other person who, directly or indirectly,
controls, is controlled by, or is under common control with such person,
including, without limitation, any general partner, managing member, officer or
director of such person.

2.                  Continuing Board Composition and Representation.

(a)                Purchaser Directors. Subject to Section 2(c) below, the
Company agrees to take all Necessary Actions to nominate each of the two
Purchaser Directors (or any replacement thereof designated by the Purchaser) for
re-election to the Board at each subsequent meeting of the shareholders of the
Company held to consider a vote on the election of directors of the class in
which such Purchaser Director serves, and not to take any action that is
designed to interfere with such election or re-election of each such Purchaser
Director to the Board. Only such individuals designated in accordance with
Section 1(c) above, or in accordance with the provisions of this Section 2,
shall be eligible for nomination or election as successors to the Purchaser
Directors. Subject to Section 2(c), if at any time a vacancy occurs on the Board
with respect to the directorship of either of the Purchaser Directors (by reason
of such director’s death, disability, resignation, removal or otherwise), the
Company agrees to take all Necessary Actions to cause a replacement director,
designated by the Purchaser (or its permitted assignees), to be appointed to
fill such vacancy promptly following his or her designation by the Purchaser (or
permitted assignees) hereunder. If the Purchaser fails to designate a
replacement director to be appointed to fill such vacancy, the Nominating and
Governance Committee shall be permitted to designate a nominee (who shall
qualify as an Independent Director) for election to the Board to fill such
vacancy at the next succeeding annual meeting of shareholders of the Company. If
the Purchaser fails to designate a replacement director to be appointed to fill
such vacancy and the Nominating and Governance Committee designates a nominee
for election to the Board to fill such vacancy as provided in the immediately
preceding sentence, the Purchaser’s rights under Sections 1 and 2 hereof shall
not be terminated and shall apply at the next succeeding meeting of shareholders
of the Company at which an election of directors occurs.

 

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(b)               New Independent Directors. Subject to Sections 2(c) below, the
Company agrees to take all Necessary Actions to nominate each of the four New
Independent Directors (or any replacement thereof designated by the Purchaser)
for re-election to the Board at each subsequent meeting of the shareholders of
the Company held to consider a vote on the election of the class in which each
such New Independent Director serves, and not to take any action that is
designed to interfere with such election or re-election of each such director to
the Board. Only such individuals designated in accordance with Section 1(d) and
1(e) above, or in accordance with the provisions of this Section 2, shall be
eligible for nomination or election as successors to the New Independent
Directors. Subject to Section 2(c), if at any time a vacancy occurs on the Board
with respect to the directorship of any of the New Independent Directors (by
reason of such director’s death, disability, resignation, removal or otherwise),
the Company and the Purchaser agree to take all Necessary Actions to cause a
replacement director, designated by the Purchaser (or its permitted assignees),
to be appointed to fill such vacancy promptly following his or her designation
by the Purchaser (or permitted assignees) hereunder. If the Purchaser fails to
designate a replacement director to be appointed to fill such vacancy, the
Nominating and Governance Committee shall be permitted to designate a nominee
(who shall qualify as an Independent Director) for election to the Board to fill
such vacancy at the next succeeding annual meeting of shareholders of the
Company. If the Purchaser fails to designate a replacement director to be
appointed to fill such vacancy and the Nominating and Governance Committee
designates a nominee for election to the Board to fill such vacancy as provided
in the immediately preceding sentence, the Purchaser’s rights under Sections 1
and 2 hereof shall not be terminated and shall apply at the next succeeding
meeting of shareholders of the Company at which an election of directors occurs.

(c)                Termination of Purchaser Board Designation Rights.
Notwithstanding any other provision in Section 2(a) or Section 2(b) above:

(i)                 The obligations of the Company under this Agreement to take
all Necessary Actions to appoint, or to nominate for election, the Purchaser
Directors, or to appoint or nominate replacements thereto, and to take all
Necessary Actions to appoint any Purchaser Director to serve on the Committees
(as defined below), in each case as designated by the Purchaser in accordance
with this Agreement, shall only apply if the Purchaser and its members, and
their respective Affiliates, collectively maintain continuous beneficial
ownership of an aggregate of at least 100% of the shares of Common Stock
initially acquired at the Closing (subject to adjustment for stock splits, stock
dividends and other similar adjustments to the shares of Common Stock).
“Beneficial ownership” shall have the meaning provided in Rule 13d-3 promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended.

 

4

 

(ii)               The obligations of the Company under this Agreement to take
all Necessary Actions to nominate the New Independent Directors, or to take all
Necessary Actions to appoint or nominate replacements thereto, and to take all
Necessary Actions to appoint any new Independent Director to serve on the
Committees (as defined below), in each case as designated by the Purchaser in
accordance with this Agreement, shall only apply if the Purchaser and its
members, and their respective Affiliates, collectively maintain continuous
beneficial ownership of at least 100% of the shares of Common Stock initially
acquired at the Closing (subject to adjustment for stock splits, stock dividends
and other similar adjustments to the shares of Common Stock).

(d)               Designation of Nominees. The Company shall give the Purchaser
written notice (the “Company Designation Request”) (i) requesting that the
Purchaser designate directors pursuant to the terms of Sections 2(a) and 2(b),
(ii) stating the Company’s intention to take all Necessary Actions to include
such designees in its upcoming proxy statement to shareholders, and (iii)
providing the date on which the proxy statement is to be mailed (the “Mailing
Date”), such Company Designation Request to be delivered not less than 45 days
prior to the Mailing Date. To designate a director pursuant to the provisions of
Sections 2(a) and 2(b), the Purchaser shall be required to have given the
Company written notice of the Purchaser’s designees, together with all
information relating to such designee or designees required to be included by
the Company in such proxy statement under applicable laws, including the federal
proxy rules (the “Designation Notice”), on or before the tenth day prior to the
Mailing Date (the “Designation Date”). If the Purchaser shall have failed to
designate nominees for election to fill any of the Purchaser Director or New
Independent Director slots on the Board as provided in this Section 2 by the
Designation Date, such director nominees shall instead be designated by the
Nominating and Governance Committee not later than two days before the Mailing
Date (the “Final Designation Date”), and such director shall, if elected, (i)
serve until the end of such director’s term and until his or her successor is
duly elected and qualifies, (ii) be an Independent Director (if not an Purchaser
Director), (iii) assume all Committee positions previously held by the prior
Purchaser Director or New Independent Director, as applicable, and (iv)
otherwise be deemed the Purchaser Director or New Independent Director, as
applicable, for purposes of this Agreement, until the next meeting of Company
shareholders at which the shareholders vote for the election of directors of the
class in which such Purchaser Director or New Independent Director serves.

(e)                Vacancies. If a vacancy shall have occurred in the position
of either Purchaser Director or any New Independent Director during any period
during which the Purchaser (or any permitted assignee thereof) has the right to
designate a replacement director to be appointed to fill such vacancy, yet the
Purchaser fails to designate a replacement director pursuant to Section 2(a) or
2(b), as applicable, for a period of more than 45 days after the vacancy in such
position has occurred, then and until such replacement is so named, the
replacement director for the Purchaser Director and/or New Independent Director
shall be designated by the Nominating and Governance Committee (i) to serve
until the end of such director’s term and until his or her successor is duly
elected and qualifies, (ii) be an Independent Director (if not an Purchaser
Director), (iii) assume all Committee positions previously held by the prior
Purchaser Director or New Independent Director, as applicable, and (iv)
otherwise be deemed the Purchaser Director or New Independent Director, as
applicable, for purposes of this Agreement.

 

5

 

(f)                Chairman of the Board. At all times during which the
Purchaser has the right to designate the Purchaser Directors for election to the
Board, the Company agrees to take all Necessary Actions so that one of the
Purchaser Directors identified by the Purchaser shall be appointed to serve as
the Chairman of the Board.

(g)               Roberts Board Right. So long as Roberts continuously maintains
beneficial ownership of at least 1,100,000 shares of Common Stock (subject to
adjustment for stock splits, stock dividends and other similar adjustments to
the shares of Common Stock) during the one year period after the Closing Date,
the Company and the Purchaser agree to take all Necessary Actions to nominate
Roberts for re-election to the Board at any meeting of the shareholders of the
Company held after the Closing and before the first anniversary of the Closing
Date to consider a vote on the election of directors of the class in which
Roberts serves (or, to the extent the Company has de-classified the Board, which
the parties acknowledge is the Company’s intent, to consider a vote on the
election of all directors), and not to take any action that is designed to
interfere with the election or re-election of Roberts to the Board during such
one-year period. Roberts agrees to resign from the Board immediately upon the
first to occur of the following two events: (i) in the event he fails to
continuously maintain beneficial ownership of at least 1,100,000 shares of
Common Stock (subject to adjustment for stock splits, stock dividends and other
similar adjustments to the shares of Common Stock) and (ii) the first
anniversary of the Closing Date. While he serves as a director, Roberts shall be
authorized to incur, and shall be reimbursed for, all reasonable travel expenses
incurred in carrying out his duties as a director. “Reasonable” is defined as
that which enables Roberts to perform his duties as a director (including meals
and travel) comfortably but not extravagantly. Roberts shall provide to the
Company receipts or other reasonable documentation of such expenses for any
individual expenditure over $25, and the Company shall reimburse Roberts for
such expenses promptly and in any event not later than 30 days after Roberts
provides such documentation to the Company.

3.                  Committee Representation.

(a)                At or immediately following the Closing, the Company agrees
to take all Necessary Actions to set the number of directors on the Board’s (i)
Audit Committee, (ii) Compensation Committee, and (iii) Nominating and
Governance Committee (each a “Committee” and collectively, the “Committees”) at
three (3) directors per Committee.

(b)               At or immediately following the Closing, the Company agrees to
take all Necessary Actions to cause three of the New Independent Directors
designated by the Purchaser to be appointed, and thereafter to be re-appointed,
to serve on each of the Committees. The members of each Committee shall
designate a Committee Chairman from among such Committee members. If, at any
time, the Board determines that a director serving on a Committee does not
qualify as an Independent Director, the Company shall give prompt written notice
of such determination and the basis therefor to the director in question and the
Purchaser. Upon making such determination, or receiving notice thereof, the
director whom the Board has determined does not qualify as an Independent
Director shall resign from all Committees as soon as reasonably practical, and
the Purchaser shall designate a replacement director who qualifies as an
Independent Director to fill the vacancy created by such resignation.

 

6

 

4.                  Voting. From and after the Closing,

(a)                The Purchaser agrees to vote all shares of Common Stock (and
any other shares of the Company’s capital stock held by Purchaser and entitled
to vote) beneficially owned by it and entitled to vote, and Roberts agrees to
vote all shares of Common Stock beneficially owned by him and entitled to vote,
in favor of the election or re-election, as the case may be, of the directors
designated by the Parties as provided in this Agreement at any meeting (or
written consent in lieu of a meeting) of the Company’s shareholders held to
consider the election of any such designated director; provided, however, that
(i) the Purchaser’s foregoing obligations with respect to the election of
Roberts as a director shall only apply while Roberts has the right to be
nominated for election as a director pursuant to Section 2(g) and (ii) Roberts’
foregoing obligations with respect to the election of the Purchaser Directors
and the New Independent Directors designated by the Purchaser for election as
directors shall terminate upon the first to occur of the termination of Roberts’
right to be nominated for election as a director pursuant to Section 2(g) and
Roberts’ resignation from the Board.

(b)               Roberts agrees to vote all shares of the Company’s capital
stock beneficially owned by him and entitled to vote in favor of any resolution
or proposal approved by a majority of the Independent Directors and recommended
by the Board for approval by shareholders of the Company; provided, however,
that Roberts’ voting obligations shall expire upon the first to occur of the
termination of Roberts’ right to be nominated for election as a director
pursuant to Section 2(g) and Roberts’ resignation from the Board. Such matters
may include, but are not limited to, any of the following matters, which the
Company and the Purchaser have stated that they intend to effectuate as soon as
is practicable after the Closing:

(i)                 Any proposal to reincorporate the Company as a Maryland
corporation, whether through an affiliated merger or otherwise;

(ii)               Any proposal to de-classify the Board of Directors of the
Company;

(iii)             Any proposal to effectuate a reverse split of the Company’s
common stock;

(iv)             Any proposal to amend the Company’s charter or bylaws to waive
the application of the corporate opportunity doctrine to the Purchaser Directors
with respect to investment opportunities identified by them or their Affiliates
for the benefit of the other investment funds and accounts managed by them or
their Affiliates; and

(v)               Any proposal to adopt an amended or restated charter of the
Company in furtherance of any of the foregoing matters that requires such an
amendment or restatement.

 

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(c)                So long as the Purchaser and its members, and their
respective Affiliates, collectively maintain continuous beneficial ownership of
an aggregate of at least 100% of the shares of Common Stock initially acquired
at the Closing (subject to adjustment for stock splits, stock dividends and
other similar adjustments to the shares of Common Stock), Roberts shall maintain
beneficial ownership of a sufficient number of shares of Common Stock that will
allow the Purchaser and Roberts to collectively maintain beneficial ownership of
a majority of the shares of Common Stock outstanding upon completion of the
Closing; provided, however, that Roberts’ obligations under this Section 4(c)
(i) shall expire upon the first to occur of the termination of Roberts’ right to
be nominated for election as a director pursuant to Section 2(g) and Roberts’
resignation from the Board and (ii) shall never require that Roberts purchase
additional shares of Common Stock.

5.                  Right of First Offer.

(a)                Grant. For a period of three (3) years following the Closing
(as defined in the Stock Purchase Agreement), subject to the terms of Section
5(d), Roberts hereby unconditionally and irrevocably grants to the Purchaser and
any of its Affiliates, collectively referred to as the Purchaser for this
Section 5, the right (the “Right of First Offer”), but not the obligation, to
purchase some or all of the Common Stock beneficially owned by Roberts
(“Transfer Stock”) with respect to any proposed assignment, sale, offer to sell,
disposition of or any other like transfer of the Transfer Stock (a “Proposed
Transfer”), at the price and on the same terms and conditions as those specified
in any Proposed Transfer Notice (as defined below).

(b)               Notice. In the event of a Proposed Transfer, Roberts must
deliver to the Purchaser a written notice setting forth the terms and conditions
of a Proposed Transfer (a “Proposed Transfer Notice”) not later than five (5)
business days prior to the consummation of such Proposed Transfer. Such Proposed
Transfer Notice shall contain the material terms and conditions (including
price) of the Proposed Transfer. To exercise its Right of First Offer, the
Purchaser must deliver a written notice notifying Roberts that the Purchaser
intends to exercise its Right of First Offer as to some or all of the Transfer
Stock with respect to any Proposed Transfer within five (5) business days after
Purchaser’s receipt of the Proposed Transfer Notice (“Purchaser Notice”).

(c)                Periods of Sale and Sale Price. If the Purchaser has not
delivered a Purchaser Notice and the five (5) business day period for the
Purchaser to deliver the Purchaser Notice has ended (“Refusal Date”), Roberts
may consummate a Proposed Transfer directly related to the Proposed Transfer
Notice only if the following conditions have been met: (i) for a sale price that
is 95% or more of the sale price specified in the Proposed Transfer Notice and
(ii) (a) within a period of ninety (90) days from the Refusal Date in the event
of a private, unregistered sale of Transfer Stock or (b) within a period of
fifteen (15) business days from the Refusal Date in the event of a publicly
registered sale of Transfer Stock. Any Proposed Transfer not consummated at the
price or within the timeframe referenced above will be subject to the
requirements referenced in Section 5(b).

 

8

 

(d)               Exempted Transfers. Notwithstanding the foregoing or anything
to the contrary herein, the provisions of Section 5(a) and 5(b) shall not apply
to: (i) bona fide gifts of Common Stock beneficially owned by Roberts to the
immediate family members of Roberts or (ii) sales of Common Stock beneficially
owned by Roberts sold under Roberts’ 10b5-1 plan which plan currently allows
Roberts to sell up to 100,000 shares of Common Stock on a quarterly basis at a
price per share of at least $1.40. Roberts shall have the irrevocable right to
continue to have a 10b5-1 plan in accordance with applicable securities laws and
any sales under such 10b5-1 plan shall continue to be Exempted Transfers. The
Company shall take all Necessary Actions to enable Roberts to exercise his right
to continue to have a 10b5-1 plan for so long as Roberts is a director or
officer of the Company.

(e)                Closing. The closing of the purchase of Transfer Stock by the
Purchaser shall take place, and all payments from the Purchaser shall have been
delivered to Roberts, by the fifteenth (15th) day following the delivery of the
Purchaser Notice. Upon Purchaser’s payment of the purchase price to Roberts as
set forth in the Purchase Notice for the applicable number of shares of Common
Stock being purchased by Purchaser, Roberts shall deliver to Purchaser good,
valid and marketable title to such Transfer Stock being purchased, free and
clear of any and all liens, encumbrances, charges, claims, restrictions,
pledges, security interests or impositions, and shall execute and deliver to the
Purchaser an irrevocable stock power providing for the sale and assignment of
such Transfer Stock.

(f)                Effect of Failure to Comply.              (i) Transfer Void;
Equitable Relief. Any Proposed Transfer not made in compliance with the
requirements of this Section 5 shall be null and void ab initio, shall not be
recorded on the books of the Company or its transfer agent and shall not be
recognized by the Company. Each party hereto acknowledges and agrees that any
breach of this Section 5 would result in substantial harm to the other parties
hereto for which monetary damages alone could not adequately compensate.
Therefore, the parties hereto unconditionally and irrevocably agree that any
non-breaching party hereto shall be entitled to seek protective orders,
injunctive relief and other remedies available at law or in equity (including,
without limitation, seeking specific performance or the rescission of sales and
other transfers of Transfer Stock not made in accordance with this Section 5),
and the Company acknowledges and agrees to enforce the provisions of this
Section 5(f).

6.                  Severalty of Obligations. The obligations under this
Agreement of each Party and the separate and several obligations of that Party
and are not joint obligations with respect to any other person. No Party shall
be responsible or liable for the obligations of or any action taken or omitted
to be taken by any other Party hereunder.

7.                  Miscellaneous Provisions.

(a)                Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
Party and delivered to each other Party. Copies of executed counterparts
transmitted by telecopy, telefax or other electronic means shall be considered
original executed counterparts for purposes of this Section, provided that
receipt of copies of such counterparts is confirmed.

 

9

 

(b)               Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed effectively
given upon the earlier of actual receipt or: (a) personal delivery to the party
to be notified, (b) when sent, if sent by electronic mail during normal business
hours of the recipient, and if not sent during normal business hours, then on
the recipient’s next business day, (c) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (d)
one (1) business day after deposit with a nationally recognized overnight
courier, freight prepaid, specifying next business day delivery, with written
verification of receipt. All communications shall be sent to the respective
parties at their address or email address as set forth on the signature page
hereof, or to such other address or email address as subsequently modified by
written notice given in accordance with this Section 7(b).

(c)                Governing Law. This Agreement shall be governed by and
construed in accordance with, the laws of the State of Georgia without regard,
to the fullest extent permitted by law, to the conflicts of law provisions
thereof which might result in the application of the laws of any other
jurisdiction.

(d)               Entire Agreement. This Agreement (including its exhibits,
appendices and schedules) and the other documents delivered pursuant to this
Agreement constitute a complete and exclusive statement of the agreement between
the Parties with respect to its subject matter, and supersede all other prior
agreements, arrangements or understandings by or between the Parties, written or
oral, express or implied, with respect to the subject matter of this Agreement.
This Agreement is not intended to confer upon any Person who is not a Party (or
their successors and assigns) any rights or remedies hereunder.

(e)                Specific Performance. The Parties acknowledge and agree that
a breach or threatened breach, of any agreement contained herein will cause
irreparable damage, and the other Parties will have no adequate remedy at law or
in equity. Accordingly, each Party agrees that injunctive relief or other
equitable remedy, in addition to remedies at law or in damages, is the
appropriate remedy for any such failure and will not oppose the granting of such
relief.

(f)                Assignment and Successors. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the Parties.
This Agreement and all the provisions hereof are personal to each of the
Parties, and except as otherwise provided in the next succeeding sentence, shall
not inure to a Party’s respective successors and may not be assigned by a Party
without the prior written consent of the other Parties. Any assignment in
violation of the foregoing shall be void and of no effect. Notwithstanding the
foregoing to the contrary, the Purchaser may assign its rights, benefits and
obligations under this Agreement, including but not limited to its rights to
designate the Purchaser Directors or New Independent Directors (or replacements
thereto) and its rights, benefits and obligations under Section 4 hereof, to any
Qualified Institutional Buyer that purchases all but not less than all of the
shares of Common Stock purchased by the Purchaser at the Closing.

(g)               Headings. The Section, Article and other headings contained in
this Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement.

 

10

 

(h)               Amendments and Waivers. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by (i) the
Company and (ii) each Party then entitled to designate a director of the Company
pursuant to the provisions hereof (each Party described in this clause (ii)
being an “Amending Party,” it being understood, for purposes of this Section
7(h), that no Party entitled at any time to designate a director hereunder shall
cease to be an Amending Party unless and until such Party shall have expressly
and permanently surrendered, forfeited or assigned any and all of such
designation rights). Any Party may, only by an instrument in writing, waive
compliance by any other Party with any term or provision hereof on the part of
such other Party to be performed or complied with. The waiver by any Party of a
breach of any term or provision hereof shall not be construed as a waiver of any
subsequent breach.

(i)                 Interpretation; Absence of Presumption.

(i)                 For the purposes hereof, (A) words in the singular shall be
held to include the plural and vice versa and words of one gender shall be held
to include the other gender as the context requires; (B) the terms “hereof,”
“herein,” “hereto” and “herewith” and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Article, Section and paragraph
references are to the Articles, Sections and paragraphs to this Agreement unless
otherwise specified; (C) the word “including” and words of similar import when
used in this Agreement shall mean “including, without limitation,” unless the
context otherwise requires or unless otherwise specified; (D) the word “or”
shall not be exclusive; and (E) provisions shall apply, when appropriate, to
successive events and transactions.

(ii)               This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the Party
drafting or causing any instrument to be drafted.

(iii)             Capitalized terms used herein but not otherwise defined shall
have the meanings set forth in the Stock Purchase Agreement.

(j)                 Severability. If any provision of this Agreement or the
application of such provision to any Person or circumstances shall be held
invalid or unenforceable by a court of competent jurisdiction, such provision or
application shall be unenforceable only to the extent of such invalidity or
unenforceability, and the remainder of the provision held invalid or
unenforceable and the application of such provision to Persons or circumstances,
other than the Party as to which it is held invalid, and the remainder of this
Agreement, shall not be affected.

(k)               Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION
AGREEMENTS OR THE TRANSACTIONS. EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY, AS APPLICABLE, BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7(k).

 

11

 

(l)                 Further Assurances. The Parties agree that, from time to
time, each of them will, and will cause their respective Affiliates to, execute
and deliver such further instruments and take such other action as may be
necessary to carry out the purposes and intents hereof.

(m)             Share Adjustments. All references to numbers of shares in this
Agreement shall be appropriately adjusted to reflect any stock dividend, split,
combination or other recapitalization affecting such shares occurring after the
date of this Agreement.

[Signature pages follow.]

 

12

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed the
day and year first above written.

