Document:

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                                                               Atlanta, Georgia
US $3,000,000.00                                               October 25, 1999

                                PROMISSORY NOTE

         FOR VALUE RECEIVED, the undersigned, ROBERTS PROPERTIES RESIDENTIAL,
L.P., a Georgia limited partnership ("Borrower"), promises to pay to the order
of FIRST UNION NATIONAL BANK, a national banking association, its successors
and assigns (hereinafter, together with all subsequent holders of this Note,
called "Lender"), whose address is Post Office Box 740074, Mail Code 9031,
Atlanta, Georgia 30374, on or before the Maturity Date (hereinafter defined),
the principal sum of THREE MILLION AND NO/100 DOLLARS ($3,000,000.00), together
with interest on the unpaid principal balance from time to time outstanding at
the "Interest Rate" (hereinafter defined).

ARTICLE I.     DEFINED TERMS

          For purposes hereof:

         1.1  "Business Day" means a day on which commercial banks and foreign
exchange markets settle payments in United States dollars in New York, New York
and London, England.

         1.2  "Business Day Convention" means that an adjustment shall be made
for any date that would otherwise fall on a day that is not a Business Day, so
that such date will be the next following Business Day.

         1.3  "LIBOR Market Rate Index" means, for any day, the rate for
1-month U.S. dollar deposits as reported by Telerate page 3750 as of 11:00 am,
London time, on such day, or if such day is not a London Business Day, then the
immediately preceding London business day (or if not so reported, then as
determined by Lender from another recognized source or interbank quotation).
In the event that the LIBOR Market Index Rate shall no longer be published or
is no longer available for any reason, then Lender shall designate a comparable
reference rate which shall be deemed to be the LIBOR Market Index Rate
hereunder.
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         1.4  "Interest Rate" means the rate of interest established pursuant
to Paragraph 2.2 below.

         1.5  "Loan" means the loan advanced under this Note and evidenced
hereby and by the other Loan Documents (hereinafter defined).

         1.6  "Loan Documents" shall have the meaning given to it in the
Security Deed (hereinafter defined).

         1.7  "London Business Day" means any day on which commercial banks are
open for business (including dealings in foreign exchange and foreign currency
deposits) in London, England.

         1.8  "Maturity Date" means the 30th day of April, 2000, subject to the
Business Day Convention or such earlier date on which this Note shall become
due by acceleration by Lender, by prepayment notice from Borrower, or
otherwise.

         1.9  "Security Deed" means that certain Deed to Secure Debt and
Security Agreement of even date herewith, executed by Borrower and given to
Lender, covering certain real and personal property situated in Fulton County,
Georgia, as more particularly described therein.

ARTICLE II.    INTEREST

         2.1  Calculation of Interest. Interest based on a 360-day year will be
accrued on the number of days funds are actually outstanding, and shall be
calculated on a daily basis.

         2.2  Interest Rate. Interest shall be charged on the outstanding
principal balance from the date hereof until the full amount of principal due
hereunder has been paid at a rate equal to the LIBOR Market Index Rate plus one
and one-half percent (1.5%) per annum, as that rate may change from day to day
in accordance with changes in the LIBOR Market Index Rate. Interest shall be
calculated daily on the basis of the actual number of days elapsed over a 360
day year.

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ARTICLE III.    PAYMENT AND PREPAYMENT

         3.1  Payment. (a) Interest. Interest will be due and payable monthly
in arrears on the 1st day of each month, commencing on November 1, 1999, and
continuing on the same day of each month thereafter, subject to the Business
Day Convention, provided that the final interest payment date shall be the
Maturity Date.

              (b)  Principal Payments. The entire remaining outstanding
principal balance and all accrued and unpaid interest shall be due and payable
in full on the Maturity Date.

              (c)  Billing. Lender will bill Borrower monthly for interest
accruing on this Note.

         3 2  Place of Payment. All payments hereunder shall be made to Lender
at Lender's address set forth in the first paragraph on page 1 of this Note, or
at such other address as Lender may from time to time designate in writing to
Borrower. All amounts payable hereunder are payable in lawful money of the
United States of America.

         3.3  Application of Payments. All payments on this Note shall, at the
option of Lender, be applied first to the payment of accrued but unpaid
interest, and any remainder shall be applied to reduction of the principal
balance hereof. Lender's books and records shall be presumed correct as to the
sums outstanding hereunder, except in the case of manifest error.

         3.4  Costs of Collection. Borrower agrees to pay all costs of
collection hereof when incurred, including reasonable attorneys' fees, whether
or not any legal action shall be instituted to enforce this Note.

         3.5  Prepayment. (a) Borrower shall have the right, at its election,
to prepay the outstanding principal balance of this Note, in whole or in part,
at any time without penalty or premium.

              (b)  If any such prepayment is only a partial payment of the
then outstanding principal balance hereof, such prepayment shall be accompanied
by the payment of all accrued but unpaid

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interest on the portion of the outstanding principal balance of the Note being
so paid through the date the prepayment is made. No partial prepayment shall
affect the obligation of Borrower to make any payment of principal or interest
due hereunder on the date set forth in this Note, until this Note has been paid
in full.

         3.6  Receipt of Payments. Payments in federal funds immediately
available in the place designated for payment received by Lender prior to 2:00
p.m. local time at said place of payment shall be credited prior to close of
business, while other payments may, at the option of Lender, not be credited
until immediately available to Lender in federal funds in the place designated
for payment prior to 2:00 p.m. local time at said place of payment on a
Business Day.

ARTICLE IV.     DEFAULT AND REMEDIES

         4.1  Events of Default. Each of the following events shall constitute
an "Event of Default":

              (a)  If Borrower shall fail, refuse or neglect to pay, in full,
any installment or portion of the indebtedness evidenced hereby within five (5)
days after the same shall become due and payable, whether at the due date
thereof stipulated herein, or at a date fixed for prepayment, or by
acceleration or otherwise; provided, however, that if such installment or
portion of the indebtedness evidenced hereby becomes due and payable as a
result of Lender's accelerating the maturity of this Note, the five (5) day
grace period for payment set forth in this Paragraph 4.1(a) shall not apply to
the accelerated Maturity Date.

              (b)  The occurrence of any Event of Default under any other Loan
Document.

              (c)  If there shall be a default in the payment of any other loan
from Lender to Borrower, whether now or hereafter existing, or such borrower
shall fail to perform any of its obligations in connection therewith.

         4.2  Late Payment Fee and Default Rate. (a) Upon the occurrence of an
Event of Default that is a monetary default:

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              (a)  Borrower shall, without notice or demand from lender, pay a
late payment fee of five percentage points (5%) of the amount of principal
and/or interest due in order to cover the extra expense involved in handling
delinquent payments; and

              (b)  at Lender's option, the interest rate shall become the
Interest Rate plus five percentage points (5%) per annum, (the "Default Rate")
commencing with and continuing for so long as this Note or any portion hereof
is in default.

              (c)  Payment of such late payment fee shall be a condition
precedent to the curing of any monetary Event of Default. Acceptance by Lender
of any late payment without an accompanying late payment fee shall not be
deemed a waiver of Lender's right to receive such late payment fee or to
receive a late payment fee for any subsequent payment received more than five
(5) days after its due date. This paragraph shall not be deemed to be a waiver
of Lender's right to accelerate payment of this Note under the terms hereof.

         4.3  Acceleration; Other Remedies. Upon the occurrence of an Event of
Default, Lender may, at its option, without further notice or demand, declare
the unpaid principal balance and accrued interest on this Note at once due and
payable, foreclose all security deeds, mortgages and liens securing payment
hereof, pursue any and all other rights, remedies, and recourses available to
Lender, or pursue any combination of the foregoing, all remedies hereunder and
under the Loan Documents being cumulative.

