EXHIBIT 10.2

MULTIFAMILY DEED TO SECURE DEBT,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT

(GEORGIA – REVISION DATE 05-11-2004)

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FHLMC Loan No. 002710226

MULTIFAMILY DEED TO SECURE DEBT,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
(GEORGIA – REVISION DATE 05-11-2004)

        THIS MULTIFAMILY DEED TO SECURE DEBT, ASSIGNMENT OF RENTS AND SECURITY
AGREEMENT (the “Instrument”) is made to be effective as of the 19th day of
April, 2005, between ROBERTS PROPERTIES RESIDENTIAL, L.P., a limited partnership
organized and existing under the laws of Georgia, whose address is 450
Northridge Parkway, Suite 302, Atlanta, Georgia 30350, as grantor (“Borrower”),
and PRIMARY CAPITAL ADVISORS LC, a limited liability company organized and
existing under the laws of the State of Georgia, whose address is 2060 Mount
Paran Road, Suite 101, Atlanta, Georgia 30327, as grantee (“Lender”). Borrower’s
organizational identification number, if applicable, is GA #K418365.

        Borrower is indebted to Lender in the principal amount of TWENTY-ONE
MILLION AND NO/100 DOLLARS ($21,000,000.00), as evidenced by Borrower’s
Multifamily Note payable to Lender, dated as of the date of this Instrument, and
maturing on May 1, 2016 (the “Maturity Date”).

        TO SECURE TO LENDER the repayment of the Indebtedness, and all renewals,
extensions and modifications of the Indebtedness, and the performance of the
covenants and agreements of Borrower contained in the Loan Documents, Borrower
grants, conveys and assigns to Lender and Lender’s successors and assigns, with
power of sale, the Mortgaged Property, including the Land located in Fulton
County, State of Georgia and described in Exhibit A attached to this Instrument.
To have and to hold the Mortgaged Property unto Lender and Lender’s successors
and assigns forever. As used in this Instrument, the term “Mortgaged Property”
is synonymous with the term “Secured Property,” and the term “lien” is
synonymous with the term “security interest and title.”

        Borrower covenants that Borrower is lawfully seized of the Mortgaged
Property and has the right, power and authority to grant, convey and assign the
Mortgaged Property, that the Mortgaged Property is unencumbered, except as shown
on the schedule of exceptions to coverage in the title policy issued to and
accepted by Lender contemporaneously with the execution and recordation of this
Instrument and insuring Lender’s interest in the Mortgaged Property (the
“Schedule of Title Exceptions”). Borrower covenants that Borrower will warrant
and defend generally the title to the Mortgaged Property against all claims and
demands, subject to any easements and restrictions listed in the Schedule of
Title Exceptions.

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Covenants.     In consideration of the mutual promises set forth in this
Instrument, Borrower and Lender covenant and agree as follows:

    1.        DEFINITIONS. The following terms, when used in this Instrument
(including when used in the above recitals), shall have the following meanings:

    (a)        “Attorneys’ Fees and Costs” means (i) fees and out-of-pocket
costs of Lender’s and Loan Servicer’s attorneys, as applicable, including costs
of Lender’s and Loan Servicer’s in-house counsel, support staff costs, costs of
preparing for litigation, computerized research, telephone and facsimile
transmission expenses, mileage, deposition costs, postage, duplicating, process
service, videotaping and similar costs and expenses; (ii) costs and fees of
expert witnesses, including appraisers; and (iii) investigatory fees. 

    (b)        “Borrower” means all persons or entities identified as “Borrower”
in the first paragraph of this Instrument, together with their successors and
assigns.

    (c)        “Business Day” means any day other than a Saturday, a Sunday or
any other day on which Lender is not open for business.

    (d)        “Collateral Agreement” means any separate agreement between
Borrower and Lender for the purpose of establishing replacement reserves for the
Mortgaged Property, establishing a fund to assure the completion of repairs or
improvements specified in that agreement, or assuring reduction of the
outstanding principal balance of the Indebtedness if the occupancy of or income
from the Mortgaged Property does not increase to a level specified in that
agreement, or any other agreement or agreements between Borrower and Lender
which provide for the establishment of any other fund, reserve or account.

    (e)        “Controlling Entity” means an entity which owns, directly or
indirectly through one or more intermediaries, (i) a general partnership
interest or a Controlling Interest of the limited partnership interests in
Borrower (if Borrower is a partnership or joint venture), (ii) a manager’s
interest in Borrower or a Controlling Interest of the ownership or membership
interests in Borrower (if Borrower is a limited liability company), (iii) a
Controlling Interest of any class of voting stock of Borrower (if Borrower is a
corporation), (iv) a trustee’s interest or a Controlling Interest of the
beneficial interests in Borrower, or (v) a managing partner’s interest or a
Controlling Interest of the partnership interests in Borrower (if Borrower is a
limited liability partnership).

    (f)        “Controlling Interest” means (i) 51 percent or more of the
ownership interests in an entity, or (ii) a percentage ownership interest in an
entity of less than 51 percent, if the owner(s) of that interest actually
direct(s) the business and affairs of the entity without the

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requirement of consent of any other party. The Controlling Interest shall be
deemed to be 51 percent unless otherwise stated in Exhibit B.

    (g)        “Environmental Permit”means any permit, license, or other
authorization issued under any Hazardous Materials Law with respect to any
activities or businesses conducted on or in relation to the Mortgaged Property.

    (h)        “Event of Default”means the occurrence of any event listed in
Section 22.

    (i)        “Fixtures” means all property owned by Borrower which is so
attached to the Land or the Improvements as to constitute a fixture under
applicable law, including: machinery, equipment, engines, boilers, incinerators,
installed building materials; systems and equipment for the purpose of supplying
or distributing heating, cooling, electricity, gas, water, air, or light;
antennas, cable, wiring and conduits used in connection with radio, television,
security, fire prevention, or fire detection or otherwise used to carry
electronic signals; telephone systems and equipment; elevators and related
machinery and equipment; fire detection, prevention and extinguishing systems
and apparatus; security and access control systems and apparatus; plumbing
systems; water heaters, ranges, stoves, microwave ovens, refrigerators,
dishwashers, garbage disposers, washers, dryers and other appliances; light
fixtures, awnings, storm windows and storm doors; pictures, screens, blinds,
shades, curtains and curtain rods; mirrors; cabinets, paneling, rugs and floor
and wall coverings; fences, trees and plants; swimming pools; and exercise
equipment.

    (j)        “Governmental Authority” means any board, commission, department
or body of any municipal, county, state or federal governmental unit, or any
subdivision of any of them, that has or acquires jurisdiction over the Mortgaged
Property or the use, operation or improvement of the Mortgaged Property.

    (k)       “Hazard Insurance” is defined in Section 19.

    (l)        “Hazardous Materials” means petroleum and petroleum products and
compounds containing them, including gasoline, diesel fuel and oil; explosives;
flammable materials; radioactive materials; polychlorinated biphenyls
(“PCBs”) and compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could become friable;
underground or above-ground storage tanks, whether empty or containing any
substance; any substance the presence of which on the Mortgaged Property is
prohibited by any federal, state or local authority; any substance that requires
special handling and any other material or substance now or in the future that
(i)  is defined as a “hazardous substance,” “hazardous material,” “hazardous
waste,” “toxic substance,” “toxic pollutant,” “contaminant,” or “pollutant” by
or within the meaning of any Hazardous Materials Law, or (ii) is regulated in
any way by or within the meaning of any Hazardous Materials Law.

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    (m)        “Hazardous Materials Laws” means all federal, state, and local
laws, ordinances and regulations and standards, rules, policies and other
governmental requirements, administrative rulings and court judgments and
decrees in effect now or in the future and including all amendments, that relate
to Hazardous Materials or the protection of human health or the environment and
apply to Borrower or to the Mortgaged Property. Hazardous Materials Laws
include, but are not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601, et seq., the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901, et seq., the
Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq., the Clean Water
Act, 33 U.S.C. Section 1251, et seq., and the Hazardous Materials Transportation
Act, 49 U.S.C. Section 5101 et seq., and their state analogs.

    (n)        “Impositions” and “Imposition Deposits” are defined in
Section 7(a).

    (o)        “Improvements” means the buildings, structures, improvements, and
alterations now constructed or at any time in the future constructed or placed
upon the Land, including any future replacements and additions.

    (p)        “Indebtedness” means the principal of, interest at the fixed or
variable rate set forth in the Note on, and all other amounts due at any time
under, the Note, this Instrument or any other Loan Document, including
prepayment premiums, late charges, default interest, and advances as provided in
Section 12 to protect the security of this Instrument.

    (q)        “Initial Owners” means, with respect to Borrower or any other
entity, the persons or entities that (i) on the date of the Note, or (ii) on the
date of a Transfer to which Lender has consented, own in the aggregate
100 percent of the ownership interests in Borrower or that entity.

    (r)        “Land” means the land described in Exhibit A.

    (s)        “Leases” means all present and future leases, subleases,
licenses, concessions or grants or other possessory interests now or hereafter
in force, whether oral or written, covering or affecting the Mortgaged Property,
or any portion of the Mortgaged Property (including proprietary leases or
occupancy agreements if Borrower is a cooperative housing corporation), and all
modifications, extensions or renewals.

    (t)        “Lender” means the entity identified as “Lender” in the first
paragraph of this Instrument, or any subsequent holder of the Note.

    (u)        “Loan Documents” means the Note, this Instrument, all guaranties,
all indemnity agreements, all Collateral Agreements, O&M Programs, the MMP and
any other documents now

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or in the future executed by Borrower, any guarantor or any other person in
connection with the loan evidenced by the Note, as such documents may be amended
from time to time.

    (v)        “Loan Servicer” means the entity that from time to time is
designated by Lender to collect payments and deposits and receive Notices under
the Note, this Instrument and any other Loan Document, and otherwise to service
the loan evidenced by the Note for the benefit of Lender. Unless Borrower
receives Notice to the contrary, the Loan Servicer is the entity identified as
“Lender” in the first paragraph of this Instrument.

    (w)        “MMP” means a moisture management plan to control water intrusion
and prevent the development of Mold or moisture at the Mortgaged Property
throughout the term of this Instrument. At a minimum, the MMP must contain a
provision for (i) staff training, (ii) information to be provided to tenants,
(iii) documentation of the plan, (iv) the appropriate protocol for incident
response and remediation and (v) routine, scheduled inspections of common space
and unit interiors.

    (x)        “Mold” means mold, fungus, microbial contamination or pathogenic
organisms.

    (y)        “Mortgaged Property” means all of Borrower’s present and future
right, title and interest in and to all of the following:

  (i) the Land;

  (ii) the Improvements;

  (iii) the Fixtures;

  (iv) the Personalty;

  (v) all current and future rights, including air rights, development rights,
zoning rights and other similar rights or interests, easements, tenements,
rights-of-way, strips and gores of land, streets, alleys, roads, sewer rights,
waters, watercourses, and appurtenances related to or benefiting the Land or the
Improvements, or both, and all rights-of-way, streets, alleys and roads which
may have been or may in the future be vacated;

  (vi) all proceeds paid or to be paid by any insurer of the Land, the
Improvements, the Fixtures, the Personalty or any other part of the Mortgaged
Property, whether or not Borrower obtained the insurance pursuant to Lender’s
requirement;

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  (vii) all awards, payments and other compensation made or to be made by any
municipal, state or federal authority with respect to the Land, the
Improvements, the Fixtures, the Personalty or any other part of the Mortgaged
Property, including any awards or settlements resulting from condemnation
proceedings or the total or partial taking of the Land, the Improvements, the
Fixtures, the Personalty or any other part of the Mortgaged Property under the
power of eminent domain or otherwise and including any conveyance in lieu
thereof;

  (viii) all contracts, options and other agreements for the sale of the Land,
the Improvements, the Fixtures, the Personalty or any other part of the
Mortgaged Property entered into by Borrower now or in the future, including cash
or securities deposited to secure performance by parties of their obligations;

  (ix) all proceeds from the conversion, voluntary or involuntary, of any of the
above into cash or liquidated claims, and the right to collect such proceeds;

  (x) all Rents and Leases;

  (xi) all earnings, royalties, accounts receivable, issues and profits from the
Land, the Improvements or any other part of the Mortgaged Property, and all
undisbursed proceeds of the loan secured by this Instrument and, if Borrower is
a cooperative housing corporation, maintenance charges or assessments payable by
shareholders or residents;

  (xii) all Imposition Deposits;

  (xiii) all refunds or rebates of Impositions by any municipal, state or
federal authority or insurance company (other than refunds applicable to periods
before the real property tax year in which this Instrument is dated);

  (xiv) all tenant security deposits which have not been forfeited by any tenant
under any Lease and any bond or other security in lieu of such deposits; and

  (xv) all names under or by which any of the above Mortgaged Property may be
operated or known, and all trademarks, trade names, and goodwill relating to any
of the Mortgaged Property.

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    (z)        “Note” means the Multifamily Note described on page 1 of this
Instrument, including all schedules, riders, allonges and addenda, as such
Multifamily Note may be amended from time to time.

    (aa)        “O&M Program” is defined in Section 18(d).

    (bb)        “Personalty” means all

  (i) accounts (including deposit accounts) of Borrower related to the Mortgaged
Property;

  (ii) equipment and inventory owned by Borrower, which are used now or in the
future in connection with the ownership, management or operation of the Land or
Improvements or are located on the Land or Improvements, including furniture,
furnishings, machinery, building materials, goods, supplies, tools, books,
records (whether in written or electronic form), computer equipment (hardware
and software);

  (iii) other tangible personal property owned by Borrower which are used now or
in the future in connection with the ownership, management or operation of the
land or Improvements or are located on the Land or in the Improvements,
including ranges, stoves, microwave ovens, refrigerators, dishwashers, garbage
disposers, washers, dryers and other appliances (other than Fixtures);

  (iv) any operating agreements relating to the Land or the Improvements;

  (v) any surveys, plans and specifications and contracts for architectural,
engineering and construction services relating to the Land or the Improvements;

  (vi) all other intangible property, general intangibles and rights relating to
the operation of, or used in connection with, the Land or the Improvements,
including all governmental permits relating to any activities on the Land and
including subsidy or similar payments received from any sources, including a
governmental authority; and

  (vii) any rights of Borrower in or under letters of credit.

    (cc)         “Property Jurisdiction” is defined in Section 30(a).

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    (dd)        “Rents” means all rents (whether from residential or
non-residential space), revenues and other income of the Land or the
Improvements, parking fees, laundry and vending machine income and fees and
charges for food, health care and other services provided at the Mortgaged
Property, whether now due, past due, or to become due, and deposits forfeited by
tenants.

    (ee)        “Taxes” means all taxes, assessments, vault rentals and other
charges, if any, whether general, special or otherwise, including all
assessments for schools, public betterments and general or local improvements,
which are levied, assessed or imposed by any public authority or quasi-public
authority, and which, if not paid, will become a lien on the Land or the
Improvements.

    (ff)        “Transfer” is defined in Section 21.