 

  COMPANY:           ROBERTS REALTY INVESTORS, INC.  

 

 

  By:       Name:          Title:    

 

 

  Address:
c/o Avenue Capital Group
399 Park Avenue
New York, New York 10022
Attention: Edward Gellert
Telephone: 212-850-7534
Email: egellert@avenuecapital.com           THE PURCHASER:           A-III
INVESTMENT PARTNERS LLC  

 

 

  By:       Name:         Title:    

 

 

  Address:
c/o Avenue Capital Group
399 Park Avenue
New York, New York 10022
Attention: Edward Gellert
Telephone: 212-850-7534
Email: egellert@avenuecapital.com           ROBERTS:                      
Signature           Address:
375 Northridge Road
Suite 330
Atlanta, GA 30350
Attention: Charles S. Roberts
Telephone: 770-394-6000
Email: cr@robertsproperties.com  

 

 

Signature Page to Governance and Voting Agreement

 

 

 

 

Exhibit A

 

[________________] [__], 20[__]

 

Board of Directors

Roberts Realty Investors, Inc.

 

 

To the Board of Directors:

 

I hereby tender my conditional resignation, as a member of the board of
directors of Roberts Realty Investors, Inc. (the “Company”), and as a member of
any and all committees thereof, upon the terms set forth herein. I acknowledge
that (i) my execution and delivery of this letter is a condition to my
eligibility to serve in such capacity, (ii) this letter shall be deemed
reaffirmed, upon each and every subsequent instance of my election or
re-election to the board of directors of the Company, by my acceptance of such
position (whether or not in writing) without the requirement of re-execution or
re-delivery of a letter of like tenor, and (iii) other than with respect to the
conditions set forth herein, this letter shall be irrevocable.

 

My resignation herein tendered shall be effective upon, and only upon, a
determination by the board of directors of the Company that I do not satisfy the
independence standards of both (1) the Company’s charter and bylaws, as in
effect on the date hereof, and (2) the NYSE MKT or such other exchange as the
Company’s shares of Common Stock are then listed.

 

Sincerely,

 

 

 

[INSERT NAME OF DIRECTOR]

 

 

 

 

EXHIBIT D

FORM OF MANAGEMENT AGREEMENT

MANAGEMENT AGREEMENT

by and among

Roberts Realty Investors, Inc., Roberts Properties Residential, L.P.

and

A-III Manager LLC

Dated as of              , 20___

MANAGEMENT AGREEMENT, dated as of ____________, 20___ (the “Effective Date”), by
and between Roberts Realty Investors, Inc., a Georgia corporation (the
“Company”), Roberts Properties Residential, L.P. (the “Operating Partnership”)
and A-III Manager LLC, a Delaware limited liability company (the “Manager”).

W I T N E S S E T H:

WHEREAS, through the Operating Partnership and its other direct and indirect
subsidiaries, the Company invests and intends to continue to invest in Target
Assets (as defined below), and the Company intends to operate its business in a
manner that will allow the Company to qualify as a real estate investment trust
for federal income tax purposes within the meaning of Sections 856 through 860
of the Internal Revenue Code of 1986, as amended (the “Code”) beginning in 2016,
or such other year in which the Company first becomes eligible to qualify as a
real estate investment trust under the Code; and

WHEREAS, the Company and the Operating Partnership, for themselves and on behalf
of any current or future subsidiaries, desire to retain the Manager to manage
and administer their business activities and day-to-day operations and to
perform services for them in the manner and on the terms set forth herein, and
the Manager wishes to be retained to provide such services.

NOW THEREFORE, in consideration of the promises and agreements hereinafter set
forth, the parties hereto hereby agree as follows:

Section 1. Definitions.

(a)           The following terms shall have the meanings set forth in this
Section 1(a):

“Acquisition Fee” means an acquisition fee, calculated and payable in cash
within five Business Days after the closing of any Property or other investment
acquired by the Company or any Subsidiary after the date hereof, in an amount
equal to 1% of the gross purchase price paid for each such Property or other
investment, including the total equity invested by the Company or any
Subsidiary, and any debt assumed or incurred to fund all or a portion of the
gross purchase price paid for such Property or other investment; provided,
however, that the Acquisition Fee shall not be applicable to (i) short-term
temporary investments in money market funds, bank accounts and other money
market instruments pending deployment of such capital in the Company’s
operations or in other investments, (ii) investments in marketable securities
purchased in an active secondary trading market and (iii) for any investment
made through a joint venture with one or more partners that are not Affiliates
of the Company, the pro rata portion of the gross purchase price for such
investment attributable to any such joint venture partner’s equity investment
based on the partner’s percentage equity interest in the joint venture;
provided, however, that the Manager shall be entitled to be paid an acquisition
fee and/or other economic benefit from such joint venture partner in respect of
the partner’s pro rata share of the investment pursuant to the terms of a
separate agreement between the Manager and the joint venture partner.  That
arrangement shall be outside the scope of the joint venture agreement between
the Company and the joint venture partner.  By way of example only, with respect
to payments of an Acquisition Fee by the Company to the Manager, if the Company
makes an investment through a joint venture with a partner where the Company and
the joint venture partner each invests 50% of the equity in such investment,
then the Manager will be entitled to receive a fee from the Company equal to 1%
of one-half of the gross purchase price for such investment.

“Administration Agreement” has the meaning set forth in Section 2(d) hereof.

“Affiliate” means, with respect to any Person, (i) any other Person directly or
indirectly controlling, controlled by, or under common control with such Person,
(ii) any executive officer, general partner or managing member of such Person,
(iii) any member of the board of directors or board of managers (or bodies
performing similar functions) of such Person, and (iv) any legal entity for
which such Person acts as an executive officer, general partner or managing
member. Notwithstanding the foregoing, the Company and its Subsidiaries shall
not be deemed to be Affiliates of the Manager or its Affiliates for purposes of
this Agreement.

 

 

 

“Agreement” means this Management Agreement, as amended, supplemented or
otherwise modified from time to time.

“Automatic Renewal Term” has the meaning set forth in Section 11(a) hereof.

“Bankruptcy” means, with respect to any Person, (a) the filing by such Person of
a voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under Title 11 of the United States Code
or any other U.S. federal or state or foreign insolvency law, or such Person’s
filing an answer consenting to or acquiescing in any such petition, (b) the
making by such Person of any assignment for the benefit of its creditors, (c)
the expiration of 90 days after the filing of an involuntary petition under
Title 11 of the Unites States Code, an application for the appointment of a
receiver for a material portion of the assets of such Person, or an involuntary
petition seeking liquidation, reorganization, arrangement or readjustment of its
debts under any other U.S. federal or state or foreign insolvency law, provided
that the same shall not have been vacated, set aside or stayed within such
90-day period or (d) the entry against such Person of a final and non-appealable
order for relief under any bankruptcy, insolvency or similar law now or
hereinafter in effect.

“Base Management Fee” means the base management fee, calculated and payable
quarterly in arrears, in an amount in cash equal to the product of: (i) the
Equity of the Company as of the end of such fiscal quarter, and (ii) one-fourth
of 1.50%. The Base Management Fee shall be pro rated for partial quarterly
periods based on the number of days in such partial period compared to a 90 day
quarter.

“Board” means the board of directors of the Company.

“Business Day” means any day except a Saturday, a Sunday or a day on which
banking institutions in New York, New York are not required to be open.

“Claim” has the meaning set forth in Section 9(c) hereof.

“Code” has the meaning set forth in the Recitals.

“Common Stock” means the common stock, par value $0.01, of the Company.

“Company” has the meaning set forth in the Recitals. When used in this Agreement
with reference to the Company’s business, assets, Properties, investment
activities and operations, the Company shall be deemed to mean the Company and
the Subsidiaries taken as a consolidated group, unless the context requires
otherwise.

“Company Indemnified Party” has meaning set forth in Section 9(b) hereof.

“Conduct Policies” has the meaning set forth in Section 2(l) hereof.

“Confidential Information” has the meaning set forth in Section 6 hereof.

“Disposition Fee” means a disposition fee, calculated and payable in cash within
five Business Days after the closing of any sale or other disposition by the
Company or any Subsidiary of any Property or other investment after the date
hereof, in an amount equal to the lesser of (i) 50% of a market brokerage
commission for such disposition and (ii) 1% of the sale price with respect to
such disposition; provided, however, that no Disposition Fee shall be payable
with respect to (a) the disposition of any Legacy Property, (b) any disposition
of a Property investment to an Affiliate of the Manager or (c) any disposition
of an investment (or a portion of an investment) with respect to which the
Manager was not entitled to receive an Acquisition Fee from the Company when
such investment was acquired.

“Effective Termination Date” has the meaning set forth in Section 11(b) hereof.

 

2

 

“Equity” means (a) the sum of (1) the net proceeds from all issuances of the
Company’s Common Stock and OP Units (without double counting) and other equity
securities from the date hereof, which shall include the issuance of Common
Stock pursuant to the terms of the Stock Purchase Agreement on the date hereof
(allocated on a pro rata basis for such issuances during the fiscal quarter of
any such issuance) and any issuances of Common Stock or OP Units in exchange for
Property investments and other investments, plus (2) the product of (x) the sum
of the (i) the number of shares of Common Stock issued and outstanding
immediately prior to the date hereof and (ii) the number of shares of Common
Stock for which the number of OP Units issued and outstanding immediately prior
to the date hereof (excluding any OP Units held by the Company) may be redeemed
in accordance with the terms of the Partnership Agreement and (y) the Purchase
Price Per Share (as defined in the Stock Purchase Agreement) paid by the
Purchaser for the shares of Common Stock issued by the Company to the Purchaser
under the Stock Purchase Agreement, as such Purchase Price Per Share may be
adjusted pursuant to the terms thereof, plus (3) the Company’s and the Operating
Partnership’s (without double counting) retained earnings calculated in
accordance with GAAP at the end of the most recently completed fiscal quarter
(without taking into account any non-cash equity compensation expense incurred
in current or prior periods), less (b) any amount in cash that the Company or
the Operating Partnership has paid to repurchase Common Stock, OP Units or other
equity securities of the Company as of the date hereof. Equity excludes (1) any
unrealized gains, losses or non-cash equity compensation expenses that have
impacted stockholders’ equity as reported in the Company’s financial statements
prepared in accordance with GAAP, regardless of whether such items are included
in other comprehensive income or loss, or in net income, (2) one-time events
pursuant to changes in GAAP, and certain non-cash items not otherwise described
above in each case, after discussions between the Manager and the Company’s
Independent Directors and approval by a majority of the Independent Directors
and (3) the Company’s accumulated deficit as of the date hereof.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“GAAP” means generally accepted accounting principles in effect in the United
States on the date such principles are applied.

“Good Reason” means (a) a material breach or default by the Company of its
obligations under this Agreement or (b) any material amendment, modification or
supplement to the Investment Guidelines by the Board, or any material
modification or revocation by the Board of the Manager’s authority set forth in
the Investment Guidelines, that is not approved, or is rejected, by the Manager.

“Governing Instruments” means, with regard to any entity, the articles of
incorporation or certificate of incorporation and bylaws in the case of a
corporation, the partnership agreement in the case of a general or limited
partnership, the certificate of formation and operating agreement in the case of
a limited liability company, the trust instrument or declaration of trust in the
case of a trust, or similar governing documents in each case as amended.

“Incentive Fee” means an incentive fee, calculated and payable after each fiscal
quarter, in an amount equal to the excess, if any, of (i) the product of (A) 20%
and (B) the excess of (1) the Company’s Adjusted Net Income (described below)
for such fiscal quarter and the immediately preceding three fiscal quarters over
(2) the Hurdle Amount (described below) for such four fiscal quarters, less (ii)
the sum of the Incentive Fees already paid or payable for each of the three
fiscal quarters preceding such fiscal quarter. Any adjustment to the Incentive
Fee calculation proposed by the Manager shall be subject to the approval of a
majority of the Independent Directors.

For purposes of calculating the Incentive Fee, “Adjusted Net Income” for the
preceding four fiscal quarters means the net income calculated in accordance
with GAAP after all base management fees but before any acquisition expenses,
expensed costs related to equity issuances, incentive fees, depreciation and
amortization and any non-cash equity compensation expenses for such period.
Adjusted Net Income will be adjusted to exclude one-time events pursuant to
changes in U.S. GAAP, as well as other non-cash charges after discussion between
the Manager and the Independent Directors and approval by a majority of the
Independent Directors in the case of non-cash charges. For the avoidance of
doubt, Adjusted Net Income includes net realized gains and losses, including
realized gains and losses resulting from dispositions of Properties and other
investments during the applicable measurement period.

For purposes of calculating the Incentive Fee, the “Hurdle Amount” is, with
respect to any four fiscal quarter period, the product of (i) 7% and (ii) the
weighted average gross proceeds per share of Common Stock or OP Unit of all of
the Common Stock and OP Unit issuances (excluding issuances of Common Stock and
OP Units, or equivalents thereof, as equity incentive awards), with each such
issuance weighted by both the number of shares of Common Stock and OP Units
issued in such issuance and the number of days that such issued shares of Common
Stock and OP Units were outstanding during such four fiscal quarter period.

 

3

 

The first Incentive Fee calculation will not occur until after completion of
four fiscal quarters (including the fiscal quarter in which the date of this
Agreement falls) following the date hereof. The Incentive Fee shall be pro rated
for partial quarterly periods based on the number of days in such partial period
compared to a 90 day quarter.

“Indemnified Party” has the meaning set forth in Section 9(b) hereof.

“Independent Director” means a member of the Board who is “independent” in
accordance with the rules of the NYSE MKT or such other securities exchange on
which the shares of Common Stock are listed.

“Initial Term” has the meaning set forth in Section 11(a) hereof.

“Intellectual Property” means all work product, documents, code, works of
authorship, programs, manuals, developments, processes, formulae, data,
specifications, fixtures, tooling, equipment, supplies, processes, inventions,
discoveries, improvements, trade secrets and know-how or similar rights.

“Intellectual Property Rights” means the worldwide right, title, and interest in
any Intellectual Property and any goodwill appurtenant thereto, including,
without limitation, all copyrights, copyright renewals or reversions,
trademarks, trade names, trade dress rights, inventions, priority rights, patent
rights, patents, and any other rights or protections in connection therewith or
related thereto.

“Investment Advisors Act” means the Investment Advisers Act of 1940, as amended.

“Investment Company Act” means the Investment Company Act of 1940, as amended.

“Investment Guidelines” means the investment guidelines approved by the Board, a
copy of which is attached hereto as Exhibit A, as the same may amended,
restated, modified, supplemented or waived pursuant to the approval of a
majority of the entire Board (which must include a majority of the Independent
Directors) and the Manager Investment Committee.

“Legacy Property” means the real properties that are owned by the Company on the
date of this Agreement as described on Exhibit A.

“Losses” has the meaning set forth in Section 9(a) hereof.

“Manager” has the meaning set forth in the Recitals.

“Manager Indemnified Party” has the meaning set forth in Section 9(a) hereof.

“Manager Investment Committee” means the investment committee formed by the
Manager, the members of which shall consist of employees of the Manager and its
Affiliates and may change from time to time.

“Manager Permitted Disclosure Parties” has the meaning set forth in Section 6
hereof.

“Notice of Proposal to Negotiate” has the meaning set forth in Section 11(c)
hereof.

“NYSE MKT” means The NYSE MKT stock exchange.

“Operating Partnership” has the meaning set forth in the Recitals.

“Person” means any natural person, corporation, partnership, association,
limited liability company, estate, trust, joint venture, any federal, state,
county or municipal government or any bureau, department or agency thereof or
any other legal entity and any fiduciary acting in such capacity on behalf of
the foregoing.

 

4

 

“Property” or “Properties” means any real property which is owned or leased,
directly or indirectly, by the Company or any of the Subsidiaries.

“Property Management Fee” means a property management fee for services rendered
in connection with the rental, leasing, operation and management of the
Company’s real estate assets and the supervision of any non-Affiliates that are
engaged by the Manager to provide such services, equal to 4% of the gross rental
receipts received each month at the Company’s and its Subsidiaries’ Properties.

“Regulation FD” means Regulation FD as promulgated by the SEC.

“REIT” means a “real estate investment trust” as defined under the Code.

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

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

“Sponsor” means A-III Investment Partners LLC, a Delaware limited liability
company.

“Stock Purchase Agreement” means that certain Stock Purchase Agreement, dated as
of November 19, 2014, by and among the Company, the Operating Partnership and
A-III Investment Partners LLC.

“Subsidiary” means (i) the Operating Partnership, (ii) any subsidiary of the
Company, (iii) any partnership the general partner of which is the Company or
any subsidiary of the Company, and (iv) any limited liability company the
managing member of which is the Company or any subsidiary of the Company.

“Target Assets” means the types of assets identified as Target Assets within the
parameters set forth in the Investment Guidelines.

“Termination Fee” means four (4) times the sum of (i) the average annual Base
Management Fee, (ii) the average annual Incentive Fee, and (iii) the average
annual Acquisition Fees and Disposition Fees, in each case earned by the Manager
in the most recently completed eight calendar quarters prior to the Effective
Termination Date.

“Termination Notice” has the meaning set forth in Section 11(b) hereof.

“Termination Without Cause” has the meaning set forth in Section 11(b) hereof.

As used herein, accounting terms relating to the Company and its Subsidiaries,
if any, not defined herein and accounting terms partly defined herein, to the
extent not defined, shall have the respective meanings given to them under GAAP.
As used herein, “calendar quarters” shall mean the period from January 1 to
March 31, April 1 to June 30, July 1 to September 30 and October 1 to December
31 of the applicable year.

The words “hereof,” “herein” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section references are to this
Agreement unless otherwise specified.

The meanings given to terms defined herein shall be equally applicable to both
the singular and plural forms of such terms. The words include, includes and
including shall be deemed to be followed by the phrase “without limitation.”

Section 2. Appointment and Duties of the Manager.

(a)           The Company hereby appoints the Manager to manage the investment
activities, Properties and day-to-day operations of the Company and its
Subsidiaries, subject at all times to the further terms and conditions set forth
in this Agreement. The Manager hereby agrees to use its commercially reasonable
efforts to perform each of the duties set forth herein, provided that funds are
made available by the Company for such purposes as set forth in Section 8
hereof. The appointment of the Manager shall be exclusive to the Manager, except
to the extent that the Manager elects, in its sole and absolute discretion,
subject to the terms of this Agreement, or is required hereby to cause the
duties of the Manager as set forth herein to be provided by third parties.

 

5

 

(b)           The Manager, in the performance of its obligations under this
Agreement, at all times will be subject to the supervision and direction of the
Board and will have only such functions and authority as the Board may delegate
to it, including, without limitation, managing the Company’s business affairs
and investment activities in conformity with the Investment Guidelines and other
policies that are approved and monitored by the Board. The parties acknowledge
that the Board has adopted the Investment Guidelines. The parties acknowledge
that, during the term of this Agreement, any changes to the investment strategy
proposed by the Manager that would require a change in the Investment Guidelines
will be subject to approval by the Board, including a majority of the
Independent Directors. The Company shall notify the Manager promptly of any
amended, restated, supplemented or waived Investment Guidelines, including any
modification or revocation of the Manager’s authority set forth in the
Investment Guidelines; provided, however, that such modification or revocation
shall not be applicable to investment transactions recommended by the Manager in
respect of which the Company, or the Manager acting on its behalf, has, directly
or indirectly, made a binding commitment or obligation prior to the date of
receipt by the Manager of such notification. Further, if the Company, directly
or indirectly, proposes to enter into any transaction in which the Manager, any
Affiliate of the Manager or any of the Manager’s directors or officers has a
direct or indirect interest, then such transaction shall be approved by a
majority of the Board not otherwise interested in such transaction, including a
majority of the Independent Directors.

(c)           The Manager will be responsible for the day-to-day business
activities, investment activities and operations of the Company and will perform
(or cause to be performed) such services and activities relating to the
investments and operations of the Company as may be appropriate, which may
include, without limitation:

(i)             serving as the Company’s and the Subsidiaries’ advisor with
respect to the periodic review (no less often than annually) of the Investment
Guidelines and other parameters for the acquisition and disposition of
Properties, financing activities and operations, any modifications to which
shall be approved by a majority of the Independent Directors, and other policies
for approval by the Board;

(ii)            advising the Board on strategic matters, including potential
acquisitions, dispositions and financings;

(iii)           advising and acting on the Company’s behalf with respect to the
Company’s and its Subsidiaries’ borrowing, issuances of securities and other
capital raising requirements, including assistance in dealings with banks and
other lenders, investment dealers and investors;

(iv)          administering the day-to-day operations and performing and
supervising the performance of such other administrative functions necessary to
the Company’s and each Subsidiary’s management in accordance with the Investment
Guidelines, including, without limitation, entering into on behalf of the
Company leases, service contracts, property management, leasing and development
agreements and other third party agreements as may be necessary or advisable in
connection with the operation of the Company’s business and properties, the
collection of revenues and payment of the Company’s and the Subsidiaries’ debts
and obligations, maintenance of appropriate computer services to perform its
administrative functions, and maintaining and administering separate bank
accounts and books of account on behalf of the Company and the Subsidiaries as
may be directed by the Board and in compliance in all material respects with
applicable securities laws and regulations;

(v)           upon request by the Board (but not more frequently than
quarterly), furnishing reports and statistical and economic research to the
Company regarding the Company’s and the Subsidiaries’ activities and services
performed for the Company and any Subsidiaries by the Manager;

(vi)          assisting the Company in qualifying to do business in all
applicable jurisdictions and to obtain and maintain all appropriate licenses;

(vii)         identifying, investigating, evaluating, selecting, conducting due
diligence with respect to, and negotiating, structuring and closing, on the
Company’s and its Subsidiaries’ behalf, of acquisitions, dispositions,
financings and other transactions consistent with the Investment Guidelines;

(viii)        with respect to prospective purchases, sales or exchanges of
Properties, conducting negotiations on the Company’s and the Subsidiaries’
behalf with sellers, purchasers and brokers, financing sources and, if
applicable, their respective agents and representatives and closing such
transactions on behalf of the Company and its Subsidiaries;

 

6

 

(ix)          negotiating and causing the Company to enter into, subject to the
Investment Guidelines, agreements relating to Company borrowings and other
agreements and instruments required to conduct the business of the Company;

(x)           investigating, selecting, engaging and supervising, at the expense
of the Company, independent contractors that provide advice to the Company
including investment bankers, brokers, underwriters, legal and accounting
services and all other services (including transfer agent and registrar
services) as may be required relating to the Company’s operations and
investments;

(xi)          coordinating and managing operations of any joint venture or
co-investment interests of the Company and conducting all matters with the joint
venture or co-investment partners;

(xii)         providing executive and administrative personnel, office space and
office services required in rendering services to the Company;

(xiii)        providing portfolio management services to the Company;

(xiv)        arranging marketing materials, advertising, industry group
activities and other promotional efforts designed to promote the Company and its
business;

(xv)         causing the Company to retain qualified accountants to assist in
developing appropriate accounting procedures and systems, internal controls and
other compliance procedures and testing systems to enable the Company to comply
in all material respects with its financial reporting obligations and applicable
securities laws and regulations;

(xvi)        developing and implementing business plans and annual budgets and
monitoring the Company’s financial performance;