         4.4  No Waiver. Failure to exercise any of the foregoing options shall
not constitute a waiver of the right to exercise the same or any other option
at any subsequent time in respect to any other event. The acceptance by Lender
of any payment hereunder that is less than payment in full of all amounts due
and payable at the time of such payment shall not constitute a waiver of the
right to exercise any of the foregoing options at that time or at any
subsequent time or nullify any prior exercise of any such option without the
express written consent of Lender.

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ARTICLE V.     MISCELLANEOUS

         5.1  Waivers. (a) Except as otherwise specifically provided in the
Loan Documents, Borrower and any endorsers or guarantors hereof jointly and
severally waive presentment and demand for payment, notice of intent to
accelerate maturity, notice of acceleration of maturity, protest or notice of
protest and nonpayment, bringing of suit and diligence in taking any action to
collect any sums owing hereunder or in proceeding against any of the rights and
properties securing payment hereof. Borrower and any endorsers or guarantors
hereof agree that the time for any payments hereunder may be extended from time
to time without notice and consent to the acceptance of further security or the
release of any existing security for this Note, all without in any manner
affecting their liability under or with respect to this Note. No extension of
time for the payment of this Note or any installment hereof shall affect the
liability of Borrower under this Note even though Borrower is not a party to
such agreement.

              (b)  Borrower hereby waives and renounces, to the extent same
may be waived and renounced, for itself, its legal representatives, successors
and assigns, all rights to the benefits of any statute of limitations and any
moratorium, reinstatement, marshaling, forbearance, valuation, stay, extension,
redemption, appraisement, exemption and homestead now provided or which may
hereafter be provided by the Constitution and the laws of the United States and
of any state, both as to itself and in and to all of its property, real and
personal, against the enforcement and collection of the obligations evidenced
by this Note.

         5.2  Homestead. Borrower hereby transfers, assigns and conveys to
Lender a sufficient amount of homestead and exemption which Borrower or
Borrower's family may have under or by virtue of the Constitution and laws of
the United States and of any state. In case of bankruptcy, Borrower authorizes
and directs the trustee to deliver to Lender a sufficient amount of property or
money claims as exempt to pay this Note and Lender is appointed
attorney-in-fact for Borrower to claim any and all homestead exemptions allowed
by law.

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         5.3  Loan Documents. This Note is issued pursuant to the Loan
Documents and is secured, inter alia, by the Security Deed. All of the
agreements, conditions, covenants, warranties, representations, provisions and
stipulations made by or imposed upon Borrower under the Loan Documents are
hereby made a part of this Note to the same extent and with the same force and
effect as if they were fully inserted herein, and Borrower covenants and agrees
to keep and perform the same, or cause them to be kept and performed, strictly
in accordance with their terms.

         5.4  Loan for Business Purposes. This Note is given for business
purposes and none of the proceeds of the Loan or this Note will be used for
personal, family or household purposes.

         5.5  Multiple Parties. If this Note is executed by more than one
party, each such party shall be jointly and severally liable for the
obligations of Borrower under this Note. If the Borrower is a partnership, each
general partner of Borrower shall be jointly and severally liable hereunder,
and each such general partner hereby waives any requirement of law that, upon
an occurrence of an Event of Default hereunder or under any of the Loan
Documents, Lender exhaust any assets of Borrower before proceeding against such
general partner's assets.

         5.6  Borrower. The term "Borrower" as used in this Note shall mean and
have reference to, collectively, all parties and each of them directly or
indirectly obligated for the indebtedness evidenced by this Note, whether as
principal maker, endorser, guarantor, or otherwise, together with all parties
who have acquired the property conveyed by the Security Deed or any portion or
portions thereof, together with the respective heirs, administrators, executors,
legal representatives, successors and assigns of each of the foregoing.

         5.7  Notice. All notices or other communications required or permitted
to be given pursuant to this Note shall be in writing and shall be considered
properly given if mailed by first-class United States mail, postage prepaid,
registered or certified with return receipt requested, or by delivering same in
person to the intended addressee, or by prepaid telegram, telex or telecopy.
Notice so mailed shall be effective two (2) days after its deposit. Notice
given in any other manner shall be effective only if and when received by the
addressee. For

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purposes of notice, the address and telecopy number of Borrower shall be the
address and telecopy number listed on the final page of this Note, and Lender's
address shall be 999 Peachtree Street, 9th Floor, Atlanta, Georgia 30309 (for
notice delivered by personal delivery or telegram), and P. O. Box 740074, Mail
Code 9031, Atlanta, Georgia 30374 (for notice delivered by registered or
certified mail), and Lender's telecopy number shall be (404) 225-4113;
provided, however, that either party shall have the right to change its address
for notice hereunder to any other location within the continental United States
by the giving of one month's notice to the other party in the manner set forth
hereinabove.

         5.8  Governing Law. This Note shall be governed by and construed
according to the laws of the State of Georgia, except that United States
federal law shall govern to the extent that it permits Lender to contract for,
charge or receive a greater amount of interest, and giving effect to all other
United States federal laws applicable to national banks. It is expressly
stipulated and agreed to be the intent of Borrower and Lender at all times to
comply with the applicable law now or hereafter governing the interest payable
on this Note or the Loan. If the applicable law is ever revised, repealed, or
judicially interpreted so as to render usurious any amount called for under
this Note, or under any of the Loan Documents, or contracted for, charged,
taken, reserved or received with respect to the Loan, or if Lender's exercise
of the option herein contained to accelerate the maturity of this Note, or if
any prepayment by Borrower results in Borrower's having paid any interest in
excess of that permitted by applicable law, then it is Borrower's and Lender's
express intent that all excess amounts theretofore collected by Lender be
credited on the principal balance of this Note (or, if the Note has been paid
in full, refunded to Borrower), and the provisions of this Note and the Loan
Documents immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
new documents, so as to comply with the then applicable law, but so as to
permit the recovery of the fullest amount otherwise called for hereunder and
thereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance or detention of the indebtedness evidenced hereby and by the other
Loan Documents shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such

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indebtedness until payment in full so that the rate or amount of interest on
account of such indebtedness does not exceed the usury ceiling from time to
time in effect and applicable to the Loan for so long as debt is outstanding
under the Loan.

         5.9  Severability. Whenever possible, each provision of this Note
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Note shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Note.

         5.10  Time of the Essence. BORROWER AGREES THAT TIME IS OF THE ESSENCE
IN THE PERFORMANCE OF ALL OBLIGATIONS HEREUNDER.

         5.11  CONSENT TO JURISDICTION; WAIVER OF RIGHT TO TRIAL BY JURY.
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR GEORGIA STATE COURT SITTING IN FULTON COUNTY, GEORGIA,
AND HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY OF, ANY
CLAIM, DEMAND, PROCEEDING ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS
NOTE, ANY OTHER LOAN DOCUMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR (B) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF BORROWER AND LENDER
WITH RESPECT TO THIS NOTE, ANY OTHER LOAN DOCUMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR
THEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE; AND BORROWER HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS PARAGRAPH WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF BORROWER TO JURISDICTION AND
THE WAIVER OF ITS RIGHT TO TRIAL BY JURY. BORROWER ACKNOWLEDGES AND AGREES THAT
THE WITHIN CONSENT AND WAIVER ARE MATERIAL INDUCEMENTS TO LENDER TO MAKE THE
LOAN.

         IN WITNESS WHEREOF, this Note has been duly executed under seal in
Atlanta, Georgia on the date first above written.

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                                    BORROWER

                                    ROBERTS PROPERTIES RESIDENTIAL, L.P.