    2.        UNIFORM COMMERCIAL CODE SECURITY AGREEMENT.

              (a)        This Instrument is also a security agreement under the
Uniform Commercial Code for any of the Mortgaged Property which, under
applicable law, may be subjected to a security interest under the Uniform
Commercial Code, whether such Mortgaged Property is owned now or acquired in the
future, and all products and cash and non-cash proceeds thereof (collectively,
“UCC Collateral”), and Borrower hereby grants to Lender a security interest in
the UCC Collateral. Borrower hereby authorizes Lender to prepare and file
financing statements, continuation statements and financing statement amendments
in such form as Lender may require to perfect or continue the perfection of this
security interest and Borrower agrees, if Lender so requests, to execute and
deliver to Lender such financing statements, continuation statements and
amendments. Borrower shall pay all filing costs and all costs and expenses of
any record searches for financing statements and/or amendments that Lender may
require. Without the prior written consent of Lender, Borrower shall not create
or permit to exist any other lien or security interest in any of the UCC
Collateral.

              (b)        Unless Borrower gives Notice to Lender within 30 days
after the occurrence of any of the following, and executes and delivers to
Lender modifications or supplements of this Instrument (and any financing
statement which may be filed in connection with this Instrument) as Lender may
require, Borrower shall not (i) change its name, identity, structure or
jurisdiction of organization; (ii) change the location of its place of business
(or chief executive office if more than one place of business); or (iii) add to
or change any location at which any of the Mortgaged Property is stored, held or
located.

              (c)        If an Event of Default has occurred and is continuing,
Lender shall have the remedies of a secured party under the Uniform Commercial
Code, in addition to all remedies

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provided by this Instrument or existing under applicable law. In exercising any
remedies, Lender may exercise its remedies against the UCC Collateral separately
or together, and in any order, without in any way affecting the availability of
Lender’s other remedies.

    (d)        This Instrument constitutes a financing statement with respect to
any part of the Mortgaged Property that is or may become a Fixture, if permitted
by applicable law.

    3.       ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION.

    (a)        As part of the consideration for the Indebtedness, Borrower
absolutely and unconditionally assigns and transfers to Lender all Rents. It is
the intention of Borrower to establish a present, absolute and irrevocable
transfer and assignment to Lender of all Rents and to authorize and empower
Lender to collect and receive all Rents without the necessity of further action
on the part of Borrower. Promptly upon request by Lender, Borrower agrees to
execute and deliver such further assignments as Lender may from time to time
require. Borrower and Lender intend this assignment of Rents to be immediately
effective and to constitute an absolute present assignment and not an assignment
for additional security only. For purposes of giving effect to this absolute
assignment of Rents, and for no other purpose, Rents shall not be deemed to be a
part of the Mortgaged Property. However, if this present, absolute and
unconditional assignment of Rents is not enforceable by its terms under the laws
of the Property Jurisdiction, then the Rents shall be included as a part of the
Mortgaged Property and it is the intention of the Borrower that in this
circumstance this Instrument create and perfect a lien on Rents in favor of
Lender, which lien shall be effective as of the date of this Instrument.

    (b)         After the occurrence of an Event of Default, Borrower authorizes
Lender to collect, sue for and compromise Rents and directs each tenant of the
Mortgaged Property to pay all Rents to, or as directed by, Lender. However,
until the occurrence of an Event of Default, Lender hereby grants to Borrower a
revocable license to collect and receive all Rents, to hold all Rents in trust
for the benefit of Lender and to apply all Rents to pay the installments of
interest and principal then due and payable under the Note and the other amounts
then due and payable under the other Loan Documents, including Imposition
Deposits, and to pay the current costs and expenses of managing, operating and
maintaining the Mortgaged Property, including utilities, Taxes and insurance
premiums (to the extent not included in Imposition Deposits), tenant
improvements and other capital expenditures. So long as no Event of Default has
occurred and is continuing, the Rents remaining after application pursuant to
the preceding sentence may be retained by Borrower free and clear of, and
released from, Lender’s rights with respect to Rents under this Instrument. From
and after the occurrence of an Event of Default, and without the necessity of
Lender entering upon and taking and maintaining control of the Mortgaged
Property directly, or by a receiver, Borrower’s license to collect Rents shall
automatically terminate and Lender shall without Notice be entitled to all Rents
as they become due and payable, including

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Rents then due and unpaid. Borrower shall pay to Lender upon demand all Rents to
which Lender is entitled. At any time on or after the date of Lender’s demand
for Rents, (i) Lender may give, and Borrower hereby irrevocably authorizes
Lender to give, notice to all tenants of the Mortgaged Property instructing them
to pay all Rents to Lender, (ii) no tenant shall be obligated to inquire further
as to the occurrence or continuance of an Event of Default, and (iii) no tenant
shall be obligated to pay to Borrower any amounts which are actually paid to
Lender in response to such a notice. Any such notice by Lender shall be
delivered to each tenant personally, by mail or by delivering such demand to
each rental unit. Borrower shall not interfere with and shall cooperate with
Lender’s collection of such Rents.

    (c)         Borrower represents and warrants to Lender that Borrower has not
executed any prior assignment of Rents (other than an assignment of Rents
securing any prior indebtedness that is being assigned to Lender, or paid off
and discharged with the proceeds of the loan evidenced by the Note), that
Borrower has not performed, and Borrower covenants and agrees that it will not
perform, any acts and has not executed, and shall not execute, any instrument
which would prevent Lender from exercising its rights under this Section 3, and
that at the time of execution of this Instrument there has been no anticipation
or prepayment of any Rents for more than two months prior to the due dates of
such Rents. Borrower shall not collect or accept payment of any Rents more than
two months prior to the due dates of such Rents.

    (d)         If an Event of Default has occurred and is continuing, Lender
may, regardless of the adequacy of Lender’s security or the solvency of Borrower
and even in the absence of waste, enter upon and take and maintain full control
of the Mortgaged Property in order to perform all acts that Lender in its
discretion determines to be necessary or desirable for the operation and
maintenance of the Mortgaged Property, including the execution, cancellation or
modification of Leases, the collection of all Rents, the making of repairs to
the Mortgaged Property and the execution or termination of contracts providing
for the management, operation or maintenance of the Mortgaged Property, for the
purposes of enforcing the assignment of Rents pursuant to Section 3(a),
protecting the Mortgaged Property or the security of this Instrument, or for
such other purposes as Lender in its discretion may deem necessary or desirable.
Alternatively, if an Event of Default has occurred and is continuing, regardless
of the adequacy of Lender’s security, without regard to Borrower’s solvency and
without the necessity of giving prior notice (oral or written) to Borrower,
Lender may apply to any court having jurisdiction for the appointment of a
receiver for the Mortgaged Property to take any or all of the actions set forth
in the preceding sentence. If Lender elects to seek the appointment of a
receiver for the Mortgaged Property at any time after an Event of Default has
occurred and is continuing, Borrower, by its execution of this Instrument,
expressly consents to the appointment of such receiver, including the
appointment of a receiver ex parte if permitted by applicable law. Lender or the
receiver, as the case may be, shall be entitled to receive a reasonable fee for
managing the Mortgaged Property. Immediately upon appointment of a receiver or
immediately upon the Lender’s entering upon and taking possession and control of
the Mortgaged Property, Borrower shall surrender possession of

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the Mortgaged Property to Lender or the receiver, as the case may be, and shall
deliver to Lender or the receiver, as the case may be, all documents, records
(including records on electronic or magnetic media), accounts, surveys, plans,
and specifications relating to the Mortgaged Property and all security deposits
and prepaid Rents. In the event Lender takes possession and control of the
Mortgaged Property, Lender may exclude Borrower and its representatives from the
Mortgaged Property. Borrower acknowledges and agrees that the exercise by Lender
of any of the rights conferred under this Section 3 shall not be construed to
make Lender a mortgagee-in-possession of the Mortgaged Property so long as
Lender has not itself entered into actual possession of the Land and
Improvements.

    (e)         If Lender enters the Mortgaged Property, Lender shall be liable
to account only to Borrower and only for those Rents actually received. Except
to the extent of Lender’s gross negligence or willful misconduct, Lender shall
not be liable to Borrower, anyone claiming under or through Borrower or anyone
having an interest in the Mortgaged Property, by reason of any act or omission
of Lender under Section 3(d), and Borrower hereby releases and discharges Lender
from any such liability to the fullest extent permitted by law.

    (f)         If the Rents are not sufficient to meet the costs of taking
control of and managing the Mortgaged Property and collecting the Rents, any
funds expended by Lender for such purposes shall become an additional part of
the Indebtedness as provided in Section 12.

    (g)         Any entering upon and taking of control of the Mortgaged
Property by Lender or the receiver, as the case may be, and any application of
Rents as provided in this Instrument shall not cure or waive any Event of
Default or invalidate any other right or remedy of Lender under applicable law
or provided for in this Instrument.

4.          ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.

    (a)         As part of the consideration for the Indebtedness, Borrower
absolutely and unconditionally assigns and transfers to Lender all of Borrower’s
right, title and interest in, to and under the Leases, including Borrower’s
right, power and authority to modify the terms of any such Lease, or extend or
terminate any such Lease. It is the intention of Borrower to establish a
present, absolute and irrevocable transfer and assignment to Lender of all of
Borrower’s right, title and interest in, to and under the Leases. Borrower and
Lender intend this assignment of the Leases to be immediately effective and to
constitute an absolute present assignment and not an assignment for additional
security only. For purposes of giving effect to this absolute assignment of the
Leases, and for no other purpose, the Leases shall not be deemed to be a part of
the Mortgaged Property. However, if this present, absolute and unconditional
assignment of the Leases is not enforceable by its terms under the laws of the
Property Jurisdiction, then the Leases shall be included as a part of the
Mortgaged Property and it is the intention of the

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Borrower that in this circumstance this Instrument create and perfect a lien on
the Leases in favor of Lender, which lien shall be effective as of the date of
this Instrument.

    (b)         Until Lender gives Notice to Borrower of Lender’s exercise of
its rights under this Section 4, Borrower shall have all rights, power and
authority granted to Borrower under any Lease (except as otherwise limited by
this Section or any other provision of this Instrument), including the right,
power and authority to modify the terms of any Lease or extend or terminate any
Lease. Upon the occurrence of an Event of Default, the permission given to
Borrower pursuant to the preceding sentence to exercise all rights, power and
authority under Leases shall automatically terminate. Borrower shall comply with
and observe Borrower’s obligations under all Leases, including Borrower’s
obligations pertaining to the maintenance and disposition of tenant security
deposits.

    (c)         Borrower acknowledges and agrees that the exercise by Lender,
either directly or by a receiver, of any of the rights conferred under this
Section 4 shall not be construed to make Lender a mortgagee-in-possession of the
Mortgaged Property so long as Lender has not itself entered into actual
possession of the Land and the Improvements. The acceptance by Lender of the
assignment of the Leases pursuant to Section 4(a) shall not at any time or in
any event obligate Lender to take any action under this Instrument or to expend
any money or to incur any expenses. Except to the extent of Lender’s gross
negligence or willful misconduct, Lender shall not be liable in any way for any
injury or damage to person or property sustained by any person or persons, firm
or corporation in or about the Mortgaged Property. Prior to Lender’s actual
entry into and taking possession of the Mortgaged Property, Lender shall not
(i) be obligated to perform any of the terms, covenants and conditions contained
in any Lease (or otherwise have any obligation with respect to any Lease);
(ii) be obligated to appear in or defend any action or proceeding relating to
the Lease or the Mortgaged Property; or (iii) be responsible for the operation,
control, care, management or repair of the Mortgaged Property or any portion of
the Mortgaged Property. The execution of this Instrument by Borrower shall
constitute conclusive evidence that all responsibility for the operation,
control, care, management and repair of the Mortgaged Property is and shall be
that of Borrower, prior to such actual entry and taking of possession.

    (d)         Upon delivery of Notice by Lender to Borrower of Lender’s
exercise of Lender’s rights under this Section 4 at any time after the
occurrence of an Event of Default, and without the necessity of Lender entering
upon and taking and maintaining control of the Mortgaged Property directly, by a
receiver, or by any other manner or proceeding permitted by the laws of the
Property Jurisdiction, Lender immediately shall have all rights, powers and
authority granted to Borrower under any Lease, including the right, power and
authority to modify the terms of any such Lease, or extend or terminate any such
Lease.

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    (e)         Borrower shall, promptly upon Lender’s request, deliver to
Lender an executed copy of each residential Lease then in effect. All Leases for
residential dwelling units shall be on forms approved by Lender, shall be for
initial terms of at least six months and not more than two years, and shall not
include options to purchase. If Borrower is a cooperative housing corporation,
association or other validly organized entity under municipal, county, state or
federal law, notwithstanding anything to the contrary contained in this
subsection, so long as Borrower is not in breach of any covenant of this
Instrument, Lender hereby consents to the execution of leases of apartments for
a term in excess of two years from Borrower to a tenant shareholder of Borrower,
to the surrender or termination of such leases of apartments where the
surrendered or terminated lease is immediately replaced or where the Borrower
makes its best efforts to secure such immediate replacement by a newly executed
lease of the same apartment to a tenant shareholder of the Borrower. However, no
consent is hereby given by Lender to any execution, surrender, termination or
assignment of a lease under terms that would waive or reduce the obligation of
the resulting tenant shareholder under such lease to pay cooperative assessments
in full when due or the obligation of the former tenant shareholder to pay any
unpaid portion of such assessments.

    (f)         Borrower shall not lease any portion of the Mortgaged Property
for non-residential use except with the prior written consent of Lender and
Lender’s prior written approval of the Lease agreement. Borrower shall not
modify the terms of, or extend or terminate, any Lease for non-residential use
(including any Lease in existence on the date of this Instrument) without the
prior written consent of Lender. However, Lender’s consent shall not be required
for the modification or extension of a non-residential Lease if such
modification or extension is on terms at least as favorable to Borrower as those
customary at that time in the applicable market and the income from the extended
or modified Lease will not be less than the income received from the Lease as of
the date of this Instrument. Borrower shall, without request by Lender, deliver
an executed copy of each non-residential Lease to Lender promptly after such
Lease is signed. All non-residential Leases, including renewals or extensions of
existing Leases, shall specifically provide that (i) such Leases are subordinate
to the lien of this Instrument; (ii) the tenant shall attorn to Lender and any
purchaser at a foreclosure sale, such attornment to be self-executing and
effective upon acquisition of title to the Mortgaged Property by any purchaser
at a foreclosure sale or by Lender in any manner; (iii) the tenant agrees to
execute such further evidences of attornment as Lender or any purchaser at a
foreclosure sale may from time to time request; (iv) the Lease shall not be
terminated by foreclosure or any other transfer of the Mortgaged Property;
(v) after a foreclosure sale of the Mortgaged Property, Lender or any other
purchaser at such foreclosure sale may, at Lender’s or such purchaser’s option,
accept or terminate such Lease; and (vi) the tenant shall, upon receipt after
the occurrence of an Event of Default of a written request from Lender, pay all
Rents payable under the Lease to Lender.

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    (g)         Borrower shall not lease any portion of the Mortgaged Property
for Borrower shall not receive or accept Rent under any Lease (whether
residential or non-residential) for more than two months in advance.

