<PAGE>   1
                                                                  EXHIBIT 10.8.5



                                                              [LOGO]  NATIONWIDE
                                                                       INSURANCE

                  DO NOT MAKE ANY MODIFICATIONS IN THE BODY OF
                  THIS APPLICATION/CONTRACT. ANY MODIFICATIONS
                  ARE TO BE ENUMERATED IN EXHIBIT "B" ATTACHED
                                    HERETO.

                                     PART I

                  Application/Contract For Mortgage Loan With
                       Nationwide Life Insurance Company

1.   APPLICATION/CONTRACT: This application is an offer made by Applicant (as
     defined in Section 3 below) to Nationwide Life Insurance Company
     (hereinafter "Nationwide) to enter into a contract for the mortgage loan
     described herein (hereinafter "Mortgage Loan). This Application/Contract
     for Mortgage Loan (hereinafter "Application/Contract") is collectively
     comprised of PART I, PART II, Exhibit A, and Exhibit B. PART II, Exhibit A,
     and Exhibit B are attached hereto and incorporated herein by reference.

     Upon Nationwide's written acceptance hereof, or upon Applicant's written
     acceptance of any counteroffer made by Nationwide in response hereto, this
     Application/Contract together with any accepted counteroffer, will
     constitute a Contract for Mortgage Loan, whereby Nationwide agrees to loan
     to Borrower (as defined in Section 4 below) upon Applicant/Borrower's full
     and timely compliance with the terms and conditions of this
     Application/Contract, and whereby Borrower agrees to accept the Mortgage
     Loan from Nationwide.

2.   LOAN CORRESPONDENT: This Application/Contract is issued through
     SHOPTAW-JAMES, INC., (hereinafter "Loan Correspondent"). Applicant agrees
     to deal with the Loan Correspondent on any matter arising from issuance of
     this Application/Contract, or in respect to the loan closing.
     Applicant/Borrower and its legal counsel will be receiving specific closing
     instructions from the Loan Correspondent, Nationwide, and/or Nationwide's
     legal counsel.

3.   APPLICANT: State the name(s) of the person(s) or entity(ies) applying for
     the Mortgage Loan (hereinafter "Applicants"):

     ROBERTS PROPERTIES RESIDENTIAL, L.P.
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4.   BORROWER: State the name of the borrowing entity as it will appear on the
     record of title (hereinafter "Borrower"); and (a) if Borrower is a
     partnership, list the partners and percentage of ownership interest of each
     partner, (b) if a corporation, list the state of incorporation and the
     principal shareholders; or (c) if a trust, list the beneficiaries and
     trustees. Please also list all underlying entities of the Borrower. Any of
     the general partners or beneficiaries of Borrower are general partnerships,
     list the partners of these general partnerships also.

     ROBERTS PROPERTIES RESIDENTIAL, L.P.
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     Nationwide is to receive from the Applicant/Borrower for its review and
     approval copies of all partnership and/or trust agreements, and copies of
     articles of incorporation, corporate bylaws, and certificates of good
     standing (from the state of incorporation and from the state where the
     Security Property, as herein defined, is located) as well as copies of the
     same for all underlying entities of the Borrower.






                                  Page 1 of 19
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5.   RESPONSIBLE INDIVIDUALS: State the name(s) of that (those) individual(s)
     who will be assuming personal liability for those items enumerated in the
     "Exculpation" section of this Application/Contract and who will be signing
     the indemnifications called for in the "ENVIRONMENTAL AUDIT AND
     INDEMNIFICATION" and "ACCESSIBILITY INSPECTION AND INDEMNIFICATION"
     sections of the Application/Contract (hereinafter "Responsible
     Individuals"):

     ROBERTS REALTY INVESTORS, INC.
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6.   GUARANTORS: If a guarantee of the Mortgage Loan is required under Paragraph
     b. of Exhibit "A" of this Application/Contract, or is required pursuant to
     other provisions of this Application/Contract, state below those
     individuals who will unconditionally, jointly, and severally guarantee the
     Mortgage Loan (hereinafter "Guarantors"):

     ROBERTS REALTY INVESTORS, INC.
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7.   MAJOR TENANTS: State below the major tenants that occupy space in or
     adjacent to the Security Property (hereinafter "Major Tenants"):

     N/A
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8.   FINANCIAL STATEMENTS: Please attach hereto current financial statements,
     which have been signed and dated, for the Applicant, for the Borrower, for
     all principals of the Borrower, for any Guarantors of the Mortgage Loan
     required pursuant to the terms of this Application/Contract, and for all
     Responsible Individuals. Current financial statements shall include a
     balance sheet, income tax returns, and cash flow statements for all real
     estate projects owned by the aforementioned individuals and/or entities.

9.   LOAN TERMS:

     (a)  Maximum Loan Amount: $8,400,000.

     (b)  Interest Rate: 7.15% percent per annum.

     (c)  Term and Amortization: The Mortgage Loan will be for a 10-year term,
          with any unpaid principal balance due at the end of the term. Payments
          are to be based upon a 30-year amortization schedule.

     (d)  Monthly Payment: $56,734.17 due by the 15th day of each month
          (hereinafter "Due Date").

          Monthly payments shall be calculated on the basis of a 360-day year
          composed of twelve 30-day months.




                                  Page 2 of 19
<PAGE>   3



10.  DESCRIPTION OF SECURITY: Describe the property that will secure the
     Mortgage Loan (hereinafter "Security Property"): (Please complete all parts
     of this section.)

     HOWELL FERRY APARTMENTS
     --------------------------------------------------------------------------
     Name of Property

<TABLE>
<CAPTION>
     <S>                                              <C>
     APARTMENTS                                       3640 PEACHTREE INDUSTRIAL BOULEVARD
     ----------------------------------------         -----------------------------------
         Type of Property                             Street and Number
     (office, retail, apt., industrial, etc.)


     DULUTH                                           GWINNETT                    GA                30136
     -------------------------------                  ------------------------   -------------     -----------
     City                                             County                     State             Zip Code


     22.5 ACRES                              180 UNITS                  APPROXIMATELY 244,839 NRA
     -------------------------------         ----------------------     ------------------------------------
     Land (acres/sq.ft.)                     Building Improvements      On-site (hereinafter "Improvements")


     APPROXIMATELY 360 SPACES
     ------------------------
     Parking Spaces


         *(Gross building area, net rentable area, number units/rooms, etc.)



     PEACHTREE INDUSTRIAL             FEE SIMPLE                            TO BE BUILT
     -------------------------        ---------------------                 -------------------------------
     - Abutting dedicated ways        Fee                                   Improvements
                                      simple/leasehold estate               Existing/Proposed
</TABLE>

         * (Public or private roadways which provide access to the Security
           Property. If roadways are private, any agreements setting forth use
           and maintenance of such roadways are subject to the review and
           approval of Nationwide)

     Is the Security Property a separate parcel and does it comply with all
     applicable subdivision ordinances and plat acts?

         X
     --------------------------------         -------------------------------
     YES                                      NO

     If NO, please explain what is being done to plat the Security Property or
     to bring the Security Property into compliance:

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11.  CLOSING DATE AND FUNDING REQUIREMENTS: The loan disbursement shall take
     place at the closing on OR BEFORE 6/1/98 (hereinafter "Closing Date"), upon
     completion of the Improvements in accordance with the approved final plans,
     specifications, and soils report and in compliance with the terms and
     conditions of this Application/Contract. This Application/Contract shall
     expire on the Closing Date and thereafter Nationwide shall have no further
     obligation to fund the Mortgage Loan. Nationwide may, in its sole
     discretion, unilaterally extend the Closing Date. Time is of the essence
     with respect to this Application/Contract. Exhibit "A" attached hereto
     outlines any other conditions or specific requirements that must be
     satisfied for funding to occur.

12.  SITE INSPECTION: Nationwide will make a site inspection of the Security
     Property to substantiate the loan amount and projected feasibility.
     Applicant/Borrower will pay to Nationwide $2,500 to defray its cost of
     making such inspection (hereinafter "Site Inspection Fee"). This Site
     Inspection Fee is to be paid at the time this Application/Contract is
     submitted to Nationwide for its review. Under no circumstances will the
     Site Inspection Fee be refunded by Nationwide.

13.  LETTER OF CREDIT: Any letter of credit required by this
     Application/Contract shall mean an irrevocable and unconditional letter of
     credit issued by a commercial bank acceptable to Nationwide having minimum
     total assets of $500,000,000, and tangible capital and surplus equal to no
     less than six (6) percent of total assets (hereinafter "Letter of
     Credits"). Borrower, any Guarantors, and the Responsible Individuals shall
     personally, jointly, severally, and unconditionally guarantee payment of
     any Letter of Credit and any renewals and/or replacements thereof, in the
     event the bank issuing the Letter of Credit becomes insolvent, files, or
     has filed against it, any bankruptcy or similar proceeding, is closed
     (either temporarily or permanently), placed in receivership,
     conservatorship, or liquidation by the Federal Deposit Insurance
     Corporation, the Resolution Trust Corporation, or any other local, state,
     or federal governmental agency, or if the bank refuses or fails to honor
     the Letter of Credit when presented by Nationwide. In addition, in the
     event any of the aforementioned events take place, Nationwide, in its sole
     discretion, may require that Borrower obtain a replacement Letter of Credit
     from a bank or other financial institution acceptable to Nationwide, in its
     sole discretion, or that Borrower pledge other security acceptable to
     Nationwide, in its sole discretion, with respect to the obligation secured
     by the Letter of Credit.