(xvii)       advising with respect to investor relations strategies and
activities, including performing investor relations services and shareholder
communications for the Company;

(xviii)      advising with respect to regulatory compliance requirements, risk
management policies and any litigation matters;

(xix)        supervising property managers and providing guidance to them with
regards to operating expenses, lease negotiation terms and capital expenditures;

(xx)         making recommendations with respect to the payment of
distributions, including dividends;

(xxi)        evaluating and recommending to the Board hedging strategies and
engaging in hedging activities on the Company’s behalf, consistent with the
Company’s intention to qualify as a REIT beginning in 2016, or such other year
in which the Company first becomes eligible to qualify as a REIT under the Code,
and with maintaining the Company’s REIT requirements thereafter and consistent
with the Investment Guidelines;

(xxii)       supervising the Company’s efforts to qualify as a REIT beginning in
2016, or such other year in which the Company first becomes eligible to qualify
as a REIT under the Code, and, thereafter, the Company’s compliance with the
REIT provisions of the Code and the Company’s qualification and maintenance as a
REIT, including soliciting required information from shareholders and complying
with the applicable provisions of Company’s Governing Instruments; assisting the
Company in taking all necessary action to enable the Company to make required
tax filings and reports, including soliciting information from shareholders to
the extent required by the Code applicable to REITs;

 

7

 

(xxiii)      assisting the Company with its public financial reporting and
disclosure-related responsibilities, including preparing or causing to be
prepared all financial statements and other reports and documentation required
by the Securities Act, the Exchange Act, the NYSE MKT Company Guide (or such
rules and guidelines applicable to any securities exchange on which the shares
of Common Stock are listed) and other applicable laws;

(xxiv)      counseling the Company and the Operating Partnership regarding the
maintenance of their exemptions from the status of an investment company
required to register under the Investment Company Act, and monitoring compliance
with the requirements for maintaining such exemptions and causing them to
maintain such exemptions from such status;

(xxv)       reporting directly to the audit committee of the Board with respect
to all financial matters;

(xxvi)      supervising the Company’s disclosure policy and reviewing all news
releases and other public announcements;

(xxvii)     assisting the Company on all strategic and tactical matters as they
relate to accounting, budget management, cost benefit analysis, risk management
and forecasting needs;

(xxviii)    providing guidance on the development of a financial and operational
strategy, and the ongoing development and monitoring of control systems designed
to preserve the Company’s Properties and reporting of accurate financial
results;

(xxix)      providing the Company with all necessary cash management services;

(xxx)       handling and resolving all claims, disputes or controversies
(including all litigation, arbitration, settlement or other proceedings or
negotiations) in which the Company or the Subsidiaries may become subject
arising out of the Company’s or the Subsidiaries’ day-to-day operations (other
than with the Manager), subject to such limitations as may be imposed by the
Board;

(xxxi)      using commercially reasonable efforts to cause expenses incurred by
the Company or the Subsidiaries (or on their behalf) to be commercially
reasonable or commercially customary and within any budgeted parameters or
guidelines established by the Board from time to time;

(xxxii)     using commercially reasonable efforts to cause the Company to comply
with all applicable laws;

(xxxiii)    maintaining the Company’s website;

(xxxiv)   investigating, selecting and, on behalf of the Company and the
Operating Partnership, engaging and conducting business with and supervising the
performance of, such Persons as the Manager deems necessary for the proper
performance of its obligations hereunder, including consultants, accountants,
correspondents, lenders, technical advisors, attorneys, brokers, underwriters,
corporate fiduciaries, escrow agents, depositaries, custodians, agents for
collection, insurers, insurance agents, banks, builders, developers,
contractors, property owners, real estate management companies, real estate
operating companies, securities investment advisors, mortgagors, mortgagees, the
registrar and the transfer agent and any and all agents for any of the
foregoing, including Affiliates of the Manager, and Persons acting in any other
capacity deemed by the Manager necessary or desirable for the performance of any
of the foregoing services, including, entering into contracts in the name of the
Company and the Operating Partnership with any of the foregoing; and

(xxxv)    any additional services as may from time-to-time be agreed to in
writing by Manager and the Company for which the Manager will be compensated on
terms to be agreed upon between the Manager and the Independent Directors of the
Company prior to the provision of such services.

(d)           The Manager will maintain an administration agreement, dated of
even date herewith, by and between the Manager and the Sponsor (the
“Administration Agreement”) pursuant to which the Sponsor will provide the
Manager with the personnel, services and resources as needed by the Manager to
enable the Manager to carry out its obligations and responsibilities under this
Agreement, subject to Section 8(a)(xx) of this Agreement. The Company and the
Operating Partnership shall be named third party beneficiaries of the
Administration Agreement. If the Administration Agreement is terminated or
materially amended, the Manager shall promptly notify the Board of such
termination or provide a copy of such amendment.

 

8

 

(e)           Subject to oversight by the Board, the Manager may retain, for and
on behalf, and at the sole cost and expense, of the Company, such services of
the persons and firms referred to in Section 8(c) hereof as the Manager deems
necessary or advisable in connection with the management and operations of the
Company and its Properties and other investments. In performing its duties under
this Section 2, the Manager shall be entitled to rely reasonably on qualified
experts and professionals (including, without limitation, accountants, legal
counsel and other professional service providers) hired by the Manager at the
Company’s sole cost and expense. In lieu of retaining non-Affiliate third
service providers as described in the preceding sentence, the Manager shall have
the right to retain, on behalf of and at the cost and expense of the Company,
Affiliates of the Manager, or to direct officers or employees of the Manager or
its Affiliates, to provide any services that the Manager deems necessary or
advisable in connection with the management and operations of the Company and
its Properties and other investments, provided that the amounts paid by the
Company for such services do not exceed the fees and expenses that a
commercially reasonable third party service provider would have charged for such
services and that any agreement between or among the Company and the Manager, on
the one hand, and any Affiliate of the Manager, on the other hand, must be
entered into on an arm’s-length basis with customary and market standard terms.
If the Manager proposes to retain any Affiliate of the Manager, or to direct
officers or employees of the Manager or its Affiliates, to provide any services
that the Manager deems necessary or advisable in connection with the management
and operations of the Company and its Properties and other investments pursuant
to the preceding sentence, then such arrangement shall be subject to the prior
approval of a majority of the Independent Directors. Further, on a quarterly
basis, the Manager shall provide the Board a summary of any such arrangements
with the Manager’s Affiliates describing the terms of the relationship and any
fees paid to such Affiliate.

(f)            For the period and on the terms and conditions set forth in this
Agreement, the Company and each of the Subsidiaries hereby constitutes, appoints
and authorizes the Manager as its true and lawful agent and attorney-in-fact, in
its name, place and stead, to negotiate, execute, deliver and enter into such
real estate purchase and sale agreements, joint venture agreements, property
management agreements, leasing and development agreements, title insurance
agreements, leases, finance agreements and arrangements, brokerage agreements,
interest rate swap agreements, “to be announced” forward contracts, agreements
relating to borrowings under programs established by the U.S. Government and/or
any agencies thereunder and such other agreements, instruments and
authorizations on their behalf, on such terms and conditions as the Manager,
acting in its reasonable discretion (but subject to the terms of this
Agreement), deems necessary or appropriate pursuant to the authority otherwise
granted to the Manager under this Agreement. This power of attorney is deemed to
be coupled with an interest. If any transaction requires approval by the
Independent Directors, the Manager will deliver to the Independent Directors all
documents and other information reasonably required by them to evaluate properly
the proposed transaction.

(g)           The Manager shall refrain from any action that, in its reasonable
judgment made in good faith, (i) is not in compliance with the Investment
Guidelines, (ii) would adversely and materially affect the qualification of the
Company as a REIT under the Code or the Company’s status as an entity excluded
from investment company status under the Investment Company Act, or (iii) would
violate any law, rule or regulation of any governmental body or agency having
jurisdiction over the Company or of the NYSE MKT or such other securities
exchange on which the securities of the Company may be listed or that would
otherwise not be permitted by the applicable Governing Instruments. If the
Manager is ordered to take any action by the Board, the Manager shall promptly
notify the Board if it is the Manager’s judgment that such action would
adversely and materially affect such status or violate any such law, rule or
regulation or Governing Instruments. Notwithstanding the foregoing, neither the
Manager nor any of its Affiliates shall be liable to the Company, the Board, or
the Company’s stockholders for any act or omission by the Manager or any of its
Affiliates, except as provided in Section 9 of this Agreement.

(h)           The Company (including the Board) agrees to take all actions
reasonably required to permit and enable the Manager to carry out its duties and
obligations under this Agreement, including, without limitation, all steps
reasonably necessary to allow the Manager to file any registration statement or
other filing required to be made under the Securities Act, Exchange Act, the
NYSE MKT Company Guide (or such equivalent guidelines applicable to any other
securities exchange on which the shares of Common Stock are listed), Code or
other applicable law, rule or regulation on behalf of the Company in a timely
manner. The Company further agrees to use commercially reasonable efforts to
make available to the Manager all resources, information and materials
reasonably requested by the Manager to enable the Manager to satisfy its
obligations hereunder, including its obligations to deliver financial statements
and any other information or reports with respect to the Company.

 

9

 

(i)             The Manager shall prepare, or, at the sole cost and expense of
the Company, cause to be prepared, all reports, financial or otherwise, with
respect to the Company reasonably required by the Board in order for the Company
to comply with its Governing Instruments, or any other materials required to be
filed with any governmental body or agency, and shall prepare, or, at the sole
cost and expense of the Company, cause to be prepared, all materials and data
necessary to complete such reports and other materials, including, without
limitation, an annual audit of the Company’s books of account by a nationally
recognized independent accounting firm.

(j)             The Manager shall prepare, or, at the sole cost and expense of
the Company, cause to be prepared, reports for the Board relating to any
proposed or consummated investment in accordance with the Investment Guidelines.

(k)           Officers, employees and agents of the Manager and its Affiliates
may serve as directors, officers, agents, nominees or signatories for the
Company or any of its Subsidiaries, to the extent permitted by their Governing
Instruments, by any resolutions duly adopted by the Board. When executing
documents or otherwise acting in such capacities for the Company or any of its
Subsidiaries, such Persons shall indicate in what capacity they are executing on
behalf of the Company or any of its Subsidiaries. Without limiting the foregoing
and subject to the provisions of Section 3(a), Section 8(a)(xx) and Section 8(b)
hereof, while this Agreement is in effect, the Manager will provide the Company
with a management team, including a Chief Executive Officer, President, Chief
Financial Officer, Secretary, and other appropriate officers of the Company to
be approved and appointed by the Board, along with appropriate support
personnel, to provide the services to be provided by the Manager to the Company
hereunder, who shall devote such of their time to the management of the Company
as necessary and appropriate, commensurate with the level of activity of the
Company from time to time.

(l)             The Manager shall provide personnel for service on the Manager
Investment Committee.

(m)          The Manager shall obtain, for the benefit of Company and its
officers and directors, at the Company’s expense pursuant to Section 8 hereof,
customary directors’ and officers’ liability insurance, commercial general
liability insurance, property and casualty liability insurance, and such other
insurance coverages as are customary and appropriate for the Company and its
assets, and the Manager and its personnel shall be named as additional named
insureds under such policies to the extent feasible and appropriate in the
Manager’s reasonable discretion; provided, that the Manager will obtain its own
employer liability insurance or will be added as an additional insured under the
employer liability insurance of one of its Affiliates.

(n)           The Manager, at the sole cost and expense of the Company, shall
provide such internal audit, compliance and control services as may be required
for the Company to comply with applicable law (including the Securities Act and
Exchange Act), regulation (including SEC regulations) and the rules and
requirements of the NYSE MKT or such other securities exchange on which the
shares of Common Stock are listed and as otherwise reasonably requested by the
Company or its Board from time to time.

(o)           The Manager acknowledges receipt of the Company’s Code of Business
Conduct and Ethics and Policy on Insider Trading (collectively, the “Conduct
Policies”) and agrees to require the persons who provide services to the Company
to comply with such Conduct Policies in the performance of such services
hereunder or such comparable policies as shall in substance hold such persons to
at least the standards of conduct set forth in the Conduct Policies.

(p)           The Manager shall use its commercially reasonable efforts to cause
the Company to comply with its covenants and obligations under the Transaction
Agreements, as such term is defined in the Stock Purchase Agreement.

Section 3. Additional Activities of the Manager; Non-Solicitation; Restrictions;
Other Agreements.

(a)           Devotion of Time.  The Manager, through the Sponsor and its
Affiliates, will provide a management team (including a chief executive officer,
president, chief financial officer, secretary and such officers as the Manager
deems appropriate, subject to approval and appointment of such officers by the
Board) along with appropriate support personnel, to deliver the management
services to the Company hereunder. The members of such management team shall
devote such of their working time and efforts to the management of the Company
as the Manager deems reasonably necessary and appropriate for the proper
performance of all of the Manager’s duties hereunder, commensurate with the
level of activity of the Company from time to time; provided, however, that the
Manager shall have the right, but not the obligation, to provide a dedicated or
partially dedicated chief financial officer, chief operating officer,
controller, investor relations professional, or internal legal counsel. To the
extent the Manager elects to provide the Company with any dedicated or partially
dedicated chief financial officer, chief operating officer, controller, investor
relations professional or internal legal counsel, each of whom will be an
employee of the Manager or one of its Affiliates, such personnel are referred to
herein as “Dedicated Employees.” The Company shall have the benefit of the
Manager’s reasonable judgment and effort in rendering services and, in
furtherance of the foregoing, the Manager shall not undertake activities which,
in its reasonable judgment, will materially adversely affect the performance of
its obligations under this Agreement.

 

10

 

(b)           Other Activities. Except as provided in the last sentence of this
Section 3(b), or the Investment Guidelines, nothing in this Agreement shall (i)
prevent the Sponsor, the Manager or any of their Affiliates, members, officers,
directors or employees, from engaging in other businesses or from rendering
services of any kind to any other Person or entity, whether or not the
investment objectives or policies of any such other Person or entity are similar
to, or directly competitive with, those of the Company, (ii) in any way bind or
restrict the Manager, the Sponsor or any of their Affiliates, members, officers,
directors or employees from buying, selling or owning any real estate or real
estate-related investments (equity or debt) or securities for their own accounts
or for the account of others for whom the Manager, the Sponsor or any of their
Affiliates, members, officers, directors or employees may be acting, or (iii) in
any way prevent the Manager, the Sponsor or any of their Affiliates, members,
officers, directors or employees from managing any other investment funds,
accounts or other investment vehicles or complying with their obligations in
connection therewith. While information and recommendations supplied to the
Company shall, in the Manager’s reasonable and good faith judgment, be
appropriate under the circumstances and in light of the investment objectives
and policies of the Company, they may be different from the information and
recommendations supplied by the Manager, the Sponsor or any Affiliate, member
officer, director or employee of the Manager or the Sponsor to others. The
Company shall have the benefit of the Manager’s judgment and commercially
reasonable effort in rendering services hereunder and, in furtherance of the
foregoing, the Manager shall not undertake activities that, in its sole judgment
made in good faith, will adversely affect the performance of its obligations
under this Agreement.

(c)           In the event of a Termination Without Cause of this Agreement by
the Company pursuant to Section 11(b) hereof or a Termination for Good Reason of
this Agreement by the Manager pursuant to Section 13(b) hereof, for two (2)
years after such termination of this Agreement, the Company shall not, without
the consent of the Manager, employ or otherwise retain any employee of the
Manager or any of its Affiliates or any person who was employed by the Manager
or any of its Affiliates on the date of termination. The Company acknowledges
and agrees that, in addition to any damages, the Manager shall be entitled to
equitable relief for any violation of this Section 3(c) by the Company,
including injunctive relief.

(d)           The Manager shall use such names, trademarks and logos as may be
adopted and designated by the Manager with respect to and in conjunction with
the operation and management of the Company and other Properties managed by the
Manager; provided, however, such names, trademarks and logos shall remain the
exclusive property of the Manager. In the event this Agreement is terminated for
any reason, or expires, all rights of the Company to use such names and such
trademarks and logos shall be immediately terminated.

(e)           All Intellectual Property created or developed in connection with
the Manager’s performance of this Agreement or otherwise and the Intellectual
Property Rights associated therewith shall be the sole and exclusive property of
the Manager. For the term of this Agreement, the Manager does hereby grant the
Company a non-exclusive, worldwide, fully paid up, royalty free,
non-sub-licensable, non-transferable license and right to use the Intellectual
Property made or used in connection with the Manager’s performance of this
Agreement for its business purposes. The Company will, upon request of the
Manager, do execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and assurances as may be requested by the
Manager to carry out the intent of this Agreement or to otherwise perfect,
record, confirm, or enforce the Manager’s rights in and to the Intellectual
Property.

(f)            The Company, for itself and its Subsidiaries, shall take, and
shall use its commercially reasonable efforts to cause the Board to take, all
Necessary Actions reasonably required to enable the Manager to carry out its
duties and obligations under, and as permitted by, this Agreement. For purposes
of this Agreement, “Necessary Actions” shall mean, with respect to a specified
result, all actions that are permitted by applicable law and applicable stock
exchange rules as shall be necessary to cause such result. Such actions shall
include, but not be limited to, adoption by the Board or committees of the Board
of resolutions or other similar action by the Board or committees of the Board
that are required to achieve such result.

 

11

 

Section 4. Agency.

The Manager shall act as agent of the Company and the Subsidiaries in making,
acquiring, financing and disposing of investments of the Company, disbursing and
collecting the funds of the Company and the Subsidiaries, paying the debts and
fulfilling the obligations of the Company and the Subsidiaries, supervising the
performance of professionals engaged by or on behalf of the Company and the
Subsidiaries and handling, prosecuting and settling any claims of or against the
Company and the Subsidiaries, the Board, holders of the Company’s securities or
representatives or assets of the Company and the Subsidiaries.

Section 5. Bank Accounts.

At the direction of the Board, the Manager may establish and maintain one or
more bank accounts in the name of the Company or any Subsidiary, and may collect
and deposit into any such account or accounts, and disburse funds from any such
account or accounts, under such terms and conditions as the Board may approve;
and the Manager shall from time to time render appropriate accountings of such
collections and payments to the Board and, upon request, to the auditors of the
Company or any Subsidiary.

Section 6. Records; Confidentiality.

The Manager shall maintain appropriate books of accounts and records relating to
services performed hereunder, and such books of account and records shall be
accessible for inspection by representatives of the Company (including the
Board) or any Subsidiary at any time during normal business hours. The Manager
shall keep confidential any and all non-public information, written or oral,
obtained by it in connection with the services rendered hereunder (“Confidential
Information”) and shall not disclose Confidential Information, in whole or in
part, to any Person other than (i) to its Affiliates, members, officers,
directors, employees, agents, representatives, legal counsel, accountants, or
advisors who need to know such Confidential Information for the purpose of
rendering services hereunder, (ii) to appraisers, financing sources and others
in the ordinary course of the Company’s business ((i) and (ii) collectively,
“Manager Permitted Disclosure Parties”), (iii) in connection with any
governmental or regulatory filings of the Company or disclosure or presentations
to Company investors (subject to compliance with Regulation FD), (iv) to
governmental officials having jurisdiction over the Company, (v) as required by
law or legal process, or (vi) with the consent of the Company upon approval of a
majority of the Independent Directors. The Manager agrees to inform each of its
Manager Permitted Disclosure Parties of the non-public nature of the
Confidential Information and to use commercially reasonable efforts to obtain
agreement from such Persons to treat such Confidential Information in accordance
with the terms hereof. Nothing herein shall prevent the Manager from disclosing
Confidential Information (i) upon the order of any court or administrative
agency, (ii) upon the request or demand of, or pursuant to any law or regulation
to, any regulatory agency or authority, (iii) to the extent reasonably required
in connection with the exercise of any remedy hereunder, or (iv) to its legal
counsel or independent auditors; provided, however that with respect to clauses
(i) and (ii), it is agreed that, so long as not legally prohibited, the Manager
will provide the Company with prompt written notice of such order, request or
demand so that the Company may seek, at its sole expense, an appropriate
protective order and/or waive the Manager’s compliance with the provisions of
this Agreement. If, failing the entry of a protective order or the receipt of a
waiver hereunder, the Manager is required to disclose Confidential Information,
the Manager may disclose only that portion of such information that is legally
required without liability hereunder; provided, that the Manager agrees to
exercise its reasonable best efforts to obtain reliable assurance that
confidential treatment will be accorded such information. Notwithstanding
anything herein to the contrary, each of the following shall be deemed to be
excluded from the provisions hereof: any Confidential Information that (A) is
available to the public from a source other than the Manager, (B) is released in
writing by the Company to the public, (C) is obtained by the Manager from a
third-party which, to the best of the Manager’s knowledge, does not constitute a
breach by such third-party of an obligation of confidence with respect to the
Confidential Information disclosed or (D) is disclosed in the ordinary course of
business, which the Manager, acting prudently, deems in its reasonable
discretion to be necessary or appropriate in connection with carrying out its
duties and obligations under this Agreement, subject to compliance with the
Company’s Regulation FD disclosure obligations. The provisions of this Section 6
shall survive the expiration or earlier termination of this Agreement for a
period of two years.

 

12

 

Section 7. Compensation.

(a)           For the services rendered under this Agreement, the Company shall
pay the Base Management Fee, Acquisition Fees, Disposition Fees, the Incentive
Fee, and the Property Management Fee to the Manager. The Manager will not
receive any compensation for the period prior to the date hereof.

(b)           The Base Management Fee shall be payable in arrears in cash, in
quarterly installments commencing with the quarter in which this Agreement is
executed. If applicable, the initial and final installments of the Base
Management Fee shall be calculated and pro-rated based on the number of days
during the initial and final quarter, respectively, that this Agreement is in
effect. The Manager shall calculate each quarterly installment of the Base
Management Fee, and deliver such calculation to the Company, together with
reasonable supporting materials, within 30 days following the last day of each
calendar quarter. The Company shall pay the Manager each installment of the Base
Management Fee within five Business Days after the date of delivery to the
Company of such calculations.

(c)           The Property Management Fee shall be payable in arrears in cash,
in monthly installments commencing with the month in which this Agreement is
executed. The Manager shall calculate each monthly installment of the Property
Management Fee, and deliver such calculation to the Company promptly at the end
of the month. The Company shall pay the Manager each installment of the Property
Management Fee within five Business Days after the date of delivery to the
Company of such calculations. The Manager may subcontract the performance of its
property management and leasing services duties to third parties (including
Affiliates) and pay all (or a portion) of the Property Management Fee to such
persons with whom it contracts for these services. The Manager will be
responsible for all fees payable to third parties (including Affiliates) in
connection with subcontracted property management and leasing responsibilities.

(d)           The Acquisition Fees and Disposition Fees shall be payable in
arrears in cash with respect to all acquisitions and dispositions of Property or
other investments occurring after the date of this Agreement. The Manager shall
calculate each Acquisition Fee and Disposition Fee, and deliver such calculation
to the Company, within 10 days following each closing of an acquisition or
disposition, as the case may be. The Company shall pay the Manager each
Acquisition Fee and Disposition Fee within five Business Days after the date of
delivery to the Company of such calculations.