    5.         PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS;
PREPAYMENT PREMIUM. Borrower shall pay the Indebtedness when due in accordance
with the terms of the Note and the other Loan Documents and shall perform,
observe and comply with all other provisions of the Note and the other Loan
Documents. Borrower shall pay a prepayment premium in connection with certain
prepayments of the Indebtedness, including a payment made after Lender’s
exercise of any right of acceleration of the Indebtedness, as provided in the
Note.

    6.         EXCULPATION. Borrower’s personal liability for payment of the
Indebtedness and for performance of the other obligations to be performed by it
under this Instrument is limited in the manner, and to the extent, provided in
the Note.

    7.         DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.

    (a)        Unless this requirement is waived in writing by Lender, which
waiver may be contained in this Section 7(a), Borrower shall deposit with Lender
on the day monthly installments of principal or interest, or both, are due under
the Note (or on another day designated in writing by Lender), until the
Indebtedness is paid in full, an additional amount sufficient to accumulate with
Lender the entire sum required to pay, when due, the items marked “Collect”
below. Lender will not require the Borrower to make Imposition Deposits with
respect to the items marked “Deferred” below.

  [Deferred]         Hazard Insurance premiums or other insurance premiums
required by Lender under Section 19,

  [Deferred]         Taxes,

  [Deferred]         water and sewer charges (that could become a lien on the
Mortgaged Property),

  N/A         ground rents,

  [Deferred]         assessments or other charges (that could become a lien on
the Mortgaged Property)

The amounts deposited under the preceding sentence are collectively referred to
in this Instrument as the “Imposition Deposits.” The obligations of Borrower for
which the Imposition Deposits are required are collectively referred to in this
Instrument as “Impositions.” The amount of the Imposition Deposits shall be
sufficient to enable Lender to pay each Imposition before the last date upon
which such payment may be made without any penalty or interest charge being
added. Lender shall maintain records indicating how much of the monthly

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Imposition Deposits and how much of the aggregate Imposition Deposits held by
Lender are held for the purpose of paying Taxes, insurance premiums and each
other Imposition.

    (b)        Imposition Deposits shall be held in an institution (which may be
Lender, if Lender is such an institution) whose deposits or accounts are insured
or guaranteed by a federal agency. Lender shall not be obligated to open
additional accounts or deposit Imposition Deposits in additional institutions
when the amount of the Imposition Deposits exceeds the maximum amount of the
federal deposit insurance or guaranty. Lender shall apply the Imposition
Deposits to pay Impositions so long as no Event of Default has occurred and is
continuing. Unless applicable law requires, Lender shall not be required to pay
Borrower any interest, earnings or profits on the Imposition Deposits. As
additional security for all of Borrower’s obligations under this Instrument and
the other Loan Documents, Borrower hereby pledges and grants to Lender a
security interest in the Imposition Deposits and all proceeds of, and all
interest and dividends on, the Imposition Deposits. Any amounts deposited with
Lender under this Section 7 shall not be trust funds, nor shall they operate to
reduce the Indebtedness, unless applied by Lender for that purpose under
Section 7(e).

    (c)        If Lender receives a bill or invoice for an Imposition, Lender
shall pay the Imposition from the Imposition Deposits held by Lender. Lender
shall have no obligation to pay any Imposition to the extent it exceeds
Imposition Deposits then held by Lender. Lender may pay an Imposition according
to any bill, statement or estimate from the appropriate public office or
insurance company without inquiring into the accuracy of the bill, statement or
estimate or into the validity of the Imposition.

    (d)        If at any time the amount of the Imposition Deposits held by
Lender for payment of a specific Imposition exceeds the amount reasonably deemed
necessary by Lender, the excess shall be credited against future installments of
Imposition Deposits. If at any time the amount of the Imposition Deposits held
by Lender for payment of a specific Imposition is less than the amount
reasonably estimated by Lender to be necessary, Borrower shall pay to Lender the
amount of the deficiency within 15 days after Notice from Lender.

    (e)        If an Event of Default has occurred and is continuing, Lender may
apply any Imposition Deposits, in any amounts and in any order as Lender
determines, in Lender’s discretion, to pay any Impositions or as a credit
against the Indebtedness. Upon payment in full of the Indebtedness, Lender shall
refund to Borrower any Imposition Deposits held by Lender.

    (f)        If Lender does not collect an Imposition Deposit with respect to
an Imposition either marked “Deferred” in Section 7(a) or pursuant to a separate
written waiver by Lender, then on or before the date each such Imposition is
due, or on the date this Instrument requires each such Imposition to be paid,
Borrower must provide Lender with proof of payment of each such Imposition for
which Lender does not require collection of Imposition Deposits. Lender may

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revoke its deferral or waiver and require Borrower to deposit with Lender any or
all of the Imposition Deposits listed in Section 7(a), regardless of whether any
such item is marked “Deferred” in such section, upon Notice to Borrower, (i) if
Borrower does not timely pay any of the Impositions, (ii) if Borrower fails to
provide timely proof to Lender of such payment, or (iii) at any time during the
existence of an Event of Default.

    (g)        In the event of a Transfer prohibited by or requiring Lender’s
approval under Section 21, Lender’s waiver of the collection of any Imposition
Deposit in this Section 7 may be modified or rendered void by Lender at Lender’s
option by Notice to Borrower and the transferee(s) as a condition of Lender’s
approval of such Transfer.

    8.        COLLATERAL AGREEMENTS. Borrower shall deposit with Lender such
amounts as may be required by any Collateral Agreement and shall perform all
other obligations of Borrower under each Collateral Agreement.

    9.        APPLICATION OF PAYMENTS. If at any time Lender receives, from
Borrower or otherwise, any amount applicable to the Indebtedness which is less
than all amounts due and payable at such time, then Lender may apply that
payment to amounts then due and payable in any manner and in any order
determined by Lender, in Lender’s discretion. Neither Lender’s acceptance of an
amount that is less than all amounts then due and payable nor Lender’s
application of such payment in the manner authorized shall constitute or be
deemed to constitute either a waiver of the unpaid amounts or an accord and
satisfaction. Notwithstanding the application of any such amount to the
Indebtedness, Borrower’s obligations under this Instrument and the Note shall
remain unchanged.

    10.        COMPLIANCE WITH LAWS. Borrower shall comply with all laws,
ordinances, regulations and requirements of any Governmental Authority and all
recorded lawful covenants and agreements relating to or affecting the Mortgaged
Property, including all laws, ordinances, regulations, requirements and
covenants pertaining to health and safety, construction of improvements on the
Mortgaged Property, fair housing, disability accommodation, zoning and land use,
and Leases. Borrower also shall comply with all applicable laws that pertain to
the maintenance and disposition of tenant security deposits. Borrower shall at
all times maintain records sufficient to demonstrate compliance with the
provisions of this Section 10. Borrower shall take appropriate measures to
prevent, and shall not engage in or knowingly permit, any illegal activities at
the Mortgaged Property that could endanger tenants or visitors, result in damage
to the Mortgaged Property, result in forfeiture of the Mortgaged Property, or
otherwise materially impair the lien created by this Instrument or Lender’s
interest in the Mortgaged Property. Borrower represents and warrants to Lender
that no portion of the Mortgaged Property has been or will be purchased with the
proceeds of any illegal activity.

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    11.        USE OF PROPERTY. Unless required by applicable law, Borrower
shall not (a) allow changes in the use for which all or any part of the
Mortgaged Property is being used at the time this Instrument was executed,
except for any change in use approved by Lender, (b) convert any individual
dwelling units or common areas to commercial use, (c) initiate a change in the
zoning classification of the Mortgaged Property or acquiesce without Notice to
and consent of Lender in a change in the zoning classification of the Mortgaged
Property, (d) establish any condominium or cooperative regime with respect to
the Mortgaged Property, (e) combine all or any part of the Mortgaged Property
with all or any part of a tax parcel which is not part of the Mortgaged
Property, or (f) subdivide or otherwise split any tax parcel constituting all or
any part of the Mortgaged Property without the prior consent of Lender.

    12.        PROTECTION OF LENDER’S SECURITY; INSTRUMENT SECURES FUTURE
ADVANCES.

    (a)        If Borrower fails to perform any of its obligations under this
Instrument or any other Loan Document, or if any action or proceeding is
commenced which purports to affect the Mortgaged Property, Lender’s security or
Lender’s rights under this Instrument, including eminent domain, insolvency,
code enforcement, civil or criminal forfeiture, enforcement of Hazardous
Materials Laws, fraudulent conveyance or reorganizations or proceedings
involving a bankrupt or decedent, then Lender at Lender’s option may make such
appearances, file such documents, disburse such sums and take such actions as
Lender reasonably deems necessary to perform such obligations of Borrower and to
protect Lender’s interest, including (i) payment of Attorneys’ Fees and Costs,
(ii) payment of fees and out-of-pocket expenses of accountants, inspectors and
consultants, (iii) entry upon the Mortgaged Property to make repairs or secure
the Mortgaged Property, (iv) procurement of the insurance required by
Section 19, and (v) payment of amounts which Borrower has failed to pay under
Sections 15 and 17.

    (b)        Any amounts disbursed by Lender under this Section 12, or under
any other provision of this Instrument that treats such disbursement as being
made under this Section 12, shall be secured by this Instrument, shall be added
to, and become part of, the principal component of the Indebtedness, shall be
immediately due and payable and shall bear interest from the date of
disbursement until paid at the “Default Rate,” as defined in the Note.

    (c)        Nothing in this Section 12 shall require Lender to incur any
expense or take any action.

    13.        INSPECTION.

    (a)        Lender, its agents, representatives, and designees may make or
cause to be made entries upon and inspections of the Mortgaged Property
(including environmental inspections and tests) during normal business hours, or
at any other reasonable time, upon reasonable notice

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to Borrower if the inspection is to include occupied residential units (which
notice need not be in writing). Notice to Borrower shall not be required in the
case of an emergency, as determined in Lender’s discretion, or when an Event of
Default has occurred and is continuing.

    (b)        If Lender determines that Mold has developed as a result of a
water intrusion event or leak, Lender, at Lender’s discretion, may require that
a professional inspector inspect the Mortgaged Property as frequently as Lender
determines is necessary until any issue with Mold and its cause(s) are resolved
to Lender’s satisfaction. Such inspection shall be limited to a visual and
olfactory inspection of the area that has experienced the Mold, water intrusion
event or leak. Borrower shall be responsible for the cost of such professional
inspection and any remediation deemed to be necessary as a result of the
professional inspection. After any issue with Mold, water intrusion or leaks is
remedied to Lender’s satisfaction, Lender shall not require a professional
inspection any more frequently than once every three years unless Lender is
otherwise aware of Mold as a result of a subsequent water intrusion event or
leak.

    (c)        If Lender or Loan Servicer determines not to conduct an annual
inspection of the Mortgaged Property, and in lieu thereof Lender requests a
certification, Borrower shall be prepared to provide and must actually provide
to Lender a factually correct certification each year that the annual inspection
is waived to the following effect:

  Borrower has not received any written complaint, notice, letter or other
written communication from tenants, management agent or governmental authorities
regarding odors, indoor air quality, mold, fungus, microbial contamination or
pathogenic organisms (“Mold”) or any activity, condition, event or omission that
causes or facilitates the growth of Mold on or in any part of the Mortgaged
Property or if Borrower has received any such written complaint, notice, letter
or other written communication that Borrower has investigated and determined
that no Mold activity, condition or event exists or alternatively has fully and
properly remediated such activity, condition, event or omission in compliance
with the Moisture Management Plan for the Mortgaged Property.

                 If Borrower is unwilling or unable to provide such
certification, Lender may require a professional inspection of the Mortgaged
Property at Borrower’s expense.

    14.        BOOKS AND RECORDS; FINANCIAL REPORTING.

    (a)        Borrower shall keep and maintain at all times at the Mortgaged
Property or the management agent’s office, and upon Lender’s request shall make
available at the Mortgaged

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Property (or, at Borrower’s option, at the management agent’s office), complete
and accurate books of account and records (including copies of supporting bills
and invoices) adequate to reflect correctly the operation of the Mortgaged
Property, and copies of all written contracts, Leases, and other instruments
which affect the Mortgaged Property. The books, records, contracts, Leases and
other instruments shall be subject to examination and inspection by Lender at
any reasonable time.

    (b)        Within 120 days after the end of each fiscal year of Borrower,
Borrower shall furnish to Lender a statement of income and expenses for
Borrower’s operation of the Mortgaged Property for that fiscal year, a statement
of changes in financial position of Borrower relating to the Mortgaged Property
for that fiscal year and, when requested by Lender, a balance sheet showing all
assets and liabilities of Borrower relating to the Mortgaged Property as of the
end of that fiscal year. If Borrower’s fiscal year is other than the calendar
year, Borrower must also submit to Lender a year-end statement of income and
expenses within 120 days after the end of the calendar year.

    (c)        Within 120 days after the end of each calendar year, and at any
other time, upon Lender’s request, Borrower shall furnish to Lender each of the
following. However, Lender shall not require any of the following more
frequently than quarterly except when there has been an Event of Default and
such Event of Default is continuing, in which case Lender may, upon written
request to Borrower, require Borrower to furnish any of the following more
frequently:

  (i) a rent schedule for the Mortgaged Property showing the name of each
tenant, and for each tenant, the space occupied, the lease expiration date, the
rent payable for the current month, the date through which rent has been paid,
and any related information requested by Lender;

  (ii) an accounting of all security deposits held pursuant to all Leases,
including the name of the institution (if any) and the names and identification
numbers of the accounts (if any) in which such security deposits are held and
the name of the person to contact at such financial institution, along with any
authority or release necessary for Lender to access information regarding such
accounts; and

  (iii) a statement that identifies all owners of any interest in Borrower and
any Controlling Entity and the interest held by each (unless Borrower or any
Controlling Entity is a publicly-traded entity in which case such statement of
ownership shall not be required), if Borrower or a Controlling Entity is a
corporation, all officers and directors of Borrower and the Controlling

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    Entity, and if Borrower or a Controlling Entity is a limited liability
companm,kjy, all managers who are not members.

    (d)        At any time upon Lender’s request, Borrower shall furnish to
Lender each of the following. However, Lender shall not require any of the
following more frequently than quarterly except when there has been an Event of
Default and such Event of Default is continuing, in which case Lender may
require Borrower to furnish any of the following more frequently:

  (i) a balance sheet, a statement of income and expenses for Borrower and a
statement of changes in financial position of Borrower for Borrower’s most
recent fiscal year;

  (ii) a quarterly or year-to-date income and expense statement for the
Mortgaged Property; and

  (iii) a monthly property management report for the Mortgaged Property, showing
the number of inquiries made and rental applications received from tenants or
prospective tenants and deposits received from tenants and any other information
requested by Lender.

    (e)        Upon Lender’s request at any time when an Event of Default has
occurred and is continuing, Borrower shall furnish to Lender monthly income and
expense statements and rent schedules for the Mortgaged Property.