                                  Page 3 of 19
<PAGE>   4


14.  APPLICATION DEPOSIT: Applicant/Borrower shall deposit with Nationwide the
     sum of $84,000 as an application deposit (hereinafter "Application
     Deposit") in connection with this Application/Contract. Nationwide may
     deposit this Application Deposit into its bank account. The deposit by
     Nationwide of such Application Deposit shall not constitute acceptance or
     approval of the Application/Contract. In the event Nationwide denies the
     Application/Contract, the Application Deposit shall be refunded to the
     Applicant without interest. Conversely, if the Application/Contract is
     approved by Nationwide, the Application Deposit shall be credited to the
     Commitment Fee required under the COMMITMENT FEE section herein and shall
     be retained by Nationwide or resumed to Applicant in accordance with this
     COMMITMENT FEE section.

15.  COMMITMENT FEE: As partial consideration for Nationwide's agreement to loan
     funds in the amounts and on the terns set forth herein, Applicant/Borrower
     shall deliver to Nationwide upon Nationwide's acceptance of this
     Application/Contract $84,000 in cash and a Letter of Credit in the amount
     of $168,000 with an expiration date of no earlier than six (6) months after
     the Closing Date of this Application/Contract (the cash and Letter of
     Credit are collectively hereinafter referred to as the "Commitment Fee").
     The Commitment Fee shall be returned to Applicant/Borrower after the
     Mortgage Loan has closed in accordance with the terms and conditions of
     this Application/Contract and Nationwide has received the original executed
     note; but should the Mortgage Loan not close as provided for in this
     Application/Contract due to a failure of the Borrower to fulfill the terms
     and conditions of this Application/Contract, or if this
     Application/Contract shall be cancelled as set forth in sub-paragraphs (a)
     through (c) of the FINANCIAL RESPONSIBILITY paragraph herein, in each case
     strictly according to the terms thereof, then Nationwide shall have the
     option, without giving prior notice to Applicant/Borrower and without
     incurring liability of any kind, to cancel this Application/Contract and
     terminate all Nationwide's obligations hereunder. Upon cancellation of this
     Application/Contract, Nationwide shall have the right to retain the
     Commitment Fee in full and in addition, to pursue all legal and equitable
     remedies available to Nationwide, including without limitation, suit to
     collect provable damages (including loss of bargain) in excess of the
     Commitment Fee.

     In the event, however, that the Mortgage Loan does not close because
     Nationwide has not approved the inspecting architect's report, the soils
     report, the plans and specifications, the environmental report, the leases,
     or the Security Property, or because one of the events outlined in
     sub-paragraphs (d) or (e) of the FINANCIAL RESPONSIBILITY section herein
     has occurred, then the Commitment Fee, less Nationwide's out-of-pocket
     expenses, shall be refunded to the Applicant/Borrower, provided, however,
     that Applicant/Borrower shall use its best efforts to correct any
     deficiencies in such reports, leases or the Security Property. If
     Applicant/Borrower does not use its best efforts to correct any such
     deficiencies to Nationwide's satisfaction, then Nationwide may cancel this
     Application/Contract and terminate all Nationwide's obligations hereunder.
     Upon cancellation of this Application/Contract, Nationwide shall have the
     right to retain the Commitment Fee and, in addition, to pursue all legal
     and equitable remedies available to Nationwide, including without
     limitation, suit to collect provable damages (including loss of bargain) in
     excess of the Commitment Fee.

     Election of any remedy by Nationwide shall not be deemed a waiver of any
     alternative remedy set forth herein or available to Nationwide at law or
     equity.

16.  SUBMISSION INFORMATION: Upon delivery of this Application/Contract or
     shortly thereafter, Applicant and/or the Loan Correspondent shall provide
     Nationwide with any documentation and information requested by Nationwide
     that is reasonably necessary for Nationwide to evaluate the feasibility of
     the Mortgage Loan, including, but not limited to, such items as an
     appraisal, site plan (showing the location of Improvements, parking, means
     of ingress and egress and other easements), operating statements, leasing
     information, a current rent roll, leases, plans and specifications for the
     building(s), surveys, legal description of the Security Property, copies of
     restrictive covenants and easements affecting the Security Property, credit
     reports, bank references, information about pending litigation affecting
     the Security Property, the Borrower, Guarantors, or Responsible
     Individuals, and partnership agreements, trust agreements, articles of
     incorporation, or other organizational documents.

17.  MODIFICATIONS: This Application/Contract shall be deemed to contain all the
     terms, conditions, and understandings between Nationwide and
     Applicant/Borrower with respect to the Mortgage Loan and shall supersede
     any and all prior understandings and agreements, written or oral, relating
     thereto. The terms and conditions of this Application/Contract shall be
     waived or modified only by written instrument signed by the parties hereto
     except that extensions for the period for acceptance of the
     Application/Contract or for extension of the Closing Date may be executed
     by Nationwide unilaterally. Any modifications made to this
     Application/Contract are not to be made in the body of the
     Application/Contract but are to be enumerated in Exhibit B attached hereto.
     Modifications should specifically reference that section of the
     Application/Contract that is being modified.

18.  APPLICANT/BORROWER: This Application/Contract is made by the undersigned
     Applicant. Applicant shall be obligated to form Borrower (if Borrower has
     not yet been formed as a legal entity) and shall cause the Borrower to
     perform its obligations under this Application/Contract. Upon its legal
     formation, Borrower shall be deemed to be bound and liable hereunder to the
     same degree as Applicant.

19.  ASSIGNMENT: This Application/Contract, the proceeds of the Mortgage Loan,
     and any rights hereunder shall not be assignable by Applicant or Borrower
     without Nationwide's prior written consent. Any attempted assignment
     without such prior written consent shall be null and void and, at
     Nationwide's option, shall constitute a default hereunder and shall result
     in this Application/Contract being terminated and of no further force and
     effect. Further, no third party shall rely upon the existence of this
     Application/Contract without written confirmation from Nationwide that the
     Application/Contract remains unchanged, that it has not been terminated,
     and that the Applicant/Borrower is not in default hereunder. Nationwide, at
     its option, may assign all or a portion of the Mortgage Loan to an
     affiliated company or companies. If a portion of the Mortgage Loan is so
     assigned, Borrower shall be asked to execute more than one promissory note
     secured by one security instrument. All legal documentation for the
     Mortgage Loan shall show both Nationwide and its affiliate(s), as the
     lender. All ancillary documents, including, but not limited to, the survey,
     environmental report, hazard insurance, and title insurance, must be
     certified to and show the insured as both Nationwide and its affiliate(s).



                                  Page 4 of 19
<PAGE>   5




Applicant has reviewed this Application/Contract, and understands that this
Application/Contract is subject to the terms and conditions of PART I, PART
II, Exhibit A, and Exhibit B of this Application/Contract, unless amended in
writing and signed by both Applicant and Nationwide.


         ROBERTS PROPERTIES RESIDENTIAL, L.P.
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         NAME OF APPLICANT
         By: Roberts Realty Investors, Inc., Its General Partner
             Charles R. Elliott, CFO

         /s/ Charles R. Elliott
         ------------------------------------------------------------------
         Signature(s)


         PLEASE USE A PEN WITH OTHER THAN BLACK INK TO SIGN THIS
         APPLICATION/CONTRACT AND DO NOT FORGET TO FILL IN THE DATE OF
         SIGNATURE BELOW.

         Applicant's Mailing Address:


         ROBERTS PROPERTIES RESIDENTIAL, L.P.
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         8010 ROSWELL ROAD
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         SUITE 120
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         ATLANTA, GA 30350
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         DATE OF SIGNATURE:  11/4/97
                           ------------------------------------------------


================================================================================
================================================================================



                    NATIONWIDE HEREBY ACCEPTS THE ABOVE APPLICATION/CONTRACT FOR
                    MORTGAGE LOAN SUBJECT TO NATIONSWIDE'S LETTER DATED
                            N/A       , 19  .
                    ------------------    --


         NATIONWIDE LIFE INSURANCE COMPANY


By:  /s/ ROBERT H. MCNAGHTEN                 DATE:    DECEMBER 19, 1997
   ------------------------------------             ---------------  --
   Name ROBERT H. MCNAGHTEN


Vice President
-------------------------------------------
   Title










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                       THIS PAGE INTENTIONALLY LEFT BLANK














                                  Page 6 of 19
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                                                              [LOGO]  NATIONWIDE
                                                                       INSURANCE

                                                      Nationwide is on your side

NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: ONE NATIONWIDE PLAZA - COLUMBUS, OHIO 43216



                                    PART II

                         STANDARD TERMS AND CONDITIONS
                  APPLICATION/CONTRACT FOR MORTGAGE LOAN WITH
                       NATIONWIDE LIFE INSURANCE COMPANY

1.   SECURITY: The Mortgage Loan shall be evidenced by a promissory note
     (hereinafter "Note") and shall be secured by:

     (a)  A duly recorded mortgage or deed of trust and security agreement
          (hereinafter "Mortgage or Deed of Trust") which constitutes a valid
          first lien upon the fee simple estate (or leasehold estate, if
          applicable) of the Security Property as identified in PART I of this
          Application/Contract and the Improvements located (or to be
          constructed) thereon.

     (b)  A first lien on all of the Borrower's furnishings, fixtures, and
          equipment located on or used in the operation of the Security Property
          (hereinafter the "Personal Property") as evidenced by a security
          agreement and UCC-1 financing statements in recordable form. Borrower
          may not sell, lease, or otherwise transfer the Personal Property
          without Nationwide's prior written consent.

     (c)  An unconditional present assignment to Nationwide of all present and
          future leases for space in the Security Property, and all rents,
          issues, and profits arising from the leasing of the Security Property.
          Such assignment shall include an assignment of any fees that permit
          the tenant to terminate its lease which fees are payable to the
          landlord under the terms and conditions of any of the Security
          Property's leases.