                                    BY:  ROBERTS REALTY INVESTORS, INC., its
                                         sole general partner

                                    By: /s/
                                       -------------------------------------
                                       Its:
                                           ---------------------------------

                                    Attest:  /s/ Charles R. Elliott
                                           ---------------------------------
                                       Title:  CFO
                                             -------------------------------

                                                    [CORPORATE SEAL]

                                    Borrower's Address:
                                    8010 Roswell Road
                                    Suite 120
                                    Atlanta, Georgia 30350

                                    Borrower's Telecopy Number:
                                    770-396-0706

                                    Borrower's Tax Identification Number:
                                    58-2122875

         This signature page is attached to and is a part of that certain
Promissory Note in the original principal amount of Three Million and No/100
Dollars ($3,000,000.00), from Roberts Properties Residential, L.P., as
"Borrower," to First Union National Bank, as "Lender."

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AFTER RECORDING, RETURN TO:
GREGORY A. RANDALL
HOLT NEY ZATCOFF & WASSERMAN, LLP
100 GALLERIA PARKWAY, SUITE 600
ATLANTA, GEORGIA  30339-5911

                   DEED TO SECURE DEBT AND SECURITY AGREEMENT

         THIS DEED TO SECURE DEBT AND SECURITY AGREEMENT (herein referred to as
the "Deed") made and entered into this 25 day of October, 1999 by and between
ROBERTS PROPERTIES RESIDENTIAL, L.P., a Georgia limited partnership (hereinafter
referred to as "Borrower"), and FIRST UNION NATIONAL BANK, whose address is 999
Peachtree Street, N.E., Ninth Floor, Atlanta, Georgia 30309, Attn: Real Estate
Portfolio Management, Mail Code 9068 (hereinafter referred to as "Lender").

                              W I T N E S S E T H:

         That for and in consideration of the sum of ONE HUNDRED AND NO/100
DOLLARS ($100.00) and other good and valuable considerations, the receipt and
sufficiency whereof are hereby acknowledged, and in order to secure the
indebtedness and other obligations of Borrower hereinafter set forth, Borrower
does hereby grant, bargain, sell, convey, assign, transfer and set over unto
Lender, its successors and assigns, all of the following described land and
interests in land, estates, easements, rights, improvements, personal property,
fixtures, equipment, furniture, furnishings, appliances and appurtenances
(hereinafter collectively referred to as the "Premises"):

         (a)      All that certain tract or parcel of land more particularly
         described in Exhibit "A" attached hereto and by this reference made a
         part hereof (hereinafter referred to as the "Land").

         (b)      All buildings, structures and improvements of every nature
         whatsoever now or hereafter situated on the Land, and all of Borrower's
         interest in all gas and electric fixtures, radiators, heaters, engines
         and machinery, boilers, ranges, elevators and motors,

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         plumbing and heating fixtures, carpeting and other floor coverings,
         fire extinguishers and any other safety equipment required by
         governmental regulation or law, washers, dryers, water heaters,
         mirrors, mantels, air conditioning apparatus, refrigerating plants,
         refrigerators, cooking apparatus and appurtenances, window screens,
         awnings and storm sashes, which are or shall be attached to the
         Premises and all other furnishings, furniture, fixtures, machinery,
         equipment, appliances, vehicles, building supplies and materials, books
         and records, chattels, inventory, accounts, farm products, consumer
         goods, general intangibles and personal property of every kind and
         nature whatsoever now or hereafter owned by Borrower and located in, on
         or about, or used or intended to be used with or in connection with the
         use, operation or enjoyment of the Premises, including all extensions,
         additions, improvements, betterments, after-acquired property,
         renewals, replacements and substitutions, or proceeds from a permitted
         sale of any of the foregoing, and all the right, title and interest of
         Borrower in any such furnishings, furniture, fixtures, machinery,
         equipment, appliances, vehicles and personal property subject to or
         covered by any prior security agreement, conditional sales contract,
         chattel mortgage or similar lien or claim, together with the benefit of
         any deposits or payments now or hereafter made by Borrower or on behalf
         of Borrower; all tradenames, trademarks, servicemarks, logos, and
         goodwill related thereto which in any way now or hereafter belong,
         relate or appertain to the Premises or any part thereof or are now or
         hereafter acquired by Borrower; and all inventory accounts, chattel
         paper, documents, equipment, fixtures, farm products, consumer goods
         and general intangibles constituting proceeds acquired with cash
         proceeds of any of the property described hereinabove, all of which are
         hereby declared and shall be deemed to be fixtures and accessions to
         the Land and a part of the Premises as between the par-ties hereto and
         all persons claiming by, through or under them, and which shall be
         deemed to be a portion of the security for the indebtedness herein
         described and to be secured by this Deed. The location of the above
         described collateral is also the location of the Land.

         (c)      All of Borrower's interest in all building materials,
         fixtures, building machinery and building equipment delivered on site
         to the real estate during the course of, or in connection with,
         construction of the buildings and improvements.

         (d)      All easements, rights-of-way, strips and gores of land,
         vaults, streets, ways, alleys, passages, sewer rights, waters, water
         courses, water rights and powers, minerals, flowers, shrubs, trees,
         timber and other emblements now or hereafter located on the Land or
         under or above the same or any part or parcel thereof or appurtenant to
         the title to the Land, and all estates, rights, titles, interests,
         privileges, liberties, tenements, hereditaments and appurtenances,
         reversion and reversions, remainder and remainders, whatsoever, in any
         way belonging, relating or appertaining to the Premises or any part
         thereof, or which hereafter shall in any way belong, relate or
         appertain to the Premises or any part thereof

         (e)      All income, rents, issues, profits, and revenues of the
         Premises from time to time accruing (including without limitation all
         payments under leases or tenancies, proceeds of insurance, condemnation
         payments, tenant security deposits whether held by Borrower or in a
         trust account, and escrow funds), and all the estate, right, title,
         interest, property,

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         possession, claim and demand whatsoever at law, as well as in equity,
         of Borrower of, in and to the same.

         TOGETHER WITH all and singular the rights, tenements, hereditaments,
members and appurtenances whatsoever, in any way belonging, relating or
appertaining to any of the Premises hereinabove mentioned or which hereafter
shall in any way belong, relate or be appurtenant thereto, whether now owned or
hereafter acquired by the Borrower, including but not limited to, all rents,
profits, issues and revenues of the Premises from time to time accruing, whether
under leases or tenancies now existing or hereafter created, reserving only the
right to the Borrower to collect the same for its own account so long as the
Borrower is not in default hereunder.

         TO HAVE AND TO HOLD the Premises and all parts, rights, members and
appurtenances thereof, to the use, benefit and behoof of Lender, its successors
and assigns, IN FEE SIMPLE forever; and Borrower covenants that Borrower is
lawfully seized and possessed of the Premises and has good right to convey the
same, that the same are unencumbered except for those matters (hereinafter
referred to as the "Permitted Encumbrances") expressly set forth in Exhibit "B"
attached hereto and incorporated herein, and that Borrower does warrant and will
forever defend the title thereto against the claims of all persons whomsoever,
except as to the Permitted Encumbrances.

         This Deed is intended to operate and is to be construed as a deed
passing the title to the Premises to Lender and is made under those provisions
of the existing laws of the State of Georgia relating to deeds to secure debt,
and not as a mortgage, and is given to secure the payment of the following
described indebtedness (hereinafter referred to collectively as the
"Indebtedness"):

         (a)      The debt evidenced by that certain Promissory Note
         (hereinafter referred to as the "Note") dated of even date herewith,
         made by Borrower, payable to the order of Lender, in the principal face
         amount of THREE MILLION AND NO/100 DOLLARS ($3,000,000.00), together
         with any and all renewals, modifications, consolidations and extensions
         of the indebtedness evidenced by the Note with interest on the
         outstanding principal at the rates provided for in the Note, with the
         final payment being due on April 30, 2000 (hereinafter the "Loan"); and

         (b)      Any and all additional advances made by Lender to protect or
         preserve the Premises or the security interest created hereby in the
         Premises, or for taxes, assessments or insurance premiums as
         hereinafter provided or for performance of any of Borrower's
         obligations hereunder or for any other purpose provided herein (whether
         or not the original Borrower remains the owner of the Premises at the
         time of such advances); and

         (c)      Any and all other obligations and indebtedness now or
         hereafter owing by Borrower to Lender.