    (f)        An individual having authority to bind Borrower shall certify
each of the statements, schedules and reports required by Sections 14(b) through
14(e) to be complete and accurate. Each of the statements, schedules and reports
required by Sections 14(b) through 14(e) shall be in such form and contain such
detail as Lender may reasonably require. Lender also may require that any of the
statements, schedules or reports listed in Section 14(b) and 14(c)(i) and
(ii) be audited at Borrower’s expense by independent certified public
accountants acceptable to Lender, at any time when an Event of Default has
occurred and is continuing or at any time that Lender, in its reasonable
judgment, determines that audited financial statements are required for an
accurate assessment of the financial condition of Borrower or of the Mortgaged
Property.

    (g)        If Borrower fails to provide in a timely manner the statements,
schedules and reports required by Sections 14(b) through (e), Lender shall give
Borrower Notice specifying the statements, schedules and reports required by
Section 14(b) through (e) that Borrower has failed to provide. If Borrower has
not provided the required statements, schedules and reports within 10 Business
Days following such Notice, then Lender shall have the right to have Borrower’s

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books and records audited, at Borrower’s expense, by independent certified
public accountants selected by Lender in order to obtain such statements,
schedules and reports, and all related costs and expenses of Lender shall become
immediately due and payable and shall become an additional part of the
Indebtedness as provided in Section 12. Notice to Borrower shall not be required
in the case of an emergency, as determined in Lender’s discretion, or when an
Event of Default has occurred and is continuing.

    (h)        If an Event of Default has occurred and is continuing, Borrower
shall deliver to Lender upon written demand all books and records relating to
the Mortgaged Property or its operation.

    (i)        Borrower authorizes Lender to obtain a credit report on Borrower
at any time.

    15.        TAXES; OPERATING EXPENSES.

    (a)        Subject to the provisions of Section 15(c) and Section 15(d),
Borrower shall pay, or cause to be paid, all Taxes when due and before the
addition of any interest, fine, penalty or cost for nonpayment.

    (b)        Subject to the provisions of Section 15(c), Borrower shall
(i) pay the expenses of operating, managing, maintaining and repairing the
Mortgaged Property (including utilities, repairs and replacements) before the
last date upon which each such payment may be made without any penalty or
interest charge being added, and (ii) pay insurance premiums at least 30 days
prior to the expiration date of each policy of insurance, unless applicable law
specifies some lesser period.

    (c)        If Lender is collecting Imposition Deposits, to the extent that
Lender holds sufficient Imposition Deposits for the purpose of paying a specific
Imposition, then Borrower shall not be obligated to pay such Imposition, so long
as no Event of Default exists and Borrower has timely delivered to Lender any
bills or premium notices that it has received. If an Event of Default exists,
Lender may exercise any rights Lender may have with respect to Imposition
Deposits without regard to whether Impositions are then due and payable. Lender
shall have no liability to Borrower for failing to pay any Impositions to the
extent that (i) any Event of Default has occurred and is continuing,
(ii) insufficient Imposition Deposits are held by Lender at the time an
Imposition becomes due and payable or (iii) Borrower has failed to provide
Lender with bills and premium notices as provided above.

    (d)        Borrower, at its own expense, may contest by appropriate legal
proceedings, conducted diligently and in good faith, the amount or validity of
any Imposition other than insurance premiums, if (i) Borrower notifies Lender of
the commencement or expected commencement of such proceedings, (ii) the
Mortgaged Property is not in danger of being sold

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or forfeited, (iii) if Borrower has not already paid the Imposition, Borrower
deposits with Lender reserves sufficient to pay the contested Imposition, if
requested by Lender, and (iv) Borrower furnishes whatever additional security is
required in the proceedings or is reasonably requested by Lender.

    (e)        Borrower shall promptly deliver to Lender a copy of all notices
of, and invoices for, Impositions, and if Borrower pays any Imposition directly,
Borrower shall furnish to Lender on or before the date this Instrument requires
such Impositions to be paid, receipts evidencing that such payments were made.

    16.        LIENS; ENCUMBRANCES. Borrower acknowledges that, to the extent
provided in Section 21, the grant, creation or existence of any mortgage, deed
of trust, deed to secure debt, security interest or other lien or encumbrance (a
“Lien”) on the Mortgaged Property (other than the lien of this Instrument) or on
certain ownership interests in Borrower, whether voluntary, involuntary or by
operation of law, and whether or not such Lien has priority over the lien of
this Instrument, is a “Transfer” which constitutes an Event of Default and
subjects Borrower to personal liability under the Note.

    17.        PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.

    (a)        Borrower shall not commit waste or permit impairment or
deterioration of the Mortgaged Property.

    (b)        Borrower shall not abandon the Mortgaged Property.

    (c)        Borrower shall restore or repair promptly, in a good and
workmanlike manner, any damaged part of the Mortgaged Property to the equivalent
of its original condition, or such other condition as Lender may approve in
writing, whether or not insurance proceeds or condemnation awards are available
to cover any costs of such restoration or repair; however, Borrower shall not be
obligated to perform such restoration or repair if (i) no Event of Default has
occurred and is continuing, and (ii) Lender has elected to apply any available
insurance proceeds and/or condemnation awards to the payment of Indebtedness
pursuant to Section 19(h)(ii), (iii), (iv) or (v), or pursuant to Section 20.

    (d)        Borrower shall keep the Mortgaged Property in good repair,
including the replacement of Personalty and Fixtures with items of equal or
better function and quality.

    (e)        Borrower shall provide for professional management of the
Mortgaged Property by a residential rental property manager satisfactory to
Lender at all times under a contract approved by Lender in writing, which
contract must be terminable upon not more than 30 days

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notice without the necessity of establishing cause and without payment of a
penalty or termination fee by Borrower or its successors.

    (f)        Borrower shall give Notice to Lender of and, unless otherwise
directed in writing by Lender, shall appear in and defend any action or
proceeding purporting to affect the Mortgaged Property, Lender’s security or
Lender’s rights under this Instrument. Borrower shall not (and shall not permit
any tenant or other person to) remove, demolish or alter the Mortgaged Property
or any part of the Mortgaged Property, including any removal, demolition or
alteration occurring in connection with a rehabilitation of all or part of the
Mortgaged Property, except (i) in connection with the replacement of tangible
Personalty, (ii) if Borrower is a cooperative housing corporation, to the extent
permitted with respect to individual dwelling units under the form of
proprietary lease or occupancy agreement and (iii) repairs and replacements in
connection with making an individual unit ready for a new occupant.

    (g)        Unless otherwise waived by Lender in writing, Borrower must have
or must establish and must adhere to the MMP. If the Borrower is required to
have an MMP, the Borrower must keep all MMP documentation at the Mortgaged
Property or at the management agent’s office and available for the Lender or the
Loan Servicer to review during any annual assessment or other inspection of the
Mortgaged Property that is required by Lender.

    18.        ENVIRONMENTAL HAZARDS.

    (a)        Except for matters described in Section 18(b), Borrower shall not
cause or permit any of the following:

  (i) the presence, use, generation, release, treatment, processing, storage
(including storage in above ground and underground storage tanks), handling, or
disposal of any Hazardous Materials on or under the Mortgaged Property or any
other property of Borrower that is adjacent to the Mortgaged Property;

  (ii) the transportation of any Hazardous Materials to, from, or across the
Mortgaged Property;

  (iii) any occurrence or condition on the Mortgaged Property or any other
property of Borrower that is adjacent to the Mortgaged Property, which
occurrence or condition is or may be in violation of Hazardous Materials Laws;

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  (iv) any violation of or noncompliance with the terms of any Environmental
Permit with respect to the Mortgaged Property or any property of Borrower that
is adjacent to the Mortgaged Property;

  (v) any violation or noncompliance with the terms of any O&M Program as
defined in subsection (d).

The matters described in clauses (i) through (v) above, except as otherwise
provided in Section 18(b), are referred to collectively in this Section 18 as
“Prohibited Activities or Conditions.”

    (b)        Prohibited Activities or Conditions shall not include lawful
conditions permitted by an O&M Program or the safe and lawful use and storage of
quantities of (i) pre-packaged supplies, cleaning materials and petroleum
products customarily used in the operation and maintenance of comparable
multifamily properties, (ii) cleaning materials, personal grooming items and
other items sold in pre-packaged containers for consumer use and used by tenants
and occupants of residential dwelling units in the Mortgaged Property; and
(iii) petroleum products used in the operation and maintenance of motor vehicles
from time to time located on the Mortgaged Property’s parking areas, so long as
all of the foregoing are used, stored, handled, transported and disposed of in
compliance with Hazardous Materials Laws.

    (c)        Borrower shall take all commercially reasonable actions
(including the inclusion of appropriate provisions in any Leases executed after
the date of this Instrument) to prevent its employees, agents, and contractors,
and all tenants and other occupants from causing or permitting any Prohibited
Activities or Conditions. Borrower shall not lease or allow the sublease or use
of all or any portion of the Mortgaged Property to any tenant or subtenant for
nonresidential use by any user that, in the ordinary course of its business,
would cause or permit any Prohibited Activity or Condition.

    (d)        As required by Lender, Borrower shall also have established a
written operations and maintenance program with respect to certain Hazardous
Materials. Each such operations and maintenance program and any additional or
revised operations and maintenance programs established for the Mortgaged
Property pursuant to this Section 18 must be approved by Lender and shall be
referred to herein as an “O&M Program.” Borrower shall comply in a timely manner
with, and cause all employees, agents, and contractors of Borrower and any other
persons present on the Mortgaged Property to comply with each O&M Program.
Borrower shall pay all costs of performance of Borrower’s obligations under any
O&M Program, and Lender’s out-of-pocket costs incurred in connection with the
monitoring and review of each O&M Program and Borrower’s performance shall be
paid by Borrower upon demand by Lender. Any such out-of-pocket costs of Lender
that Borrower fails to pay promptly shall become an additional part of the
Indebtedness as provided in Section 12.

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    (e)        Borrower represents and warrants to Lender that, except as
previously disclosed by Borrower to Lender in writing (which written disclosure
may be in certain environmental assessments and other written reports accepted
by Lender in connection with the funding of the Indebtedness and dated prior to
the date of this Instrument):

  (i) Borrower has not at any time engaged in, caused or permitted any
Prohibited Activities or Conditions on the Mortgaged Property;

  (ii) to the best of Borrower’s knowledge after reasonable and diligent
inquiry, no Prohibited Activities or Conditions exist or have existed on the
Mortgaged Property;

  (iii) the Mortgaged Property does not now contain any underground storage
tanks, and, to the best of Borrower’s knowledge after reasonable and diligent
inquiry, the Mortgaged Property has not contained any underground storage tanks
in the past. If there is an underground storage tank located on the Mortgaged
Property that has been previously disclosed by Borrower to Lender in writing,
that tank complies with all requirements of Hazardous Materials Laws;

  (iv) to the best of Borrower’s knowledge after reasonable and diligent
inquiry, Borrower has complied with all Hazardous Materials Laws, including all
requirements for notification regarding releases of Hazardous Materials. Without
limiting the generality of the foregoing, Borrower has obtained all
Environmental Permits required for the operation of the Mortgaged Property in
accordance with Hazardous Materials Laws now in effect and all such
Environmental Permits are in full force and effect;

  (v) to the best of Borrower’s knowledge after reasonable and diligent inquiry,
no event has occurred with respect to the Mortgaged Property that constitutes,
or with the passing of time or the giving of notice would constitute,
noncompliance with the terms of any Environmental Permit;

  (vi) there are no actions, suits, claims or proceedings pending or, to the
best of Borrower’s knowledge after reasonable and diligent inquiry, threatened
that involve the Mortgaged Property and allege, arise out of, or relate to any
Prohibited Activity or Condition; and

  (vii) Borrower has not received any written complaint, order, notice of
violation or other communication from any Governmental Authority with

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    regard to air emissions, water discharges, noise emissions or Hazardous
Materials, or any other environmental, health or safety matters affecting the
Mortgaged Property or any other property of Borrower that is adjacent to the
Mortgaged Property.

    (f)        Borrower shall promptly notify Lender in writing upon the
occurrence of any of the following events:

  (i) Borrower’s discovery of any Prohibited Activity or Condition;

  (ii) Borrower’s receipt of or knowledge of any written complaint, order,
notice of violation or other communication from any tenant, management agent,
Governmental Authority or other person with regard to present or future alleged
Prohibited Activities or Conditions, or any other environmental, health or
safety matters affecting the Mortgaged Property or any other property of
Borrower that is adjacent to the Mortgaged Property;

  (iii) Borrower’s breach of any of its obligations under this Section 18.

Any such notice given by Borrower shall not relieve Borrower of, or result in a
waiver of, any obligation under this Instrument, the Note, or any other Loan
Document.

    (g)        Borrower shall pay promptly the costs of any environmental
inspections, tests or audits, a purpose of which is to identify the extent or
cause of or potential for a Prohibited Activity or Condition (“Environmental
Inspections”), required by Lender in connection with any foreclosure or deed in
lieu of foreclosure, or as a condition of Lender’s consent to any Transfer under
Section 21, or required by Lender following a reasonable determination by Lender
that Prohibited Activities or Conditions may exist. Any such costs incurred by
Lender (including Attorneys’ Fees and Costs and the costs of technical
consultants whether incurred in connection with any judicial or administrative
process or otherwise) that Borrower fails to pay promptly shall become an
additional part of the Indebtedness as provided in Section 12. As long as (i) no
Event of Default has occurred and is continuing, (ii) Borrower has actually paid
for or reimbursed Lender for all costs of any such Environmental Inspections
performed or required by Lender, and (iii) Lender is not prohibited by law,
contract or otherwise from doing so, Lender shall make available to Borrower,
without representation of any kind, copies of Environmental Inspections prepared
by third parties and delivered to Lender. Lender hereby reserves the right, and
Borrower hereby expressly authorizes Lender, to make available to any party,
including any prospective bidder at a foreclosure sale of the Mortgaged
Property, the results of any Environmental Inspections made by or for Lender
with respect to the Mortgaged Property. Borrower consents to Lender notifying
any party (either as part of a notice of sale or otherwise) of the results of
any Environmental Inspections made by or for Lender. Borrower acknowledges that
Lender cannot control or otherwise assure the truthfulness or accuracy of the

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results of any Environmental Inspections and that the release of such results to
prospective bidders at a foreclosure sale of the Mortgaged Property may have a
material and adverse effect upon the amount that a party may bid at such sale.
Borrower agrees that Lender shall have no liability whatsoever as a result of
delivering the results to any third party of any Environmental Inspections made
by or for Lender, and Borrower hereby releases and forever discharges Lender
from any and all claims, damages, or causes of action, arising out of, connected
with or incidental to the results of, the delivery of any of Environmental
Inspections made by or for Lender.

    (h)        If any investigation, site monitoring, containment, clean-up,
restoration or other remedial work (“Remedial Work”) is necessary to comply with
any Hazardous Materials Law or order of any Governmental Authority that has or
acquires jurisdiction over the Mortgaged Property or the use, operation or
improvement of the Mortgaged Property, or is otherwise required by Lender as a
consequence of any Prohibited Activity or Condition or to prevent the occurrence
of a Prohibited Activity or Condition, Borrower shall, by the earlier of (i) the
applicable deadline required by Hazardous Materials Law or (ii) 30 days after
Notice from Lender demanding such action, begin performing the Remedial Work,
and thereafter diligently prosecute it to completion, and shall in any event
complete the work by the time required by applicable Hazardous Materials Law. If
Borrower fails to begin on a timely basis or diligently prosecute any required
Remedial Work, Lender may, at its option, cause the Remedial Work to be
completed, in which case Borrower shall reimburse Lender on demand for the cost
of doing so. Any reimbursement due from Borrower to Lender shall become part of
the Indebtedness as provided in Section 12.