     (d)  Such other documentation evidencing and securing the Mortgage Loan as
          may be required by Nationwide or Nationwide's counsel.

2.   PREPAYMENT PRIVILEGE:

     (a)  VOLUNTARY: During the term of the Mortgage Loan, full prepayment of
          the Note shall be permitted upon the Borrower delivering to Nationwide
          thirty (30) days prior written notice of the Borrower's intent to
          prepay the Mortgage Loan in full, together with a premium equal to the
          greater of

          (i)  The sum of (a) the present value of the scheduled monthly
               payments on the Mortgage Loan from the date of prepayment to the
               maturity date and (b) the present value of the amount of
               principal and interest due on the maturity date of the Mortgage
               Loan (assuming all scheduled monthly payments due prior to the
               maturity date were made when due); minus (c) the outstanding
               principal balance of the Mortgage Loan as of the date of
               prepayment. The present values described in (a) and (b) are to be
               computed on a monthly basis as of the date of prepayment,
               discounted at the yield to maturity of the U.S. Treasury Note or
               Bond that is closest in maturity to the maturity date of the
               Mortgage Loan as reported in the Wall Street Journal on the fifth
               business day preceding the date of prepayment; or

          (ii) One percent of the outstanding principal balance of the Mortgage
               Loan.

     (b)  INVOLUNTARY: In the event the Mortgage Loan is declared due and
          payable in full due to a default in the repayment of the Note, or in
          the event the Mortgage Loan is declared due and payable due to a
          default in any of the terms, covenants and conditions contained in the
          Mortgage or Deed of Trust or in any of the other loan documents
          executed as evidence of or as further security for the Mortgage Loan,
          there shall be paid therewith an involuntary prepayment premium equal
          to the voluntary prepayment premium then payable.

     (c)  APPLICATION OF INSURANCE PROCEEDS OR CONDEMNATION AWARDS: The
          application of any insurance proceeds or condemnation awards to the
          reduction of the outstanding principal balance of the Mortgage Loan
          shall be at par with no prepayment premium due and payable and the
          monthly payment shall be reduced accordingly.

     (d)  PREPAYMENT DURING LAST NINETY DAYS: During the last ninety (90) days
          of the term of the Mortgage Loan, the Borrower may prepay at par the
          full outstanding principal balance of the Mortgage Loan.






                                  Page 7 of 19
<PAGE>   8



3.   ADDITIONAL LOAN TERMS:

     (a)  DEFAULT INTEREST RATE: The lesser of (i) the highest rate of interest
          allowable under the laws of the state in which the Security Property
          is located, or (ii) the then applicable rate of interest of the Note
          plus five (5) percent per annum. The default rate of interest shall
          apply only if the entire outstanding principal balance of the Mortgage
          Loan shall become due and payable, whether at maturity, by
          acceleration or otherwise.

     (b)  LATE PAYMENT CHARGE: Prior to acceleration, a late payment charge of
          five cents ($.05) for each dollar of principal and/or interest not
          paid by the Due Date shall accrue to the benefit of Nationwide each
          month the payment is delinquent as reimbursement for additional
          administrative costs incurred by Nationwide as a result of the late
          payment. A payment of principal and/or interest shall be deemed to
          have been paid on the Due Date if the envelope bearing said payment is
          postmarked by the U.S. Postal Service on or before said Due Date, is
          correctly addressed, and bears adequate first-class postage.

     (c)  TAX AND INSURANCE ESCROW: On the Closing Date, a tax and insurance
          escrow shall be established and adequate funds shall be deposited with
          Nationwide to bring the tax and insurance escrow into balance at that
          time. Thereafter, in addition to and concurrent with each monthly
          installment of principal and interest, a tax and insurance escrow
          deposit shall be made by Borrower. The amount of the escrow deposit
          shall be set by Nationwide based upon the latest available data and
          the funds shall be deposited with Nationwide so that the tax and
          insurance escrow account equals an amount sufficient to pay one year's
          taxes and one year's insurance premiums at least thirty (30) days
          prior to the due dates for the payment of taxes and insurance
          premiums.

     (d)  LOAN YEAR: A "Loan Year" shall mean each twelve (12)-month period
          beginning with the first full monthly installment of principal and/or
          interest due under the terms of the Note and each anniversary thereof.

     (e)  CURE PERIODS: Borrower shall have no period in which to cure a
          monetary default. A non-monetary default is any default which is not a
          monetary default or an incurable default as defined in the Note.
          Borrower shall have thirty (30) days after written notice thereof from
          Nationwide to cure a non-monetary default, unless the non-monetary
          default cannot be cured within said thirty (30) day period in which
          event Borrower shall have a reasonable period of time to complete
          cure, provided that action to cure such non-monetary default is
          commenced within said thirty (30) day period and Borrower is, in
          Nationwide's sole judgment, diligently pursuing a cure to completion.

4.   PLANS, SPECIFICATIONS, AND SOILS REPORT: Applicant/Borrower shall submit to
     Nationwide within thirty (30) days of Nationwide's acceptance of this
     Application/Contract a complete set of final (or "as-built" if the
     Improvements are completed as of the date of this Application/Contract)
     plans and specifications for the Improvements constructed or to be
     constructed on the Security Property (hereinafter "Plans and
     Specifications"); each sheet of said plans is to be dated and signed by the
     project architect and bear his seal. Nationwide shall also receive a copy
     of the professional soils engineer's report on the site along with his
     recommendations (hereinafter "Soils Reporting"). The Plans and
     Specifications and the Soils Report are subject to the review and approval
     of Nationwide.

5.   INSPECTING ARCHITECT: Nationwide shall appoint an architect of its choice
     (hereinafter "Inspecting Architect") to review, at Applicant/Borrower's
     expense, the Plans and Specifications, and the Soils Report. If the
     Improvements are under construction, the Inspecting Architect shall make
     monthly inspections of the Improvements being constructed on the Security
     Property during the construction period and shall issue written reports to
     Nationwide indicating that the Improvements are being constructed in
     accordance with the final Plans and Specifications and in accordance with
     the recommendations of the Soils Report. If the Improvements are complete
     as of the date of this Application/Contract, the Inspecting Architect shall
     inspect the Security Property and shall issue a written report stating that
     the Improvements were, to the best of his/her knowledge, completed in
     accordance with the Plans and Specifications submitted to Nationwide and in
     accordance with the recommendations of the Soils Report. The Inspecting
     Architect shall also comment on the structural and operational integrity of
     the Improvements, specifically referencing the construction detail, the
     HVAC system, and the roofing system. Any deficiencies disclosed by any of
     the Inspecting Architect's reports must be corrected to Nationwide's
     satisfaction prior to the Closing Date of the Mortgage Loan.

6.   ENVIRONMENTAL AUDIT AND INDEMNIFICATION: Prior to the Closing Date of the
     Mortgage Loan, an environmental engineer, satisfactory to Nationwide, shall
     perform, at Applicant/Borrower's expense, an environmental audit of the
     Security Property, which audit shall be subject to the review and approval
     of Nationwide. The environmental audit shall be addressed to Nationwide and
     shall include reports and investigations of any current or past use of the
     Security Property, as well as of other properties contiguous to the
     Security Property, and shall demonstrate that the Security Property
     (including the ground water of the Security Property)

     (a)  is in compliance with all laws, rules, and regulations of any federal,
          state, county, or local governmental authority relating to
          environmental matters within the jurisdiction of such governmental
          authority, and

     (b)  does not contain any chemical, material, or substance in excess of
          legal limits exposure to which is prohibited, limited, or regulated by
          any federal, state, county, or local governmental authority, or which
          is known to pose a hazard to the health and safety of the occupants of
          the Security Property, and

     (c)  does not contain asbestos in any form, and

     (d)  does not contain an underground storage tank of any kind, and

     (e)  has not been used, and is not currently being used for any activities
          involving, directly or indirectly, the use, generation, treatment,
          storage, or disposal of any hazardous or toxic chemical, material,
          substance or waste.




                                  Page 8 of 19
<PAGE>   9



Nationwide reserves the right to retain, also at Applicant/Borrower's expense, a
consultant to review any report prepared by the environmental engineer and/or to
conduct its own investigation of the Security Property. If any hazardous or
toxic chemical, material substance or waste is revealed in such audit,
Applicant/Borrower shall remove same or otherwise adequately dispose of same and
restore the Security Property to a condition acceptable to Nationwide, in its
sole discretion, prior to the Closing Date.

Further, the Borrower and the Responsible Individuals shall indemnify and hold
Nationwide harmless from and against any and all losses, liabilities, damages,
injuries, costs, expenses, and claims of any and every kind whatsoever, incurred
or suffered by, or asserted against Nationwide with respect to, or as a direct
or indirect result of, the presence on, under, or about the Security Property,
or the escape, seepage, leakage, spillage, discharge, emission, or release from,
the Security Property of any hazardous materials, including, without limitation,
any losses, liabilities, damages, injuries, costs, expenses, or claims asserted
or arising under any hazardous waste laws, regardless of whether or not caused
by, or within the control of Borrower. The indemnification shall survive the
repayment and satisfaction of the Mortgage Loan unless at such time Borrower
provides Nationwide an environmental report acceptable to Nationwide showing the
Security Property to be free of hazardous materials and not in violation of
hazardous waste laws; however, the Borrower shall not be liable under the
indemnity if the Security Property becomes contaminated subsequent to
Nationwide's acquisition of the Security Property by foreclosure or by
acceptance of a deed in lieu thereof, or subsequent to any transfer of ownership
which was approved or authorized by Nationwide. The burden of proof under this
subparagraph with regard to establishing the date upon which such chemical,
material or substance was placed or appeared in, on, or under the Security
Property shall be upon Borrower.