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         The Note, this Deed, and all documents, instruments, deeds and
agreements now or hereinafter evidencing, securing, guaranteeing or otherwise
relating to the Note, this Deed or the Indebtedness are collectively hereinafter
referred to as the "Loan Documents."

         Should the Indebtedness be paid according to the tenor and effect
thereof when the same shall become due and payable, and should Borrower perform
all covenants herein contained in a timely manner, then this Deed shall be
promptly canceled and surrendered.

         Borrower hereby further covenants and agrees with Lender as follows:

                                    ARTICLE I

         1.01 Payment of Indebtedness. Borrower will pay the Note according to
the tenor thereof and the remainder of the Indebtedness promptly as the same
shall become due.

         1.02 Taxes, Liens and Other Charges.

         (a)      Borrower shall pay, on or before the due date thereof or the
day any fine, penalty, interest or cost may be added thereto or imposed by law
for the non-payment thereof, all taxes, assessments, levies, license fees,
permit fees and all other charges (in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen) of every character
whatsoever (including all penalties and interest thereon) now or hereafter
levied, assessed, confirmed or imposed on, or in respect of, or which may be a
lien upon, the Premises, or any part thereof, or any estate, right or interest
therein, or upon the rents, issues, income or profits thereof, and shall submit
to Lender such evidence of the due and punctual payment of all such taxes,
assessments and other fees and charges as Lender may require.

         (b)      Borrower shall pay, on or before the due date thereof or the
day any fine, penalty, interest or cost may be added thereto or imposed by law
for the non-payment thereof, all taxes, assessments, charges, expenses, costs
and fees which may now or hereafter be levied upon, or assessed or charged
against, or incurred in connection with the Note, the remainder of the
Indebtedness, this Deed or any other Loan Documents, excluding only state and
federal taxes on the income earned by Lender. Borrower shall submit to Lender
such evidence of the due and punctual payment of all such taxes, assessments,
charges, expenses, costs, and fees as Lender may reasonably require.

         (c)      Borrower shall pay, on or before the due date thereof, all
premiums on policies of insurance covering, affecting or relating to the
Premises, as required pursuant to Section 1.03. Borrower shall submit to Lender
such evidence of the due and punctual payment of all such premiums as Lender may
reasonably require.

         (d)      In the event of the passage of any state, federal, municipal
or other governmental law, order, rule or regulation, subsequent to the date
hereof, in any manner changing or modifying the laws now in force governing the
taxation of deeds to secure debt or security agreements or debts secured thereby
or the manner of collecting such taxes so as to adversely

                                       4
<PAGE>   5

affect Lender, Borrower will promptly pay any such tax on or before the due date
thereof, or the day any fine, penalty, interest or cost may be added thereto or
imposed by law for the non-payment thereof. If Borrower fails to make such
prompt payment or if, in the opinion of Lender, any such state, federal,
municipal, or other governmental law, order, rule or regulation prohibits
Borrower from making such payment or would penalize Lender if Borrower makes
such payment or if, in the opinion of Lender, the making of such payment might
result in the imposition of interest beyond the maximum amount permitted by
applicable law, then the entire balance of the Indebtedness and all interest
accrued thereon shall, at the option of Lender, become immediately due and
payable.

          (e)     Borrower will cause all debts and liabilities of any
character, including without limitation all debts and liabilities for labor,
material and equipment and all debts and charges for utilities servicing the
Premises, incurred in the improvement, maintenance, operation and development of
the Premises, to be promptly paid, and will not suffer any mechanic's,
materialman's, laborer's, statutory or other lien, including, but not limited
to, any lien resulting from Borrower's failure to perform under subparagraphs
1.02(a) and (b) above, to be filed of record upon all or any part of the
Premises and not released (by payment, bonding or otherwise) within ten (10)
days after Borrower receives actual notice thereof, unless a shorter period for
the release of any specific lien is provided elsewhere in this Deed.

          1.03 Insurance.

          (a)     The Borrower shall keep any buildings and all improvements,
whether now located on the Land or hereinafter constructed on the Land,
continuously insured against loss or damage by fire and against such other
hazards as may be required.

          (b)     Borrower shall procure for, deliver to and maintain for the
benefit of Lender during the term of this Deed, original paid up insurance
policies of such insurance companies, in such amounts, in form and substance,
and with such expiration dates as are acceptable to Lender and containing
non-contributory standard mortgagee clauses, their equivalent or a mortgagee
loss payable endorsement in favor of Lender satisfactory in all respects to
Lender, providing the types of insurance covering the Premises and the interest
and liabilities incident to ownership, possession and operation thereof as may
be required.

          (c)     Borrower shall provide single limit comprehensive general
liability insurance in an amount satisfactory to Lender against claims and
liability for bodily injury or property damage to persons or property occurring
on the Premises.

          (d)     Lender is hereby authorized and empowered, at its option, to
adjust or compromise any loss under any insurance policies maintained pursuant
to this Section 1.03, and to collect and receive the proceeds from any such
policy or policies. Each insurance company is hereby authorized and directed to
make payment for all such losses directly to Lender, instead of to Borrower or
to Borrower and Lender jointly. In the event any insurance company fails to
disburse directly and solely to Lender but disburses instead either solely to
Borrower or to Borrower and Lender jointly, Borrower agrees immediately to
endorse and transfer such

                                       5
<PAGE>   6

proceeds to Lender. Upon the failure of Borrower to endorse and transfer such
proceeds as aforesaid, Lender may execute such endorsements or transfers for and
in the name of Borrower and Borrower hereby irrevocably appoints Lender as
Borrower's agent and attorney-in-fact so to do. After deducting from said
insurance proceeds all of its expenses incurred in the collection and
administration of such sums, including reasonable attorneys' fees actually
incurred, Lender may apply the net proceeds or any part thereof, at its option,
(i) to the payment of the Indebtedness, whether or not due and in whatever order
Lender elects; (ii) to the repair and/or restoration of the Premises or (iii)
for any other purposes or objects for which Lender is entitled to advance funds
under this Deed, all without affecting the security interest created by this
Deed; and any balance of such monies then remaining shall be paid to the party
legally entitled thereto. Lender shall not be held responsible for any failure
to collect any insurance proceeds due under the terms of any policy regardless
of the cause of such failure.

          (e)     At least thirty (30) days prior to the expiration date of each
policy maintained pursuant to this Section 1.03, a renewal or replacement
thereof satisfactory to Lender shall be delivered to Lender. Borrower shall
deliver to Lender receipts evidencing the payment for all such insurance
policies and renewals or replacements. The delivery of any insurance policies
hereunder shall constitute an assignment of all unearned premiums as further
security hereunder. In the event of the foreclosure of this Deed or any other
transfer of title to the Premises in extinguishment of the Indebtedness, all
right, title and interest of Borrower in and to all insurance policies then in
force shall pass to the purchaser or to Lender, as the case may be, and Lender
is hereby irrevocably appointed by Borrower as attorney-in-fact for Borrower to
assign any such policy to said purchaser or to Lender, as the case may be.