    (i)        Borrower shall comply with all Hazardous Materials Laws
applicable to the Mortgaged Property. Without limiting the generality of the
previous sentence, Borrower shall (i) obtain and maintain all Environmental
Permits required by Hazardous Materials Laws and comply with all conditions of
such Environmental Permits; (ii) cooperate with any inquiry by any Governmental
Authority; and (iii) comply with any governmental or judicial order that arises
from any alleged Prohibited Activity or Condition.

    (j)        Borrower shall indemnify, hold harmless and defend (i) Lender,
(ii) any prior owner or holder of the Note, (iii) the Loan Servicer, (iv) any
prior Loan Servicer, (v) the officers, directors, shareholders, partners,
employees and trustees of any of the foregoing, and (vi) the heirs, legal
representatives, successors and assigns of each of the foregoing (collectively,
the“Indemnitees”) from and against all proceedings, claims, damages, penalties
and costs (whether initiated or sought by Governmental Authorities or private
parties), including Attorneys’ Fees and Costs and remediation costs, whether
incurred in connection with any judicial or administrative process or otherwise,
arising directly or indirectly from any of the following:

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  (i) any breach of any representation or warranty of Borrower in this
Section 18;

  (ii) any failure by Borrower to perform any of its obligations under this
Section 18;

  (iii) the existence or alleged existence of any Prohibited Activity or
Condition;

  (iv) the presence or alleged presence of Hazardous Materials on or under the
Mortgaged Property or in any of the Improvements or on or under any property of
Borrower that is adjacent to the Mortgaged Property; and

  (v) the actual or alleged violation of any Hazardous Materials Law.

    (k)        Counsel selected by Borrower to defend Indemnitees shall be
subject to the approval of those Indemnitees. In any circumstances in which the
indemnity under this Section 18 applies, Lender may employ its own legal counsel
and consultants to prosecute, defend or negotiate any claim or legal or
administrative proceeding and Lender, with the prior written consent of Borrower
(which shall not be unreasonably withheld, delayed or conditioned) may settle or
compromise any action or legal or administrative proceeding. However, unless an
Event of Default has occurred and is continuing, or the interests of Borrower
and Lender are in conflict, as determined by Lender in its discretion, Lender
shall permit Borrower to undertake the actions referenced in this Section in
accordance with this Section and Section 18(l) so long as Lender approves such
action, which approval shall not be unreasonably withheld or delayed. Borrower
shall reimburse Lender upon demand for all costs and expenses incurred by
Lender, including all costs of settlements entered into in good faith,
consultants’ fees and Attorneys’ Fees and Costs.

    (l)        Borrower shall not, without the prior written consent of those
Indemnitees who are named as parties to a claim or legal or administrative
proceeding (a “Claim”), settle or compromise the Claim if the settlement
(i) results in the entry of any judgment that does not include as an
unconditional term the delivery by the claimant or plaintiff to Lender of a
written release of those Indemnitees, satisfactory in form and substance to
Lender; or (ii) may materially and adversely affect Lender, as determined by
Lender in its discretion.

    (m)        Borrower’s obligation to indemnify the Indemnitees shall not be
limited or impaired by any of the following, or by any failure of Borrower or
any guarantor to receive notice of or consideration for any of the following:

  (i) any amendment or modification of any Loan Document;

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  (ii) any extensions of time for performance required by any Loan Document;

  (iii) any provision in any of the Loan Documents limiting Lender’s recourse to
property securing the Indebtedness, or limiting the personal liability of
Borrower or any other party for payment of all or any part of the Indebtedness;

  (iv) the accuracy or inaccuracy of any representations and warranties made by
Borrower under this Instrument or any other Loan Document;

  (v) the release of Borrower or any other person, by Lender or by operation of
law, from performance of any obligation under any Loan Document;

  (vi) the release or substitution in whole or in part of any security for the
Indebtedness; and

  (vii) Lender’s failure to properly perfect any lien or security interest given
as security for the Indebtedness.

    (n)        Borrower shall, at its own cost and expense, do all of the
following:

  (i) pay or satisfy any judgment or decree that may be entered against any
Indemnitee or Indemnitees in any legal or administrative proceeding incident to
any matters against which Indemnitees are entitled to be indemnified under this
Section 18;

  (ii) reimburse Indemnitees for any expenses paid or incurred in connection
with any matters against which Indemnitees are entitled to be indemnified under
this Section 18; and

  (iii) reimburse Indemnitees for any and all expenses, including Attorneys’
Fees and Costs, paid or incurred in connection with the enforcement by
Indemnitees of their rights under this Section 18, or in monitoring and
participating in any legal or administrative proceeding.

    (o)        The provisions of this Section 18 shall be in addition to any and
all other obligations and liabilities that Borrower may have under applicable
law or under other Loan Documents, and each Indemnitee shall be entitled to
indemnification under this Section 18 without regard to whether Lender or that
Indemnitee has exercised any rights against the Mortgaged Property or any other
security, pursued any rights against any guarantor, or pursued any other rights
available under the Loan Documents or applicable law. If Borrower consists of

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more than one person or entity, the obligation of those persons or entities to
indemnify the Indemnitees under this Section 18 shall be joint and several. The
obligation of Borrower to indemnify the Indemnitees under this Section 18 shall
survive any repayment or discharge of the Indebtedness, any foreclosure
proceeding, any foreclosure sale, any delivery of any deed in lieu of
foreclosure, and any release of record of the lien of this Instrument.
Notwithstanding the foregoing, if Lender has never been a
mortgagee-in-possession of, or held title to, the Mortgaged Property, Borrower
shall have no obligation to indemnify the Indemnitees under this Section 18
after the date of the release of record of the lien of this Instrument by
payment in full at the Maturity Date or by voluntary prepayment in full.

    19.        PROPERTY AND LIABILITY INSURANCE.

    (a)        Borrower shall keep the Improvements insured at all times against
such hazards as Lender may from time to time require, which insurance shall
include but not be limited to coverage against loss by fire and allied perils,
general boiler and machinery coverage, rent loss and extra expense insurance. If
Lender so requires, such insurance shall also include sinkhole insurance, mine
subsidence insurance, earthquake insurance, and, if the Mortgaged Property does
not conform to applicable zoning or land use laws, building ordinance or law
coverage. Borrower acknowledges and agrees that Lender’s insurance requirements
may change from time to time throughout the term of the Indebtedness. If any of
the Improvements is located in an area identified by the Federal Emergency
Management Agency (or any successor to that agency) as an area having special
flood hazards, Borrower shall insure such Improvements against loss by flood.
All insurance required pursuant to this Section 19(a) shall be referred to as
“Hazard Insurance.”

    (b)        All premiums on Hazard Insurance policies required under
Section 19(a) shall be paid in the manner provided in Section 7, unless Lender
has designated in writing another method of payment. All such policies shall
also be in a form approved by Lender. All policies of property damage insurance
shall include a non-contributing, non-reporting mortgage clause in favor of, and
in a form approved by, Lender. Lender shall have the right to hold the original
policies or duplicate original policies of all Hazard Insurance required by
Section 19(a). Borrower shall promptly deliver to Lender a copy of all renewal
and other notices received by Borrower with respect to the policies and all
receipts for paid premiums. At least 5 days prior to the expiration date of any
Hazard Insurance policy, Borrower shall deliver to Lender evidence acceptable to
Lender that the policy has been renewed. If Borrower has not delivered the
original (or a duplicate original) of a renewal policy prior to the expiration
date of any Hazard Insurance policy, Borrower shall deliver the original (or a
duplicate original) of a renewal policy in a form satisfactory to Lender within
120 days after the expiration date of the original policy.

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    (c)        Borrower shall maintain at all times commercial general liability
insurance, workers’ compensation insurance and such other liability, errors and
omissions and fidelity insurance coverages as Lender may from time to time
require.

    (d)        All insurance policies and renewals of insurance policies
required by this Section 19 shall be in such amounts and for such periods as
Lender may from time to time require, and shall be issued by insurance companies
satisfactory to Lender.

    (e)        Borrower shall comply with all insurance requirements and shall
not permit any condition to exist on the Mortgaged Property that would
invalidate any part of any insurance coverage that this Instrument requires
Borrower to maintain.

    (f)        In the event of loss, Borrower shall give immediate written
notice to the insurance carrier and to Lender. Borrower hereby authorizes and
appoints Lender as attorney-in-fact for Borrower to make proof of loss, to
adjust and compromise any claims under policies of Hazard Insurance, to appear
in and prosecute any action arising from such Hazard Insurance policies, to
collect and receive the proceeds of Hazard Insurance, and to deduct from such
proceeds Lender’s expenses incurred in the collection of such proceeds. This
power of attorney is coupled with an interest and therefore is irrevocable.
However, nothing contained in this Section 19 shall require Lender to incur any
expense or take any action. Lender may, at Lender’s option, (i) require a
“repair or replacement” settlement, in which case the proceeds will be used to
reimburse Borrower for the cost of restoring and repairing the Mortgaged
Property to the equivalent of its original condition or to a condition approved
by Lender (the “Restoration”), or (ii) require an “actual cash value” settlement
in which case the proceeds may be applied to the payment of the Indebtedness,
whether or not then due. To the extent Lender determines to require a repair or
replacement settlement and apply insurance proceeds to Restoration, Lender shall
apply the proceeds in accordance with Lender’s then-current policies relating to
the restoration of casualty damage on similar multifamily properties.

    (g)        Notwithstanding any provision to the contrary in this Section 19,
as long as no Event of Default, or any event which, with the giving of Notice or
the passage of time, or both, would constitute an Event of Default, has occurred
and is continuing,

  (i) in the event of a casualty resulting in damage to the Mortgaged Property
which will cost $10,000 or less to repair, the Borrower shall have the sole
right to make proof of loss, adjust and compromise the claim and collect and
receive any proceeds directly without the approval or prior consent of the
Lender so long as the insurance proceeds are used solely for the Restoration of
the Mortgaged Property; and

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  (ii)  in the event of a casualty resulting in damage to the Mortgaged Property
which will cost more than $10,000 but less than $50,000 to repair, the Borrower
is authorized to make proof of loss and adjust and compromise the claim without
the prior consent of Lender, and Lender shall hold the applicable insurance
proceeds to be used to reimburse Borrower for the cost of Restoration of the
Mortgaged Property and shall not apply such proceeds to the payment of sums due
under this Instrument.

    (h)        Lender will have the right to exercise its option to apply
insurance proceeds to the payment of the Indebtedness only if Lender determines
that at least one of the following conditions is met:

  (i) an Event of Default (or any event, which, with the giving of Notice or the
passage of time, or both, would constitute an Event of Default) has occurred and
is continuing;

  (ii) Lender determines, in its discretion, that there will not be sufficient
funds from insurance proceeds, anticipated contributions of Borrower of its own
funds or other sources acceptable to Lender to complete the Restoration;

  (iii) Lender determines, in its discretion, that the rental income from the
Mortgaged Property after completion of the Restoration will not be sufficient to
meet all operating costs and other expenses, Imposition Deposits, deposits to
reserves and loan repayment obligations relating to the Mortgaged Property; or

  (iv) Lender determines, in its discretion, that the Restoration will not be
completed at least one year before the Maturity Date (or six months before the
Maturity Date if Lender determines in its discretion that re-leasing of the
Mortgaged Property will be completed within such six-month period); or

  (v) Lender determines that the Restoration will not be completed within one
year after the date of the loss or casualty.

    (i)        If the Mortgaged Property is sold at a foreclosure sale or Lender
acquires title to the Mortgaged Property, Lender shall automatically succeed to
all rights of Borrower in and to any insurance policies and unearned insurance
premiums and in and to the proceeds resulting from any damage to the Mortgaged
Property prior to such sale or acquisition.

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    (j)        Unless Lender otherwise agrees in writing, any application of any
insurance proceeds to the Indebtedness shall not extend or postpone the due date
of any monthly installments referred to in the Note, Section 7 of this
Instrument or any Collateral Agreement, or change the amount of such
installments.

    (k)        Borrower agrees to execute such further evidence of assignment of
any insurance proceeds as Lender may require.

    20.        CONDEMNATION.

    (a)        Borrower shall promptly notify Lender in writing of any action or
proceeding or notice relating to any proposed or actual condemnation or other
taking, or conveyance in lieu thereof, of all or any part of the Mortgaged
Property, whether direct or indirect (a “Condemnation”). Borrower shall appear
in and prosecute or defend any action or proceeding relating to any Condemnation
unless otherwise directed by Lender in writing. Borrower authorizes and appoints
Lender as attorney-in-fact for Borrower to commence, appear in and prosecute, in
Lender’s or Borrower’s name, any action or proceeding relating to any
Condemnation and to settle or compromise any claim in connection with any
Condemnation, after consultation with Borrower and consistent with commercially
reasonable standards of a prudent lender. This power of attorney is coupled with
an interest and therefore is irrevocable. However, nothing contained in this
Section 20 shall require Lender to incur any expense or take any action.
Borrower hereby transfers and assigns to Lender all right, title and interest of
Borrower in and to any award or payment with respect to (i) any Condemnation, or
any conveyance in lieu of Condemnation, and (ii) any damage to the Mortgaged
Property caused by governmental action that does not result in a Condemnation.

    (b)        Lender may apply such awards or proceeds, after the deduction of
Lender’s expenses incurred in the collection of such amounts (including
Attorneys’ Fees and Costs) at Lender’s option, to the restoration or repair of
the Mortgaged Property or to the payment of the Indebtedness, with the balance,
if any, to Borrower. Unless Lender otherwise agrees in writing, any application
of any awards or proceeds to the Indebtedness shall not extend or postpone the
due date of any monthly installments referred to in the Note, Section 7 of this
Instrument or any Collateral Agreement, or change the amount of such
installments. Borrower agrees to execute such further evidence of assignment of
any awards or proceeds as Lender may require.

    21.        TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER.
[RIGHT TO UNLIMITED TRANSFERS — WITH LENDER APPROVAL].

    (a)        “Transfer” means

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  (i)  a sale, assignment, transfer or other disposition (whether voluntary,
involuntary or by operation of law);

  (ii)  the granting, creating or attachment of a lien, encumbrance or security
interest (whether voluntary, involuntary or by operation of law);

  (iii)  the issuance or other creation of an ownership interest in a legal
entity, including a partnership interest, interest in a limited liability
company or corporate stock;

  (iv)  the withdrawal, retirement, removal or involuntary resignation of a
partner in a partnership or a member or manager in a limited liability company;
or

  (v)  the merger, dissolution, liquidation, or consolidation of a legal entity
or the reconstitution of one type of legal entity into another type of legal
entity.

For purposes of defining the term “Transfer,” the term “partnership” shall mean
a general partnership, a limited partnership, a joint venture and a limited
liability partnership, and the term “partner” shall mean a general partner, a
limited partner and a joint venturer.