7.   ACCESSIBILITY INSPECTION AND INDEMNIFICATION: The Inspecting Architect
     shall also provide a written opinion as to whether the Improvements are in
     compliance with all provisions governing accessibility for the disabled
     under The Fair Housing Act of 1988, The Americans With Disabilities Act and
     any amendments thereto or any other accessibility laws. Further, the
     Borrower and the Responsible Individuals shall indemnify and hold
     Nationwide harmless from and against any and all losses, liabilities,
     damages, injuries, costs, expenses, and claims of any and every kind
     whatsoever, incurred or suffered by, or asserted against Nationwide with
     respect to, or as a direct or indirect result of, noncompliance with the
     foregoing laws, as amended, or any other similar, present or future laws
     applicable to the Security Property. The indemnification shall survive the
     repayment and satisfaction of the Mortgage Loan; provided, however,
     Borrower shall not be liable for compliance with any accessibility laws
     that first become effective, or for any violation of any accessibility laws
     resulting from alterations or improvements to the Security Property that
     are performed, subsequent to Nationwide's actually acquiring title to the
     Security Property pursuant to foreclosure or acceptance of deed in lieu
     thereof, or subsequent to any transfer of ownership of the Security
     Property that has the prior written approval of Nationwide; provided that
     such transferee assumes in writing all obligations of Borrower with respect
     to compliance with accessibility laws under the Deed of Trust/Mortgage and
     Accessibility Indemnity Agreement.

8.   COMMENCEMENT OF CONSTRUCTION: If the Improvements are to be constructed,
     this Application/Contract may be cancelled at Nationwide's option and all
     fees retained if construction of the Improvements has not commenced within
     ninety (90) days of the date that this Application/Contract is accepted by
     Nationwide.

9.   LEASES: All existing leases, or any other leases hereinafter created, shall
     be subject to the review and approval of Nationwide, shall be for a minimum
     term of three (3) years (not applicable if Security Property is an
     apartment project) and shall be assigned, in form and content acceptable to
     Nationwide, as additional security for the Mortgage Loan. At Nationwide's
     option, any lease may be made superior or subordinate to the Mortgage or
     Deed of Trust.

     As an accommodation to the Borrower, Nationwide will approve a standard
     lease form. Notwithstanding the approval of a standard lease form,
     Nationwide specifically reserves the right to approve each lease wherein
     the tenant occupies more than ten (10) percent of the net leasable area of
     the Improvements, or the lease term, excluding renewal options, exceeds
     five (5) years; said review shall include a review of the prospective
     tenant's current financial statements and the most recent Dun & Bradstreet
     credit report on said tenant, all to be provided through
     Applicant/Borrower. Borrower may deal with smaller tenants (those taking
     3,000 square feet of space or less) in the ordinary course of business
     without Nationwide's consent.

10.  TENANT FINISH AND CONSTRUCTION ESCROW ACCOUNT: There shall be an escrow
     account established on the Closing Date in an amount equal to one hundred
     twenty-five (125) percent of the total estimated cost of completing all
     unleased, unoccupied, and unfinished leasable space in the Improvements and
     the cost of completing any other construction items, including, but not
     limited to, landscaping and paving. The Inspecting Architect shall estimate
     the costs of completion in writing within ten days prior to the Closing
     Date. The funds shall be placed in an interest-bearing escrow account, with
     interest earned payable to the Borrower, and will be made available to the
     Borrower as the construction is completed and the unfinished leasable space
     is actually finished and occupied by tenants under leases approved by
     Nationwide without default of either party. The space shall be deemed
     "actually finished and occupied by tenants" when the tenant(s)" has(have)
     provided Nationwide with estoppel certificate(s), acceptable to Nationwide
     in its sole discretion, the Inspecting Architect has inspected the finished
     space and provided Nationwide with a written report stating that the tenant
     finish has been completed, the governmental entity having jurisdiction over
     the Security Property has issued unconditional Certificates of Occupancy
     for the subject space, and Nationwide has received a title update showing
     no new liens of record. Any funds escrowed for tenant finish and other
     construction work which are not disbursed within twelve (12) months of the
     Closing Date shall be applied at par against the then outstanding principal
     balance of the Mortgage Loan, and the monthly payment shall be reduced
     accordingly. Nationwide, at its option, may unilaterally extend the
     expiration date for the completion of the space and the completion of other
     construction items and for the release of escrowed funds.




                                  Page 9 of 19
<PAGE>   10


11.  MORTGAGE OR DEED OF TRUST COVENANTS: The Mortgage or Deed of Trust shall
     contain those items customarily found in such documents including, but not
     limited to, the following provisions:

     (a)  TRANSFER: The entire outstanding principal balance of the Mortgage
          Loan, together with accrued unpaid interest and other sums required by
          the loan documents, shall become immediately due and payable upon the
          Borrower assigning, mortgaging, or otherwise conveying any interest in
          the Security Property, or if there is a change in the controlling
          interest of Borrower, without the prior written consent of Nationwide.
          Notwithstanding the above, if Nationwide approves a transfer of the
          Security Property or a change in the controlling interest in the
          Borrower, Nationwide reserves the right to charge an assumption fee
          and/or to change the monthly payment to reflect a change in the
          Mortgage Loan's interest rate, an initiation of amortization or a
          modification of the existing amortization schedule. Notwithstanding
          the foregoing, there will be no change in the maturity date of the
          Note.

          If a transfer of the Security Property or a controlling interest in
          Borrower is approved by Nationwide, Nationwide must receive, for its
          review and approval, copies of all transfer and other related
          documents, such transferee must assume in writing all obligations of
          the Borrower under the loan documents, and Borrower must pay all costs
          and expenses in connection with such transfer and assumption,
          including, without limitation, all fees and expenses incurred by
          Nationwide.

     (b)  INSURANCE: Borrower shall furnish insurance policies to Nationwide
          evidencing the following coverages and amounts, properly assigned to
          Nationwide by a standard mortgagee clause:

          (i)   Fire, extended coverage, and other hazards as requested from
                time to time by Nationwide, covering all Improvements for their
                full replacement cost, less excavating and foundation costs,
                provided, however, in no case shall the amount of insurance be
                less than the difference between the amount of the Mortgage Loan
                and eighty (80) percent of appraised land value of the Security
                Property.

          (ii)  Rent loss insurance, without a co-insurance provision, in an
                amount equal to not less than twelve (12) months of scheduled
                rental income from the Security Property; or, if applicable,
                business interruption insurance in an amount sufficient to pay
                debt service, operating expenses, taxes, and insurance for the
                Security Property for a period of twelve (12) months.

          (iii) Comprehensive public liability insurance in an adequate amount,
                taking into consideration the property type being insured and
                the corresponding liability exposure. The amount of liability
                insurance shall be subject to the approval of Nationwide.

          (iv)  Flood insurance, if the Security Property lies within a Special
                Flood Hazard Area as designated on the Department of Housing and
                Urban Development's Maps, or another flood prone area. If the
                Security Property is not in a Special Flood Hazard Area,
                Nationwide must receive a certification from a registered land
                surveyor or a licensed engineer to this effect.

          (v)   Any other insurance coverage deemed necessary by Nationwide.

(c)  INSURANCE PROCEEDS: Borrower shall assign all insurance proceeds relating
     to damage or destruction of the Security Property to Nationwide. Nationwide
     shall release the insurance proceeds to the Borrower as restoration
     progresses, if the loss or damage from fire or other casualty is in an
     amount less than fifty (50) percent of the outstanding principal balance of
     the Mortgage Loan, subject to the following conditions:

     (i)    Borrower is not in default under the terms, covenants, and
            conditions of the loan documents or any other agreements between
            Borrower and Nationwide.

     (ii)   The Improvements shall be at least eighty (80) percent leased after
            restoration pursuant to leases approved in writing by Nationwide.

     (iii)  Nationwide approves in writing the plans and specifications for
            restoration.

     (iv)   There are sufficient funds on deposit at all times with Nationwide
            to complete the rebuilding, as certified by an architect approved by
            Nationwide.

     (v)    Borrower provides suitable completion, payment and performance
            bonds, and builder's all risk insurance in form and amount
            acceptable to Nationwide.

     (vi)   The insurer does not assert any defense to payment under such
            policies against the Borrower or any tenant of the Security
            Property pursuant to the insurance policy covering the
            Improvements of the Security Property.

     (vii)  Nationwide shall have the option of applying, at par, any surplus
            insurance proceeds which remain after rebuilding to the reduction of
            the outstanding principal balance of the Mortgage Loan.

     (viii) Funds shall be disbursed not more often than once each month and in
            not more than five (5) increments of not less than $50,000 each,
            except for the last disbursement.

     (ix)   Prior to any disbursement, an inspecting engineer/architect of
            Nationwide's choice, whose fees shall be paid by Borrower, shall
            certify completion of work in place in accordance with approved
            plans and specifications, and in accordance with all applicable
            building codes, zoning ordinances, and all other local or federal
            governmental regulations.



                                 Page 10 of 19
<PAGE>   11


     (x)    Such other conditions as would customarily be required by a local
            construction or are otherwise reasonable.

     In the event of loss or damage by fire or other casualty in an amount
     greater than fifty (50) percent of the outstanding principal balance of the
     Mortgage Loan, Nationwide, at its sole option, may require the Borrower to
     use any insurance proceeds to either immediately rebuild any portion or all
     of the Improvements or Nationwide shall apply the insurance proceeds to the
     outstanding principal balance of the Mortgage Loan. Any reduction of the
     outstanding principal balance of the Mortgage Loan as a result of the
     application of the casualty insurance proceeds shall be at par and the
     monthly payment shall be reduced accordingly.