(e)           The Incentive Fee will be calculated and payable in arrears in
cash on a quarterly basis. The Manager shall calculate each quarterly Incentive
Fee, and deliver such calculation to the Company, within 30 days following the
last day of each calendar quarter; provided, that the first Incentive Fee
calculation will not occur until after completion of four fiscal quarters
(including the fiscal quarter in which the date of this Agreement falls)
following the date hereof. The Incentive Fee shall be pro rated for partial
quarterly periods based on the number of days in such partial period compared to
a 90 day quarter. The Company shall pay the Manager each installment of the
Incentive Fee within five Business Days after the date of delivery to the
Company of such calculation.

Section 8. Expenses of the Company.

(a)           The Company shall bear all of its operating expenses, except those
specifically required to be borne by the Manager under this Agreement. The
Company shall pay directly all such expenses or, if and to the extent paid by
the Manager or any of its Affiliates, shall reimburse the Manager or such
Affiliate in accordance with this Section 8. The expenses required to be borne
by the Company include, but are not limited to:

(i)             issuance and transaction costs incident to the acquisition,
disposition and financing of Properties and other investments;

(ii)            legal, regulatory, compliance, tax, accounting, consulting,
auditing, administrative fees and expenses and fees and expenses for other
similar services rendered to the Company by third-party service providers
retained by the Manager;

(iii)           the fees and other compensation payable to the Independent
Directors and the cost of liability insurance to indemnify the Company’s
directors and officers;

 

13

 

(iv)          the costs associated with the establishment and maintenance of any
credit facilities and other indebtedness of the Company (including commitment
fees, accounting fees, legal fees, closing costs, etc.);

(v)           expenses associated with securities offerings of the Company;

(vi)          expenses relating to the payment of distributions;

(vii)         expenses connected with communications to holders of the Company’s
securities and in complying with the continuous reporting and other requirements
of the Exchange Act, the SEC and other governmental bodies;

(viii)        transfer agent, registrar and exchange listing fees;

(ix)          the costs of printing and mailing proxies, reports and other
materials to the Company’s shareholders;

(x)           costs associated with any computer software or hardware,
electronic equipment, or purchased information technology services from third
party vendors that is used solely for the Company;

(xi)          reasonable costs and out of pocket expenses incurred by directors,
officers, employees or other agents of the Company and the Manager for travel on
the Company’s behalf;

(xii)         the portion of any costs and expenses incurred by the Manager or
its Affiliates with respect to market information systems and publications,
research publications and materials that are allocable to the Company in
accordance with the expense allocation policies of the Manager or such
Affiliates;

(xiii)        settlement, clearing, and custodial fees and expenses;

(xiv)        all taxes and license fees;

(xv)         all insurance costs incurred with respect to insurance policies
obtained in connection with the operation of the Company’s business, including
but not limited to errors and omissions insurance covering activities of the
Manager, the Sponsor, their respective Affiliates and any of their employees
relating to the performance of the Manager’s duties and obligations under this
Agreement or of the Sponsor’s duties under the Administration Agreement, except
that, for the avoidance of doubt, the Company shall not be required to reimburse
the insurance premiums incurred by the Manager for employer liability insurance;

(xvi)        all other actual out of pocket costs and expenses relating to the
Company’s business and investment operations, including, without limitation, the
costs and expenses of originating, acquiring, owning, financing, operating,
rehabilitating, protecting, maintaining, developing and disposing of
investments, including appraisal, reporting, audit and legal fees;

(xvii)       any judgment or settlement of pending or threatened proceedings
(whether civil, criminal or otherwise) against the Company or any Subsidiary, or
against any trustee, director, officer, member, general partner, manager or
employee of the Company or of any Subsidiary in his capacity as such for which
the Company or any Subsidiary is required to indemnify such trustee, director,
officer, member, general partner, manager or employee by any court or
governmental agency, or settlement of pending or threatened proceedings;

(xviii)      the costs of maintaining compliance with all federal, state and
local rules and regulations, including securities regulations, or any other
regulatory agency, the cost of obtaining tax advice and the preparation of any
tax returns, all taxes and license fees and all insurance costs incurred on the
Company’s behalf;

(xix)        expenses relating to any office or office facilities, including
disaster backup recovery sites and facilities, maintained expressly for the
Company and separate from offices of the Manager;

 

14

 

(xx)         the costs of the wages, salaries and benefits incurred by the
Manager with respect to any Dedicated Employees that the Manager elects to
provide to the Company pursuant to Section 3(a) above; provided that (A) if any
Dedicated Employee devotes less than 100% of his or her working time and efforts
to matters related to the Company and its business, the Company shall be
required to bear only a pro rata portion of the costs of the wages, salaries and
benefits incurred by the Manager with respect to such Dedicated Employee based
on the percentage of such employee’s working time and efforts spent on matters
related to the Company, (B) the amount of such wages, salaries and benefits paid
or reimbursed with respect to the Dedicated Employees shall be subject to the
approval of the Compensation Committee of the Board and, if required by the
Board, of the Board and (C) during the one (1) year period following the date of
this Agreement, the aggregate amount of cash compensation paid to Dedicated
Employees by the Company, or reimbursed by the Company to the Manager in respect
thereof, shall not exceed $500,000;

(xxi)        any equity-based compensation that the Company, upon the approval
of the Board or the Compensation Committee of the Board, elects to pay to any
director, officer or employee of the Company or the Manager or any of the
Manager’s Affiliates who provides services to the Company or any of the
Subsidiaries; and

(xxii)       all other costs and expenses approved by the Board.

(b)           Other than as expressly provided above, the Company will not be
required to pay any portion of the rent, telephone, utilities, office furniture,
equipment, machinery and other office, internal and overhead expenses of the
Manager and its Affiliates. In particular, the Manager is not entitled to be
reimbursed for wages, salaries and benefits of its officers and employees, other
than as described in Section 8(a)(xx) and Section 8(a)(xxi) above.

(c)           Subject to any required Board approval, the Manager may retain,
for and on behalf, and at the sole cost and expense, of the Company, such
services of non-Affiliate third party accountants, legal counsel, appraisers,
insurers, brokers, transfer agents, registrars, developers, contractors,
investment banks, financial advisors, banks and other lenders and others as the
Manager deems necessary or advisable in connection with the management and
operations of the Company. In lieu of retaining non-Affiliate third service
providers as described in the preceding sentence, the Manager shall have the
right to retain, on behalf of and at the cost and expense of the Company,
Affiliates of the Manager, or to direct officers or employees of the Manager or
its Affiliates, to provide any services that the Manager deems necessary or
advisable in connection with the management and operations of the Company and
its Properties and other investments, provided that the amounts paid by the
Company for such services do not exceed the fees and expenses that a
commercially reasonable third party service provider would have charged for such
services. If the Manager proposes to retain any Affiliate of the Manager, or to
direct officers or employees of the Manager or its Affiliates, to provide any
services that the Manager deems necessary or advisable in connection with the
management and operations of the Company and its Properties and other
investments pursuant to the preceding sentence, then such arrangement shall be
subject to the prior approval of a majority of the Independent Directors. The
provisions of this Section 8(c) shall survive the expiration or earlier
termination of this Agreement to the extent such expenses have previously been
incurred or are incurred in connection with such expiration or termination.

(d)           Costs and expenses incurred by the Manager on behalf of the
Company shall be reimbursed monthly to the Manager. The Manager shall prepare a
written statement in reasonable detail documenting the costs and expenses of the
Company and those incurred by the Manager on behalf of the Company during each
month, and shall deliver such written statement to the Company within thirty
(30) days after the end of each month. The Company shall pay all amounts payable
to the Manager pursuant to this Section 8(d) within five (5) Business Days after
the receipt of the written statement without demand, deduction, offset or delay.
Cost and expense reimbursement to the Manager shall be subject to adjustment in
connection with the annual audit of the Company. The provisions of this Section
8 shall survive the expiration or earlier termination of this Agreement to the
extent such expenses have previously been incurred or are incurred in connection
with such expiration or termination.

Section 9. Limits of the Manager’s Responsibility.

(a)           The Manager assumes no responsibility under this Agreement other
than to render the services called for hereunder in good faith and shall not be
responsible for any action of the Board in following or declining to follow any
advice or recommendations of the Manager or, if applicable, the Sponsor,
including as set forth in the Investment Guidelines. The Manager and its
Affiliates and their respective controlling Persons, members, directors,
officers, managers, employees, partners, owners and stockholders, will not be
liable to the Company, any Subsidiary, the Board, the Company’s stockholders or
any Subsidiary’s stockholders or any of their respective controlling Persons,
directors, trustees, managers, officers, members, employees, partners or
security holders for any acts or omissions by the Manager or any such Person
performed in accordance with and pursuant to this Agreement, except by reason of
acts or omissions found by a court of competent jurisdiction in a final,
non-appealable judgment to be attributable to bad faith, willful misconduct or
gross negligence of their respective duties under this Agreement. The Company
shall, to the full extent lawful, reimburse, indemnify and hold harmless the
Manager, its Affiliates and their respective controlling Persons, members,
directors, officers, employees, managers, owners and stockholders (each, a
“Manager Indemnified Party”), of and from any and all expenses, losses, damages,
liabilities, demands, charges and claims of any nature whatsoever (including
reasonable attorneys’ fees) (collectively “Losses”) in respect of or arising
from any acts or omissions of such Manager Indemnified Party performed in good
faith under this Agreement and not constituting fraud, bad faith, willful
misconduct or gross negligence of duties of such Manager Indemnified Party under
this Agreement. In addition, the Manager Indemnified Parties will not be liable
for trade errors that may result from ordinary negligence, including, without
limitation, errors in the investment decision making process or in the trade
process.

 

15

 

(b)           The Manager shall, to the full extent lawful, reimburse, indemnify
and hold harmless the Company, and the directors, officers and stockholders of
the Company and each Person, if any, controlling the Company (each, a “Company
Indemnified Party”; a Manager Indemnified Party and a Company Indemnified Party
are each sometimes hereinafter referred to as an “Indemnified Party”) of and
from any and all Losses in respect of or arising from (i) any acts or omissions
of the Manager found by a court of competent jurisdiction in a final,
non-appealable judgment to be attributable to the gross negligence, willful
misconduct, fraud or bad faith on the part of any such Person, and (ii) any
claims by any of the Manager’s or its Affiliates’ employees relating to the
terms and conditions of their employment by the Manager or any of its
Affiliates, as applicable.

(c)           In case any such claim, suit, action or proceeding (a “Claim”) is
brought against any Indemnified Party in respect of which indemnification may be
sought by such Indemnified Party pursuant hereto, the Indemnified Party shall
give prompt written notice thereof to the indemnifying party, which notice shall
include all documents and information in the possession of or under the control
of such Indemnified Party reasonably necessary for the evaluation and/or defense
of such Claim and shall specifically state that indemnification for such Claim
is being sought under this Section; provided, however, that the failure of the
Indemnified Party to so notify the indemnifying party shall not limit or affect
such Indemnified Party’s rights other than pursuant to this Section. Upon
receipt of such notice of Claim (together with such documents and information
from such Indemnified Party), the indemnifying party shall, at its sole cost and
expense, in good faith defend any such Claim with counsel reasonably
satisfactory to such Indemnified Party, which counsel may, without limiting the
rights of such Indemnified Party pursuant to the next succeeding sentence of
this Section, also represent the indemnifying party in such investigation,
action or proceeding. In the alternative, such Indemnified Party may elect to
conduct the defense of the Claim, if (i) such Indemnified Party reasonably
determines that the conduct of its defense by the indemnifying party could be
materially prejudicial to its interests, (ii) the indemnifying party refuses to
assume such defense (or fails to give written notice to the Indemnified Party
within ten (10) days of receipt of a notice of Claim that the indemnifying party
assumes such defense), or (iii) the indemnifying party shall have failed, in
such Indemnified Party’s reasonable judgment, to defend the Claim in good faith.
The indemnifying party may settle any Claim against such Indemnified Party
without such Indemnified Party’s consent, provided (i) such settlement is
without any Losses whatsoever to such Indemnified Party, (ii) the settlement
does not include or require any admission of liability or culpability by such
Indemnified Party and (iii) the indemnifying party obtains an effective written
release of liability for such Indemnified Party from the party to the Claim with
whom such settlement is being made, which release must be reasonably acceptable
to such Indemnified Party, and a dismissal with prejudice with respect to all
claims made by the party against such Indemnified Party in connection with such
Claim. The applicable Indemnified Party shall reasonably cooperate with the
indemnifying party, at the indemnifying party’s sole cost and expense, in
connection with the defense or settlement of any Claim in accordance with the
terms hereof. If such Indemnified Party is entitled pursuant to this Section to
elect to defend such Claim by counsel of its own choosing and so elects, then
the indemnifying party shall be responsible for any good faith settlement of
such Claim entered into by such Indemnified Party. Except as provided in the
immediately preceding sentence, no Indemnified Party may pay or settle any Claim
and seek reimbursement therefor under this Section.

(d)           Reasonable expenses (including attorney’s fees) incurred by an
Indemnitee in defense or settlement of a claim that may be subject to a right of
indemnification hereunder may be advanced by the Company to such Indemnitee as
such expenses are incurred prior to the final disposition of such claim;
provided that, Indemnitee undertakes to repay such amounts if it shall be
determined by a court of competent jurisdiction that Indemnitee was not entitled
to be indemnified hereunder.

(e)           The provisions of this Section 9 shall survive the expiration or
earlier termination of this Agreement.

 

16

 

Section 10. No Joint Venture; Independent Contractor.

The Company and any Subsidiary on the one hand and the Manager or its Affiliates
and members on the other hand are not partners or joint venturers with each
other and nothing herein shall be construed to make them such partners or joint
venturers or impose any liability as such on either of them. The parties hereto
expressly acknowledge and agree that the Manager is at all times acting and
performing under this Agreement as an independent contractor, retaining control
over and responsibility for its own operations and personnel, and that no act or
omission by either the Company or the Manager shall be construed to make or
constitute the other its partner, member, principal, agent, joint venturer or
associate and the parties agree to report the foregoing treatment of the Manager
for tax purposes in any applicable tax filing.

Section 11. Term; Renewal; Termination Without Cause.

(a)           This Agreement shall become effective on the date hereof and shall
continue in operation, unless terminated in accordance with the terms hereof,
until the fifth anniversary of the date hereof (the “Initial Term”). After the
Initial Term, this Agreement shall be deemed renewed automatically each year for
an additional one-year period (an “Automatic Renewal Term”) unless the Company
or the Manager elects not to renew this Agreement in accordance with Section
11(b) or Section 11(d), respectively.

(b)           Notwithstanding any other provision of this Agreement to the
contrary, upon the expiration of the Initial Term or any Automatic Renewal Term
and upon 180 days’ prior written notice to the Manager (the “Termination
Notice”), upon the affirmative vote of at least two-thirds of the Independent
Directors that (1) there has been unsatisfactory performance by the Manager that
is materially detrimental to the Company and its Subsidiaries taken as a whole
or (2) the Base Management Fee, Incentive Fees, Acquisition Fees, Disposition
Fees and Property Management Fees, taken as a whole, payable to the Manager are
unfair (determined after reasonable inquiry by the Independent Directors as to
the market rates charged by similarly situated managers), subject to Section
11(c) below, the Company may, without cause, in connection with the expiration
of the Initial Term or the then current Automatic Renewal Term, decline to renew
this Agreement (any such nonrenewal, a “Termination Without Cause”). In the
event of a Termination Without Cause, the Company shall pay the Manager the
Termination Fee before or on the last day of the Initial Term or such Automatic
Renewal Term, as the case may be (the “Effective Termination Date”). The Company
may terminate this Agreement for cause pursuant to Section 13 hereof even after
a Termination Notice and, in such case, no Termination Fee shall be payable.

(c)           Notwithstanding the provisions of subsection (b) above, if the
reason for nonrenewal specified in the Company’s Termination Notice is that at
least two-thirds of the Independent Directors have determined that the Base
Management Fee, Incentive Fees, Acquisition Fees, Disposition Fees and Property
Management Fees, taken as a whole, payable to the Manager are unfair in
accordance with the paragraph above, the Company shall not have the foregoing
nonrenewal right in the event the Manager agrees that it will continue to
perform its duties hereunder during the Automatic Renewal Term that would
commence upon the expiration of the Initial Term or then current Automatic
Renewal Term under a fee arrangement that at least two-thirds of the Independent
Directors determine to be fair; provided, however, the Manager shall have the
right to renegotiate the Base Management Fee, Incentive Fees, Acquisition Fees,
Disposition Fees and Property Management Fees, taken as a whole, payable to the
Manager by delivering to the Company, not less than 120 days prior to the
pending Effective Termination Date, written notice (a “Notice of Proposal to
Negotiate”) of its intention to renegotiate such fees. Thereupon, the Company
and the Manager shall endeavor to negotiate such fees in good faith. Provided
that the Company and the Manager agree to a revised fee arrangement or other
compensation structure within sixty (60) days following the Company’s receipt of
the Notice of Proposal to Negotiate, the Termination Notice from the Company
shall be deemed of no force and effect, and this Agreement shall continue in
full force and effect on the terms stated herein, except that the Base
Management Fee, Incentive Fees, Acquisition Fees, Disposition Fees and Property
Management Fees payable to the Manager or other compensation structure shall
reflect the revised fee arrangement or other compensation structure as then
agreed upon by the Company and the Manager. The Company and the Manager agree to
execute and deliver an amendment to this Agreement setting forth such revised
fee arrangement or other compensation structure promptly upon reaching an
agreement regarding same. In the event that the Company and the Manager are
unable to agree to a revised fee arrangement or other compensation structure
during such sixty (60) day period, this Agreement shall terminate on the
Effective Termination Date and the Company shall be obligated to pay the Manager
the Termination Fee upon the Effective Termination Date.

 

17

 

(d)           No later than 180 days prior to the expiration of the Initial Term
or the then current Automatic Renewal Term, the Manager may deliver written
notice to the Company informing it of the Manager’s intention to decline to
renew this Agreement, whereupon this Agreement shall not be renewed and extended
and this Agreement shall terminate effective on the anniversary date of this
Agreement next following the delivery of such notice. The Company is not
required to pay to the Manager the Termination Fee if the Manager terminates
this Agreement pursuant to this Section 11(d).

(e)           Except as set forth in this Section 11, a termination or
nonrenewal of this Agreement pursuant to this Section 11 shall be without any
further liability or obligation of either party to the other, except as provided
in Section 6, Section 8, Section 9 and Section 15 of this Agreement.

(f)            The Manager shall cooperate with the Company in executing an
orderly transition of the management of the Company’s consolidated assets to a
new manager.

Section 12. Assignments.

(a)           Assignments by the Manager. This Agreement shall terminate
automatically without payment of the Termination Fee in the event of its
assignment, in whole or in part, by the Manager, unless such assignment is
consented to in writing by the Company with the consent of a majority of the
Independent Directors. Any such permitted assignment shall bind the assignee
under this Agreement in the same manner as the Manager is bound, and the Manager
shall be liable to the Company for all acts or omissions of the assignee under
any such assignment. In addition, the assignee shall execute and deliver to the
Company a counterpart of this Agreement naming such assignee as the Manager.
Notwithstanding the foregoing, the Manager may, without the approval of the
Company’s Independent Directors, (i) assign this Agreement to an Affiliate of
the Manager, conditioned on such Affiliate becoming a party to, or becoming
subject to the rights and obligations of and the Services Agreement, (ii)
delegate to one or more of its Affiliates the performance of any of its
responsibilities hereunder so long as it remains liable for any such Affiliate’s
performance, in each case so long as assignment or delegation does not require
the Company’s approval under the Investment Advisors Act (but if such approval
is required, the Company shall not unreasonably withhold, condition or delay its
consent). Nothing contained in this Agreement shall preclude any pledge,
hypothecation or other transfer of any amounts payable to the Manager under this
Agreement.

Notwithstanding the foregoing, any change in control of any direct or indirect
owner of equity interest in the Manager, or of any Affiliate thereof, shall not
be deemed to constitute an assignment of this Agreement by the Manager and shall
not be subject to the consent of the Company or the Board.

 

(b)           Assignments by the Company. This Agreement shall not be assigned
by the Company without the prior written consent of the Manager, except in the
case of assignment by the Company to another REIT or other organization which is
a successor (by merger, consolidation, purchase of assets, or other transaction)
to the Company, in which case such successor organization shall be bound under
this Agreement and by the terms of such assignment in the same manner as the
Company is bound under this Agreement.

Section 13. Termination for Cause; Termination for Good Reason.

(a)           The Company may terminate this Agreement effective upon at least
30 days’ prior written notice of termination from the Company to the Manager,
without payment of any Termination Fee, if (i) the Manager, its agents or its
assignees breaches any material provision of this Agreement and such breach
shall continue for a period of 30 days after written notice thereof specifying
such breach and requesting that the same be remedied in such 30-day period (or
45 days after written notice of such breach if the Manager takes steps to cure
such breach within 30 days of the written notice), (ii) there is a commencement
of any proceeding relating to the Manager’s Bankruptcy or insolvency, including
an order for relief in an involuntary bankruptcy case or the Manager authorizing
or filing a voluntary bankruptcy petition, (iii) the dissolution of the Manager,
or (iv) the Manager commits fraud against the Company, misappropriates or
embezzles funds of the Company, or acts, or fails to act, in a manner
constituting bad faith, willful misconduct, gross negligence or reckless
disregard in the performance of its duties under this Agreement; provided,
however, that if any of the actions or omissions described in this clause (iv)
are caused by an employee and/or officer of the Manager or one of its Affiliates
and the Manager takes all necessary and appropriate action against such person
and cures the damage caused by such actions or omissions within 30 days of the
Manager actual knowledge of its commission or omission, the Company shall not
have the right to terminate this Agreement pursuant to this Section 13(a)(iv).

 

18

 

(b)           The Manager may terminate this Agreement effective upon 60 days’
prior written notice of termination to the Company in the event that the Manager
determines that an event or circumstances constituting “Good Reason” shall have
occurred, and the Company shall not have remedied such event or circumstances to
the reasonable satisfaction of the Manager within 30 days after written notice
thereof. The Company is required to pay to the Manager the Termination Fee if
the termination of this Agreement is made pursuant to this Section 13(b).

(c)           The Manager may terminate this Agreement if the Company becomes
required to register as an investment company under the Investment Company Act,
with such termination deemed to occur immediately before such event, in which
case the Company shall not be required to pay the Termination Fee.

Section 14. Action Upon Termination.

From and after the effective date of termination of this Agreement pursuant to
Sections 11, 12, or 13 of this Agreement, the Manager shall not be entitled to
compensation for further services hereunder, but shall be paid all compensation
accruing to the date of termination and, if terminated pursuant to Section 13(b)
hereof or not renewed pursuant to Section 11(b) hereof (subject to Section 11(c)
hereof), the Termination Fee. Upon any such termination, the Manager shall
forthwith:

(a)           after deducting any accrued compensation and reimbursement for its
expenses to which it is then entitled, pay over to the Company or a Subsidiary
all money collected and held for the account of the Company or a Subsidiary
pursuant to this Agreement;

(b)           deliver to the Board a full accounting, including a statement
showing all payments collected by it and a statement of all money held by it,
covering the period following the date of the last accounting furnished to the
Board with respect to the Company and any Subsidiaries;

(c)           deliver to the Board all property and documents of the Company and
any Subsidiaries then in the custody of the Manager; and

(d)           use commercially reasonable efforts to cooperate with the Company
or any persons or entity designated by the Board to succeed the Manager as the
manager of the Company (a “Successor Manager”) to accomplish an orderly transfer
of the operation and management of the Company and its investment activities to
such Successor Manager. For a period of thirty (30) days after the effective
date of any termination of this Agreement, the Manager shall make its officers
reasonably available during normal business hours to answer questions from and
consult with the Company or designated representatives of any Successor Manager
with respect to the Company’s business, operations and investment activities
during the period prior to the termination.