    (b)        “Transfer” does not include

  (i)  a conveyance of the Mortgaged Property at a judicial or non-judicial
foreclosure sale under this Instrument,

  (ii)  the Mortgaged Property becoming part of a bankruptcy estate by operation
of law under the United States Bankruptcy Code, or

  (iii)  a lien against the Mortgaged Property for local taxes and/or
assessments not then due and payable.

    (c)        The occurrence of any of the following Transfers shall not
constitute an Event of Default under this Instrument, notwithstanding any
provision of Section 21(e) to the contrary:

  (i)  a Transfer to which Lender has consented;

  (ii) a Transfer that occurs in accordance with Section 21(d);

  (iii) the grant of a leasehold interest in an individual dwelling unit for a
term of two years or less not containing an option to purchase;

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  (iv) a Transfer of obsolete or worn out Personalty or Fixtures that are
contemporaneously replaced by items of equal or better function and quality,
which are free of liens, encumbrances and security interests other than those
created by the Loan Documents or consented to by Lender;

  (v) the creation of a mechanic’s, materialman’s, or judgment lien against the
Mortgaged Property, which is released of record or otherwise remedied to
Lender’s satisfaction within 60 days of the date of creation;

  (vi) if Borrower is a housing cooperative, any Transfer of the shares in the
housing cooperative or any assignment of the occupancy agreements or leases
relating thereto by tenant shareholders of the housing cooperative; and

  (vii) any Transfer of an interest in Borrower or any interest in a Controlling
Entity (which, if such Controlling Entity were Borrower, would result in an
Event of Default) listed in (A) through (F) below (a “Preapproved Transfer”),
under the terms and conditions listed as items (1) through (7) below:

  (A) a sale or transfer to one or more of the transferor’s immediate family
members; or

  (B) a sale or transfer to any trust having as its sole beneficiaries the
transferor and/or one or more of the transferor's immediate family members; or

  (C) a sale or transfer from a trust to any one or more of its beneficiaries
who are immediate family members of the transferor; or

  (D) the substitution or replacement of the trustee of any trust with a trustee
who is an immediate family member of the transferor; or

  (E) a sale or transfer to an entity owned and controlled by the transferor or
the transferor’s immediate family members; or

  (F) a sale or transfer to an individual or entity that has an existing
interest in the Borrower or in a Controlling Entity.

  (1) Borrower shall provide Lender with prior written Notice of the proposed
Preapproved Transfer, which Notice must be accompanied by a non-refundable
review fee in the amount of $N/A.

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  (2) For the purposes of these Preapproved Transfers, a transferor’s immediate
family members will be deemed to include a spouse, parent, child or grandchild
of such transferor.

  (3) Either directly or indirectly, N/A shall retain at all times a managing
interest in the Borrower.

  (4) At the time of the proposed Preapproved Transfer, no Event of Default
shall have occurred and be continuing and no event or condition shall have
occurred and be continuing that, with the giving of Notice or the passage of
time, or both, would become an Event of Default.

  (5) Lender shall be entitled to collect all costs, including the cost of all
title searches, title insurance and recording costs, and all Attorneys’ Fees and
Costs.

  (6) Lender shall not be entitled to collect a transfer fee as a result of
these Preapproved Transfers.

  (7) In the event of a Transfer prohibited by or requiring Lender’s approval
under this Section 21, this Section (c)(vii) may be modified or rendered void by
Lender at Lender’s option by Notice to Borrower and the transferee(s), as a
condition of Lender’s consent.

    (d)        The occurrence of any of the following Transfers shall not
constitute an Event of Default under this Instrument, provided that Borrower has
notified Lender in writing within 30 days following the occurrence of any of the
following, and such Transfer does not constitute an Event of Default under any
other Section of this Instrument:

  (i) a change of the Borrower’s name, provided that UCC financing statements
and/or amendments sufficient to continue the perfection of Lender’s security
interest have been properly filed and copies have been delivered to Lender;

  (ii) a change of the form of the Borrower not involving a transfer of the
Borrower’s assets and not resulting in any change in liability of any Initial
Owner, provided that UCC financing statements and/or amendments sufficient to
continue the perfection of Lender’s security interest have been

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    properly filed and copies have been delivered to Lender;

  (iii) the merger of the Borrower with another entity when the Borrower is the
surviving entity

  (iv) a Transfer that occurs by devise, descent, or by operation of law upon
the death of a natural person; and

  (v) the grant of an easement, if before the grant Lender determines that the
easement will not materially affect the operation or value of the Mortgaged
Property or Lender’s interest in the Mortgaged Property, and Borrower pays to
Lender, upon demand, all costs and expenses, including Attorneys’ Fees and
Costs, incurred by Lender in connection with reviewing Borrower’s request.

    (e)        The occurrence of any of the following Transfers shall constitute
an Event of Default under this Instrument:

  (i) a Transfer of all or any part of the Mortgaged Property or any interest in
the Mortgaged Property;

  (ii) if Borrower is a limited partnership, a Transfer of (A) any general
partnership interest, or (B) limited partnership interests in Borrower that
would cause the Initial Owners of Borrower to own less than a Controlling
Interest of all limited partnership interests in Borrower;

  (iii) if Borrower is a general partnership or a joint venture, a Transfer of
any general partnership or joint venture interest in Borrower;

  (iv) if Borrower is a limited liability company, (A) a Transfer of any
membership interest in Borrower which would cause the Initial Owners to own less
than a Controlling Interest of all the membership interests in Borrower, (B) a
Transfer of any membership or other interest of a manager in Borrower that
results in a change of manager or (C) a change in a nonmember manager;

  (v) if Borrower is a corporation (A) the Transfer of any voting stock in
Borrower which would cause the Initial Owners to own less than a Controlling
Interest of any class of voting stock in Borrower or (B) if the outstanding
voting stock in Borrower is held by 100 or more shareholders,

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    one or more Transfers by a single transferor within a 12-month period
affecting an aggregate of 5 percent or more of that stock;

  (vi) if Borrower is a trust, (A) a Transfer of any beneficial interest in
Borrower which would cause the Initial Owners to own less than a Controlling
Interest of all the beneficial interests in Borrower, (B) the termination or
revocation of the trust, or (C) the removal, appointment or substitution of a
trustee of Borrower;

  (vii) if Borrower is a limited liability partnership, (A) a Transfer of any
partnership interest in Borrower which would cause the Initial Owners to own
less than a Controlling Interest of all partnership interests in Borrower, or
(B) a transfer of any partnership or other interest of a managing partner in
Borrower that results in a change of manager; and

  (viii) a Transfer of any interest in a Controlling Entity which, if such
Controlling Entity were Borrower, would result in an Event of Default under any
of Sections 21(e)(i) through (vii) above.

Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default in order to exercise any of its
remedies with respect to an Event of Default under this Section 21.

    (f)        Lender shall consent, without any adjustment to the rate at which
the Indebtedness secured by this Instrument bears interest or to any other
economic terms of the Indebtedness set forth in the Note, to a Transfer that
would otherwise violate this Section 21 if, prior to the Transfer, Borrower has
satisfied each of the following requirements:

  (i) the submission to Lender of all information required by Lender to make the
determination required by this Section 21(f);

  (ii) the absence of any Event of Default;

  (iii) the transferee meets all of the eligibility, credit, management and
other standards (including but not limited to any standards with respect to
previous relationships between Lender and the transferee) customarily applied by
Lender at the time of the proposed Transfer to the approval of borrowers in
connection with the origination or purchase of similar mortgages on multifamily
properties;

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  (iv) the transferee’s organization, credit and experience in the management of
similar properties are deemed by the Lender, in its discretion, to be
appropriate to the overall structure and documentation of the existing
financing;

  (v) the Mortgaged Property, at the time of the proposed Transfer, meets all
standards as to its physical condition, occupancy, net operating income and the
collection of reserves that are customarily applied by Lender at the time of the
proposed Transfer to the approval of properties in connection with the
origination or purchase of similar mortgages on multifamily properties;

  (vi) in the case of a Transfer of all or any part of the Mortgaged Property,
(A) the execution by the transferee of Lender’s then-standard assumption
agreement that, among other things, requires the transferee to perform all
obligations of Borrower set forth in the Note, this Instrument and any other
Loan Documents, and may require that the transferee comply with any provisions
of this Instrument or any other Loan Document which previously may have been
waived or modified by Lender, (B) if Lender requires, the transferee causes one
or more individuals or entities acceptable to Lender to execute and deliver to
Lender a guaranty in a form acceptable to Lender, and (C) the transferee
executes such additional Collateral Agreements as Lender may require;

  (vii) in the case of a Transfer of any interest in a Controlling Entity, if a
guaranty has been executed and delivered in connection with the Note, this
Instrument or any of the other Loan Documents, the Borrower causes one or more
individuals or entities acceptable to Lender to execute and deliver to Lender a
guaranty in a form acceptable to Lender; and

  (viii) Lender’s receipt of all of the following:

  (A) a review fee in the amount of $3.000.00;

  (B) a transfer fee in an amount equal to one percent (1.00%) of the unpaid
principal balance of the Indebtedness immediately before the applicable
Transfer; and

  (C) the amount of Lender’s out-of-pocket costs (including reasonable
Attorneys’ Fees and Costs) incurred in reviewing the Transfer request.

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    22.        EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute an Event of Default under this Instrument:

    (a)        any failure by Borrower to pay or deposit when due any amount
required by the Note, this Instrument or any other Loan Document;

    (b)        any failure by Borrower to maintain the insurance coverage
required by Section 19;

    (c)        any failure by Borrower to comply with the provisions of
Section 33;

    (d)        fraud or material misrepresentation or material omission by
Borrower, any of its officers, directors, trustees, general partners or managers
or any guarantor in connection with (i) the application for or creation of the
Indebtedness, (ii) any financial statement, rent schedule, or other report or
information provided to Lender during the term of the Indebtedness, or (iii) any
request for Lender’s consent to any proposed action, including a request for
disbursement of funds under any Collateral Agreement;

    (e)        any failure to comply with the provisions of Section 20;

    (f)        any Event of Default under Section 21;

    (g)        the commencement of a forfeiture action or proceeding, whether
civil or criminal, which, in Lender’s reasonable judgment, could result in a
forfeiture of the Mortgaged Property or otherwise materially impair the lien
created by this Instrument or Lender’s interest in the Mortgaged Property;

    (h)        any failure by Borrower to perform any of its obligations under
this Instrument (other than those specified in Sections 22(a) through (g)), as
and when required, which continues for a period of 30 days after Notice of such
failure by Lender to Borrower. However, if Borrower’s failure to perform its
obligations as described in this Section 22(h) is of the nature that it cannot
be cured within the 30 day grace period but reasonably could be cured within 90
days, then Borrower shall have additional time as determined by Lender in its
discretion, not to exceed an additional 60 days, in which to cure such default,
provided that Borrower has diligently commenced to cure such default during the
30-day grace period and diligently pursues the cure of such default. However, no
such Notice or grace periods shall apply in the case of any such failure which
could, in Lender’s judgment, absent immediate exercise by Lender of a right or
remedy under this Instrument, result in harm to Lender, impairment of the Note
or this Instrument or any other security given under any other Loan Document;

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    (i)        any failure by Borrower to perform any of its obligations as and
when required under any Loan Document other than this Instrument which continues
beyond the applicable cure period, if any, specified in that Loan Document;

    (j)        any exercise by the holder of any other debt instrument secured
by a mortgage, deed of trust or deed to secure debt on the Mortgaged Property of
a right to declare all amounts due under that debt instrument immediately due
and payable;

    (k)        Borrower voluntarily files for bankruptcy protection under the
United States Bankruptcy Code or voluntarily becomes subject to any
reorganization, receivership, insolvency proceeding or other similar proceeding
pursuant to any other federal or state law affecting debtor and creditor rights,
or an involuntary case is commenced against Borrower by any creditor (other than
Lender) of Borrower pursuant to the United States Bankruptcy Code or other
federal or state law affecting debtor and creditor rights and is not dismissed
or discharged within 90 days after filing; and

    (l)        any of Borrower’s representations and warranties in this
Instrument is false or misleading in any material respect.

    23.        REMEDIES CUMULATIVE. Each right and remedy provided in this
Instrument is distinct from all other rights or remedies under this Instrument
or any other Loan Document or afforded by applicable law, and each shall be
cumulative and may be exercised concurrently, independently, or successively, in
any order.

    24.        FORBEARANCE.

    (a)        Lender may (but shall not be obligated to) agree with Borrower,
from time to time, and without giving notice to, or obtaining the consent of, or
having any effect upon the obligations of, any guarantor or other third party
obligor, to take any of the following actions: extend the time for payment of
all or any part of the Indebtedness; reduce the payments due under this
Instrument, the Note, or any other Loan Document; release anyone liable for the
payment of any amounts under this Instrument, the Note, or any other Loan
Document; accept a renewal of the Note; modify the terms and time of payment of
the Indebtedness; join in any extension or subordination agreement; release any
Mortgaged Property; take or release other or additional security; modify the
rate of interest or period of amortization of the Note or change the amount of
the monthly installments payable under the Note; and otherwise modify this
Instrument, the Note, or any other Loan Document.

    (b)        Any forbearance by Lender in exercising any right or remedy under
the Note, this Instrument, or any other Loan Document or otherwise afforded by
applicable law, shall not be a waiver of or preclude the exercise of any other
right or remedy, or the subsequent exercise of any

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right or remedy. The acceptance by Lender of payment of all or any part of the
Indebtedness after the due date of such payment, or in an amount which is less
than the required payment, shall not be a waiver of Lender’s right to require
prompt payment when due of all other payments on account of the Indebtedness or
to exercise any remedies for any failure to make prompt payment. Enforcement by
Lender of any security for the Indebtedness shall not constitute an election by
Lender of remedies so as to preclude the exercise of any other right available
to Lender. Lender’s receipt of any awards or proceeds under Sections 19 and 20
shall not operate to cure or waive any Event of Default.

    25.        LOAN CHARGES. If any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower is interpreted
so that any charge provided for in any Loan Document, whether considered
separately or together with other charges levied in connection with any other
Loan Document, violates that law, and Borrower is entitled to the benefit of
that law, that charge is hereby reduced to the extent necessary to eliminate
that violation. The amounts, if any, previously paid to Lender in excess of the
permitted amounts shall be applied by Lender to reduce the principal of the
Indebtedness. For the purpose of determining whether any applicable law limiting
the amount of interest or other charges permitted to be collected from Borrower
has been violated, all Indebtedness which constitutes interest, as well as all
other charges levied in connection with the Indebtedness which constitute
interest, shall be deemed to be allocated and spread over the stated term of the
Note. Unless otherwise required by applicable law, such allocation and spreading
shall be effected in such a manner that the rate of interest so computed is
uniform throughout the stated term of the Note.

    26.        WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the
right to assert any statute of limitations as a bar to the enforcement of the
lien of this Instrument or to any action brought to enforce any Loan Document.