(d)  ADDITIONAL INSURANCE REQUIREMENTS: All policies required of
     Applicant/Borrower shall be written with companies which have a rating as
     published in the current issue of Best's Key Rating Guide of at least
     A:VIII, shall be in forms satisfactory to Nationwide, shall cite
     Nationwide's interest as mortgagee in standard non-contributory mortgagee
     clauses effective as of the Closing Date, shall be maintained throughout
     the term of the Mortgage Loan without cost to Nationwide, shall be
     deposited with Nationwide, and shall contain such provisions as Nationwide
     deems necessary or desirable to protect its interest, including, without
     limitation, a provision for thirty (30) days prior written notice to
     Nationwide of the insurance company's intent to cancel the policy. Said
     insurance requirements shall specifically be set forth in the Mortgage or
     Deed of Trust. If a blanket policy is issued, a certified copy of said
     policy shall be furnished together with an Evidence of Insurance (Acord
     Form 27) for property insurance and a Certificate of Insurance (Acord Form
     25-S) for liability insurance indicating that Nationwide is the insured
     under said policies with regard to the Security Property and that coverages
     with respect thereto are in the required amounts.

(e)  CONDEMNATION: Nationwide shall receive an assignment of all claims, awards,
     proceeds, or rights of action in connection with any condemnation of or
     eminent domain proceeding affecting the Security Property. Nationwide
     reserves the right, at its sole option, to apply any condemnation awards to
     the reduction of the outstanding principal balance of the Mortgage Loan at
     par or to hold the awards in an escrow account to be used for the cost of
     restoring the Security Property. Notwithstanding the above, if any part of
     the Improvements shall be condemned by any governmental authority having
     jurisdiction over the Security Property or if so much of the Security
     Property shall be condemned by any governmental authority having
     jurisdiction over the Security Property that the Security Property is in
     violation of applicable parking, zoning, platting or other ordinances, or
     fails to comply with the terms of the Major Tenant leases, in each case,
     Nationwide shall be entitled to apply all condemnation proceeds to the
     repayment of the outstanding principal balance of the Mortgage Loan, at
     par, and Nationwide shall have the further right to call the Mortgage Loan
     due and payable in full without the imposition of a prepayment premium.

(f)  MANAGEMENT AND LEASING RESTRICTION: During the term of the Mortgage Loan,
     Borrower, or its designee who shall be approved by Nationwide, shall be the
     exclusive manager and leasing agent of the Security Property. Any
     management or leasing agreement shall be subordinate to the Mortgage or
     Deed of Trust and shall be subject to the review and approval of
     Nationwide. If there is no formal management agreement, Borrower shall
     provide Nationwide with a letter so stating and further stating the name of
     the person or entity charged with the responsibility of managing the
     Security Property.

(g)  SECONDARY FINANCING: There shall be no secondary financing of the Security
     Property.

(h)  MAINTENANCE OF THE SECURITY PROPERTY: Borrower shall not commit, suffer, or
     permit any waste or deterioration of the Security Property in any respect
     nor alter the Improvements nor erect any additional improvements or make
     additions to the existing Improvements on the Security Property without the
     prior written consent of Nationwide. The foregoing restriction shall not
     apply to erection or removal of non-load-bearing interior walls or
     alterations required by the terms of tenant leases which have been approved
     by Nationwide. Borrower shall cause the Security Property to comply at all
     times with all applicable federal, state, and local laws related thereto.
     Borrower shall not use, generate, treat, store, or dispose of any hazardous
     chemical, material, substance, or waste on the Security Property, nor will
     Borrower knowingly allow any tenant of the Security Property to use,
     generate, treat, store, or dispose of any hazardous chemical, material,
     substance, or waste on the Security Property. Nationwide shall have the
     right to inspect the Security Property at any time during normal business
     hours.

(i)  ANNUAL STATEMENTS: Borrower shall furnish to Nationwide, within one hundred
     twenty (120) days of the end of the Borrower's fiscal year, annual
     statements (income statements and balance sheets) for the Borrower and the
     Security Property. These statements shall be in form acceptable to
     Nationwide and shall be prepared in accordance with generally accepted
     accounting principles and shall include a rent roll certified as true and
     correct by the Borrower and current annual sales figures for all Major
     Tenants if required under their respective leases or otherwise available.
     If the Mortgage Loan is in default at any time, for any reason, Nationwide
     shall have the right to require that these financial statements be audited
     and certified by a certified public accountant approved by Nationwide, the
     cost of which shall be paid by the Borrower. In addition, Nationwide may,
     upon prior notice, inspect and make copies of all books and records
     relating to the Security Property during normal business hours. A charge of
     $200 per month for administrative expenses shall be assessed for each
     successive month that financial statements are not delivered to Nationwide
     after the expiration of the one hundred twenty (120)-day period.

(j)  Leases: The Borrower agrees to keep and perform all terms, conditions, and
     covenants of all leases affecting the Security Property on its part to be
     kept and performed.




                                 Page 11 of 19
<PAGE>   12


(k)  EXCULPATION: The liability of Borrower with respect to the payment of
     principal and interest under the Note shall be "non-recourse", and
     Nationwide's source of satisfaction of said indebtedness and Borrower's
     other obligations under the Note and under any of the other loan documents
     shall be limited to the Security Property and Nationwide's receipt of the
     rents, issues, and profits from the Security Property. Nationwide shall not
     seek to procure payment out of other assets of the Borrower or any person
     or entity comprising the Borrower, or to seek any judgment (except as
     hereinafter provided) for any sums which are or may be payable under the
     Note, Mortgage/Deed of Trust, or any of the other loan documents, as well
     as any claim or judgment (except as hereinafter provided) for any
     deficiency remaining after foreclosure of the Mortgage/Deed of Trust.
     Notwithstanding the foregoing, nothing herein contained shall be deemed to
     be a release or impairment of the indebtedness evidenced by the Note or the
     security therefor intended by the other loan documents or be deemed to
     preclude Nationwide from exercising its rights to foreclose the
     Mortgage/Deed of Trust or to enforce any of its other rights or remedies
     under the loan documents. It is expressly understood and agreed that the
     aforementioned limitation on liability shall in no way affect or apply to
     Borrower's or Responsible Individuals' continued liability for the
     following items:

     (i)       fraud or misrepresentation made in connection with the Note or
               any of the other loan documents governing, securing, or
               pertaining to the payment thereof;

     (ii)      failure to pay taxes prior to delinquency or to pay assessments,
               charges for labor or materials, or any other charges which may
               create liens on any portion of the Security Property;

     (iii)     the misapplication of (a) proceeds of insurance covering any
               portion of the Security Property, or (b) proceeds of the sale or
               condemnation of any portion of the Security Property, or (c)
               rentals received by or on behalf of the Borrower subsequent to
               the date on which Nationwide makes written demand therefor
               pursuant to any instrument governing, securing, or pertaining to
               the payment of the Note;

     (iv)      causing or permitting waste to occur in, on, or about the
               Security Property and failure to maintain the Security Property,
               excepting ordinary wear and tear;

     (v)       the return to Nationwide of all unearned advance rentals and
               security deposits paid by tenants of the Security Property and
               not refunded to or forfeited by such tenants;

     (vi)      the return to Nationwide of any and all fees paid to Borrower by
               tenants of the Security Property which fees permit tenants to
               terminate their leases;

     (vii)     loss by fire or casualty to the extent not compensated by
               insurance proceeds collected by Nationwide;

     (viii)    the return of, or reimbursement for all Personal Property owned
               by the Borrower taken from the Security Property by or on behalf
               of the Borrower, out of the ordinary course of business, and not
               replaced by items of equal or greater value than the original
               value of the Personal Property so removed;

     (ix)      all court costs and reasonable attorneys' fees actually incurred
               which are provided for in the Note or in any other loan documents
               governing, securing, or pertaining to the payment of the Note;

     (x)       (a) removal of any chemical, material, or substance in excess of
               legal limits to which exposure is prohibited, limited, or
               regulated by any federal, state, county, or local authority which
               may or could pose a hazard to the health and safety of the
               occupants of the Security Property, regardless of the source of
               origination, (b) the restoration of the Security Property to
               comply with all governmental regulations pertaining to hazardous
               waste found in, on, or under the Security Property, regardless of
               the source of origination, and (c) any indemnity or other
               agreement to hold Nationwide harmless from and against any and
               all losses, liabilities, damages, injuries, costs, and expenses
               of any and every kind arising as a result of the existence and/or
               removal of hazardous materials, toxic substances, or hazardous
               waste and from the violation of hazardous waste laws. The
               Borrower shall not be liable hereunder if the Security Property
               became contaminated subsequent to Nationwide's acquisition of the
               Security Property by foreclosure or acceptance of a deed in lieu
               thereof or subsequent to any transfer of ownership of the
               Security Property which was approved or authorized by Nationwide;
               provided that such transferee assumes in writing all obligations
               of Borrower with respect to compliance with environmental laws
               under the Deed of Trust/Mortgage and Environmental Indemnity.
               Liability under this section shall extend beyond repayment of the
               Note and compliance with the terms of the Mortgage or Deed of
               Trust unless at such time Borrower provides Nationwide an
               environmental assessment report acceptable to Nationwide showing
               the Security Property to be free of hazardous materials and not
               in violation of hazardous waste laws. The burden of proof under
               this subparagraph with regard to establishing the date upon which
               such chemical, material, or substance was placed or appeared in,
               on, or under the Security Property shall be upon Borrower;

     (xi)      (a) any and all costs incurred in order to cause the Improvements
               to comply with the accessibility provisions of The Fair Housing
               Act of 1988, The Americans With Disabilities Act, and any other
               accessibility laws, and (b) any indemnity or other agreement to
               hold Nationwide harmless from and against any and all losses,
               liabilities, damages, injuries, costs, or expenses of any kind
               arising as a result of non-compliance with any accessibility
               laws; provided, however, Borrower shall not be liable for
               compliance with any accessibility laws that first become
               effective, or for any violation of any accessibility laws
               resulting from alterations or improvements to the Security
               Property that are performed, subsequent to Nationwide's actually
               taking possession of the Security Property pursuant to
               foreclosure of the Mortgage/Deed of Trust or acceptance of deed
               in lieu thereof, or subsequent to any transfer of ownership of
               the Security Property that has the prior written approval of
               Nationwide; provided that such transferee assumes in writing all
               obligations of Borrower with respect to compliance with
               accessibility laws under the Deed of Trust/Mortgage and
               Accessibility Indemnity Agreement.