Section 15. Release of Money or Other Property Upon Written Request.

The Manager agrees that any money or other property of the Company (which such
term, for the purposes of this Section 15, shall be deemed to include any and
all of its Subsidiaries, if any) held by the Manager shall be held by the
Manager as custodian for the Company, and the Manager’s records shall be
appropriately and clearly marked to reflect the ownership of such money or other
property by the Company. Upon the receipt by the Manager of a written request
signed by a duly authorized officer of the Company requesting the Manager to
release to the Company any money or other property then held by the Manager for
the account of the Company under this Agreement, the Manager shall release such
money or other property to the Company within a reasonable period of time, but
in no event later than 60 days following such request. Upon delivery of such
money or other property to the Company, the Manager shall not be liable to the
Company, the Board, or the Company’s stockholders or partners for any acts or
omissions by the Company in connection with the money or other property released
to the Company in accordance with this Section. The Company shall indemnify the
Manager, its Affiliates, members, directors, officers, stockholders, employees
and agents against any and all Losses which arise in connection with the
Manager’s proper release of such money or other property to the Company in
accordance with the terms of this Section 15. Indemnification pursuant to this
provision shall be in addition to any right of the Manager to indemnification
under Section 9 of this Agreement.

 

19

 

Section 16. Representations and Warranties.

(a)           The Company hereby represents and warrants to the Manager as
follows:

(i)             The Company and each of its Subsidiaries is duly organized,
validly existing and in good standing under the laws of the applicable
jurisdiction, has the corporate power and authority and the legal right to own
and operate its assets, to lease any Property it may operate as lessee and to
conduct the business in which it is now engaged and is duly qualified as a
foreign corporation and in good standing under the laws of each jurisdiction
where its ownership or lease of Property or the conduct of its business requires
such qualification, except for failures to be so qualified, authorized or
licensed that could not in the aggregate have a material adverse effect on the
business operations, assets or financial condition of the Company and its
Subsidiaries, if any, taken as a whole.

(ii)            The Company has the corporate power and authority and the legal
right to make, deliver and perform this Agreement and all obligations required
hereunder and has taken all necessary corporate action to authorize this
Agreement on the terms and conditions hereof and the execution, delivery and
performance of this Agreement and all obligations required hereunder. No consent
of any other Person, including stockholders and creditors of the Company, and no
license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing or declaration with, any governmental authority is
required by the Company in connection with this Agreement or the execution,
delivery, performance, validity or enforceability of this Agreement and all
obligations required hereunder. This Agreement has been, and each instrument or
document required hereunder will be, executed and delivered by a duly authorized
officer of the Company, and this Agreement constitutes, and each instrument or
document required hereunder when executed and delivered hereunder will
constitute, the legally valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.

(iii)           The execution, delivery and performance of this Agreement and
the documents or instruments required hereunder will not violate any provision
of any existing law or regulation binding on the Company or any of the
Subsidiaries, or any order, judgment, award or decree of any court, arbitrator
or governmental authority binding on the Company or any Subsidiary, or the
Governing Instruments of, or any securities issued by the Company or any
Subsidiary or of any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which the Company or any Subsidiary is a party or
by which the Company or any Subsidiary or any of their assets may be bound, the
violation of which would have a material adverse effect on the business
operations, assets or financial condition of the Company and its Subsidiaries,
if any, taken as a whole, and will not result in, or require, the creation or
imposition of any lien on any of its Property, assets or revenues pursuant to
the provisions of any such mortgage, indenture, lease, contract or other
agreement, instrument or undertaking.

(b)           The Manager hereby represents and warrants to the Company as
follows:

(i)             The Manager is duly organized, validly existing and in good
standing under the laws of the State of Delaware, has the limited liability
company power and authority and the legal right to own and operate its assets,
to lease the Property it operates as lessee and to conduct the business in which
it is now engaged and is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership or lease of
Property or the conduct of its business requires such qualification, except for
failures to be so qualified, authorized or licensed that could not in the
aggregate have a material adverse effect on the business operations, assets or
financial condition of the Manager.

(ii)            The Manager has the limited liability company power and
authority and the legal right to make, deliver and perform this Agreement and
all obligations required hereunder and has taken all necessary corporate action
to authorize this Agreement on the terms and conditions hereof and the
execution, delivery and performance of this Agreement and all obligations
required hereunder. No consent of any other Person, including members and
creditors of the Manager, and no license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration with,
any governmental authority is required by the Manager in connection with this
Agreement or the execution, delivery, performance, validity or enforceability of
this Agreement and all obligations required hereunder. This Agreement has been,
and each instrument or document required hereunder will be, executed and
delivered by a duly authorized officer of the Manager, and this Agreement
constitutes, and each instrument or document required hereunder when executed
and delivered hereunder will constitute, the legally valid and binding
obligation of the Manager enforceable against the Manager in accordance with its
terms.

 

20

 

(iii)           The execution, delivery and performance of this Agreement and
the documents or instruments required hereunder will not violate any provision
of any existing law or regulation binding on the Manager, or any order,
judgment, award or decree of any court, arbitrator or governmental authority
binding on the Manager, or the Governing Instruments of, or any securities
issued by the Manager or of any mortgage, indenture, lease, contract or other
agreement, instrument or undertaking to which the Manager is a party or by which
the Manager or any of its assets may be bound, the violation of which would have
a material adverse effect on the business operations, assets or financial
condition of the Manager, and will not result in, or require, the creation or
imposition of any lien or any of its Property, assets or revenues pursuant to
the provisions of any such mortgage, indenture, lease, contract or other
agreement, instrument or undertaking.

Section 17. Miscellaneous.

(a)           Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
email), and, unless otherwise expressly provided herein, shall be deemed to have
been duly given or made when delivered against receipt or upon actual receipt of
(i) personal delivery, (ii) delivery by reputable overnight courier, (iii)
delivery by email transmission or (iv) delivery by registered or certified mail,
postage prepaid, return receipt requested, addressed as set forth below (or to
such other address as may be hereafter notified by the respective parties hereto
in accordance with this Section 17):

  If to the Company and     the Operating Partnership:   Roberts Realty
Investors, Inc.     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
    River Front Plaza, East Tower     951 East Byrd Street     Richmond,
Virginia 23219     Attention:  Daniel M. LeBey, Esq.     Telephone:  (804)
788-7366     Email:  dlebey@hunton.com               If to the Manager: 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:
[                                                            ]    
[                                                            ]     Attention:  
  Telephone:     Email:

 

(b)           Binding Nature of Agreement; Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors and assigns as
provided herein.

(c)           Integration. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof.

 

21

 

(d)           Amendments. This Agreement and any terms hereof may not be
amended, supplemented or modified except in an instrument in writing executed by
the parties hereto.

(e)           GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND
THE UNITED STATES DISTRICT COURT FOR ANY DISTRICT WITHIN SUCH STATE FOR THE
PURPOSE OF ANY ACTION OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND TO THE LAYING OF VENUE IN
SUCH COURT.

(f)            WAIVER OF JURY TRIAL. EACH PARTY HERETO ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

(g)           Survival of Representations and Warranties. All representations
and warranties made hereunder, and in any document, certificate or statement
delivered pursuant hereto or in connection herewith, shall survive the execution
and delivery of this Agreement.

(h)           No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of a party hereto, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

(i)             Costs and Expenses. Each party hereto shall bear its own costs
and expenses (including the fees and disbursements of counsel and accountants)
incurred in connection with the negotiations and preparation of and the closing
under this Agreement, and all matter incident thereto.

(j)             Section Headings. The section and subsection headings in this
Agreement are for convenience in reference only and shall not be deemed to alter
or affect the interpretation of any provisions hereof.

(k)           Counterparts. This Agreement may be executed by the parties to
this Agreement on any number of separate counterparts (including by email in
.pdf form), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.

(l)             Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

22

 

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

Roberts Realty Investors, Inc.

  By:       Name:         Title:    

 

 

Roberts Properties Residential, L.P.

By:  Roberts Realty Investors, Inc., its general partner

 

 

  By:       Name:         Title:    

 

 

A-III MANAGER LLC

 

 

  By:       Name:         Title:    

 

 

23

 

Exhibit A

Investment Guidelines

(a)           No investment shall be made that would cause the Company to fail
to qualify as a REIT under the Code following the requalification of the Company
as a REIT (which is anticipated to be January 1, 2015 or 2016).

(b)           A priority of the Company initially will be to dispose of the four
legacy properties.

(c)           Target Assets: Multifamily, office, mixed use office (i.e.,
properties that are primarily office, including commercial office properties
with a retail, parking, self-storage or other component), retail, industrial,
healthcare and lodging properties, as well as preferred equity or debt
instruments secured by mortgages on these types of properties, B pieces or
mezzanine loans secured by pledges of equity interests in entities that own
these types of properties or other forms of subordinate debt in connection with
these types of properties.     (d)           Excluded Assets: For-sale
condominium conversion or condominium development projects.       (e)          
Investment Policy: The Company will generally target wholly-owned Target Assets;
however, the Company may make majority or minority investments alongside
partners, so long as the Company maintains full or shared control over
day-to-day management and major decisions.  While the Company is not prohibited
from engaging in development of Target Assets, it is not anticipated that the
Company would undertake significant ground-up development projects until later
in its lifecycle.     (f)            Investment Structures:  

Acquisitions may take the form of simple purchase contracts but may also take
the form of forward purchase contracts and purchase option agreements for
properties and as such transactions may involve structured investments,
including mezzanine or preferred structures.

 

 

(g)           Prior to completion of the disposition of the Company’s legacy
assets and completion of one or more capital raising transactions in which the
Company raises an aggregate of at least $100 million of new equity capital, the
Manager will not be subject to any specific quantitative investment parameters,
but the Manager will obtain the approval of the Board of Directors with respect
to any single investment in which more than 25% of the Company’s total equity is
invested.

(h)           Following completion of the disposition of the Company’s legacy
assets and completion of one or more capital raising transactions in which the
Company raises an aggregate of at least $100 million of new equity capital, the
quantitative investment parameters for capital deployment shall be as follows:

  · No more than 33% of the Company’s total assets can be invested in any one
single asset, except as approved by the Board of Directors;

  · No more than 33% of the Company’s total assets may be invested in any one
MSA, except as approved by the Board of Directors; and

  · The Company’s aggregate borrowings (for the Company’s assets as a whole)
cannot exceed 75% of the aggregate cost of its tangible assets at the time of
the next new borrowing, except as approved by the Board of Directors.

(h)           Target unleveraged IRRs of 9% or greater or leveraged IRRs of 12%
or greater.

(i)            Pending investment of the Company’s capital in the Target Assets
or other assets permitted under these guidelines, as described above, the
Manager may invest any cash or excess cash reserves of the Company, including
cash from operations, capital transactions and the proceeds of any future
offerings of the Company’s securities, in short-term investments, subject to the
requirements for the Company’s qualification as a REIT under the Code following
the requalification of the Company as a REIT.

 

These Investment Guidelines may be amended, restated, modified, supplemented or
waived by the Board (which must include a majority of the Independent Directors)
without the approval of the Company’s stockholders.

 

24

 

EXHIBIT E

FORM OF REGISTRATION RIGHTS AGREEMENT

 

 

REGISTRATION RIGHTS AGREEMENT, dated as of                , 20__ (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
             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.

 

2

 

“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.

 

3

 

“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.

 

4

 

(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).

 

5

 

(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.

 

6

 

 

  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.

 

7

 

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);

 

8

 

(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;

 

9

 

(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.

 

10

 

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.                       Name:     Title:  
      PURCHASER: A-III Investment Partners LLC                       Name:    
Title:  

 

 

 

 

EXHIBIT F

form of tax protection agreement

 

 

THIS TAX PROTECTION AGREEMENT (this “Agreement”) is made as of the ___ day of
_________, 20__ by and between Roberts Realty Investors, Inc., a Georgia
corporation (the “Company”), and Roberts Properties Residential, L.P, a Georgia
limited partnership (the “Operating Partnership,” and, together with the
Company, the “Seller Parties”), A-III Investment Partners LLC, a Delaware
limited liability company (the “Purchaser”) and A-III Manager LLC, a Delaware
limited liability company (the “Manager” and, together with the Purchaser, the
“Purchaser Parties” and, together with the Purchaser and the Seller Parties, the
“Parties” and each a “Party”), for the benefit of the Eligible Investors (as
defined in this Agreement below) who shall be designated third party
beneficiaries of this Agreement.

WHEREAS, the Seller Parties and the Purchaser have entered into a Stock Purchase
Agreement (the “Stock Purchase Agreement”), dated as of November 19, 2014,
pursuant to which, among other things, (i) on the date hereof (the “Closing
Date”) the Purchaser has purchased from the Company, and the Company has issued
and sold to the Purchaser, ____________ shares of common stock, $.01 par value
per share, of the Company (the “Common Stock”), (ii) the Company has agreed,
subject to the terms and conditions of the Stock Purchase Agreement, to issue
additional shares of Common Stock to the Purchaser in a Post-Closing Issuance
(as defined in the Stock Purchase Agreement), and (iii) the Company has granted
to the Purchaser a warrant to purchase additional shares of Common Stock
pursuant to a Warrant Agreement dated as of the date hereof between the Company
and the Purchaser; and

WHEREAS, pursuant to the Stock Purchase Agreement, on the date hereof, the
Seller Parties and the Manager have entered into that certain Management
Agreement pursuant to which, among other things, the Seller Parties have engaged
the Manager, and the Manager has agreed, to provide certain management services
for the Seller Parties; and

WHEREAS, under the Stock Purchase Agreement, the Parties and the Purchaser have
agreed that the Parties shall enter into this Agreement on the Closing Date.

NOW, THEREFORE, in consideration of the respective representations, warranties,
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereto agree as follows:

1.      Definitions.

“Eligible Investors” means persons who own both units and shares.

“Offering” means the offering by the Operating Partnership pursuant to the
Memorandum to Eligible Investors.

“Memorandum” means that certain Confidential Private Offering Memorandum dated
July 8, 2013, a copy of which has been provided to the Purchaser.

“Necessary Actions” means, with respect to a specified result, all actions (to
the extent such actions are permitted by applicable law and applicable stock
exchange rules and, in the case of any action by the Company that requires a
vote or other action on the part of the Board, to the extent such action is
consistent with the fiduciary duties that the Company’s directors may have in
such capacity) necessary to cause such result, including: (i) causing members of
the Board to act in a certain manner; (ii) executing agreements and instruments;
and (iii) making or causing to be made, with governmental, administrative or
regulatory authorities, all filings, registrations or similar actions that are
required to achieve such result.

 

 

 

“Partnership Agreement” means the First Amended and Restated Partnership
Agreement of the Operating Partnership, as amended.

“shares” means shares of Common Stock, including shares of Common Stock
purchased in the future on the NYSE MKT stock exchange (or other exchange on
which the shares of Common Stock are then listed).

“units” means units of limited partnership interest in the Operating
Partnership.

2.      Agreement by the Parties.

Each Party agrees to take all Necessary Actions within its reasonable control
(a) to cause the Offering to continue to be available to Eligible Investors and
(b) to cause the Operating Partnership to retain the shares it has previously
acquired in the Offering and any shares it acquires in the future in the
Offering.

3.      Term of Agreement.

(a)      This Agreement shall continue in effect until the earlier of:

(i)      the date on which the Company has purchased, pursuant to Section 6.7(f)
of the Partnership Agreement, all (but not less than all) outstanding units held
by limited partners (other than the Company as the general partner of the
Operating Partnership);

(ii)      the dissolution of the Operating Partnership;

(iii)      the date on which all of the units issued in the Offering have been
exchanged for shares or otherwise sold or transferred by the Eligible Investor
who participated in the Offering, including via bankruptcy or death;

(iv)      the date on which this Agreement is terminated in accordance with
Section 4(g);

(v)      the date on which all of the shares held by the Operating Partnership
are converted into or exchanged for cash in connection with a merger, sale of
assets, or other extraordinary transaction involving the Company; or

(vi)      the dissolution of the Company.

(b)      Notwithstanding the foregoing, in the event the Board designation
rights (the “Board Designation Rights”) granted to the Purchaser under Section 2
of that certain Governance and Voting Agreement, dated as of the Closing Date,
by and among the Company, the Purchaser and Charles S. Roberts, (the “Governance
and Voting Agreement”) are terminated in accordance with the terms thereof
sooner than the date on which this Agreement is terminated under Section 3(a)
above, the obligations of the Purchaser and the Manager under this Agreement
shall automatically terminate on the date that the Purchaser’s Board Designation
Rights terminate under the Governance and Voting Agreement.

 

2

 

4.      Miscellaneous.

(a)                Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the Parties. Nothing in this Agreement, express or
implied, is intended to confer upon any Party other than the Parties hereto or
their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.

(b)               Governing Law. This Agreement shall be governed by the laws of
the State of Georgia.

(c)                Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Counterparts may be
delivered via facsimile, electronic mail (including pdf) or other transmission
method and any counterpart so delivered shall be deemed to have been duly and
validly delivered and be valid and effective for all purposes.

(d)               Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

(e)                Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed effectively
given upon the earlier of actual receipt or: (i) personal delivery to the Party
to be notified, (ii) one (1) business day after deposit with a nationally
recognized overnight courier, freight prepaid, specifying next business day
delivery, with written verification of receipt, or (iii) delivery via email. All
communications shall be sent to the respective Parties at their address or email
address, as applicable, as set forth on the signature page hereto, or to such
address as subsequently modified by written notice given in accordance with this
Section 4(e). Notices and other communications to Eligible Investors shall be
delivered, using any of the same means described above, to the attention of
Charles S. Roberts c/o Roberts Properties, Inc., 375 Northridge Road, Suite 330
Atlanta, GA 30350; Email: cr@robertsproperties.com.

(f)                Attorneys’ Fees. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement,
the prevailing Party shall be entitled to reasonable attorneys’ fees, costs and
necessary disbursements in addition to any other relief to which such Party may
be entitled.

 

3

 

(g)               Amendments and Waivers. It is expressly agreed that the
purchasers of units in the Offering, but not their successors and assigns, shall
be third party beneficiaries of this Agreement for as long as they hold the
units they purchased in the Offering and that each of them may enforce the
provisions of this Agreement. Accordingly, any term of this Agreement may be
amended, terminated or waived only with the written consent of (i) each of the
Parties hereto and (ii) each of the original purchasers of units in the Offering
if and only if they hold at the time of such amendment, termination or waiver
any of the units they purchased in the Offering. Any amendment or waiver
effected in accordance with this Section 4(g) shall be binding upon the Parties.

(h)               Severability. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.

(i)                 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any Party under this Agreement, upon any
breach or default of any other Party under this Agreement, shall impair any such
right, power or remedy of such non-breaching or non-defaulting Party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of any similar breach or default thereafter occurring; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any Party of any breach or
default under this Agreement, or any waiver on the part of any Party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
Party, shall be cumulative and not alternative.

(j)                 Specific Performance. The Parties agree that irreparable
damage would occur if any provision of this Agreement were not performed in
accordance with the terms hereof and that the Parties (including the purchasers
of units in the Offering) shall be entitled to specific performance of the terms
hereof, in addition to any other remedy to which they are entitled at law or in
equity.

[Signatures are on the following page.]

 

 

4

 

IN WITNESS WHEREOF, the Parties have executed this Tax Protection Agreement as
of the date first written above.

ROBERTS REALTY INVESTORS, INC.

 

By:                                                                    

Name:

Title:

 

Address:

399 Park Avenue

New York, New York 10022

Attention: Edward Gellert

Telephone: 212-850-7534

Email: egellert@avenuecapital.com

 

ROBERTS PROPERTIES RESIDENTIAL, L.P.

By: Roberts Realty Investors, Inc., its general partner

 

 

 

By:                                                                    

Name:

Title:

 

Address:

399 Park Avenue

New York, New York 10022

Attention: Edward Gellert

Telephone: 212-850-7534

Email: egellert@avenuecapital.com

 

A-III INVESTMENT PARTNERS LLC

 

 

 

By:                                                                    

Name:

Title:

 

 

Address:

c/o Avenue Capital Group

399 Park Avenue

New York, New York 10022

Attention: Edward Gellert

Telephone: 212-850-7534

Email: egellert@avenuecapital.com

 

A-III MANAGER LLC

 

 

 

By:                                                                    

Name:

Title:

 

 

Address:

c/o Avenue Capital Group

399 Park Avenue

New York, New York 10022

Attention: Edward Gellert

Telephone: 212-850-7534

Email: egellert@avenuecapital.com

 

 

 

5

 

EXHIBIT G

 

 

 

DISCLOSURE SCHEDULE

 

TO THE

 

STOCK PURCHASE AGREEMENT

 

DATED NOVEMBER 19, 2014

 

BY AND AMONG

 

ROBERTS REALTY INVESTORS, INC.,

 

ROBERTS PROPERTIES RESIDENTIAL, L.P.

 

AND

 

A-III INVESTMENT PARTNERS LLC

 

 

 

 

 

 

 

This disclosure schedule (this “Disclosure Schedule”) has been prepared and
delivered to A-III Investment Partners LLC (the “Purchaser”) by Roberts Realty
Investors, Inc. (the “Company”) and Roberts Properties Residential, L.P. (the
“Operating Partnership” as of the Effective Date of that certain Stock Purchase
Agreement (the “Agreement”), by and among the Company, the Operating Partnership
and the Purchaser. Capitalized terms used and not otherwise defined herein shall
have the respective meanings ascribed to such terms in the Agreement.

 

This Disclosure Schedule has been arranged in a manner that corresponds to the
numbered and lettered sections and subsections of the Agreement. The disclosures
in any section or subsection of the Disclosure Schedule shall constitute
disclosure for purposes of each section or subsection of the Agreement where
such information is relevant.

 

Headings and introductory language have been included in this Disclosure
Schedule for convenience only, and such headings and introductory language shall
not have the effect of amending, and shall not be used to construe, the
representations and warranties regarding the Company and Operating Partnership
set forth in the Agreement.

 

 

 

 

Schedule 1.4

 

The Company’s Properties

 

  1. North Springs is a 10-acre transit-oriented site located in Sandy Springs
that is zoned for a mixed-use development.

  2. Bradley Park is a 22-acre site located in Forsyth County near the GA-400
and Highway 20 interchange, zoned for 154 multifamily units.

  3. Northridge is an 11-acre site located in Sandy Springs near the GA-400 and
Northridge interchange, zoned for 220 multifamily units.

  4. Highway 20 is a 38-acre site located in the City of Cumming in Forsyth
County, zoned for 210 multifamily units.

 

 

 

 

Schedule 2.2

 

The Company’s Ownership Percentage in the Operating Partnership

 

The aggregate percentage ownership interest of the Company in the Operating
Partnership is 80.23%.