    27.        WAIVER OF MARSHALLING. Notwithstanding the existence of any other
security interests in the Mortgaged Property held by Lender or by any other
party, Lender shall have the right to determine the order in which any or all of
the Mortgaged Property shall be subjected to the remedies provided in this
Instrument, the Note, any other Loan Document or applicable law. Lender shall
have the right to determine the order in which any or all portions of the
Indebtedness are satisfied from the proceeds realized upon the exercise of such
remedies. Borrower and any party who now or in the future acquires a security
interest in the Mortgaged Property and who has actual or constructive notice of
this Instrument waives any and all right to require the marshalling of assets or
to require that any of the Mortgaged Property be sold in the inverse order of
alienation or that any of the Mortgaged Property be sold in parcels or as an
entirety in connection with the exercise of any of the remedies permitted by
applicable law or provided in this Instrument.

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    28.        FURTHER ASSURANCES. Borrower shall execute, acknowledge, and
deliver, at its sole cost and expense, all further acts, deeds, conveyances,
assignments, estoppel certificates, financing statements or amendments,
transfers and assurances as Lender may require from time to time in order to
better assure, grant, and convey to Lender the rights intended to be granted,
now or in the future, to Lender under this Instrument and the Loan Documents.

    29.        ESTOPPEL CERTIFICATE. Within 10 days after a request from Lender,
Borrower shall deliver to Lender a written statement, signed and acknowledged by
Borrower, certifying to Lender or any person designated by Lender, as of the
date of such statement, (i) that the Loan Documents are unmodified and in full
force and effect (or, if there have been modifications, that the Loan Documents
are in full force and effect as modified and setting forth such modifications);
(ii) the unpaid principal balance of the Note; (iii) the date to which interest
under the Note has been paid; (iv) that Borrower is not in default in paying the
Indebtedness or in performing or observing any of the covenants or agreements
contained in this Instrument or any of the other Loan Documents (or, if the
Borrower is in default, describing such default in reasonable detail);
(v) whether or not there are then existing any setoffs or defenses known to
Borrower against the enforcement of any right or remedy of Lender under the Loan
Documents; and (vi) any additional facts requested by Lender.

    30.        GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.

    (a)        This Instrument, and any Loan Document which does not itself
expressly identify the law that is to apply to it, shall be governed by the laws
of the jurisdiction in which the Land is located (the “Property Jurisdiction”).

    (b)        Borrower agrees that any controversy arising under or in relation
to the Note, this Instrument, or any other Loan Document may be litigated in the
Property Jurisdiction. The state and federal courts and authorities with
jurisdiction in the Property Jurisdiction shall have jurisdiction over all
controversies that shall arise under or in relation to the Note, any security
for the Indebtedness, or any other Loan Document. Borrower irrevocably consents
to service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise. However, nothing in this Section 30 is intended
to limit Lender’s right to bring any suit, action or proceeding relating to
matters under this Instrument in any court of any other jurisdiction.

    31.        NOTICE.

    (a)        All Notices, demands and other communications (“Notice”) under or
concerning this Instrument shall be in writing. Each Notice shall be addressed
to the intended recipient at its address set forth in this Instrument, and shall
be deemed given on the earliest to occur of (i) the date when the Notice is
received by the addressee; (ii) the first Business Day after the Notice is

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delivered to a recognized overnight courier service, with arrangements made for
payment of charges for next Business Day delivery; or (iii) the third Business
Day after the Notice is deposited in the United States mail with postage
prepaid, certified mail, return receipt requested.

    (b)        Any party to this Instrument may change the address to which
Notices intended for it are to be directed by means of Notice given to the other
party in accordance with this Section 31. Each party agrees that it will not
refuse or reject delivery of any Notice given in accordance with this
Section 31, that it will acknowledge, in writing, the receipt of any Notice upon
request by the other party and that any Notice rejected or refused by it shall
be deemed for purposes of this Section 31 to have been received by the rejecting
party on the date so refused or rejected, as conclusively established by the
records of the U.S. Postal Service or the courier service.

    (c)        Any Notice under the Note and any other Loan Document that does
not specify how Notices are to be given shall be given in accordance with this
Section 31.

    32.        SALE OF NOTE; CHANGE IN SERVICER; LOAN SERVICING. The Note or a
partial interest in the Note (together with this Instrument and the other Loan
Documents) may be sold one or more times without prior Notice to Borrower. A
sale may result in a change of the Loan Servicer. There also may be one or more
changes of the Loan Servicer unrelated to a sale of the Note. If there is a
change of the Loan Servicer, Borrower will be given Notice of the change. All
actions regarding the servicing of the loan evidenced by the Note, including the
collection of payments, the giving and receipt of Notice, inspections of the
Mortgaged Property, inspections of books and records, and the granting of
consents and approvals, may be taken by the Loan Servicer unless Borrower
receives Notice to the contrary. If Borrower receives conflicting Notices
regarding the identity of the Loan Servicer or any other subject, any such
Notice from Lender shall govern.

    33.        SINGLE ASSET BORROWER. Until the Indebtedness is paid in full,
Borrower (a) shall not own any real or personal property other than the
Mortgaged Property and personal property related to the operation and
maintenance of the Mortgaged Property; (b) shall not operate any business other
than the management and operation of the Mortgaged Property; and (c) shall not
maintain its assets in a way difficult to segregate and identify.

    34.        SUCCESSORS AND ASSIGNS BOUND. This Instrument shall bind, and the
rights granted by this Instrument shall inure to, the respective successors and
assigns of Lender and Borrower. However, a Transfer not permitted by Section 21
shall be an Event of Default.

    35.        JOINT AND SEVERAL LIABILITY. If more than one person or entity
signs this Instrument as Borrower, the obligations of such persons and entities
shall be joint and several.

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    36.        RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.

    (a)        The relationship between Lender and Borrower shall be solely that
of creditor and debtor, respectively, and nothing contained in this Instrument
shall create any other relationship between Lender and Borrower.

    (b)        No creditor of any party to this Instrument and no other person
shall be a third party beneficiary of this Instrument or any other Loan
Document. Without limiting the generality of the preceding sentence, (i) any
arrangement (a “Servicing Arrangement”) between the Lender and any Loan Servicer
for loss sharing or interim advancement of funds shall constitute a contractual
obligation of such Loan Servicer that is independent of the obligation of
Borrower for the payment of the Indebtedness, (ii) Borrower shall not be a third
party beneficiary of any Servicing Arrangement, and (iii) no payment by the Loan
Servicer under any Servicing Arrangement will reduce the amount of the
Indebtedness.

    37.        SEVERABILITY; AMENDMENTS. The invalidity or unenforceability of
any provision of this Instrument shall not affect the validity or enforceability
of any other provision, and all other provisions shall remain in full force and
effect. This Instrument contains the entire agreement among the parties as to
the rights granted and the obligations assumed in this Instrument. This
Instrument may not be amended or modified except by a writing signed by the
party against whom enforcement is sought; provided, however, that in the event
of a Transfer prohibited by or requiring Lender’s approval under Section 21, any
or some or all of the Modifications to Instrument set forth in Exhibit B (if
any) may be modified or rendered void by Lender at Lender’s option by Notice to
Borrower and the transferee(s).

    38.        CONSTRUCTION. The captions and headings of the Sections of this
Instrument are for convenience only and shall be disregarded in construing this
Instrument. Any reference in this Instrument to an “Exhibit” or a “Section”
shall, unless otherwise explicitly provided, be construed as referring,
respectively, to an Exhibit attached to this Instrument or to a Section of this
Instrument. All Exhibits attached to or referred to in this Instrument are
incorporated by reference into this Instrument. Any reference in this Instrument
to a statute or regulation shall be construed as referring to that statute or
regulation as amended from time to time. Use of the singular in this Agreement
includes the plural and use of the plural includes the singular. As used in this
Instrument, the term “including” means “including, but not limited to.”

    39.        DISCLOSURE OF INFORMATION. Lender may furnish information
regarding Borrower or the Mortgaged Property to third parties with an existing
or prospective interest in the servicing, enforcement, evaluation, performance,
purchase or securitization of the Indebtedness, including but not limited to
trustees, master servicers, special servicers, rating agencies, and
organizations maintaining databases on the underwriting and performance of
multifamily mortgage loans. Borrower irrevocably waives any and all rights it
may have under applicable law to prohibit such disclosure, including but not
limited to any right of privacy.

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    40.        NO CHANGE IN FACTS OR CIRCUMSTANCES. Borrower warrants that
(a) all information in the application for the loan submitted to Lender (the
“Loan Application”) and in all financial statements, rent schedules, reports,
certificates and other documents submitted in connection with the Loan
Application are complete and accurate in all material respects; and (b) there
has been no material adverse change in any fact or circumstance that would make
any such information incomplete or inaccurate.

    41.        SUBROGATION. If, and to the extent that, the proceeds of the loan
evidenced by the Note are used to pay, satisfy or discharge any obligation of
Borrower for the payment of money that is secured by a pre-existing mortgage,
deed of trust or other lien encumbering the Mortgaged Property (a “Prior Lien”),
such loan proceeds shall be deemed to have been advanced by Lender at Borrower’s
request, and Lender shall automatically, and without further action on its part,
be subrogated to the rights, including lien priority, of the owner or holder of
the obligation secured by the Prior Lien, whether or not the Prior Lien is
released.

    42.        ADJUSTABLE RATE MORTGAGE — THIRD PARTY CAP AGREEMENT “CAP
COLLATERAL.”

    (a)        If the Note provides for interest to accrue at an adjustable or
variable interest rate (other than during the “Extension Period,” as defined in
the Note, if applicable), then the definition of “Mortgaged Property” shall
include the “Cap Collateral.” The “Cap Collateral” shall mean

  (i) any interest rate cap agreement, interest rate swap agreement, or other
interest rate-hedging contract or agreement obtained by Borrower as a
requirement of any Loan Document or as a condition of Lender’s making the Loan
(a “Cap Agreement”);

  (ii) any and all moneys (collectively, “Cap Payments”) payable pursuant to any
Cap Agreement by the interest rate cap provider or other counterparty to a Cap
Agreement or any guarantor of the obligations of any such cap provider or
counterparty (a “Cap Provider”);

  (iii) all rights of Borrower under any Cap Agreement and all rights of
Borrower to all Cap Payments, including contract rights and general intangibles,
whether existing now or arising after the date of this Instrument;

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  (iv) all rights, liens and security interests or guaranties granted by a Cap
Provider or any other person to secure or guaranty payment of any Cap Payment
whether existing now or granted after the date of this Instrument;

  (v) all documents, writings, books, files, records and other documents arising
from or relating to any of the foregoing, whether existing now or created after
the date of this Instrument; and

  (vi) all cash and non-cash proceeds and products of (ii) – (v) above.

    (b)        As additional security for Borrower’s obligation under the Loan
Documents, Borrower hereby assigns and pledges to Lender all of Borrower’s
right, title and interest in and to the Cap Collateral. Borrower has instructed
and will instruct each Cap Provider and any guarantor of a Cap Provider’s
obligations to make Cap Payments directly to Lender or to Loan Servicer on
behalf of Lender.

    (c)        So long as there is no Event of Default, Lender or Loan Servicer
will remit to Borrower each Cap Payment received by Lender or Loan Servicer with
respect to any month for which Borrower has paid in full the monthly installment
of principal and interest or interest only, as applicable, due under the Note.
Alternatively, at Lender’s option so long as there is no Event of Default,
Lender may apply a Cap Payment received by Lender or Loan Servicer with respect
to any month to the applicable monthly payment of accrued interest due under the
Note if Borrower has paid in full the remaining portion of such monthly payment
of principal and interest or interest only, as applicable.

    (d)        Following an Event of Default, in addition to any other rights
and remedies Lender may have, Lender may retain any Cap Payments and apply them
to the Indebtedness in such order and amounts as Lender determines. Neither the
existence of a Cap Agreement nor anything in this Instrument shall relieve
Borrower of its primary obligation to timely pay in full all amounts due under
the Note and otherwise due on account of the Indebtedness.

    (e)        If the Note does not provide for interest to accrue at an
adjustable or variable interest rate (other than during the Extension Period)
then this Section 42 shall be of no force or effect.

    43.        ACCELERATION; REMEDIES. At any time during the existence of an
Event of Default, Lender, at Lender’s option, may declare the Indebtedness to be
immediately due and payable without further demand, and may invoke the power of
sale granted in this Instrument (and Borrower appoints Lender as Borrower’s
agent and attorney-in-fact to exercise such power of sale in the name and on
behalf of Borrower) and any other remedies permitted by Georgia law or provided
in this Instrument or in any other Loan Document. Borrower acknowledges that the
power of sale granted in this Instrument may be exercised by Lender without
prior judicial hearing. Lender shall be entitled to collect all costs and
expenses incurred in pursuing such remedies, including reasonable attorneys’
fees, costs of documentary evidence, abstracts and title reports.

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        Lender may sell and dispose of the Mortgaged Property at public auction,
at the usual place for conducting sales at the courthouse in the county where
all or any part of the Mortgaged Property is located, to the highest bidder for
cash, first advertising the time, terms and place of such sale by publishing a
notice of sale once a week for four consecutive weeks (without regard to the
actual number of days) in a newspaper in which sheriff’s advertisements are
published in such county, all other notice being waived by Borrower; and Lender
may thereupon execute and deliver to the purchaser a sufficient instrument of
conveyance of the Mortgaged Property in fee simple, which may contain recitals
as to the happening of the default upon which the execution of the power of sale
granted by this Section depends. The recitals in the instrument of conveyance
shall be presumptive evidence that Lender duly complied with all preliminary
acts prerequisite to the sale and instrument of conveyance. Borrower constitutes
and appoints Lender as Borrower’s agent and attorney-in-fact to make such
recitals, sale and conveyance. Borrower ratifies all of Lender’s acts, as such
attorney-in-fact, and Borrower agrees that such recitals shall be binding and
conclusive upon Borrower and that the conveyance to be made by Lender (and in
the event of a deed in lieu of foreclosure, then as to such conveyance) shall be
effectual to bar all right, title and interest, equity of redemption, including
all statutory redemption, homestead, dower, curtsey and all other exemptions of
Borrower, or its successors in interest, in and to the Mortgaged Property.

        The Mortgaged Property may be sold in one parcel and as an entirety, or
in such parcels, manner or order as Lender, in its discretion, may elect, and
one or more exercises of the powers granted in this Section shall not extinguish
or exhaust the power unless the entire Mortgaged Property is sold or the
Indebtedness is paid in full, and Lender shall collect the proceeds of such
sale, applying such proceeds as provided in this Section. In the event of a
deficiency, Borrower shall immediately on demand from Lender pay such deficiency
to Lender, subject to the provisions of the Note limiting Borrower’s personal
liability for payment of the Indebtedness. Borrower acknowledges that Lender may
bid for and purchase the Mortgaged Property at any foreclosure sale and shall be
entitled to apply all or any part of the Indebtedness as a credit to the
purchase price. Borrower covenants and agrees that Lender shall apply the
proceeds of the sale in the following order: (a) to all reasonable costs and
expenses of the sale, including reasonable attorneys’ fees and costs of title
evidence; (b) to the Indebtedness in such order as Lender, in Lender’s
discretion, directs; and (c) the excess, if any, to the person or persons
legally entitled to the excess. The power and agency granted in this Section 43
are coupled with an interest, are irrevocable by death or otherwise and are in
addition to the remedies for collection of the Indebtedness as provided by law.