          1.04 Monthly Deposits. Upon the occurrence of an Event of Default, at
the option of Lender and upon written notice to Borrower, and further to secure
the payment of the taxes and assessments referred to in Section 1.02 and the
premiums on the insurance referred to in Section 1.03, Borrower shall deposit
with Lender, on the due date of each installment under the Note, such amounts as
in the reasonable estimation of Lender shall be necessary to pay such charges as
they become due; said deposits to be held by Lender, with interest, and free of
any liens or claims on the part of Borrower or creditors of Borrower and as part
of the security of Lender, and to be used by Lender to pay current taxes and
assessments and insurance premiums on the Premises as the same accrue and are
payable. Payment from said sums for said purposes shall be made by Lender at its
discretion and may be made even though such payments will benefit subsequent
owners of the Premises. Said deposits shall not be, nor be deemed to be, trust
funds but may be commingled with the general funds of Lender. If said deposits
are insufficient to pay the taxes and assessments in full as the same become
payable, Borrower, upon written request of Lender, will deposit with Lender such
additional sum or sums as may be required in order for Lender to pay such taxes
and assessments in full. Upon any Event of Default or Potential Default under
this Deed or the Note, or any other Loan Documents, Lender may, at its option,
apply any money in the fund resulting from said deposits to the payment of the
Indebtedness in such manner as it may elect. As used herein, "Potential Default"
shall mean any event, circumstance or occurrence which with the giving of notice
or passage of time, or both, would be an Event of Default hereunder.

                                       6
<PAGE>   7

          1.05 Condemnation. If all or any portion of the Premises shall be
damaged or taken through condemnation (which term when used in this Deed shall
include any damage or taking by any governmental authority, quasi-governmental
authority, or any party having the power of condemnation and any transfer by
private sale in lieu thereof), either temporarily or permanently, then the
entire Indebtedness shall, at the option of Lender, become immediately due and
payable. Borrower, promptly upon obtaining knowledge of the institution, or the
proposed, contemplated or threatened institution, of any action or proceeding
for the taking through condemnation of the Premises or any part thereof will
notify Lender, and Lender is hereby authorized, at its option, to commence,
appear in and prosecute, through counsel selected by Lender, in its own or in
Borrower's name, any action or proceeding relating to any condemnation, and to
settle or compromise any claim in connection therewith. All such compensation,
awards, damages, claims, rights of action and proceeds and the right thereto are
hereby assigned by Borrower to Lender, and Lender is authorized, at its option,
to collect and receive all such compensation, awards or damages and to give
proper receipts and acquittances, therefor without any obligation to question
the amount of any such compensation, awards or damages. After deducting from
said condemnation proceeds all of its expenses incurred in the collection and
administration of such sums, including attorney's fees, Lender may apply the net
proceeds or any part thereof, at its option, (a) to the payment of the
Indebtedness, whether or not due and in whatever order Lender elects, (b) to the
repair and/or restoration of the Premises and/or (c) for any other purposes or
objects for which Lender is entitled to advance funds under this Deed, all
without affecting the lien of this Deed; and any balance of such monies then
remaining shall be paid to Borrower or any other person or entity lawfully
entitled thereto. Borrower agrees to execute such further assignment of any
compensation, awards, damages, claims, rights of action and proceeds as Lender
may reasonably require. If, prior to the receipt by Lender of such award or
proceeds, the Premises shall have been sold on foreclosure of this Deed, or
under the power of sale herein granted, Lender shall have the right to receive
such award or proceeds to the extent of any unpaid Indebtedness following such
sale, with legal interest thereon, whether or not a deficiency judgment on this
Deed or the Note shall have been sought or recovered, and to the extent of
reasonable counsel fees, costs and disbursements incurred by Lender in
connection with the collection of such award or proceeds.

          1.06 Care of Premises.

          (a)     Borrower will keep the buildings, parking areas, roads and
walkways, common areas, landscaping and all other improvements of any kind now
or hereafter erected on the Land or any part thereof in good condition and
repair, will not commit or suffer any waste and will not do or suffer to be done
anything which will increase the risk of fire or other hazard to the Premises or
any part thereof or which would or could result in the cancellation of any
insurance policy carried with respect to the Premises.

          (b)     Borrower will not remove, demolish nor alter the design or
structural character of any building, fixture or other improvement now or
hereafter constructed on the Land without the prior written consent of Lender.

                                       7
<PAGE>   8

          (c)     If the Premises or any part thereof is damaged by fire or any
other cause, Borrower will give immediate written notice thereof to Lender.

          (d)     Lender or its representative is hereby authorized to enter
upon and inspect the Premises at any time during normal business hours, subject
to rights of tenants and upon at least twenty four (24) hours notice to
Borrower.

          (e)     Borrower will promptly comply with all present and future
laws, ordinances, rules and regulations of any governmental authority affecting
the Premises or any part thereof. If Borrower receives notice from any federal,
state, or other governmental entity that the Premises fail to comply with any
applicable law, ordinance, rule, order or regulation, Borrower will promptly
furnish a copy of such notice to Lender.

          (f)     Subject to Section 1.03(d) hereof respecting insured losses,
if all or any part of the Premises shall be damaged by fire or other casualty,
Borrower will promptly restore the Premises to the equivalent of its original
condition to the extent practical; and subject to Section 1.05 hereof respecting
condemnation, if a part of the Premises shall be taken through condemnation,
Borrower will promptly restore, repair or alter the remaining portions of the
Premises in a manner reasonably satisfactory to Lender. Borrower shall not be
obligated to so restore, repair or alter unless in each instance Lender agrees
to make available to Borrower (pursuant to procedures satisfactory to Lender)
any net insurance or condemnation proceeds actually received by Lender hereunder
in connection with such casualty loss or condemnation, to the extent such
proceeds are required to defray the expense of such restoration, repair or
alteration; provided, however, the insufficiency of any such insurance or
condemnation proceeds to defray the entire expense of restoration, repair or
alteration shall in no way relieve Borrower of its obligation to restore, repair
or alter.

          1.07 Leases, Contracts, Etc.

          (a)     As additional collateral and further security for the
Indebtedness, Borrower does hereby assign to Lender Borrower's interest in any
and all leases, tenant contracts, rental agreements, franchise agreements,
management contracts, construction contracts, and other contracts, licenses and
permits now or hereafter affecting the Premises, or any part thereof, and
Borrower agrees to execute and deliver to Lender such additional instruments, in
form and substance reasonably satisfactory to Lender, as may hereafter from time
to time be requested by Lender further to evidence and confirm said assignment;
provided, however, that acceptance of any such assignment shall not be construed
as a consent by Lender to any lease, tenant contract, rental agreement,
franchise agreement, management contract, construction contract, or other
contract, license or permit, or to impose upon Lender any obligation with
respect thereto.

          (b)     Borrower shall not execute any further assignment of the
income, rents, issues or profits, or any part thereof, from the Premises unless
Lender shall first consent in writing to such assignment and unless such
assignment shall expressly provide that it is subordinate to the assignment
contained in this Deed and any assignment executed pursuant hereto or concerning
the Indebtedness.

                                       8
<PAGE>   9

         (c)      Borrower shall furnish to Lender, within ten (10) days after a
written request by Lender to do so, a certified statement setting forth the name
of all lessees and tenants of the Premises, the terms of their respective
leases, tenant contracts or rental agreements, the space occupied, and the
rentals payable thereunder, and stating, to the best knowledge of Borrower,
whether any defaults, off-sets or defenses exist under or in connection with any
of said leases, tenant contracts or rental agreements.

          (d)     As of the date hereof, there exist no leases, tenant contracts
or rental agreements with respect to the Premises or any portion thereof except
as previously disclosed to Lender.