 

 

 

 

Schedule 2.8

 

Governmental Consents and Filings

 

 

None.

 

 

 

 

Schedule 2.9

 

Legal Actions

 

 

None.

 

 

 

 

Schedule 2.11

 

Certain Transactions

 

 

  (a) Letter of Intent by and between Roberts Properties Residential, L.P. and
Bradley Park Apartments, LLC dated October 27, 2014 (Bradley Park).

 

 

 

 

Schedule 2.13

 

Absence of Violation, Defaults and Conflicts

 

(b) The inability to provide current financial statements to the Lenders of the
Loans listed in Schedule 2.36 due to the matters described in Schedule 2.33
could result in a Default. Each Loan listed in Schedule 2.36 has a cure period
for such Default.

 

 

 

 

Schedule 2.17

 

Employee Matters

 

Schedule of Compensation of

Each Officer, Employee, Consultant and Independent Contractor

for 2013 and 2014

 

 

(a) 2013 Form 10-K - Item 11. Executive Compensation. - Page 43-44   Consultant
– {Individual Name Redacted} - $32,748.22   2013 Form 10-K - Item 15. Exhibits,
Financial Statement Schedules. - Page F-18-   F-19 - Footnote 5 - Shareholders’
Equity - Restricted Stock – Paragraph 3       2014 – Charles S. Roberts –
President – Salary - $225,000   2014 – Charles R. Elliott – CFO - $3,000 per
month – Total of $30,000   Mr. Elliott also receives the standard Director Fees
of $18,000 per year for his service as a Director   2014 – Anthony W. Shurtz –
Chief Financial Officer – Salary - $140,000   Severance Compensation - $70,000  
  (d) Anthony W. Shurtz – Chief Financial Officer - Severance Compensation -
$70,000

 

 

 

 

Schedule 2.21

 

Mortgages, Pledges, Liens, Security Interests, Claims, Restrictions or
Encumbrances

 

 

Exhibit No.

In Company’s
Form 10-K for 2013

Description     10.4.1 Restrictive Covenant by Roberts Properties Peachtree
Dunwoody, LLC, assumed by Roberts Properties Residential, L.P. on January 20,
2005.  [Incorporated by reference to Exhibit 10.2 in our current report on Form
8-K dated January 21, 2005.]     10.9.27 Deed to Secure Debt, Assignment of
Rents, and Security Agreement dated July 18, 2013 by and between Roberts
Properties Residential, L.P. and North Springs Financial, LLC (North
Springs).  [Incorporated by reference to Exhibit 10.2 in our current report on
Form 8-K dated July 18, 2013.]     N/A Deed to Secure Debt, and Assignment of
Lessor’s Interest in Leases dated September 29, 2005 between Roberts Properties
Residential, L.P. and Bank of North Georgia, as amended and modified (Bradley
Park).       N/A Declaration of Covenants and Conditions by Roberts Properties
Residential, L.P. and Manchester Park Homeowners Association, Inc. dated
November 1, 2013 (Bradley Park).       N/A Deed to Secure Debt and Security
Agreement, Assignment of Leases and Rents, and Security Agreement dated April 8,
2009 by and between Roberts Properties Residential, L.P. and Touchmark National
Bank, as amended and modified (Highway 20).       N/A Deed to Secure Debt and
Security Agreement, Assignment of Leases and Rents, and Security Agreement dated
as of September 27, 2013 by and between Roberts Properties Residential, L.P. and
Touchmark National Bank (Highway 20).     N/A Amended and Restated Declaration
of Reciprocal Easements dated August 12, 1994 as amended and modified
(Northridge).     N/A The Company and the Operating Partnership hereby list and
incorporate by reference all Properties listed in Schedule 1.4.     N/A
Reciprocal Easements Agreement by and between Highway Nine Investors, LLC and
Roberts Properties Residential, L.P. dated November 3, 2014 (Bradley Park).    
N/A Any matters shown on Purchaser’s title reports for the Company and Operating
Partnership’s real property.  

 

 

 

 

Schedule 2.27

 

Environmental and Safety Laws

 

 

(a) Bradley Park contains wet lands as delineated on the survey.     (b) A house
with asbestos containing materials was located on the property adjacent to
Bradley Park.  The house was demolished by a licensed asbestos abatement company
and in accordance with applicable Environmental Laws.

 

 

 

 

Schedule 2.33

 

SEC Reports

 

  1. During the course of Purchaser’s due diligence, an error was discovered in
the calculation of the 95% gross income test for purposes of the Company’s
qualification as a REIT in the tax year ended December 31, 2009. As a result,
the Company failed to qualify to be taxed as a REIT for federal and state income
tax purposes in the tax year ended December 31, 2009, and the Code prohibits the
Company from qualifying as a REIT for its taxable years ended December 31, 2010
through December 31, 2013. The Company Exchange Act Reports filed since December
31, 2009 have incorrectly stated that the Company qualified to be taxed as a
REIT for federal and state income tax purposes and the Company’s financial
statements for all such periods were prepared accordingly. However, due to the
Company’s net operating losses for such years, the Company will have no
Liability for federal and state income taxes for its taxable years ended
December 31, 2009 through December 31, 2013.

 

  2. The Current Report on Form 8-K filed by the Company on October 11, 2011 was
filed after the required filing date.

 

  3. The Current Report on Form 8-K filed by the Company on November 14, 2014
was filed after the required filing date.

 

  4. As described in Form 12b-25 filed by the Company on November 17, 2014, the
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014
was not filed by the required filing date.

 

 

 

 

Schedule 2.35

 

Material Contracts

 

  (a) Obligations to Make an Investment or Loan

 

None.

 

  (b) Leases

 

Exhibit No.

In Company’s
Form 10-K for 2013

Description     10.8.4 Office Lease by and between Roberts Capital Partners,
LLC, as Landlord, and Roberts Properties Residential, L.P., as Tenant, dated as
of February 19, 2014.  [Incorporated by reference to our current report on Form
8-K dated February 19, 2014.]

 

  (c) Performance of Services, Delivery of Goods or Materials

 

  1. The Company engages and pays law firms, accounting firms, other
professionals and temporary staffing firms in the ordinary course of business.

 

  2. Architectural Contract with Pieper O’Brien Herr Architects dated July 24,
2014 (Northridge/Artisan Apartments)

 

  3. Contract with Paradigm Engineering Services, Inc. dated May 14, 2014
(Northridge/Artisan Apartments)

 

  4. Architectural Contract with Pieper O’Brien Herr Architects dated July 21,
2014 (Bradley Park)

 

  5. Waterproofing Contract with Williamson & Associates, Inc. dated August 20,
2014 (Bradley Park)

 

 

 

 

 

  (d) Out of the Ordinary Course

 

Exhibit No.

In Company’s
Form 10-K for 2013

Description    

10.9.30

 

 

 

 

 

Purchase and Sale Agreement dated October 15, 2013 by and between Roberts
Properties Residential, L.P. and the Fulton County Board of Education
(Northridge Office Building). [Incorporated by reference to Exhibit 10.1 in our
current report on Form 8-K dated October 15, 2013.]

 

  (e) Affecting Interest in Property

 

  1. The Company and the Operating Partnership hereby list and incorporate by
reference all Contracts listed in Schedule 2.21 and Schedule 2.36.

 

  2. Letter of Intent by and between Roberts Properties Residential, L.P. and
Bradley Park Apartments, LLC dated October 27, 2014 (Bradley Park).

 

  (f) Contracts with Respect to Company Intellectual Property

 

None.

 

  (g) Capital Asset Agreements

 

Letter of Intent by and between Roberts Properties Residential, L.P. and Bradley
Park Apartments, LLC dated October 27, 2014 (Bradley Park).

 

  (h) Contracts with Directors, Officers or Other Employees

 

  1. Agreement with Charles R. Elliott to provide CFO services for $3,000 per
month – Total of $30,000 for 2014.

 

  2. Agreement for Severance with Anthony W. Shurtz – Chief Financial Officer -
$70,000.

 

  3. Indemnification Agreements, dated as of the Effective Date, by and between
the Company and each of its Officers and Directors.

 

  4. Reimbursement arrangements with the Roberts Companies as described in the
Company Exchange Act Reports and in Exhibits 10.8.1, 10.8.2 and 10.8.3 to the
Company’s Annual Report on Form 10-K for the Fiscal Year Ended December 31,
2013, which exhibits are hereby incorporated by reference into this Disclosure
Schedule.

 

  5. For the avoidance of doubt, the Company and the Operating Partnership list
the following agreements with Affiliates of Mr. Roberts:

 

 

 

 

 

Exhibit No.

In Company’s
Form 10-K for 2013

Description     10.2.1 Construction Agreement between Roberts Properties
Residential, L.P. and Roberts Properties Construction, Inc.  (Northridge)
[Incorporated by reference to Exhibit 10.1.18 in our quarterly report on Form
10-Q for the quarter ended March 31, 2003.]     10.4.1 Restrictive Covenant by
Roberts Properties Peachtree Dunwoody, LLC, assumed by Roberts Properties
Residential, L.P. on January 20, 2005.  (North Springs) [Incorporated by
reference to Exhibit 10.2 in our current report on Form 8-K dated January 21,
2005.]     10.4.2 Design and Development Agreement between Roberts Properties
Residential, L.P. and Roberts Properties, Inc., dated as of April 14,
2005.  (North Springs) [Incorporated by reference to Exhibit 10.2 in our current
report on Form 8-K dated April 12, 2005.]     10.4.3 Construction Contract
between Roberts Properties Residential, L.P. and Roberts Properties
Construction, Inc., dated as of April 14, 2005.  (North Springs)  [Incorporated
by reference to Exhibit 10.4 in our current report on Form 8-K dated April 12,
2005.]     10.5.1 Design and Development Agreement between Roberts Properties
Residential, L.P. and Roberts Properties, Inc., dated as of August 4,
2005.  (Bradley Park) [Incorporated by reference to Exhibit 10.1 in our current
report on Form 8-K dated August 9, 2005.]     10.5.2 Construction Contract
between Roberts Properties Residential, L.P. and Roberts Properties
Construction, Inc., dated as of August 4, 2005.  (Bradley Park)  [Incorporated
by reference to Exhibit 10.2 in our current report on Form 8-K dated August 9,
2005.]     10.6.1 Design and Development Agreement between Roberts Properties
Residential, L.P. and Roberts Properties, Inc., dated as of February 21,
2006.  (Highway 20) [Incorporated by reference to Exhibit 10.1 in our current
report on Form 8-K dated February 21, 2006.]     10.6.2 Construction Contract
between Roberts Properties Residential, L.P. and Roberts Properties
Construction, Inc., dated as of February 21, 2006.  (Highway 20) [Incorporated
by reference to Exhibit 10.2 in our current report on Form 8-K dated February
21, 2006.]     10.8.4 Office Lease by and between Roberts Capital Partners, LLC,
as Landlord, and Roberts Properties Residential, L.P., as Tenant, dated as of
February 19, 2014.  [Incorporated by reference to our current report on Form 8-K
dated February 19, 2014.]

 

 

 

 

 

  (i) Powers of Attorney

 

  1. The Partnership Agreement.

 

 

Exhibit No.

In Company’s
Form 10-K for 2013

Description     10.9.27 Deed to Secure Debt, Assignment of Rents, and Security
Agreement dated July 18, 2013 by and between Roberts Properties Residential,
L.P. and North Springs Financial, LLC (North Springs).  [Incorporated by
reference to Exhibit 10.2 in our current report on Form 8-K dated July 18,
2013.]     10.9.28 Unconditional Guaranty of Payment and Performance dated July
18, 2013 by Roberts Realty Investors, Inc. in favor of North Springs Financial,
LLC (North Springs). [Incorporated by reference to Exhibit 10.3 in our current
report on Form 8-K dated July 18, 2013.]     N/A Deed to Secure Debt and
Security Agreement, Assignment of Leases and Rents, and Security Agreement dated
April 8, 2009 by and between Roberts Properties Residential, L.P. and Touchmark
National Bank, as amended and modified (Highway 20).       N/A Deed to Secure
Debt and Security Agreement, Assignment of Leases and Rents, and Security
Agreement dated as of September 27, 2013 by and between Roberts Properties
Residential, L.P. and Touchmark National Bank (Highway 20).     N/A Guaranty of
Payment and Performance dated April 8, 2009 by Roberts Realty Investors, Inc. in
favor of Touchmark National Bank (Highway 20).     N/A Deed to Secure Debt, and
Assignment of Lessor’s Interest in Leases dated September 29, 2005 between
Roberts Properties Residential, L.P. and Bank of North Georgia, as amended and
modified (Bradley Park).          N/A Guaranty by Corporation dated February 9,
2010 by Roberts Realty Investors, Inc. in favor of Bank of North Georgia, as
amended and modified (Bradley Park).

 

  (j) Labor Union Contracts

 

None.

 

  (k) Deferred Compensation

 

ADP 401(k) Plan

 

 

 

 

 

 

  (l) Limiting Agreements

 

  1. No Contract prohibits the Company or the Operating Partnership from freely
engaging in business anywhere in the world.

 

  2. The Company has entered into approximately 91 mutual non-disclosure
agreements with Persons that previously expressed interest in a strategic
transaction with the Company and has provided copies of those agreements to the
Purchaser.

 

  (m) Sharing of profits, losses, costs, taxes or other liabilities

 

  1. The Partnership Agreement.

 

  2. The Northridge Parkway, LLC Operating Agreement.

 

  (n) Debt Obligations

 

The Company and the Operating Partnership hereby list and incorporate by
reference all Contracts listed in Schedule 2.36.

 

  (o) Brokers and Finders

 

  Description       Commission Agreement by and between Roberts Properties
Residential, L.P. and Gary J. Lee, Marcus & Millichap for 5 Registered Parties
dated September 4, 2014 (North Springs).

 

  (p) Contracts with any Governmental Entity

 

None.

 

  (q) Indemnification

 

Exhibit No.

In Company’s
Form 10-K for 2013

Description     N/A

The Company and the Operating Partnership hereby list and incorporate by
reference all Contracts listed in Schedule 2.36 and in the Exhibits to the
Company Exchange Act Reports if and to the extent that such documents include
obligations to indemnify another Person.

 

 

  (r) Surety Bonds or Letters of Credit

 

None.

 

 

 

 

Schedule 2.36

 

Loans and Guarantees

 

(a)

 

Exhibit No.

In Company’s
Form 10-K for 2013

Description     10.9.26 Promissory Note in the principal amount of $5,500,000
dated July 18, 2013 by Roberts Properties Residential, L.P. to the order of
North Springs Financial, LLC (North Springs).  [Incorporated by reference to
Exhibit 10.1 in our current report on Form 8-K dated July 18, 2013.]     10.9.27
Deed to Secure Debt, Assignment of Rents, and Security Agreement dated July 18,
2013 by and between Roberts Properties Residential, L.P. and North Springs
Financial, LLC (North Springs).  [Incorporated by reference to Exhibit 10.2 in
our current report on Form 8-K dated July 18, 2013.]     10.9.28 Unconditional
Guaranty of Payment and Performance dated July 18, 2013 by Roberts Realty
Investors, Inc. in favor of North Springs Financial, LLC (North Springs).
[Incorporated by reference to Exhibit 10.3 in our current report on Form 8-K
dated July 18, 2013.]     N/A Collateral Assignment of Contracts, Licenses,
Permits, Warranties and Certificates dated July 18, 2013 by and between Roberts
Properties Residential, L.P. and North Springs Financial, LLC (North Springs).  
  N/A Indemnity Agreement Regarding Hazardous Substances dated July 18, 2013 by
and between Roberts Properties Residential, L.P., Roberts Realty Investors, Inc.
and North Springs Financial, LLC (North Springs).     N/A Promissory Note in the
original principal amount of $3,335,000 dated September 29, 2005 by Roberts
Properties Residential, L.P. to the order of Bank of North Georgia, as amended
and modified (Bradley Park).       N/A Deed to Secure Debt, and Assignment of
Lessor’s Interest in Leases dated September 29, 2005 between Roberts Properties
Residential, L.P. and Bank of North Georgia, as amended and modified (Bradley
Park).          N/A Guaranty by Corporation dated February 9, 2010 by Roberts
Realty Investors, Inc. in favor of Bank of North Georgia, as amended and
modified (Bradley Park).     N/A Environmental Indemnity Agreement dated
September 29, 2005 by and between Roberts Properties Residential, L.P., Roberts
Realty Investors, Inc. and Bank of North Georgia, as amended and modified
(Bradley Park).

 

 

 

 

 

Exhibit No.

In Company’s
Form 10-K for 2013

Description     N/A Note in the original principal amount of $3,500,000 dated
April 8, 2009 by Roberts Properties Residential, L.P. to the order of Touchmark
National Bank, as amended and modified (Highway 20).       N/A Deed to Secure
Debt and Security Agreement, Assignment of Leases and Rents, and Security
Agreement dated April 8, 2009 by and between Roberts Properties Residential,
L.P. and Touchmark National Bank, as amended and modified (Highway 20).         
N/A Guaranty of Payment and Performance dated April 8, 2009 by Roberts Realty
Investors, Inc. in favor of Touchmark National Bank (Highway 20).     N/A Loan
Agreement dated as of April 8, 2009 by and between Roberts Properties
Residential, L.P. and Touchmark National Bank, as amended and modified (Highway
20).     N/A UCC Financing Statements filed on April 9, 2009 by Touchmark
National Bank, as amended and modified (Highway 20).     N/A Assignment of
Contracts, Warranties, Licenses, Permits and Plans dated as of April 8, 2009 by
and between Roberts Properties Residential, L.P. and Touchmark National Bank, as
amended and modified (Highway 20).     N/A Environmental Indemnity Agreement
dated as of April 8, 2009 by and between Roberts Properties Residential, L.P.
and Touchmark National Bank, as amended and modified (Highway 20).     N/A Deed
to Secure Debt and Security Agreement, Assignment of Leases and Rents, and
Security Agreement dated as of September 27, 2013 by and between Roberts
Properties Residential, L.P. and Touchmark National Bank (Highway 20).     N/A
Environmental Indemnity Agreement dated as of September 27, 2013 by and between
Roberts Properties Residential, L.P. and Touchmark National Bank (Highway 20).  
 

 

  (b) None.

 

  (c) The Company and the Operating Partnership hereby list and incorporate by
reference all Contracts listed in subsection (a) above and Schedule 2.21, if and
to the extent that such Contracts constitute a guarantee, mortgage, pledge,
lien, assignment or other security agreement or arrangement by the Company, the
Operating Partnership or the Subsidiary or is an agreement or arrangement
whereby the Company, the Operating Partnership or the Subsidiary is responsible
for the indebtedness, or for the default in the performance of any obligation,
of any other Person.

 

  (d) The Company and the Operating Partnership hereby list and incorporate by
reference all Contracts listed in subsection (a) above if and to the extent that
such Contracts constitute bonds, guarantees or other forms of credit support or
similar arrangements provided by any Affiliates of the Company for the benefit
of any of the Company, the Operating Partnership or the Subsidiary.

 

 

 

EXHIBIT H

FORM OF COMPLIANCE CERTIFICATE

 

This Compliance Certificate (this “Certificate”) is being delivered as of
__________, 20___, pursuant to Section 4.4 of that certain Stock Purchase
Agreement, dated as of November 19, 2014, (the “Agreement”), by and among
Roberts Realty Investors, Inc., a Georgia corporation (the “Company”), Roberts
Properties Residential, L.P., a Georgia limited partnership (the “Operating
Partnership”) and A-III Investment Partners LLC, a Delaware limited liability
company (the “Purchaser”). Capitalized terms not otherwise defined in this
Certificate shall have the meaning set forth in the Agreement. The undersigned
President and Chief Financial Officer of the Company, acting as officers of the
Company on behalf of both the Company itself and the Operating Partnership for
which the Company is the General Partner, each hereby certifies to the Purchaser
as follows:

 

1.                  That, subsequent to the Effective Date, there has not been
(A) any change, or any development or event that reasonably could be expected to
result in a change, that has or reasonably could be expected to have a Material
Adverse Effect, (B) any increase in the aggregate outstanding consolidated
indebtedness of the Company and the Subsidiaries to which the Purchaser has not
consented in accordance with Section 6 of the Agreement, (C) any dividend or
distribution of any kind declared, paid or made on the capital stock or other
equity interests of the Company or any of the Subsidiaries (other than OP
Redemptions and OP Exchanges), or (D) any loss or damage (whether or not
insured) to any of the current properties of the Company or any of the
Subsidiaries that has been sustained or is expected to be sustained that has or
could reasonably be expected to have a Material Adverse Effect.

 

2.                  Each of the representations and warranties of the Company
and the Operating Partnership contained in the Agreement (or in any of the other
documents or instruments to be delivered in connection therewith), to the extent
qualified by Material Adverse Effect or other materiality qualification
contained in any such representation or warranty, is (except for representations
and warranties made as of a specific date, which were complete and accurate as
of such date) complete and accurate as of the date hereof as if made as of the
date hereof, and, to the extent not qualified by any Material Adverse Effect or
other materiality (or equivalent) qualification contained in any such
representation or warranty, is (except for representations and warranties made
as of a specific date, which were complete and accurate in all material respects
as of such date) complete and accurate in all material respects as of the date
hereof as if made as of the date hereof; provided that the representations and
warranties set forth in Sections 2.1, 2.2, 2.3, 2.4 (other than any de minimis
discrepancy in the aggregate number of issued and outstanding shares of Common
Stock and OP Units), 2.5 and 2.6 of the Agreement are complete and accurate in
all respects.

 

3.                  The Company and the Operating Partnership have (A) delivered
all documents and other items required of the Company or the Operating
Partnership, as applicable, pursuant to Section 4 of the Agreement and (B)
performed and complied in all material respects with all covenants, agreements,
obligations and conditions contained in the Agreement that were required to be
performed or complied with by the Company or the Operating Partnership on or
before the date hereof.

 

 

 

 

4.                  No investigation, suit, action or other proceeding is (i)
threatened in writing or pending by a Governmental Entity that seeks restraint,
prohibition, damages, monetary relief or other relief in connection with the
Agreement or the consummation of the transactions contemplated hereby, (ii)
pending before any Governmental Entity by a non-Governmental Entity that seeks
restraint or prohibition in connection with the Agreement and that the Purchaser
reasonably determines to be reasonably likely to result in the incurrence by the
Company or the Purchaser of any Liability in excess of $100,000, and there is no
effective injunction, writ or restraint in place concerning any of the
foregoing, or (iii) threatened in writing or pending before any Governmental
Entity in which a Governmental Entity is a party that would or is reasonably
likely to result in a governmental investigation or material governmental
damages being imposed on the Purchaser or the Company or any of their respective
Affiliates. There is no change in any Law that would prohibit the consummation
of the transactions contemplated by the Agreement.

 

5.                  The Company is not and has not been deemed to be an issuer
described in Rule 144(i)(1)(i) under the Securities Act.

 

6.                  Trading in the Company’s Common Stock on the NYSE MKT
exchange is not and has not been suspended nor have the shares of the Company’s
Common Stock been de-listed from such exchange, under applicable SEC or NYSE MKT
rules and regulations.