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        If the Mortgaged Property is sold pursuant to this Section 43, Borrower,
or any person holding possession of the Mortgaged Property through Borrower,
shall surrender possession of the Mortgaged Property to the purchaser at such
sale on demand. If possession is not surrendered on demand, Borrower or such
person shall be a tenant holding over and may be dispossessed in accordance with
Georgia law.

    44.        RELEASE. Upon payment of the Indebtedness, Lender shall cancel
this Instrument. Borrower shall pay Lender’s reasonable costs incurred in
canceling this Instrument.

    45.        BORROWER’S WAIVER OF CERTAIN RIGHTS. To the fullest extent
permitted by law, Borrower agrees that Borrower will not at any time insist
upon, plead, claim or take the benefit or advantage of any present or future law
providing for any appraisement, valuation, stay, extension or redemption,
homestead, moratorium, reinstatement, marshalling or forbearance, and Borrower,
for Borrower, Borrower’s heirs, devisees, representatives, successors and
assigns, and for any and all persons ever claiming any interest in the Mortgaged
Property, to the fullest extent permitted by law, waives and releases all rights
of redemption, valuation, appraisement, stay of execution, reinstatement
(including all rights under O.C.G.A. Section 44-14-85), notice of intention to
mature or declare due the whole of the Indebtedness, and all rights to a
marshaling of assets of Borrower, including the Mortgaged Property.

    46.        DEED TO SECURE DEBT. This conveyance is to be construed under the
existing laws of the State of Georgia as a deed passing title, and not as a
mortgage, and is intended to secure the payment of the Indebtedness.

    47.        ASSUMPTION NOT A NOVATION. Lender’s acceptance of an assumption
of the obligations of this Instrument and the Note, and the release of Borrower
pursuant to Section 21, shall not constitute a novation and shall not affect the
priority of the lien created by this Instrument.

    48.        WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) COVENANTS
AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF
THIS INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER
THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN
THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH
PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

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            ATTACHED EXHIBITS. The following Exhibits are attached to this
Instrument:

                     |X|    Exhibit A          Description of the Land
(required).

                     |X|    Exhibit B          Modifications to Instrument

{Signatures on next page}

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        IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument or
has caused this Instrument to be signed and delivered by its duly authorized
representative.

Signed, sealed, and delivered     BORROWER:

ROBERTS PROPERTIES RESIDENTIAL, LP., a     in the presence of:   Georgia limited
partnership      

By: ROBERTS REALTY INVESTORS,
INC., a Georgia Corporation
Its General Partner       /s/ Ellen Gleason
Unofficial Witness   By: /s/ Greg M. Burnett
Name: Greg M. Burnett
Title: Secretary and Treasurer  

/s/ Eileen van Staden
Notary Public          Commission Expiry:  October 20, 2007      [Affix notarial
seal]  

[Corporate Seal]                              

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EXHIBIT A

[DESCRIPTION OF THE LAND]

All that tract of land lying and being in Land Lots 230, 231, 234, & 235, 1st
District, 1st Section, Fulton County, Georgia and being more particularly
described as follows:

BEGINNING at a ½-inch rebar found at the intersection of the proposed east
right-of-way line of Addison Way (right-of-way varies) with the land lot line
common to said Land Lots 230 and 231, which ½-inch rebar found is located South
88 degrees 50 minutes 38 seconds East 280.22 feet along the land lot line common
to said Land Lots 230 and 231 from a ¾-inch iron bar found in 1993 which is now
destroyed at the common corner to Land Lots 197, 198, 230 and 231, 1st District,
1st Section, Fulton County, Georgia; running thence along the proposed east
right-of-way line of Addison Way North 00 degrees 24 minutes 12 seconds East
164.13 feet to a ½-inch rebar found; thence, leaving said proposed right-of-way
line, North 70 degrees 42 minutes 42 seconds East 144.99 feet to a ½-inch rebar
found; thence North 00 degrees 20 minutes 06 seconds West 76.75 feet to a ½-inch
rebar found; thence North 03 degrees 44 minutes 46 seconds West 54.84 feet to a
½-inch rebar found; thence North 16 degrees 40 degrees 49 seconds West 33.86
feet to a ½-inch rebar found; thence North 39 degrees 51 minutes 19 seconds West
54.71 feet to a ½-inch rebar found; thence North 40 degrees 54 minutes 27
seconds West 105.77 feet to a ½-inch rebar set; thence North 40 degrees 45
minutes 23 seconds West 36.77 feet to a ½-inch rebar found on the southeast
right-of-way line of Jones Bridge Road (right-of-way varies); thence along the
southeast right-of-way line of Jones Bridge Road the following courses and
distances: (1) North 50 degrees 08 minutes 06 seconds East 453.26 feet to a
point, (2) along the arc of a curve to the right (which arc is subtended by a
chord having a bearing and distance of North 50 degrees 20 minutes 34 seconds
East 82.84 feet and a radius of 11,417.30 feet) 82.84 feet to a point, (3) North
50 degrees 33 minutes 03 seconds East 81.13 feet to a ½-inch rebar set, (4)
North 55 degrees 41 minutes 36 seconds East 131.76 feet to a ½-inch rebar set,
and (5) North 50 degrees 33 minutes 03 seconds East 168.08 feet to a ½-inch
rebar set; thence, leaving said right-of-way line, South 43 degrees 17 minutes
02 seconds East 211.03 feet to a ½-inch rebar found; thence South 31 degrees 12
minutes 02 seconds East 269.95 feet to a ½-inch rebar found; thence South 43
degrees 12 minutes 02 seconds East 169.97 feet to a ½-inch rebar found; thence
South 35 degrees 12 minutes 02 seconds East 199.96 feet to a ½-inch rebar found;
thence South 35 degrees 06 minutes 54 seconds East 125.15 feet to a ½-inch rebar
found; thence South 22 degrees 26 minutes 33 seconds East 160.21 feet to a
½-inch rebar found; thence South 29 degrees 19 minutes 38 seconds East 149.93
feet to a ½-inch rebar found; thence South 37 degrees 41 minutes 40 seconds East
154.92 to a ½-inch rebar found; thence South 47 degrees 58 minutes 48 seconds
East 164.89 feet to a ½-inch rebar found; thence South 71 degrees 07 minutes 02
seconds West 134.90 feet to a ½-inch rebar found; thence South 86 degrees 52
minutes 02 seconds West 299.77 feet to a ½-inch rebar found; thence South 79
degrees 37 minutes 02 seconds West 124.91 feet to a ½-inch rebar found; thence
North 73 degrees 51

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A-1

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minutes 50 seconds West 173.42 feet to a ½-inch rebar set; thence South 87
degrees 15 minutes 00 seconds West 300.00 feet to a ½-inch rebar set; thence
South 75 degrees 00 minutes 00 seconds West 190.00 feet to a point in a lake;
thence North 65 degrees 22 minutes 41 seconds West 207.50 feet to a ½-inch rebar
found; thence South 51 degrees 09 minutes 57 seconds West 243.72 feet to a
½-inch rebar found; thence North 33 degrees 05 minutes 48 seconds East 258.89
feet to a ½-inch rebar set; thence North 11 degrees 54 minutes 35 seconds West
33.74 feet to a ½-inch rebar set; thence North 56 degrees 54 minutes 17 seconds
West 178.55 feet to a ½-inch rebar found on the land lot line common to Land
Lots 230 and 231; thence along said common land lot line, North 88 degrees 50
minutes 38 seconds West 24.40 feet to a ½-inch rebar found; thence leaving said
common land lot line, South 71 degrees 34 minutes 47 seconds West 36.90 feet to
a ½-inch rebar found on the proposed east right-of-way line of Addison Way;
thence along said proposed right-of-way line, along the arc of a curve to the
left (which arc is subtended by a chord having a bearing and distance of North
17 degrees 20 minutes 45 seconds East 12.87 feet and a radius of 362.86 feet)
12.87 feet to the POINT OF BEGINNING, said tract containing approximately 30.665
acres as shown on plat of ALTA/ACSM Land Title Survey for Roberts Properties
Residential, L.P., Primary Capital Advisors LC, Federal Home Loan Mortgage
Corporation and Commonwealth Land Title Insurance Company, prepared by Rochester
& Associates, Inc., bearing the seal and certification of Josh W. Trawick,
Georgia Registered Land Surveyor No. 2974, dated January 14, 2000, last revised
April 18, 2005.

TOGETHER WITH, a non-exclusive right, title and interest in and to the easements
appurtenant to the above described Tract created pursuant to that certain
Reciprocal Easement, Restrictive Covenant and Covenant Agreement by and between
Fulton County, a political subdivision of the State of Georgia, Roberts
Properties Jones Bridge, L.L.C., a Georgia limited liability company, and
Roberts Properties Residential, L.P., a Georgia limited partnership, dated
December 22, 1999, filed for record on December 27, 1999, and recorded at Deed
Book 28224, page 083, Fulton County, Georgia records (the “Appurtenant Easement
No. 1”).

TOGETHER WITH, a non-exclusive right, title and interest in and to the easements
appurtenant to the above described Tract created pursuant to that certain
Declaration of Easements by Roberts Properties Residential, L.P., a Georgia
limited partnership, dated October 19, 1999, filed for record on October 21,
1999, and recorded at Deed Book 27850, page 046, Fulton County, Georgia records;
as amended by that certain First Amendment to Declaration of Easements by
Roberts Properties Residential, L.P., dated May 2, 2000, recorded in Deed Book
28996, page 182, aforesaid records; as amended by that certain Second Amendment
to Declaration of Easements by Roberts Properties Residential, L.P., dated May
4, 2000, filed June 15, 2000, recorded in Deed Book 29172, page 281, aforesaid
records. (the “Appurtenant Easement No. 2 ”).

TOGETHER WITH, a non-exclusive right, title and interest in and to the easement
appurtenant to the above described tract created pursuant to that certain Grant
of Access Easement by

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A-2

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Roberts Properties Residential, L.P., a Georgia limited partnership, dated April
15, 2005, and recorded or to be recorded in the aforesaid records (the
“Appurtenant Easement No. 3”).

Appurtenant Easement Nos. 1, 2 and 3 are collectively referred to herein as
“Appurtenant Easements”.

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A-3

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EXHIBIT B

MODIFICATIONS TO INSTRUMENT

        The following modifications are made to the text of the Instrument that
precedes this Exhibit:

1.        Section 14 is hereby modified as follows:

  The following words appearing in Section 14(b) are hereby deleted: “Within 120
days after the end of each fiscal year of Borrower”; and the following words are
hereby inserted and substituted therefor: “At any time upon Lender’s request”.
In addition, the last sentence of section 14(b) is hereby deleted.

  The following words appearing in Section 14(c) are hereby deleted: “Within 120
days after the end of each calendar year, and at any other time”; and the
following words are hereby inserted and substituted therefor: “At any”.”

  The following words are hereby inserted in Section 14(h), after “demand”:
“true and correct copies, certified by Borrower’s general partner’s or
Borrower’s chief financial officer, of”.

  Section 14(d)(iii) is modified to add the following at the end of the section:
“Notwithstanding anything to the contrary herein, Borrower shall not be required
to provide such report to Lender except at any time when an Event of Default
exists

2.     Section 21(c)(vii) is hereby deleted.

3.     New sections 21(c)(viii) and 21(c)(ix) are added as follows:

  "(viii) A Transfer of fee simple title to the Mortgaged Property to Roberts
Realty Investors, Inc. (the “REIT”), provided that each of the following
requirements has been satisfied:

  (A) Borrower has provided Lender with at least 30 days prior written notice of
the proposed Transfer, which notice shall be accompanied by a non-refundable
review fee in the amount of $5,000;

  (B) No other Transfer has occurred, and the REIT is at the time of the
proposed Transfer a Georgia corporation in good standing and a self-administered
real estate investment trust;

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B-1

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  (C) the absence of any Event of Default;

  (D) the execution by the REIT of an assumption agreement that is acceptable to
Lender and that requires the REIT to perform all obligations of Borrower set
forth in the Note, this Instrument and any other Loan Documents, and to comply
with all of the provisions of this Instrument or the other Loan Documents (but
which does not impose upon the REIT any greater obligations or liabilities than
are imposed upon the Borrower named herein as set forth in the Loan Documents);

  (E) The Guaranty executed and delivered concurrently with the execution and
delivery of this Instrument by Roberts Realty Investors, Inc. and any future
substitute guarantor (collectively, the “Guarantors”) shall remain in full force
and effect after such transfer and prior to the Transfer shall be ratified and
confirmed in writing by each of the Guarantors in form and substance acceptable
to Lender.

  (F) Borrower has delivered to Lender a commitment from the title insurance
company that issued the title insurance policy insuring this Instrument to
endorse such title insurance policy and update and continue the coverage
provided thereby to the date of the recording of the deed transferring title to
the Mortgaged Property to the REIT, with no additional exceptions to insurance
coverage; and the original of such endorsement is delivered to Lender promptly
following the recording of such deed; and

  (G) Lender has been paid or reimbursed by Borrower for all of Lender’s
out-of-pocket costs (including title search and title insurance charges,
recording charges and reasonable fees and expenses of Lender’s legal counsel)
incurred in connection with the Transfer request and Transfer. No separate
transfer fee shall be payable in connection with the Transfer described in this
Section 21(c)(viii).

  (ix) A Transfer of publicly traded shares or other publicly traded units of
ownership in the REIT or a Controlling Entity; or a Transfer (which shall
include an exchange for shares or other units of ownership in the REIT) of
limited partnership interests in Borrower. No Transfer described in this Section
21(c)(ix) shall be subject to the conditions or requirements of Section 21(f).”

        4.        Section 22 is hereby modified by adding new subsections (m)
through (o) as follows:

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B-2

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  “(m) Borrower’s exercise of its right to terminate that certain Declaration of
Easements dated October 19, 1999 and recorded in the real estate records of
Fulton County, Georgia at Deed Book 27850, Page 46, except that Borrower may
exercise its right to terminate the easements for ingress and egress, parking,
use of the recreational facilities, and use of the clubhouse/leasing office and
the mailboxes and laundry facilities associated therewith, provided that the
easements for utilities and sanitary and storm sewer remain in full force and
effect during the term of the loan evidenced by the Note;

  (n) failure by Borrower to maintain and repair Addison Way until such roadway
is dedicated and accepted by Fulton County, Georgia or the City of Alpharetta,
Georgia;

  (o) a transfer of ownership of Addison Way to any third party other than the
City of Alpharetta, Georgia or Fulton County, Georgia.”

        5.        Notwithstanding any right to Transfers contained in the loan
Documents, no Transfers will be consented to during the Extension Period.

        6.        Section 33, “Single Asset Borrower”, is hereby deleted.

        7.        A new section 50 is added as follows:

    “50. ATTORNEY’S FEES. Whenever reference is made in
this Instrument or any of the Loan Documents to the payment of
“reasonable attorney’s fees” or words of similar import, the same
shall mean and refer to the payment of actual attorney’s fees
incurred based upon the attorney’s normal hourly rates and the
number of hours worked, and not the attorney’s fees statutorily
defined in O.C.G.A. section 13-1-11.”