          1.08 Security Agreement.

                  With respect to the machinery, apparatus, equipment, fittings,
fixtures, building supplies and materials, articles of personal property,
chattels, chattel paper, documents, inventory, accounts, consumer goods and
general intangibles referred to or described in this Deed, or in any way
connected with the use and enjoyment of the Premises, this Deed is hereby made
and declared to be a security agreement, encumbering each and every item of such
property included herein, in compliance with the provisions of the Uniform
Commercial Code as enacted in the State of Georgia. Upon request by Lender, at
any time and from time to time, a financing statement or statements reciting
this Deed to be a security agreement affecting all of such property shall be
executed by Borrower and Lender and appropriately filed. The remedies for any
violation of the covenants, terms and conditions of the security agreement
contained in this Deed shall be (i) as prescribed herein, or (ii) as prescribed
by general law, or (iii) as prescribed by the specific statutory consequences
now or hereafter enacted and specified in said Uniform Commercial Code, all at
Lender's sole election. Borrower and Lender agree that the filing of such
financing statement or statements in the records normally having to do with
personal property shall not in any way affect the agreement of Borrower and
Lender that everything used in connection with the production of income from the
Premises or adapted for use therein or which is described or reflected in this
Deed, is, and at all times and for all purposes and in all proceedings, legal or
equitable, shall be regarded as part of the real estate conveyed hereby
regardless of whether (a) any such item is physically attached to the
improvements, (b) serial numbers are used for the better identification of
certain items capable of being thus identified in an exhibit to this Deed, or
(c) any such item is referred to or reflected in any such financing statement or
statements so filed at any time. Similarly, the mention in any such financing
statement or statements of the rights in and to (aa) the proceeds of any fire
and/or hazard insurance policy, or (bb) any award in eminent domain proceedings
for a taking or for loss of value, or (cc) Borrower's interest as lessor in any
present or future lease or rights to income growing out of the use and/or
occupancy of the Premises, whether pursuant to lease or otherwise, shall not in
any way alter any of the rights of Lender as determined by this Deed or affect
the priority of Lender's security interest granted hereby or by any other
recorded document, it being understood and agreed that such mention in such
financing statement or statements is solely for the protection of Lender in the
event any court shall at any time hold with respect to the foregoing clauses
(aa), (bb) or (cc) of this sentence, that notice of Lender's priority of
interest to be effective against a particular class of persons, must be filed in
the Uniform Commercial Code records.

                                       9
<PAGE>   10

          1.09 Further Assurances; After Acquired Property. At any time, and
from time to time, upon request by Lender, Borrower will make, execute and
deliver or cause to be made, executed and delivered, to Lender and, where
appropriate, cause to be recorded and/or filed and from time to time thereafter
to be re-recorded and/or refiled at such time and in such offices and places as
shall be deemed necessary by Lender, any and all such other and further deeds to
secure debt, mortgages, deeds of trust, security agreements, financing
statements, continuation statements, instruments of further assurance,
certificates, and other documents as to the Premises as may, in the opinion of
Lender, be reasonably necessary in order to effectuate, complete or perfect, or
to continue and preserve (i) the obligations of Borrower under the Note, this
Deed and the other Loan Documents and (ii) the security interest created by this
Deed as a first and prior security interest upon and security title in and to
all of the Premises, whether now owned or hereafter acquired by Borrower. The
security title of this Deed and the security interest created hereby will
automatically attach, without further act, to all after acquired property as
described herein attached to and/or used in the operation of the Premises or any
part thereof.

          1.10 Expenses. Borrower will pay or reimburse Lender, upon demand
therefore, for all reasonable attorney's fees actually incurred, costs and
expenses incurred by Lender in any suit, action, legal proceeding or dispute of
any kind in which Lender is made a party or appears as party plaintiff or
defendant, affecting the Indebtedness, this Deed or the interest created herein,
or the Premises, including, but not limited to, the exercise of the power of
sale contained in this Deed, any condemnation action involving the Premises or
any action to protect the security hereof; and any such amounts paid by Lender
shall be added to the Indebtedness and shall be secured by this Deed.
Notwithstanding the foregoing, in any litigation involving a dispute between
Lender and Borrower, Lender shall not be entitled to recover its reasonable
attorneys' fees, costs and expenses if Borrower is the prevailing party in such
litigation.

          1.11 Estoppel Affidavits. Borrower, upon ten (10) days prior written
notice, shall furnish Lender a written statement, duly acknowledged, setting
forth the unpaid principal of, and interest on, the Indebtedness secured hereby
and whether or not any offsets or defenses exist against the Indebtedness, or
any portion thereof, and, if such offsets or defenses exist, stating in
reasonable detail the specific facts relating to each such offset or defense.

          1.12 Subrogation. To the full extent of the Indebtedness, Lender is
hereby subrogated to the liens, claims and demands, and to the rights of the
owners and holders of each and every claim, demand and other encumbrance on the
Premises which is paid or satisfied, in whole or in part, out of the proceeds of
the Indebtedness, and the respective liens, claims, demands and other
encumbrances shall be, and each of them is hereby, preserved and shall pass to
and be held by Lender as additional collateral and further security for the
Indebtedness, to the same extent they would have been preserved and would have
been passed to and held by Lender, had they been duly and legally assigned,
transferred, set over and delivered unto Lender by assignment, notwithstanding
the fact that any instrument providing public notice of the same may be
satisfied and canceled of record.

                                       10
<PAGE>   11

          1.13 Books, Records, Accounts and Annual Reports. Borrower shall keep
and maintain or shall cause to be kept and maintained, at Borrower's cost and
expense, proper and accurate books, records and accounts reflecting all items of
income and expense of Borrower in connection with the Premises as may be
required. Upon the occurrence of an Event of Default and upon three (3) days
advance notice, Lender, by Lender's agents, accountants and attorneys, shall
have the right from time to time to examine such books, records and accounts at
the office of Borrower or such other person or entity maintaining such books,
records and accounts and to make copies or extracts thereof as Lender shall
desire and to discuss Borrower's affairs, finances and accounts with Borrower
and with the officers and principals of Borrower, at such reasonable times as
may be requested by Lender. Borrower shall provide Lender with current financial
information as may be reasonably requested by Lender from time to time.

          1.14 Limit of Validity. If from any circumstances whatsoever
fulfillment of any provision of this Deed or of the Note, at the time
performance of such provision shall be due, shall involve transcending the
limits of validity presently prescribed by any applicable usury statute or any
other applicable law, with regard to obligations of like character and amount,
then ipso facto the obligation to be fulfilled shall be reduced to the limit of
such validity, so that in no event shall any exaction be possible under this
Deed or under the Note that is in excess of the current limit of such validity,
but such obligation shall be fulfilled to the limit of such validity. The
provisions of this Section 1.14 shall control every other provision of this
Deed and of the Note.

          1.15  Intentionally left blank.

          1.16 Conveyance of Premises. Borrower hereby acknowledges to Lender
that (i) the identity and expertise of Borrower were and continue to be material
circumstances upon which Lender has relied in connection with, and which
constitute valuable consideration to Lender for, the extending to Borrower of
the indebtedness evidenced by the Note and (ii) any change in such identity or
expertise could materially impair or jeopardize the security for the payment of
the Note granted to Lender by this Deed. Borrower therefore covenants and agrees
with Lender, as part of the consideration for the extending to Borrower of the
indebtedness evidenced by the Note, that Borrower shall not further encumber,
pledge, convey, transfer, assign or sell any or all of its interest in the
Premises without the prior written consent of Lender.

          1.17 Use of Premises. Borrower shall not be permitted to alter or
change the present use of the Premises or to abandon the Premises without the
prior written consent of Lender.

          1.18 Acquisition of Collateral. Borrower shall not acquire any portion
of the personal property covered by this Deed subject to any security interest,
conditional sales contract, title retention arrangement or other charge or lien
taking precedence over the security title and lien of this Deed.

          1.19 Change of Ownership. Except as expressly permitted in this Deed,
the underlying ownership in Borrower shall not be changed without the prior
written consent of Lender. If Borrower or any general partner of Borrower is a
corporation, for purposes of this Section 1.19 a

                                       11
<PAGE>   12

change in ownership shall be deemed to occur upon any dissolution, merger,
consolidation, or sale of the controlling percentage of the capital stock of
Borrower, or the sale of more than twenty percent (20%) of the value of the
assets of Borrower other than in the ordinary course of business. The phrase
"controlling percentage" shall mean the ownership of, and the right to vote,
stock possessing more than fifty percent (50%) of the total combined voting
power of all classes of Borrower's capital stock issued, outstanding, and
entitled to vote for the election of directors. If Borrower is a general
partnership, joint venture or limited partnership, for purposes of this Section
1. 19, a change in ownership shall be deemed to occur upon a withdrawal,
substitution or addition of any partner or joint venturer owning twenty percent
(20 %) or more of the equity interest in the partnership, joint venture or
limited partnership, or upon the dissolution or liquidation of the partnership,
joint venture, or limited partnership.