 

7.                  The Requisite Company Vote has been obtained.

 

8.                  The Company has received duly executed resignation and
release letters of each member of the Board of Directors in the form of
Exhibit L-1 attached to the Agreement, as well as all officers and employees of
the Company in the form set forth in Exhibit L-2 attached to the Agreement.

 

9.                  The Company has received a written waiver from the Roberts
Companies in form and substance reasonably acceptable to the Purchaser, and in
recordable form if deemed necessary by the Purchaser in its reasonable
discretion, pursuant to which the Roberts Companies have waived (a) any covenant
on any of the Company’s properties and any special rights that entitle the
Roberts Companies to receive any compensation or provide any right to
participate in the development or construction of any property and any related
reimbursement, and (b) any other Contract to participate in the development or
construction of any property and any related reimbursement.

 

[Signature page follows]

 

 

 

 

IN WITNESS WHEREOF, each of the undersigned have executed this Company and
Operating Partnership Compliance Certificate as of the date first written above.

 

 

COMPANY:

 

ROBERTS REALTY INVESTORS, INC.

 

 

By:       Name:  Charles S. Roberts     Title:    Chief Executive Officer and
President                     By:       Name:  Charles R. Elliott    
Title:    Chief Financial Officer  

 

 

OPERATING PARTNERSHIP:

 

ROBERTS PROPERTIES RESIDENTIAL, L.P.

 

By: Roberts Realty Investors, Inc., its general partner

 

By:       Name:  Charles S. Roberts     Title:    Chief Executive Officer and
President                     By:       Name:  Charles R. Elliott    
Title:    Chief Financial Officer  

 

 

[SIGNATURE PAGE TO COMPLIANCE CERTIFICATE]

 

 

 

 

EXHIBIT i

FORM OF WARRANT AGREEMENT

 

THIS WARRANT AGREEMENT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR THE SECURITIES LAWS OF ANY STATE, AND EXCEPT AS PROVIDED IN SECTION 5 OF THIS
WARRANT AGREEMENT, THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR, IN THE
OPINION OF THE COMPANY’S SECURITIES LAW COUNSEL, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.

WARRANT AGREEMENT

This Warrant Agreement (“Agreement”) is executed as of this _____ day of
__________, 20__, by Roberts Realty Investors, Inc., a Georgia corporation
(“Company”), in favor of A-III Investment Partners LLC, a Delaware limited
liability company (the “Initial Holder”), in accordance with the terms and
subject to the conditions set forth in this Agreement.

WHEREAS, the Initial Holder has undertaken substantial financial risk in
connection with the investment (“Share Purchase”) in the Company pursuant to
that certain Stock Purchase Agreement between Initial Holder and the Company,
dated November 19, 2014 (the “Stock Purchase Agreement”);

WHEREAS, in connection with the Share Purchase by the Initial Holder, the
Company desires to grant to Initial Holder warrants (each, a “Warrant” and,
collectively, the “Warrants”) to purchase shares of common stock, $0.01 par
value per share, of the Company (“Common Stock”); and

WHEREAS, the execution of this Agreement is a condition to the closing of the
transactions contemplated by the Stock Purchase Agreement.

NOW, THEREFORE, in consideration of the foregoing and the agreements hereinafter
set forth, the receipt and sufficiency of which are hereby acknowledged, the
Company and, by acceptance of a Warrant, the Initial Holder, on its behalf and
on behalf of all subsequent registered holders of the Warrants (each, a “Holder”
and, collectively, the “Holders”), agrees as follows:

1.                  Definitions. All capitalized terms that are not defined in
this Agreement shall have the meaning ascribed to such terms in the Stock
Purchase Agreement.

2.                  Grant of Warrants. Subject to the terms, restrictions,
limitations and conditions stated in this Agreement, the receipt and sufficiency
of which are hereby acknowledged, the Company hereby grants to the Initial
Holder the number of Warrants set forth on Exhibit A. Each Warrant initially
shall be exercisable for one fully paid and non-assessable share of Common Stock
(a “Warrant Share” and, collectively, the “Warrant Shares”), subject to
adjustment as provided in Section 13 of this Agreement. The Initial Holder and
all subsequent Holders shall have the rights and obligations set forth in this
Agreement. The Warrants issued hereby are being issued to the Initial Holder in
recognition of the financial risk undertaken by the Initial Holder in connection
with the Stock Purchase Agreement and the other terms and conditions thereof.

3.                  Warrant Certificates. The Warrants shall be evidenced by one
or more warrant certificates, which shall be substantially in the form attached
to this Agreement as Exhibit B (“Warrant Certificates”). The Warrant
Certificates shall have such marks of identification or designation and such
legends or endorsements thereon as the Company deems appropriate, so long as
they are not inconsistent with the provisions of this Agreement, or as are
required to comply with any law, rule or regulation applicable to the Company,
the Warrants or the Warrant Shares. The Warrant Certificates shall be executed
on behalf of the Company by the manual, facsimile or imprinted signature of its
Chief Executive Officer, President or any Senior Vice President and shall be
attested by the manual, facsimile or imprinted signature of its Secretary or any
Assistant Secretary.

 

 

 

4.                  Term of Warrants. The term for the exercise of the Warrants
shall begin at the closing of the Share Purchase (the “Issue Date”) and expire
at 5:00 p.m. New York, New York time on the third (3rd) anniversary of the Issue
Date (the “Expiration Time”).

5.                  Securities Law Representations and Related Provisions.

(a)                Purchase Entirely for Own Account. This Agreement is made
with the Initial Holder in reliance upon the Initial Holder’s representation to
the Company, which by the Initial Holder’s execution of this Agreement, the
Initial Holder hereby confirms, that the Warrants to be acquired by the Initial
Holder will be acquired for investment for the Initial Holder’s own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that the Initial Holder has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, the Initial Holder further represents that the Initial Holder
does not presently have any Contract or undertaking with any Person to sell,
transfer or grant participations to such Person or to any third Person, with
respect to any of the Warrants or Warrant Shares.

(b)               Initial Holder Is an Accredited Investor. The Initial Holder
is, or each beneficial owner of equity interests in the Purchaser is, an
accredited investor as defined in Rule 501(a) of Regulation D promulgated under
the Securities Act.

(c)                Conditions to Transfer and Exercise of the Warrants and
Warrant Shares. Notwithstanding anything in this Agreement to the contrary, no
Warrants may be transferred unless at the time a Holder seeks to transfer such
Warrants, either (a) a prospectus or registration statement relating to the
Warrants is in effect under applicable laws and rules of the U.S. Securities and
Exchange Commission (the “SEC”) and applicable state blue sky laws, or (b) the
transfer of Warrants is made pursuant to an available exemption from
registration or qualification under the securities laws of the United States and
applicable state blue sky laws in the reasonable judgment of the Company’s
securities counsel. Further, notwithstanding anything in this Agreement to the
contrary, no Warrants will be exercisable and the Company will not be obligated
to issue Warrant Shares upon the exercise of Warrants unless at the time a
Holder seeks to exercise such Warrants, either (a) a prospectus or registration
statement relating to the Warrant Shares is in effect under applicable laws and
rules of the SEC and applicable state blue sky laws, or (b) the issuance of the
Warrant Shares is made pursuant to an available exemption from registration or
qualification under the securities laws of the United States and applicable
state blue sky laws in the reasonable judgment of the Company’s securities
counsel. Except as provided in the Registration Rights Agreement between the
Company and the Initial Holder dated             , 20   , the Initial Holder
acknowledges that the Company has no obligation to register or qualify the
Warrants or the Warrant Shares and has no obligation to register or qualify the
Warrants or the Warrant Shares for resale. The Initial Holder further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements that include the time
and manner of sale, the holding period for the Warrants and the Warrant Shares,
whether the Holder is an accredited investor as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act, and on requirements relating
to the Company that are outside the Holder’s control, and which the Company is
under no obligation and may not be able to satisfy.

 

2

 

(d)               Legends. This Agreement has the legend set forth on page one
above. Certificates evidencing the Warrant Shares shall be imprinted with a
legend in substantially the following form unless a prospectus or registration
statement relating to the Warrant Shares is in effect under applicable laws and
rules of the SEC and applicable state blue sky laws:

THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND EXCEPT AS PROVIDED
IN SECTION 5 OF THE WARRANT UNDER WHICH THESE SHARES WERE ISSUED (A COPY OF
WHICH IS ON FILE WITH THE COMPANY), THESE SHARES MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER
SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR, IN THE OPINION OF THE
COMPANY’S SECURITIES LAW COUNSEL, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS EXEMPT FROM REGISTRATION.

6.                  Exercise of Warrants.

(a)                The purchase price per Warrant Share to be paid by a Holder
for Warrant Shares subject to the Warrants shall be equal (a) initially, to the
Purchase Price Per Share in cash, as adjusted pursuant to Section 6.2(c) of the
Stock Purchase Agreement and (b) after the post-Closing adjustment pursuant to
Section 1.3 of the Stock Purchase Agreement, the Adjustment Date Purchase Price
Per Share, subject in each case to further adjustment as set forth in Section 13
of this Agreement (the “Exercise Price”). In no event shall this Agreement be
amended to provide for the payment of the Exercise Price other than in cash
(including by exchange of securities, including Warrants, or by other forms of
“cashless exercise”), and the parties hereby acknowledge that the Company would
not have otherwise entered into this Agreement.

(b)               Subject to Section 5, a Holder may exercise Warrants evidenced
by a Warrant Certificate in whole or in part at any time prior to the Expiration
Time by delivering to the secretary of the Company (i) the Warrant Certificate;
(ii) a written notice to the Company specifying the number of Warrant Shares
with respect to which Warrants are being exercised; and (iii) payment either by
wire transfer of immediately available funds to an account designated by the
Company or by certified or official bank check or bank cashier’s check payable
to the order of the Company, in each case for the full amount of the aggregate
Exercise Price of the Warrant Shares being acquired.

7.                  Delivery of Warrant Shares; Partial Exercise. Upon receipt
of the items set forth in Section 6(b), and subject to the terms of this
Agreement, the Company shall promptly deliver to, and register in the name of,
the Holder a certificate or certificates representing the number of Warrant
Shares acquired by exercise of a Warrant. In the event of a partial exercise of
Warrant(s), a new Warrant Certificate evidencing the number of Warrant Shares
that remain subject to the Warrant shall be issued by the Company to such Holder
or to his duly authorized assigns.

 

3

 

8.                  Registration of Transfer and Exchange. Subject to Section 5:

(a)                The Company shall keep, or cause to be kept, at its principal
place of business or at such other location designated by the Company, a
register or registers in which, subject to such reasonable regulations as the
Company may prescribe, the registrar and transfer agent (the “Securities
Registrar”) shall register the Warrant Certificates and the transfers thereof as
provided herein (“Securities Register”). The initial Securities Registrar shall
be the secretary or assistant secretary of the Company, and thereafter, the
Securities Registrar may be removed and/or appointed as authorized by the
Company.

(b)               Upon surrender for registration of transfer of any Warrant
Certificate, the Company shall issue and deliver to the Holder or his duly
authorized assigns, one or more new Warrant Certificates of like tenor and in
like aggregate amount.

(c)                At the option of the Holder, Warrant Certificates may be
exchanged for other Warrant Certificates of like tenor and in like aggregate
amount upon surrender of the Warrant Certificates to be exchanged. Upon such
surrender, the Company shall issue and deliver to the Holder or his duly
authorized assigns, one or more new Warrant Certificates of like tenor and in
like aggregate amount.

(d)               Every Warrant Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied (if so required by the
Company or the Securities Registrar) by a written instrument or instruments of
transfer, in form satisfactory to the Company or the Securities Registrar, duly
executed by the registered Holder or by such Holder’s duly authorized attorney
in writing.

9.                  Replacement of Warrant Certificates.

(a)                Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of a Warrant Certificate
and, in the case of loss, theft or destruction, on delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company or, in the
case of mutilation, surrender and cancellation of such Warrant Certificate, the
Company shall issue and deliver to the Holder or his duly authorized assigns
after compliance with Section 5, one or more new Warrant Certificates of like
tenor and in like aggregate amount. In the case of loss, theft or destruction of
a Warrant Certificate, prior to the issuance of a replacement Warrant
Certificate, the Company may also require that a bond be posted in such amount
as the Company may determine is necessary as indemnity against any claim that
may be made against it with respect to such Warrant Certificate.

(b)               All Warrants shall be held and owned under the express
condition that the provisions of this Section are exclusive with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Warrant
Certificates and shall preclude (to the extent lawful) all other rights and
remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.

 

4

 

(c)                Upon the issuance of any new Warrant Certificate under this
Section, the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Company and its agents
and counsel) connected therewith.

(d)               Every new Warrant Certificate issued pursuant to this
Section shall constitute an additional contractual obligation of the Company,
whether or not the mutilated, destroyed, lost or stolen Warrant Certificate
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Agreement equally and proportionately with any and all other
Warrant Certificates duly issued hereunder.

10.              Persons Deemed Holders. Prior to the due presentment of a
Warrant Certificate for registration of transfer or exchange, the Company, any
Securities Registrar and any other agent of the Company may treat the person in
whose name such Warrant Certificate is registered in the Securities Register as
the sole Holder of such Warrant Certificate and of the Warrant represented by
such Warrant Certificate for all purposes whatsoever, and shall not be bound to
recognize any equitable or other claim to or interest in such Warrant
Certificate or in the Warrant represented by such Warrant Certificate on the
part of any person and shall be unaffected by any notice to the contrary.

11.              Cancellation. All Warrant Certificates surrendered for the
purpose of exercise, exchange or registration of transfer shall be cancelled by
the Securities Registrar, and no Warrant Certificates shall be issued in lieu
thereof, except as expressly permitted by the provisions of this Agreement.

12.              Fractional Warrant Shares. A Warrant Certificate exercisable
for fractional Warrant Shares shall receive, upon surrender of the Warrant
Certificate, a check in the amount equal to any cash in lieu of any fractional
share of Common Stock to which such Holder may be otherwise entitled.

13.              Stock Dividends, Splits, Etc.

(a)                If, prior to the Expiration Time, the Company shall subdivide
its outstanding shares of Common Stock into a greater number of shares of Common
Stock, or declare and pay a dividend on its outstanding shares of Common Stock
payable in additional shares of Common Stock, the Exercise Price, as then in
effect, shall be proportionately reduced, and the Company shall proportionately
increase the number of Warrant Shares then subject to exercise under this
Warrant (and not previously exercised.)

(b)               If, prior to the Expiration Time, the Company shall combine
its outstanding shares of Common Stock into a lesser number of shares of Common
Stock, the Exercise Price, as then in effect, shall be proportionately
increased, and the Company shall proportionately reduce the number of Warrant
Shares then subject to exercise under this Warrant (and not previously
exercised.)

 

5

 

14.              Reorganization, Reclassifications, Consolidation or Merger. If,
prior to the Expiration Time, there shall be a reorganization or
reclassification of the outstanding shares of Common Stock (other than as
provided in Section 13 of this Agreement), or any consolidation or merger of the
Company with another entity, the Holder shall be entitled to receive, during the
remainder of the term of this Agreement and upon payment of the Exercise Price,
the number of shares of stock or other securities or property of the Company or
of the successor entity (or its parent company) resulting from such
consolidation or merger, as the case may be, to which a holder of Warrant
Shares, deliverable upon the exercise of a Warrant, would have been entitled
upon such reorganization, reclassification, consolidation or merger; and, in any
case, the Company shall make appropriate adjustments (as determined by the board
of directors of the Company in its sole discretion) in the application of the
provisions with respect to the rights and interests of the Holders so that the
provisions set forth in this Agreement (including the adjustment to the Exercise
Price and the number of Warrant Shares issuable upon exercise of the Warrants)
shall be applicable, as nearly as may be practicable, to any shares or other
property thereafter deliverable upon the exercise of this Warrant.

15.              Certificate as to Adjustments; Issuance of New Warrant
Certificates. Within thirty (30) days following any adjustment provided for in
Section 13 or 14 of this Agreement, the Company shall give written notice of the
adjustment to the Holders. The notice shall state the Exercise Price as adjusted
and the increased or decreased number of shares of Common Stock purchasable upon
the exercise of the Warrants and shall set forth in reasonable detail the method
of calculation for each. Notwithstanding anything to the contrary set forth
herein or in the Warrant Certificates, the Company may, at its option, issue new
Warrant Certificates evidencing the Warrants, in such form as may be approved by
the Company, to reflect any adjustment or change in the Exercise Price and the
number or kind of stock or other securities or property purchasable upon
exercise of the Warrants.

16.              Miscellaneous.

(a)                Any notice or other communication required or permitted to be
made hereunder shall be in writing, duly signed by the party giving such notice
or communication and shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid as follows (or at such other address for a party as shall be specified
by like notice): (i) if given to the Company, at its principal place of
business; and (ii) if given to a Holder, at the address set forth for the Holder
on the books and records of the Company. A notice given to the Company by a
Holder with respect to the exercise of a Warrant shall not be effective until
received by the Company.

(b)               The Company shall, at all times, reserve and keep available
out of its authorized and unissued shares of Common Stock or out of any shares
of Common Stock held in treasury that number of shares of Common Stock that will
from time to time be sufficient to permit the exercise in full of all
outstanding Warrants. The Company shall take all such action as may be necessary
to ensure that all Warrant Shares delivered upon exercise of any Warrants shall,
at the time of delivery of the Warrant Certificates for such Warrant Shares, be
duly authorized, validly issued, fully paid and nonassessable.

(c)                The Company shall pay when due and payable any and all
federal and state transfer taxes and charges (other than any applicable income
taxes) that may be payable in respect of the issuance and delivery of Warrant
Certificates (excluding the Warrant Certificate issued to the Initial Holder) or
of certificates for Warrant Shares receivable upon the exercise of any Warrants;
provided, however, that the Company shall not be required to pay any tax that
may be payable in respect of the issuance and delivery (i) of any Warrant
Certificate or stock certificate registered in a name other than that of the
Holder of the Warrant Certificate that has been surrendered, or (ii) of any
Warrant Certificate under Section 9.

 

6

 

(d)               No Holder, in his capacity as such, shall be entitled to vote
or receive dividends or shall be deemed for any other purpose the holder of the
Warrant Shares or other securities which may at any time be issuable upon the
exercise of such Warrant. Nothing contained herein or in any Warrant Certificate
shall be construed to confer upon any Holder, in his capacity as such, any of
the rights of a shareholder of the Company, including any right to vote for the
election of directors or upon any matter submitted to shareholders of the
Company at any meeting thereof, to give or withhold consent to any corporate
action, or to receive notices of meeting or other actions affecting
shareholders.

(e)                Each Holder, by accepting a Warrant Certificate, accepts and
agrees to the terms of this Agreement. The terms of this Agreement shall be
binding upon the Company, the Initial Holder and the subsequent Holders and
their respective heirs, successors, representatives and permitted assigns.
Nothing expressed or referred to herein is intended or will be construed to give
any person other than the Company or the Holders any legal or equitable right,
remedy or claim under or in respect of this Agreement, or any provision herein
contained, it being the intention of the Company and the Holders that this
Agreement, the assumption of obligations and statements of responsibilities
hereunder, and all other conditions and provisions hereof are for the sole
benefit of the Company and the Holders and for the benefit of no other person.

(f)                This Agreement constitutes the full understanding of the
Company and the Holders, a complete allocation of risks between them and a
complete and exclusive statement of the terms and conditions of their agreement
relating to the subject matter hereof and supersedes any and all prior
agreements, whether written or oral, that may exist between the Company and any
Holder with respect thereto. Except as otherwise specifically provided in this
Agreement, no conditions, usage of trade, course of dealing or performance,
understanding or agreement purporting to modify, vary, explain or supplement the
terms or conditions of this Agreement will be binding unless hereafter or
contemporaneously herewith made in writing and signed by the party to be bound,
and no modification will be effected by the acknowledgment or acceptance of
documents containing terms or conditions at variance with or in addition to
those set forth in this Agreement.

(g)                The headings contained in this Agreement are for convenience
of reference only and will not affect in any way the meaning or interpretation
of this Agreement. The words “hereof,” “herein” and “hereunder” and words of
similar import when used in this Agreement will refer to this Agreement as a
whole and not to any particular provision in this Agreement. Each use herein of
the masculine, neuter or feminine gender will be deemed to include the other
genders. Each use herein of the plural will include the singular and vice versa,
in each case as the context requires or as is otherwise appropriate. The word
“or” is used in the inclusive sense. Whenever the words “include,” “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation.” References to a person are also to its permitted
successors or assigns. No provision of this Agreement is to be construed to
require, directly or indirectly, any person to take any action, or omit to take
any action, which action or omission would violate applicable law (whether
statutory or common law), rule or regulation.

 

7

 

(h)               THIS AGREEMENT, EACH WARRANT AND EACH WARRANT CERTIFICATE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICTS OF LAWS. IN THE EVENT OF A DISPUTE INVOLVING THIS
AGREEMENT, THE PARTIES IRREVOCABLY AGREE THAT VENUE FOR SUCH DISPUTE SHALL LIE
EXCLUSIVELY IN A COURT OF COMPETENT JURISDICTION IN NEW YORK, NEW YORK.

********

 

8

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a
duly authorized officer as of the date first above written.

 

  ROBERTS REALTY INVESTORS, INC.           By:       Name:       Title:    

 

 

Acknowledged and Agreed as of the date first above written:

A-III Investment Partners LLC

 

By:     Name:       Title:    

 

 

9

 

EXHIBIT A

WARRANTS GRANTED

 

Name   Number of Warrants A-III Investment Partners LLC   The number of Warrants
equal to $38,000,000 divided by the Purchase Price Per Share as defined in the
Stock Purchase Agreement, as adjusted pursuant to Section 6.2(c) of the Stock
Purchase Agreement and the post-closing adjustment pursuant to Section 1.3 of
the Stock Purchase Agreement, subject to further adjustment pursuant to
Section 13 of the Warrant Agreement

 

 

10

 

EXHIBIT B

FORM OF WARRANT CERTIFICATE

THIS WARRANT CERTIFICATE AND THE SHARES ISSUABLE UNDER THAT CERTAIN WARRANT
AGREEMENT DATED AS OF __________, 20__ BY ROBERTS REALTY INVESTORS, INC., A
GEORGIA CORPORATION (THE “COMPANY”), IN FAVOR OF THE INITIAL HOLDER, AS THE SAME
MAY BE AMENDED FROM TIME TO TIME (THE “AGREEMENT”), HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE, AND EXCEPT AS PROVIDED IN SECTION 5 OF THE WARRANT
AGREEMENT, THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR, IN THE
OPINION OF THE COMPANY’S SECURITIES LAW COUNSEL, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION. A COPY OF THE AGREEMENT IS
ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY
DURING NORMAL BUSINESS HOURS. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF
THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF THE AGREEMENT.

No. W-001 Number of Warrants: _______

 

 

 

WARRANT CERTIFICATE

This Warrant Certificate certifies that A-III Investment Partners LLC, or
registered assigns, is the registered holder of a warrant to purchase the number
of fully-paid and non-assessable shares of common stock, $0.01 par value of the
Company (“Warrant Shares”) set forth above, at the Exercise Price set forth in
Section 6 of the Agreement (the “Warrant”).