                                 Page 12 of 19
<PAGE>   13


     (xii)     Obligations under any Letter(s) of Credit held by Nationwide as
               outlined in the LETTER OF CREDIT section of this
               Application/Contract;

     The Responsible Individuals will be required to execute a separate
     indemnity agreement wherein they agree to personally, jointly, severally,
     and unconditionally indemnify Nationwide for all sums due Nationwide under
     items (i) through (xii) above. Moreover, the Borrower and said Responsible
     Individuals shall become personally liable, jointly and severally, for the
     entire amount of the Mortgage Loan (including all principal, interest, and
     other charges) in the that the Borrower (1) violates the covenant governing
     the placing of subordinate financing on the Security Property or (2)
     violates the covenant restricting transfers of interest in the Security
     Property or transfers of ownership interests in the Borrower.

     The obligations of the Borrower in subparagraphs (i) through (xii) above,
     except as provided herein, shall survive the repayment and satisfaction of
     the Mortgage Loan.

     So long as a guaranty with respect to repayment of principal and interest
     is in force and effect, the "non-recourse" nature of the Mortgage Loan as
     to repayment of principal and interest as expressed above shall be
     suspended and of no force or effect.

12.  FINANCIAL RESPONSIBILITY: Nationwide may terminate this
     Application/Contract and retain the Commitment Fee and pursue other
     remedies reserved herein if at any time prior to the Closing Date, any of
     the following events occur:

     (a)  Borrower, any Guarantor, or any of the Responsible Individuals has
          made a general assignment for the benefit of creditors, or there is
          filed by or against the Borrower, any Guarantor or any of the
          Responsible Individuals, a petition in bankruptcy or for the
          appointment of a receiver, or there commences under any bankruptcy or
          insolvency law, proceedings for the Borrower's, Guarantor's, or any of
          the Responsible Individual's relief, or for the compromise, extension,
          arrangement, or adjustment of the Responsible Individual's
          obligations, or there is an outstanding money judgment against the
          Borrower, Guarantor, or any of the Responsible Individuals.

     (b)  There has been more than a ten (10) percent decline in Borrower's,
          Guarantor's, or any of the Responsible Individual's tangible net worth
          from that represented to Nationwide in the financial statements
          provided to Nationwide at the time this Application/Contract was
          submitted to Nationwide. Current financial statements shall be
          presented to Nationwide no later than ten (10) days prior to the
          Closing Date.

     (c)  There is filed by or against the Borrower, any general partner of
          Borrower, any Guarantor, or any of the Responsible Individuals pending
          litigation which, in Nationwide's sole discretion, would have a
          materially adverse impact on the financial condition of any of the
          aforementioned parties or their ability to repay the loan. Any such
          litigation must be disclosed in writing to Nationwide which disclosure
          must include the nature and status of the litigation.

     (d)  There has been a material adverse change in the financial condition
          and/or operating results of any of the Major Tenants. Current
          financial statements for the latest period available showing balance
          sheets and operating results shall be presented to Nationwide no later
          than ten (10) days prior to the Closing Date.

     (e)  Any of the Major Tenants makes a general assignment for the benefit of
          creditors, or there is filed by or against any such Major Tenants a
          petition in bankruptcy or for the appointment of a receiver, or there
          commences under any bankruptcy or insolvency law proceedings for the
          Major Tenant's relief, or for the compromise, extension, arrangement,
          rearrangement, reorganization, or adjustment of any of the Major
          Tenant's obligations.

13.  CLOSING:

     (a)  At least thirty (30) days prior written notice shall be given by
          Applicant/Borrower to Nationwide of Applicant's/Borrower's readiness
          to close the Mortgage Loan. Nationwide and Nationwide's counsel shall
          have the full thirty (30)-day period to review and/or prepare all
          legal documents and all other documents required under the terms of
          this Application/Contract. The burden of assembling and presenting all
          materials and of curing all matters determined to be objections or
          title defects is the responsibility of the Applicant/Borrower. Federal
          Reserve Funds for the closing will be wired to the entity charged with
          closing the Mortgage Loan and disbursing funds on the Closing Date,
          provided that Nationwide receives at least twenty-four (24) hours
          notice thereof. The Closing Date shall not be on a Friday or the last
          business day of the month unless the Borrower agrees in writing to
          assume responsibility for the payment of interest on the Mortgage Loan
          in the event of a delay in the receipt of funds caused by a delay
          within the Federal Reserve System or the receiving bank.
          Interest shall accrue from the date of wiring.

          The following shall be furnished to Nationwide prior to the Closing
          Date and any subsequent disbursements, if any:

          (i)  Photographs of the completed Improvements.

          (ii) Certificates of occupancy and all necessary licenses from
               appropriate governmental authorities and evidence satisfactory to
               Nationwide that all utilities necessary for the operation of the
               Security Property have been installed and the installation fees
               have been paid.






                                 Page 13 of 19
<PAGE>   14


(iii)  Legal opinions dated as of the Closing Date, in form and substance
       satisfactory to Nationwide, from Borrower's counsel who shall be licensed
       to practice law in the state in which the Security Property is located,
       and to the extent Nationwide requests, from Nationwide's outside counsel,
       which Nationwide deems necessary or appropriate in a project of this
       kind, including, but not limited to, the following: that all documents
       evidencing and securing the Mortgage Loan contemplated hereby have been
       duly authorized, executed, and delivered by the Borrower and are legal,
       valid, binding obligations of the Borrower enforceable in accordance with
       their respective terms; that the partnership/corporation/trust (as the
       case may be) and all entities comprising the Borrower are duly organized,
       validly existing, and in good standing, pursuant to all applicable laws
       and are authorized to do business in the state in which the Security
       Property is located; that the partnership/corporation/trust (as the case
       may be) has the authority to borrow money and to own the Security
       Property and to carry on its operations as conducted and as proposed to
       be conducted; that the Mortgage Loan does not violate the usury laws of
       the state where the Security Property is located; that there is no
       action, suit, or legal proceeding pending, or to the knowledge of such
       counsel, after due inquiry of Borrower, threatened against or affecting
       the partnership/corporation/trust, its partners, officers, or trustees
       (as the case may be) any Guarantor or any Responsible Individual or the
       Security Property before or by any court, administrative agency or other
       governmental authority or any arbitrator; that neither the execution nor
       the delivery of this Application/Contract or the documents evidencing and
       securing the Mortgage Loan, nor compliance with the provisions of the
       loan documents will conflict with or result in a breach of any of the
       provisions of, or constitute a default under the partnership
       agreement/corporate by-laws, articles of incorporation, and
       regulations/trust indenture (as the case may be) or of any applicable
       law, judgment, order, writ, injunction, decree, rule, or regulation of
       any court, administrative agency, or other governmental authority, or any
       determination or award of any arbitrator, or of any agreement or other
       instrument to which the Borrower is a party or by which the Borrower is
       bound; that no reports have come to the attention of such counsel
       indicating that the Security Property is in violation of any
       environmental laws, rules or regulations enacted by federal, state, or
       local authorities having jurisdiction over the Security Property; and as
       to such other matters incidental to the transaction herein contemplated
       as Nationwide may reasonably request. If the borrowing entity has been
       formed in a state other than the state in which the Security Property is
       located, Nationwide shall require a legal opinion from an attorney
       licensed to practice law in the state of formation opining to the
       Borrower's due formation and good standing within the state of formation.

(iv)   Copy of all title company closing statements.

(v)    AIA Certificate of Substantial Completion executed by the Borrower, the
       project general contractor, and the project architect indicating that the
       Improvements have been completed in accordance with the final plans and
       specifications, including any grading, seeding, landscaping, paving, and
       all other on-site and off-site improvements impacting the operation of
       the Security Property.

(vi)   Estoppel certificates executed by each tenant occupying any portion of
       the Security Property in the form currently required by Nationwide (not
       applicable if the Security Property is an apartment project).

(vii)  A rent roll that is certified as true and complete by the Borrower and
       showing all tenants in occupancy, the address or suite number (or
       apartment number for apartments) taken by each tenant, the square footage
       being occupied by each tenant (except on apartment projects), the date of
       lease expiration for each tenant, and the minimum annual rent (or monthly
       rent for apartments) paid by each tenant.