          1.20 Rules, Regulations. Borrower hereby represents and warrants: (i)
that Borrower shall comply with all laws, ordinances, rules, regulations,
covenants, conditions, and restrictions affecting the Premises and shall not
commit or permit any act upon or concerning the Premises in violation of any
such laws, ordinances, rules, regulations, covenants, conditions, and
restrictions; and (ii) that, to the best of Borrower's actual knowledge, the
location, construction, occupancy, operation and actual or intended use of the
Premises do not violate any applicable law, ordinance, rule, regulation,
covenant, condition or restriction affecting the Premises. Borrower agrees to
indemnify and hold Lender harmless from and against and shall reimburse Lender
for, any and all claims, demands, causes of action, losses, damages,
liabilities, costs and expenses (including, without limitation, reasonable
attorneys' fees and court costs) arising out of or in connection with the breach
of any representation or warranty of Borrower set forth in this Section 1.20 and
the failure of Borrower to perform any obligation herein required to be
performed by Borrower.

          1.21 Hazardous Waste and Substances: Environmental Indemnity. Borrower
shall comply with all laws, governmental standards and regulations applicable to
Borrower and/or to the Premises in connection with occupational health and
safety, Hazardous Substances (as hereinafter defined), and environmental
matters. Borrower shall promptly notify Lender of its receipt of any notice of a
violation of any such law, standard or regulation. The use, generation, storage,
release, threatened release, discharge, disposal or presence on, under or about
the Premises of any Hazardous Substances by Borrower, Borrower's agents, or any
tenant or sublessee occupying part or all of the Premises (unless permitted and
in accordance with all applicable laws) which is not cured within fifteen (15)
days following written notice to Borrower shall be an Event of Default under
this Deed. "Hazardous Substances" shall mean any toxic or hazardous waste or
substances, including, without limitation, petroleum, including crude oil or any
fraction thereof, flammable explosives, radioactive materials, asbestos, any
material containing polychlorinated biphenyls, and any of the substances defined
as "hazardous substances" or "toxic substances" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. ss. 9601 et seq., Hazardous Materials Transportation Act, 49 U. S.
C. ss. 1802, the Resource Conservation and Recovery Act, 42

                                       12
<PAGE>   13

U. S. C. ss. 6901 et seq., and in the Toxic Substance Control Act of 1976, as
amended, 15 U.S.C. ss. 2601 et seq., or in any other federal, state, local or
other governmental legislation, statute, law, code, rule, regulation or
ordinance identified by its terms as pertaining to the disposal of hazardous
substances or waste.

                                   ARTICLE II

         2.01 Defaults. The terms "Event of Default" or "Events of Defaults",
wherever used in this Deed, shall mean any one or more of the following events:

          (a)     If Borrower shall fail, refuse or neglect to pay, in full, any
installment or portion of the Indebtedness within five (5) days after the same
shall become due and payable, whether at the due date thereof stipulated in the
Loan Documents, or at a date fixed for prepayment, or by acceleration or
otherwise; provided, however, that if such installment or portion of the
Indebtedness becomes due and payable as a result of Lender's accelerating the
maturity of the Indebtedness in accordance with the Loan Documents, the five (5)
day grace period for payment set forth in this Paragraph 5.1 shall not apply to
the accelerated due date.

          (b)     Failure by Borrower to duly and timely observe or perform any
other term, covenant, condition or agreement in this Deed; or

          (c)     The occurrence of a default or event of default on the part of
Borrower under any of the other Loan Documents after expiration of any
applicable grace periods provided therein, if any; or

          (d)     Except for the breach of any warranty of title, which breach
shall be governed by paragraph 2. 01(j) below, any warranty or representation of
Borrower contained in this Deed or in any of the other Loan Documents proves to
be untrue or misleading in any material respect; or

          (e)     The filing by Borrower, or any endorser or guarantor of the
Note (any such endorser or guarantor of the Note, being hereinafter referred to
as an "Affiliate") of a voluntary petition in bankruptcy or the filing by
Borrower or any Affiliate of any petition or answer seeking or acquiescing in
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief for itself under any present or future federal,
state or other statute, law or regulation relating to bankruptcy, insolvency or
other relief for debtors, or Borrower's or any Affiliate's seeking or consenting
to or acquiescing in the appointment of any trustee, receiver or liquidator of
Borrower or such Affiliate to take possession of all or any substantial part of
the Premises or of any other property or assets of Borrower or such Affiliate,
or of any or all of the income, rents, issues, earnings, profits or revenues
thereof, or the making by Borrower or any Affiliate of any general assignment
for the benefit of creditors, or the admission in writing by Borrower or any
Affiliate of its inability to pay its debts generally as they become due or the
commission by Borrower or any Affiliate of an act of bankruptcy; or

          (f)     The filing of a petition against Borrower or any Affiliate
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief

                                       13
<PAGE>   14

under any present or future federal, state or other law or regulation relating
to bankruptcy, insolvency or other relief for debtors, or the appointment of any
trustee, receiver or liquidator of Borrower or any Affiliate or of all or any
substantial part of the Premises or of any or all of the income, rents, issues,
profits or revenues thereof unless such petition shall be dismissed within sixty
(60) days after such filing, but in any event prior to the entry of an order,
judgment or decree approving such petition; or

          (g)     The Premises or any part thereof are subjected to actual or
threatened waste, or any material part thereof is removed, demolished or altered
(except for replaceable personal property which is promptly replaced and except
for any casualty or condemnation) without the prior written consent of Lender;
or

          (h)     (1) Borrower or any Affiliate (if a corporation) is liquidated
or dissolved or its charter expires or is revoked, or (2) Borrower or any
Affiliate (if a partnership or business association) is dissolved or
partitioned, or (3) Borrower or any Affiliate (if a trust) is terminated or
expires; or

          (i)     The filing of any federal tax lien against Borrower or any
Affiliate unless such lien is satisfied or bonded within forty-five (45) days
after its filing; or

(j)      Any lien or other encumbrance is filed against the Premises or against
the Borrower which according to law is superior to the lien or encumbrance
created by this Deed (except for a lien for real property taxes which are not
yet due and payable), or any claim of priority to this Deed by title, lien or
otherwise is asserted in any legal or equitable proceeding, and Borrower does
not provide Lender, within five (5) days of Borrower's actual notice of such
lien or claim, with reasonably satisfactory assurance from the insurance company
providing title insurance to Lender for the Premises that Lender has title
insurance coverage over such superior lien or claim, or Borrower does not
remove, satisfy or bond such lien or claim within thirty (30) days of Borrower's
actual notice thereof.

         2.02 Acceleration of Maturity.

         If an Event of Default shall have occurred then the entire Indebtedness
shall, at the option of Lender, immediately become due and payable without
notice, except as specifically provided herein, in the Note, and in the Loan
Documents, time being of the essence of this Deed; and no omission on the part
of Lender to exercise such option when entitled to do so shall be construed as a
waiver of such right.

         2.03 Right to Enter and Take Possession.

         (a) If an Event of Default shall have occurred and be continuing,
Borrower, upon demand of Lender, shall forthwith surrender to Lender the actual
possession of the Premises and if, and to the extent, permitted by law, Lender
itself, or by such officers or agents as it may appoint, may enter and take
possession of all the Premises without the appointment of a receiver, or an
application therefor, and may exclude Borrower and its agents and employees
wholly therefrom,

                                       14
<PAGE>   15

and may have joint access with Borrower to the books, papers and accounts of
Borrower relating to the Premises.