The Warrant evidenced by this Warrant Certificate is part of a duly authorized
issue of Warrants issued pursuant to the Agreement, which is hereby incorporated
by reference in and made a part of this instrument and is hereby referred to for
a description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the Holder. All terms used, but not
otherwise defined, in this Warrant Certificate shall have the meanings assigned
to them in the Agreement. If any provision of this Warrant Certificate conflicts
with a provision of the Agreement, the provision of the Agreement shall
supersede.

This Warrant may not be exercised after 5:00 p.m., New York, New York time, on
the third (3rd) anniversary of the Issue Date, as provided in Section 4 of the
Agreement.

The Holder may exercise the Warrant evidenced by this Warrant Certificate in
whole or in part at any time prior to the Expiration Time by delivering to the
secretary or assistant secretary of the Company (i) the Warrant Certificate;
(ii) a written notice to the Company specifying the number of Warrant Shares
with respect to which Warrants are being exercised; and (iii) a check for the
full amount of the aggregate Exercise Price of the Warrant Shares being
acquired.

 

 

 

Notwithstanding the preceding and notwithstanding anything in the Agreement to
the contrary, this Warrant may not be transferred unless at the time the Holder
seeks to transfer such Warrant, either (a) a prospectus or registration
statement relating to the Warrant is in effect under applicable laws and rules
of the U.S. Securities and Exchange Commission (the “SEC”) and applicable state
blue sky laws, or (b) the transfer of the Warrant is made pursuant to an
available exemption from registration or qualification under the securities laws
of the United States and applicable state blue sky laws in the reasonable
judgment of the Company’s securities counsel. Further, notwithstanding the
preceding and anything in the Agreement to the contrary, this Warrant will be
exercisable and the Company will not be obligated to issue Warrant Shares upon
the exercise of Warrants unless at the time the Holder seeks to exercise such
Warrant, either (a) a prospectus or registration statement relating to the
Warrant Shares is in effect under applicable laws and rules of the SEC and
applicable state blue sky laws, or (b) the issuance of the Warrant Shares is
made pursuant to an available exemption from registration or qualification under
the securities laws of the United States and applicable state blue sky laws in
the reasonable judgment of the Company’s securities counsel. Except as provided
in the Registration Rights Agreement between the Company and the Initial Holder
dated                , 20   , the Holder acknowledges that the Company has no
obligation to register or qualify this Warrant or the Warrant Shares and has no
obligation to register or qualify this Warrant or the Warrant Shares for resale.
The Holder further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various requirements that
include the time and manner of sale, the holding period for the Warrant and the
Warrant Shares, whether the Holder is an accredited investor as defined in Rule
501(a) of Regulation D promulgated under the Securities Act, and on requirements
relating to the Company that are outside the Holder’s control, and which the
Company is under no obligation and may not be able to satisfy.

Upon receipt of the items set forth above, and subject to the terms of the
Agreement, the Company shall promptly deliver to, and register in the name of,
the Holder a certificate or certificates representing the number of Warrant
Shares acquired by exercise of this Warrant. In the event of a partial exercise
of this Warrant, a new Warrant Certificate evidencing the number of Warrant
Shares that remain subject to this Warrant shall be issued by the Company to
such Holder or to his duly authorized assigns.

The Agreement provides that upon the occurrence of certain events the Exercise
Price and the type and/or number of the Company’s securities issuable thereupon
may, subject to certain conditions, be adjusted. In such event, the Company may,
at its option, issue a new Warrant Certificate evidencing the adjustment in the
Exercise Price and the number and/or type of securities issuable upon the
exercise of the Warrants.

Upon surrender for registration of transfer of this Warrant Certificate, subject
to the terms of the Agreement, the Company shall issue and deliver to the Holder
or his duly authorized assigns, one or more new Warrant Certificates of like
tenor and in like aggregate amount.

Prior to the due presentment of this Warrant Certificate for registration of
transfer or exchange, the Company, any Securities Registrar and any other agent
of the Company may treat the person in whose name this Warrant Certificate is
registered in the Securities Register as the sole Holder of this Warrant
Certificate and of the Warrant represented by this Warrant Certificate for all
purposes whatsoever, and shall not be bound to recognize any equitable or other
claim to or interest in this Warrant Certificate or in the Warrant represented
by this Warrant Certificate on the part of any person and shall be unaffected by
any notice to the contrary.

The Holder, in his capacity as such, shall not be entitled to vote or receive
dividends or shall be deemed from any other purpose the holder of the Warrant
Shares or other securities which may at any time be issuable upon the exercise
of this Warrant. Nothing contained in this Warrant Certificate shall be
construed to confer upon the Holder, in his capacity as such, any of the rights
of a shareholder of the Company, including any right to vote for the election of
directors or upon any matter submitted to shareholders of the Company at any
meeting thereof, to give or withhold consent to any corporate action, or to
receive notices of meeting or other actions affecting shareholders.

 

2

 

Any notice or other communication required or permitted to be made by the Holder
to the Company shall be in writing, duly signed by the Holder and shall be
deemed delivered and effective when given personally or mailed by first-class
registered or certified mail, postage prepaid to the Company, at its principal
place of business (or such other address as designated in writing to the Holder
by the Company). A notice given to the Company by a Holder with respect to the
exercise of this Warrant shall not be effective until received by the Company.

IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed under its corporate seal.

Dated as of _________, 20__

 

  ROBERTS REALTY INVESTORS, INC.             By:       Name:         Title:    

 

3

 

EXHIBIT j-1

FORM OF director RESIGNATION AND RELEASE

  

Reference is made to that certain Stock Purchase Agreement (the “Purchase
Agreement”), dated as of November 19, 2014, by and among Roberts Realty
Investors, Inc., a Georgia corporation (the “Company”), Roberts Properties
Residential, L.P., a Georgia limited partnership (the “Operating Partnership”)
and A-III Investment Partners LLC, a Delaware limited liability company (the
“Purchaser”), a condition of which is the delivery by the Company to the
Purchaser of resignations and releases from each of the directors, officers and
employees of the Company. Capitalized terms not otherwise defined in this
Resignation and Release shall have the meaning set forth in the Purchase
Agreement. The undersigned acknowledges that delivery of this Resignation and
Release is a material inducement to Purchaser’s willingness to consummate the
transactions contemplated by the Purchase Agreement, and that Purchaser would
not do so without the benefit of the provisions of this Resignation and Release.

 

Effective as of the Closing Date, the undersigned hereby resigns from any and
all positions that he may hold as a director, officer or employee of the
Company.

 

In exchange for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned hereby releases and forever
discharges, and covenants not to assert or file any claim against, the Company,
the Purchaser and each of their respective affiliates, and the respective
shareholders, members, partners, directors, officers, managers, employees,
benefit plans, successors and assigns thereof (the “Released Parties”) from or
with respect to any and all promises, liabilities, amounts due or payable,
indebtedness, losses, claims, litigation, demands and causes of action, known or
unknown, fixed or contingent, including, but not limited to, any actions brought
in tort or for breach of contract, or under any federal or state statute, law or
regulation, which the undersigned has, had or purports to have against any of
the Released Parties as of or prior to the Closing Date; provided however that
the undersigned retains all rights as an Indemnified Party under the Purchase
Agreement to indemnification, advancement of expenses and exculpation by the
Company as provided in the Organizational Documents of the Company and its
Subsidiaries, and pursuant to Director and Officer Indemnification Agreements
between the Company and the undersigned.

 

 

[Signature page follows.]

 

 

 

 

IN WITNESS WHEREOF, the undersigned has executed this Resignation and Release as
of the date first written above.

 

 

        [Director/Officer/Employee]  

 

 

[Signature page to Resignation and Release]

 

 

 

 

EXHIBIT J-2

FORM OF OFFICER AND EMPLOYEE RESIGNATION AND RELEASE

  

Reference is made to that certain Stock Purchase Agreement (the “Purchase
Agreement”), dated as of November 19, 2014, by and among Roberts Realty
Investors, Inc., a Georgia corporation (the “Company”), Roberts Properties
Residential, L.P., a Georgia limited partnership (the “Operating Partnership”)
and A-III Investment Partners LLC, a Delaware limited liability company (the
“Purchaser”), a condition of which is the delivery by the Company to the
Purchaser of resignations and releases from each of the directors, officers and
employees of the Company. Capitalized terms not otherwise defined in this
Resignation and Release shall have the meaning set forth in the Purchase
Agreement. The undersigned, Charles S. Roberts, acknowledges that delivery of
this Resignation and Release is a material inducement to Purchaser’s willingness
to consummate the transactions contemplated by the Purchase Agreement, and that
Purchaser would not do so without the benefit of the provisions of this
Resignation and Release. This Resignation and Release is conditioned upon the
execution of the Employment Agreement.

 

Effective as of the Closing Date, the undersigned, Charles S. Roberts, hereby
resigns from his positions as Chief Executive Officer, President and Chairman of
the Board of Directors, as a director of the Company (subject to the right to be
appointed as a director pursuant to the Governance and Voting Agreement), and
from any and all positions that he may hold as a director, officer, employee or
manager of any Subsidiary of the Company.

 

In exchange for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned hereby releases and forever
discharges, and covenants not to assert or file any claim against, the Company,
the Purchaser and each of their respective affiliates and the respective
shareholders, members, partners, directors, officers, managers, employees,
benefit plans, successors and assigns thereof (the “Released Parties”) from or
with respect to any and all promises, liabilities, amounts due or payable,
indebtedness, losses, claims, litigation, demands and causes of action, known or
unknown, fixed or contingent, including, but not limited to, any actions brought
in tort or for breach of contract, or under any federal or state statute, law or
regulation, which the undersigned has, had or purports to have against any of
the Released Parties, as of or prior to the Closing Date; provided, however,
that the undersigned retains all rights as an Indemnified Party under the
Purchase Agreement to indemnification, advancement of expenses and exculpation
by the Company as provided in the Organizational Documents of the Company and
its Subsidiaries, and pursuant to the Director and Officer Indemnification
Agreement between the Company and the undersigned. Notwithstanding the foregoing
provisions of this Resignation and Release, the provisions of this Resignation
and Release shall not constitute a release by the undersigned of any rights he
has under the Employment Agreement to be executed and delivered by the Company
and the undersigned as of the date hereof.

 

[Signature page follows]

 

 

 

 

IN WITNESS WHEREOF, the undersigned has executed this Resignation and Release as
of the date first written above.

 

 

        Charles S. Roberts  

 

 

 

[Signature page to Resignation and Release]

 

 

 

 

 

EXHIBIT K

FORM OF ESCROW AGREEMENT

 

THIS ESCROW AGREEMENT (this “Escrow Agreement”) is made as of this 19th day of
November, 2014 by and among COMMONWEALTH LAND TITLE INSURANCE COMPANY, with an
address at c/o New York Land Services, 630 3rd Avenue, 12th Floor, New York, NY
10017 (the “Escrow Agent”), Roberts Realty Investors, Inc., a Georgia
corporation with an address at 375 Northridge Road, Suite 330, Atlanta, GA 30350
(the “Company”), and A-III Investment Partners LLC, a Delaware limited liability
company with an address at c/o Avenue Capital Group, 399 Park Avenue, New York,
NY 10022 (the “Purchaser”);

 

WHEREAS, the Purchaser and the Company are parties to that certain Stock
Purchase Agreement, of even date herewith, (the “Stock Purchase Agreement”),
pursuant to which, among other things, the Purchaser has agreed to purchase from
the Company, and the Company has agreed to sell to the Purchaser, newly issued
shares of the Company’s common stock for an aggregate purchase price of
$12,000,000; and

WHEREAS, the Purchaser and the Company have requested Escrow Agent to act as
escrow agent (i) to hold $750,000 cash (the “Deposit”) in accordance with the
terms and provisions of this Escrow Agreement and (ii) to disburse the Deposit
in accordance with the terms and provisions of the Stock Purchase Agreement and
this Escrow Agreement.

NOW, THEREFORE, in consideration of the promises and undertakings herein made,
the parties hereto, intending to be legally bound, agree as follows:

1.                  The Purchaser and the Company hereby appoint Escrow Agent as
escrow agent pursuant to this Escrow Agreement and the Stock Purchase Agreement.
The Deposit is hereby delivered by the Purchaser to Escrow Agent, who by signing
below acknowledges receipt thereof. Such receipt is made subject to the
Conditions of Escrow attached to and made a part of this Escrow Agreement.

2.                  Escrow Agent is to hold the Deposit in escrow and deliver it
to the Company or the Purchaser in accordance with the provisions of the Stock
Purchase Agreement and this Escrow Agreement. The Deposit shall be deposited by
Escrow Agent in a segregated Premium Commercial Money Market Deposit account at
JPMorgan Chase Bank, N.A., bearing interest at the rate determined by JPMorgan
Chase Bank, N.A. and all interest accruing thereon shall be paid to the
Purchaser upon disbursement of the Deposit by Escrow Agent, regardless of
whether the Purchaser or the Company is entitled to receive the Deposit under
the terms of the Stock Purchase Agreement. The Purchaser and the Company
understand and acknowledge that said account in which the Deposit will be held
cannot be established until Escrow Agent receives original executed IRS Form
W-9’s from the Purchaser.

3.                  In the event the Escrow Agent receives at any time a written
statement from the Company (“Company’s Notice”) stating that the Company has
terminated the Stock Purchase Agreement pursuant to Section 8.1(d)(i) thereof
due to an Intentional Breach (as defined therein) of any representation or
warranty by the Purchaser or pursuant to Section 8.1(d)(ii) thereof, Escrow
Agent shall immediately forward a copy of Company’s Notice to the Purchaser in
accordance with Paragraph 8 hereof. If, within five (5) business days of
delivering a copy of Company’s Notice to the Purchaser, Escrow Agent does not
receive written notice from the Purchaser objecting to the release of the
Deposit to the Company, then Escrow Agent shall deliver the Deposit (but not the
accrued interest thereon) by wire transfer to the Company pursuant to wire
instructions provided by the Company; provided, however, if Escrow Agent
receives written notice from the Purchaser within such five (5) business day
period stating that the Purchaser disputes Company’s right to receive the
Deposit and directing Escrow Agent not to deliver the Deposit to the Company as
provided above, Escrow Agent shall not deliver the Deposit to the Company but
instead shall retain the Deposit until instructed otherwise by a court of
competent jurisdiction or in writing jointly by the Company and the Purchaser
or, if appropriate, interplead the Deposit in a court of competent jurisdiction.

 

 

 

4.                  In the event that Escrow Agent receives at any time a
written statement from the Purchaser (“Purchaser’s Notice”) stating that (a) the
Stock Purchase Agreement has been terminated by mutual consent of the Company
and the Purchaser pursuant to Section 8.1(a) thereof, (b) the Purchaser has
terminated the Stock Purchase Agreement pursuant to Section 8.1(b)(i), Section
8.1(b)(ii) or Section 8.1(b)(iii) thereof, (c) the Purchaser has terminated the
Stock Purchase Agreement pursuant to Section 8.1(c)(i), Section 8.1(c)(ii) or
Section 8.1(c)(iii) thereof, or (d) the Company has terminated the Stock
Purchase Agreement for any reason other than pursuant to Section 8.1(d)(i)
thereof due to an Intentional Breach (as defined therein) of any representation
or warranty by the Purchaser or pursuant to Section 8.1(d)(ii) thereof, Escrow
Agent shall immediately forward a copy of Purchaser’s Notice to Company in
accordance with Paragraph 8 hereof. If, within five (5) business days of
delivering a copy of Purchaser’s Notice to Company, Escrow Agent does not
receive written notice from the Company objecting to the release of the Deposit
to the Purchaser, then Escrow Agent shall deliver the Deposit by wire transfer
to the Purchaser pursuant to wire instructions provided by the Purchaser;
provided, however, if Escrow Agent receives written notice from the Company
within such five (5) business day period stating that the Company disputes the
Purchaser’s right to receive the Deposit and directing Escrow Agent not to
deliver the Deposit to the Purchaser as provided above, Escrow Agent shall not
deliver the Deposit to the Purchaser but instead shall retain the Deposit until
instructed otherwise by a court of competent jurisdiction or in writing jointly
by the Company and the Purchaser or, if appropriate, interplead the Deposit in a
court of competent jurisdiction.

In the event that the Closing (as defined in the Stock Purchase Agreement) has
occurred and upon notice from the Purchaser and the Company that the Closing has
occurred, the Escrow Agent shall immediately deliver the Deposit by wire
transfer to the Purchaser pursuant to wire instructions provided by the
Purchaser.

If Escrow Agent is made a party to any judicial, non-judicial or administrative
action, hearing or process based on the acts of the Purchaser and the Company
and not on the malfeasance and/or gross negligence of Escrow Agent in performing
its duties hereunder, then the losing party shall indemnify, save and hold
harmless Escrow Agent from the expenses, costs and reasonable attorneys’ fees
incurred by Escrow Agent in responding to such action, hearing or process.

 

2

 

5.                 The Purchaser and the Company acknowledge and agree that the
duties of Escrow Agent are purely ministerial in nature, that Escrow Agent is
acting as an accommodation to both the Purchaser and the Company, and that
Escrow Agent, in performing its duties, shall not be liable for: (i) any loss,
cost or damage which Escrow Agent may incur as a result of serving as escrow
agent hereunder, except for any loss, costs or damage arising out of its own
willful misconduct or gross negligence; (ii) any action taken or omitted to be
taken in reliance upon any document, including any written instructions provided
for in this Agreement, which Escrow Agent shall in good faith believe to be
genuine; and (iii) any loss or impairment of the Deposit deposited with a
Federally insured financial institution, resulting from the failure, insolvency,
or suspension of the depositary. The Purchaser and the Company acknowledge that
they are aware that the Federal Deposit Insurance Corporation (FDIC) coverage
applies only to a cumulative maximum amount for each individual depositor for
all of depositor’s accounts at the same or related institution. The Purchaser
and the Company are further aware that Escrow Agent is not responsible for
levies by taxing authorities based upon the taxpayer identification number used
to establish this interest bearing account.

6.                  If any dispute arises with respect to this Escrow Agreement,
whether such dispute arises between the parties hereto or between the parties
hereto and other persons, Escrow Agent is authorized to interplead such dispute
in a court of competent jurisdiction.

7.                  All notices given by any party hereunder shall be in writing
and shall be deemed duly given (i) on the day delivered if delivered in person
or by email or (ii) on the first business day after prepaid deposit if delivered
by overnight delivery service such as Federal Express, UPS, Emory Airfreight,
Airborne Express, U.S. Postal Service Express Mail or other national overnight
courier service. Any such notice is to be addressed to the appropriate party of
the address set forth below (or such other address as the party might request in
writing):

a.                 As to Escrow Agent:

Commonwealth Land Title Insurance Company

c/o New York Land Services

Attn: Kashima A. Loney/Teresa Hill

630 3rd Avenue, 12th Floor

New York, NY 10017                 

Email: kashima.loney@fnf.com or teresa.hill@fnf.com

 

b.                 As to the Company:

Roberts Realty Investors, Inc.

Attn: Charles S. Roberts

375 Northridge Road, Suite 330

Atlanta, GA 30350

Email: cr@robertsproperties.com

 

 

 

3

 

With a copy to:

 

Alston & Bird LLP

Attn: Justin R. Howard

1201 West Peachtreet St. NW

Atlanta, GA 30309

Email: justin.howard@alston.com

 

  c. As to the Purchaser:

 

A-III Investment Partners LLC

c/o Avenue Capital Group

Attn: Edward Gellert

399 Park Avenue

New York, NY 10022

Email: egellert@avenuecapital.com

 

With a copy to:                 

Hunton & Williams LLP

Attn: Daniel M. LeBey, Esq.

Riverfront Plaza, East Tower

951 East Byrd Street

Richmond, VA 23219

Email: dlebey@hunton.com

 

 

8.                  The instructions and Conditions of Escrow contained herein
may not be modified, amended or altered in any way except by a writing (which
may be in counterpart copies) signed by the Company, the Purchaser and Escrow
Agent. This Escrow Agreement is intended solely to supplement and implement the
provisions of the Agreement and is not intended to modify, amend or very any of
the rights or obligations of Purchaser or Company under the Stock Purchase
Agreement.

9.                  This Escrow Agreement shall be construed in accordance with
the internal laws of the state of New York.

10.              This Escrow Agreement may be executed in one or more
counterparts which when taken together shall constitute one and the same
agreement and such counterparts may be delivered by facsimile, to be followed up
with original counterparts.

11.              This Escrow Agreement shall be binding upon and inure to the
benefit of Purchaser, Company and Escrow Agent and each of their respective
successors and assigns.

[Signatures on next page]

 

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AGREED to, as of the day and year first above written.

  THE PURCHASER:           A-III Investment Partners LLC,     a Delaware limited
liability company           By:           Name: Edward Gellert       Title:
Authorized Signatory                 THE COMPANY:           Roberts Realty
Investors, Inc.,     A Georgia corporation                 By:           Name:
Charles S. Roberts       Title:   President           ESCROW AGENT:          
COMMONWEALTH LAND TITLE     INSURANCE COMPANY,     a Nebraska corporation      
          By:           Name: Kashima A. Loney        Title: Counsel   

 

 

 

 

CONDITIONS OF ESCROW

 

Escrow Agent accepts its undertaking as escrow agent for the Purchaser and the
Company subject to these Conditions of Escrow:

1.                  The Deposit may be processed for collection in the normal
course of business by Escrow Agent.

2.                  Escrow Agent shall not be liable for loss or damage
resulting from:

  a. Any good faith act or forbearance of Escrow Agent;

  b. Any default, error, action or omission of Escrow Agent or any other party
other than the gross negligence or willful misconduct of Escrow Agent;

  c. The expiration of any time limit or other delay that is not caused by the
failure of Escrow Agent to proceed in its ordinary course of business, and in no
event where such time limit is not disclosed in writing to Escrow Agent;

  d. The lack of authenticity of any writing delivered to Escrow Agent or of any
signature thereto, or the lack of authority of the signatory to sign such
writing;

  e. Escrow Agent’s compliance with all attachments, writs, orders, judgments or
other legal process issued by any court of competent jurisdiction;

  f. Escrow Agent’s assertion or failure to assert any cause of action of
defense in any judicial or administrative proceeding; and

  g. Any loss or damage that arises after the Deposit has been disbursed in
accordance with the terms of this Escrow Agreement and the Stock Purchase
Agreement.

 

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3.                  Escrow Agent shall be indemnified fully by the Purchaser and
the Company for all its expenses, costs and reasonable attorneys’ fees incurred
in connection with any interpleader action that Escrow Agent might file, in its
sole discretion, to resolve any dispute as to the Deposit.

4.                  If Escrow Agent is made a party to any judicial,
non-judicial or administrative action, hearing or process based on the acts of
the Purchaser and the Company and not on the malfeasance and/or negligence of
Escrow Agent in performing its duties hereunder, then the losing party shall
indemnify, save and hold harmless Escrow Agent from the expenses, costs and
reasonable attorneys’ fees incurred by Escrow Agent in responding to such
action, hearing or process.

5.                  Escrow Agent shall be paid the sum of $750.00, to cover its
expenses in opening, maintaining and disbursing the proceeds of the Escrow
Account (“Escrow Service Charge”). The Escrow Service Charge shall be delivered
to the Escrow Agent contemporaneously with the Deposit.

 

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