(viii) Borrower's certificate executed by the Borrower on the Closing Date
       stating that no part of the Security Property has been damaged and not
       repaired to Nationwide's satisfaction, nor taken in condemnation or other
       similar proceeding, nor that such proceeding is pending, or to the best
       of the Borrower's knowledge, threatened; that direct connections have
       been made to abutting public water, sewer, gas, electrical, and telephone
       facilities and that the Improvements are ready for occupancy; that the
       original building permit and an unconditional certificate of occupancy or
       other unconditional certificate of appropriate governmental authorities
       evidencing compliance with all zoning, building, and other applicable
       regulations, have been issued. The Borrower's certificate shall also
       state that there are no lawsuits pending, or, to the best of the
       Borrower's knowledge, threatened against the Borrower, the Guarantors,
       any of the Responsible Individuals or the Security Property, nor are
       there any judgments outstanding against the Borrower, the Guarantors, or
       any of the Responsible Individuals. Borrower shall also represent and
       warrant to Nationwide that Borrower is not engaged, and has not at any
       time since Borrower's acquisition of the Security Property, engaged in a
       "pattern of racketeering activity" within the meaning of 18 U.S.C. ss.
       1961, as amended, or within the meaning of any similar local, state, or
       federal law, nor has Borrower committed any other act or engaged in any
       other pattern of actions, the potential results of which might include
       forfeiture of Borrower's interest in the Security Property.

(ix)   Mortgagee's title insurance policy with mechanic's lien protection and
       without survey exception issued by a title company acceptable to
       Nationwide. Said policy shall also include ALTA Form 3.1 zoning and ALTA
       Form 9 comprehensive endorsements, or their equivalents if permissible by
       state law, and such other endorsements as required by Nationwide or
       Nationwide's counsel. If a 3.1 zoning endorsement or similar endorsement
       is not available under state law, Nationwide shall be furnished with
       other documentary evidence satisfactory to Nationwide that the Security
       Property complies with all applicable zoning requirements. Furthermore,
       Nationwide shall require evidence satisfactory to Nationwide that the
       Security Property currently complies and, upon foreclosure, will comply
       with all applicable subdivision ordinances and plat acts.





                                 Page 14 of 19
<PAGE>   15


(x)    A current certified as-built survey of the property disclosing all
       improvements, encroachments, easements and rights-of-way, abutting
       streets, and the number of parking spaces (including those reserved for
       the handicapped). The survey must meet the minimum standard detail
       requirements as adopted in 1992 by The American Land Title Association
       and American Congress On Surveying & Mapping (and any subsequent
       requirements), must show a state of facts acceptable to Nationwide and
       the title company issuing the required title policy, be prepared and
       certified by a duly registered land surveyor or licensed engineer, and be
       revised and recertified upon completion of construction least two (2)
       weeks prior to the Closing Date showing the Improvements as constructed
       on the site. The legal description of the Security Property shall be
       shown on the face of the survey and a flood hazard certification attached
       if applicable. The certification must also state whether abutting streets
       and other means of ingress and egress have been publicly dedicated and
       accepted for maintenance by the local governmental authority having
       jurisdiction over the Security Property. If abutting streets or other
       means of ingress and egress are privately owned, the certification must
       specifically state this fact and an agreement for maintenance and repair
       must be provided to Nationwide for its review and approval.

(xi)   Certification by Borrower of the total cost of construction of the
       Security Property. If said costs are less than the loan amount, the loan
       amount shall be reduced to an amount no greater than this total certified
       cost. (Applicable only if Improvements have been completed within the
       last thirty-six (36) months.) For purposes of this paragraph, the date of
       completion of construction of the Security Property shall be May 1998.

(b)    Whether or not a closing occurs, Applicant/Borrower agrees to pay or
       reimburse Nationwide for all fees and expenses incidental to the Mortgage
       Loan herein contemplated, including, but not limited to, legal fees,
       Commitment Fee, Inspecting Architect fee, survey fee, Site Inspection
       Fee, title fee, environmental engineer and/or consultant fee, and closing
       costs.

(c)    The Mortgage Loan shall also be subject to all legal requirements
       Nationwide's counsel may reasonably assert in order to assure that
       Nationwide's lien constitutes a valid first priority encumbrance against
       the Security Property. Further, the Mortgage Loan shall be subject to
       evidence satisfactory to Nationwide and Nationwide's counsel, in their
       sole discretion, that the Security Property complies in all respect with
       all federal, state, county, or municipal laws, ordinances, rules and
       regulations applicable thereto. In addition, the Mortgage Loan is further
       subject to the Borrower providing Nationwide or Nationwide's counsel with
       such additional documentation as Nationwide's counsel may reasonably
       require or which is customarily required by institutional mortgage
       lenders.

14.    PARTNERSHIP AGREEMENT/TRUST INDENTURE/ARTICLES OF INCORPORATION: The
       partnership agreement/trust indenture/articles of incorporation (as the
       case may be) establishing and governing the operation of Borrower and the
       same for all underlying entities comprising Borrower and for the
       Guarantors and/or Responsible Individuals (if Guarantors and/or
       Responsible Individuals are not individuals) shall be subject to review
       and approval by Nationwide.

15.    ADVERTISING: Applicant/Borrower hereby authorizes Nationwide to
       publicize, without divulging the specific terms thereof, in advertising,
       press releases, or other material the fact that Nationwide has provided
       the permanent financing for the Security Property. Subject to local code
       requirements, Nationwide is authorized to display a sign on the Security
       Property during the construction period (only applicable if Improvements
       are to be built) referring to Nationwide as the provider of permanent
       financing.

16.    LIMITATION OF INTEREST: In no event shall Nationwide be entitled to
       receive, nor shall Borrower be obligated to pay, or contract to pay any
       amount as interest or as a charge for the use of money which exceeds the
       maximum rate of interest that may be charged or contracted for under the
       laws of the state in which the Security Property is located. If
       Nationwide receives or contracts to receive an amount which exceeds such
       maximum rate, said amount shall be applied to reduce the outstanding
       principal balance of the Mortgage Loan, or otherwise credited to the
       Borrower and not computed or received by Nationwide as interest. This
       provision shall prevail in any agreement between Nationwide and
       Applicant/Borrower.

17.    SEPARATE AGREEMENT: A separate agreement executed by the appropriate
       parties, providing for the maintenance and operation of all common access
       ways, parking facilities, and other common areas or facilities, including
       a party wall agreement between parties in interest in contiguous
       buildings, shall be executed and placed of record prior to the recording
       of the loan documents. Any such agreement shall be subject to
       Nationwide's prior review and approval.

       If there are outparcels that are not part of the Security Property or
       that may be released from the Security Property after the Closing Date,
       said outparcels shall be legally subdivided from the balance of the
       Security Property and the subdivision map shall be in appropriate form
       for recording with the county clerk's office. This replat shall comply
       with all applicable requirements, and said replat shall be executed and
       acknowledged by the appropriate governmental entities. Covenants
       governing the outparcel(s) shall include cross easements for ingress,
       egress, and parking, and restrictions limiting the height and square
       footage of any improvements constructed or to be constructed on the
       outparcel(s).

       Said covenants shall (i) comply with all provisions in the leases for
       space in the Security Property; (ii) be subject to Nationwide's prior
       written approval; (iii) comply with all zoning ordinances of record; and
       (iv) be filed of record.

18.    SURVIVAL OF TERMS: All the terms and conditions of this
       Application/Contract not expressly set forth in the loan documents or
       other instruments executed and delivered by the Borrower with respect to
       the Mortgage Loan shall survive the closing of the Mortgage Loan and
       shall remain in full force and effect. If there is a conflict between the
       terms of this Application/Contract and the loan documents, the loan
       documents shall govern.



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                                 Page 16 of 19
<PAGE>   17

                                  EXHIBIT "A"

The funding of the Mortgage Loan is further conditioned upon the following:

a.     The following leases (which are subject to the review and approval by
       Nationwide) are to be in full force and effect as of the Closing Date of
       the Mortgage Loan and the tenant(s) shall be in occupancy, open for
       business, and paying rent in accordance with the terms of their lease,
       without default of either party:

<TABLE>
<CAPTION>
                          DATE OF      AREA            TERM       MINIMUM
       TENANT              LEASE    (SO. FT.)         (YRS.)    ANNUAL RENT
       ------              -----    ---------         ------    -----------
       <S>                <C>       <C>               <C>       <C>
</TABLE>

AS A CONDITION OF CLOSING, THE SECURITY PROPERTY SHALL BE AT LEAST 50% OCCUPIED
(90 UNITS) AT AN AVERAGE LEASE RENT OF NOT LESS THAN $0.65 PER SQUARE FOOT.

b.     Execution of a guarantee (hereinafter called "Guarantees") by the
       Borrower and Guarantors whereby the Mortgage Loan as to both payment and
       performance is unconditionally, jointly, and severally guaranteed for the
       full amount of the Mortgage Loan. This Guarantee shall be in full force
       and effect on the Closing Date. The Guarantee shall be released when the
       Net Operating Income generated by the Security Property is at least equal
       to 1.25 times the annual debt service payments due under the terms of the
       loan documents ("Guarantee Coverage Tests") for a period of at least
       three consecutive months. For purposes of this paragraph, "Net Operating
       Income" shall mean the annualized rents and expense reimbursements to be
       received from tenants pursuant to leases approved by Nationwide where the
       tenants are paying rent (i.e., any free rent periods must have expired),
       are in occupancy and open for business, minus Operating Expenses, all of
       which are to be calculated as of the time of the requested release of the
       Guarantee. Operating Expenses for purposes hereof shall be the annualized
       expenses of the Security Property, including, but not limited to, a
       management fee equal to 4 percent of the annualized rental income and
       also including other operating expenses of $3,259 per unit; provided,
       however, that annualized Operating Expenses for purposes hereof shall not
       be less than $659,227. Property tax expenses shall be calculated assuming
       the completed Improvements are fully assessed and using the most recent
       tax rate available (whether certified or not).

c.     Borrower shall deliver to Nationwide a Letter of Credit with an
       expiration date of no earlier than 12 months after the Closing Date in
       form and substance satisfactory to Nationwide in an amount equal to 2
       times the annualized deficit that exists at closing between the Net
       Operating Income being generated by the Security Property and 1.10 times
       the annual debt service payments due under the terms of the loan
       documents. For purposes of this paragraph, "Net Operating Income" shall
       mean the annualized rents and expense reimbursements to be received from
       tenants of the Security Property pursuant to leases approved by
       Nationwide where the tenants are paying rent (i.e., any free rent periods
       must have expired), are in occupancy, and open for business, minus
       Operating Expenses, all of which are to be calculated as of the Closing
       Date. Operating Expenses for purposes hereof shall be the annualized
       expenses of the Security Property, including, but not limited to, a
       management fee equal to 4 percent of the annualized rental income and
       other operating expenses of $3,259 per UNIT; provided, however, that
       annualized Operating Expenses for purposes hereof shall not be less than
       $659,227. Property tax expenses shall be calculated assuming the
       completed Improvements are fully assessed and using the most recent tax
       rate available (whether certified or not). This Letter of Credit shall be
       released by Nationwide when Net Operating Income received is at least
       1.10 times ("Shortfall Coverage Tests") as great as the annual debt
       service on the Mortgage Loan for a period of three consecutive months. If
       the Shortfall Coverage Test is not satisfied within 9 months of the
       Closing Date or, if at any time during the existence of the Letter of
       Credit, there is a default by the Borrower under the terms of the loan
       documents, Nationwide may redeem the Letter of Credit and apply the cash
       proceeds therefrom to the reduction of the outstanding principal balance
       of the Mortgage Loan at par, or to the payment of any other amounts owed
       by Borrower to Nationwide under the terms of the loan documents. In the
       event Nationwide is unable to collect the full amount of said Letter of
       Credit for any reason, the Borrower, any Guarantors, and the Responsible
       Individuals shall remain unconditionally liable for the face amount of
       said Letter of Credit.

d.     To determine whether Borrower qualifies for a release of the Guarantee
       and/or Letter of Credit, Borrower shall deliver to Nationwide such
       information as Nationwide may reasonably request including, without
       limitation (i) a current rent roll certified to be true and correct by
       Borrower, (ii) a true and complete copy of all fully executed leases
       entered into which are being used to satisfy the criteria for release,
       (iii) unconditional certificates of occupancy for the completed tenant
       spaces, (iv) an unqualified estoppel certificate on Nationwide's standard
       form (or such other form as may be acceptable to Nationwide) from each
       tenant whose lease is being used to satisfy the criteria for release, and
       (v) actual operating statements for the Security Property which will
       identify all operating expenses associated with the Security Property.
       (Estoppel certificates are not necessary for apartment projects.) Rental
       income from any Major Tenant shall not be included in these calculations
       if such Major Tenant makes a general assignment for the benefit of
       creditors, or there is filed by or against any such Major Tenant a
       petition in bankruptcy or for the appointment of a receiver, or there
       commences under any bankruptcy or insolvency law proceedings for the
       Major Tenant's relief, or for the compromise, extension, arrangement,
       rearrangement, reorganization, or adjustment of any of the Major Tenant's
       obligations.






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                                 Page 18 of 19
<PAGE>   19


                                  EXHIBIT "B"

Below are the only modifications made to the Application/Contract. If there are
no modifications, so state.

SEE ATTACHED EXHIBIT "B"


































                                 Page 19 of 19
<PAGE>   20



                                  EXHIBIT "B"
                      APPLICATION/CONTRACT BY AND BETWEEN
                     NATIONWIDE LIFE INSURANCE COMPANY AND
                      ROBERTS PROPERTIES RESIDENTIAL, L.P.

Below are the only modifications made to the Application/Contract on the Howell
Ferry Apartments.

1.     In Part II, Paragraph 3(e), add the following at the end of the
       paragraph: "For a monetary default, Nationwide will give notice and a
       five-day right-to-cure (defined as a "Monetary Cure Period). Such
       Monetary Cure Period shall be limited to one per loan year for the term
       of the loan. It is understood and agreed a monetary default does not
       waive Nationwide's right to the late payment charge described in Part II,
       Paragraph 3(b)."

2.     In Part II, Paragraph 3(c), add the following: "Notwithstanding the
       foregoing, Nationwide will waive the above requirements by separate
       letter so long as title to the Security Property remains with Borrower or
       with an affiliate or subsidiary of Borrower, there is no default under
       the Mortgage/Deed of Trust, the Standard Lease form has not changed, and
       paid tax receipts and evidence of payment of insurance premiums, prior to
       their applicable due dates, are received by Nationwide in a timely
       manner."

3.     In Part II, Paragraph 5, delete the last sentence and replace with the
       following sentence, "In the event Nationwide does not approve Inspecting
       Architect's report, Borrower may terminate this Application/Contract and
       the Commitment Fee less Nationwide's out of pocket expenses shall be
       refunded to the Borrower."

4.     In Part II, Paragraph 9, insert the following after the words
       "hereinafter created" in the first line: "and not on the standard lease
       form approved by Nationwide."

5.     In Part II, Paragraph 10 should be deleted in its entirety.

6.     In Part II, Paragraph 11(a), add the following to the end of the first
       paragraph: "Notwithstanding the foregoing, Borrower shall have the
       one-time right to transfer the Security Property to another party,
       provided the transferee is acceptable to Nationwide, in its sole
       discretion, without a change in the loan terms, so long as Borrower pays
       Nationwide a cash assumption fee equal to 1% of the outstanding principal
       balance of the loan. This one-time right of transfer shall apply only to
       Borrower and not to any subsequent transferee. It is understood and
       agreed that upon such transfer, Borrower shall be relieved from all
       liability under the loan documents for events occurring subsequent to the
       date of the approved transfer.

       "It is also understood and agreed that Nationwide will allow the transfer
       of the Security Property without Nationwide's consent and without change
       in the loan terms or payment of a transfer fee provided (i) the transfer
       is made to the general partner of the Borrower; (ii) there is no change
       in the ownership interests of the general partner of the Borrower other
       than in the ordinary course of business; and (iii) Nationwide shall be
       given prompt notice and documentation of such transfer, and Borrower
       shall pay all of Nationwide's out of pocket expenses associated with such
       transfer."

7.     In Part II, Paragraph 11(b), Subsection (v), insert the word "reasonably"
       before the word "deemed."

8.     In Part II, Paragraph 1l(c), Subparagraph (ii) should be deleted.

9.     In Part II, Paragraph 1l(d), in the fourth line, before the words "shall
       be deposited with Nationwide" insert "a certified copy of which."

10.    In Part II, Paragraph 11(f), insert the following: "Nationwide
       acknowledges that Roberts Properties Residential, L.P. is an approved
       manager and leasing agent subject to Nationwide's review and approval of
       the management and leasing agreements."




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<PAGE>   21



                                  EXHIBIT "B"
                                  CONTINUED

11.    In Part II, Paragraph 13(ix), insert the following at the end of the
       paragraph: "Notwithstanding the foregoing, Nationwide will waive the
       aforementioned zoning endorsement provided it receives satisfactory
       evidence and assurances regarding zoning compliance from the local
       municipality."

12.    In Exhibit "A", after Paragraph (d), insert the following: "Nationwide
       acknowledges that Paragraphs (b), (c), and (d) in this Exhibit shall be
       applicable in the event that the debt coverage ratio of the Security
       Property on the Closing Date is less than 1.25, and if on the Closing
       Date the debt coverage ratio is 1.25 or greater, Paragraphs (b), (c), and
       (d) shall be of no force or effect."

13.    In Part II, Paragraph 11 (i), insert the following: "Nationwide
       acknowledges that the Borrower is Roberts Properties Residential, L.P.
       which is the entity through which the Company, Roberts Realty Investors,
       Inc. conducts business and owns all of its real estate assets. As the
       sole general partner of Roberts Properties Residential, L.P., the Company
       controls the Borrower. Therefore, the audited financial statements to be
       furnished to Nationwide are those of the Company, Roberts Realty
       Investors, Inc. It is understood that the Borrower will furnish the
       Security Property's operating statements to Nationwide within 120 days of
       each calendar year end."

14.    In Part I, Paragraph 15, second paragraph, second line, after the words
       "Security Property," insert the following: "including without
       limitations, all title and survey matters relating to the Security
       Property."

15.    In Part II, Paragraph 4, in the first line, "thirty (30) days" is changed
       to "ninety (90) days."

16.    Part I, Paragraph 9(b): Insert at the end of the paragraph the following:

       "Notwithstanding the foregoing, Borrower may extend the expiration date
       for no more than two consecutive 30-day periods, provided however, that
       in any event, the Closing Date of the Application/Contract shall not be
       later than July 31, 1998. As a condition to each 30-day extension, the
       Borrower will pay to Nationwide a non-refundable extension fee in an
       amount equal to the following: The loan amount times the difference
       between the current Application/Contract interest rate and the then
       current corresponding 30-day U.S. Treasury Bill Rate as published in the
       Wall Street Journal on the fifth business day preceding the Closing Date
       for the applicable extension divided by 12. For example, if the 30-day
       U.S. Treasury Bill Rate is 5.30%, then the non-refundable extension fee
       for a 30-day period is calculated as follows: ($8,400,000 times (7.15%
       less 5.30%) divided by 12 = $12,950). Borrower must give Nationwide
       written notice of its intention to exercise each extension option at
       least seven business days prior to expiration of the Closing Date or
       extended Closing Date."













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