          (b) Subject to the terms and conditions of Section 2.03(a) herein, if
Borrower shall for any reason fail to surrender or deliver the Premises or any
part thereof after such demand by Lender, Lender may obtain a judgment or decree
conferring upon Lender the right to immediate possession or requiring Borrower
to deliver immediate possession of the Premises to Lender, and Borrower hereby
specifically covenants and agrees that Borrower will not oppose, contest or
otherwise hinder or delay Lender in any action or proceeding by Lender to obtain
such judgment or decree. Borrower will pay to Lender, upon demand, all expenses
of obtaining such judgment or decree, including reasonable compensation to
Lender's attorneys and agents; and all such expenses and compensation shall,
until paid, become part of the Indebtedness and shall be secured by this Deed.

          (c) Subject to the terms and conditions of Section 2.03(a) herein,
upon every such entering upon or taking of possession, Lender may hold, store,
use, operate, manage and control and maintain the Premises and conduct the
business thereof, and, from time to time (i) make all necessary and proper
maintenance, repairs, renewals, replacements, additions, betterments and
improvements thereto and thereon and purchase or otherwise acquire additional
fixtures, personalty and other property; (ii) insure or keep the Premises
insured; (iii) manage and operate the Premises and exercise all the rights and
power of Borrower to the same extent as Borrower could in its own name or
otherwise with respect to the same; and (iv) enter into any and all agreements
with respect to the exercise by others of any of the powers herein granted
Lender, all as Lender from time to time may determine to be in its best
interest. Lender may collect and receive all the income, rents, issues, profits
and revenues from the Premises, including those past due as well as those
accruing thereafter, and Lender may apply any money and proceeds received by
Lender, in whatever order or priority Lender in its sole discretion may
determine, to the payment of (i) all expenses of taking, holding, managing and
operating the Premises (including reasonable compensation for the services of
all persons employed for such purposes); (ii) the cost of all such maintenance,
repairs, renewals, replacements, additions, betterments, improvements, purchases
and acquisitions; (iii) the cost of such insurance; (iv) such taxes, assessments
and other similar charges as Lender may at its option pay; (v) other proper
charges upon the Premises or any part thereof; (vi) the reasonable compensation,
expenses and disbursements of the attorneys and agents of Lender; (vii) accrued
interest; (viii) deposits required in Section 1.04 and other sums required to be
paid under this Deed; and (ix) overdue installments of principal. Anything in
this Section 2.03 to the contrary notwithstanding, Lender shall not be obligated
to discharge or perform the duties of a landlord to any tenant or incur any
liability as the result of any exercise by Lender of its rights under this Deed,
nor shall Lender be responsible or liable for any waste committed on the
Premises by any tenant or other person or for any dangerous or defective
condition of the Premises, or for any negligence in the management, upkeep,
repair or control of the Premises resulting in any loss, injury or death to any
tenant, licensee, employee, or stranger, and Lender shall be liable to account
only for the rents, incomes, issues, profits and revenues actually received by
Lender.

                                       15
<PAGE>   16

          (d) For the purpose of carrying out the provisions of this Section
2.03, the Borrower hereby constitutes and appoints the Lender the true and
lawful attorney in fact of the Borrower to do and perform, from time to time,
any and an actions necessary and incidental to such purpose and does, by these
presents, ratify and confirm any and all actions of said attorney in fact.

          (e) In the event that all such interest, deposits and principal
installments and other sums due under any of the terms, covenants, conditions
and agreements of this Deed shall be paid and all Events of Defaults shall be
cured, and as a result thereof Lender surrenders possession of the Premises to
Borrower, the same right of taking possession shall continue to exist if any
subsequent Event of Default shall occur.

         2.04 Performance by Lender. If Borrower shall default in the payment,
performance or observance of any term, covenant or condition of this Deed and
after the expiration of any applicable notice and cure period, if any, Lender
may, at its option, pay, perform or observe the same, and all payments made or
costs or expenses incurred by Lender in connection therewith shall be secured
hereby and shall be, upon demand, immediately repaid by Borrower to Lender with
interest thereon at the default rate provided in the Note. Lender shall be the
sole judge of the necessity for any such actions and of the amounts to be paid.
Lender is hereby empowered to enter and to authorize others to enter upon the
Premises or any part thereof for the purpose of performing or observing any such
defaulted term, covenant or condition without thereby becoming liable to
Borrower or any person in possession holding under Borrower.

         2.05 Receiver. If an Event of Default shall have occurred and be
continuing, Lender, upon application to a court of competent jurisdiction, shall
be entitled as a matter of strict right without notice and without regard to the
adequacy or value of any security for the Indebtedness secured hereby or the
solvency of any party bound for its payment, to the appointment of a receiver to
take possession of and to operate the Premises and to collect and apply the
rents, issues, profits and revenues thereof. The receiver shall have all the
rights and powers permitted under the laws of the State of Georgia. Borrower
will pay to Lender upon demand all expenses, including receiver's fees,
attorney's fees, costs and agent's compensation, incurred pursuant to the
provisions of this Section 2.05; and any such amounts paid by Lender shall be
added to the Indebtedness and shall be secured by this Deed.

         2.06 Enforcement.

          (a)     When the Indebtedness shall become due, whether by
acceleration or at maturity and Borrower fails to pay the Indebtedness in full
at maturity, Lender, at its option, may sell the Premises or any part of the
Premises at public sale or sales before the door of the courthouse of the county
in which the Premises or any part of the Premises is situated, to the highest
bidder for cash, in order to pay the Indebtedness and all expenses of the sale
and of all proceedings in connection therewith, including reasonable attorney's
fees, if incurred, after advertising the time, place and terms of sale once a
week for four (4) weeks immediately preceding such sale (but without regard to
the number of days) in a newspaper in which Sheriff's sales are advertised in
said county. At any such public sale, Lender may execute and deliver to the
purchaser a conveyance of the Premises or any part of the Premises in fee
simple, with full warranties of title,

                                       16
<PAGE>   17

and to this end, Borrower hereby constitutes and appoints Lender the agent and
attorney-in-fact of Borrower to make such sale and conveyance, and thereby to
divest Borrower of all right, title or equity that Borrower may have in and to
the Premises and to vest the same in the purchaser or purchasers at such sale or
sales, and all the acts and doings of said agent and attorney-in-fact are hereby
ratified and confirmed and any recitals in said conveyance or conveyances as to
facts essential to a valid sale shall be binding upon Borrower. The aforesaid
power of sale and agency hereby granted are coupled with an interest and are
irrevocable by death or otherwise, and are granted as cumulative of the other
remedies provided hereby or by law for collection of the Indebtedness and shall
not be exhausted by one exercise thereof but may be exercised until full payment
of all of the Indebtedness. In the event of any sale under this Deed by virtue
of the exercise of the powers herein granted, or pursuant to any order in any
judicial proceeding or otherwise, the Premises may be sold as an entirety or in
separate parcels and in such manner or order as Lender in its sole discretion
may elect, and if Lender so elects, Lender may sell the personal property
covered by this Deed at one or more separate sales in any manner permitted by
the Uniform Commercial Code of the State of Georgia, and one or more exercises
of the powers herein granted shall not extinguish nor exhaust such powers, until
the entire Premises are sold or the Indebtedness is paid in full. If the
Indebtedness is now or hereafter further secured by any chattel mortgages,
pledges, contracts of guaranty, assignments of lease or other security
instruments, Lender may at its option exhaust the remedies granted under any of
said security instruments either concurrently or independently, and in such
order as Lender may determine.

          (b)     If an Event of Default shall have occurred and be continuing,
Lender may, in addition to and not in abrogation of the rights covered under
subsection (a) of this Section 2.06, either with or without entry or taking
possession as herein provided or otherwise, proceed by a suit or suits in law or
in equity or by any other appropriate proceeding or remedy (i) to enforce
payment of the Note or the performance of any term, covenant, condition or
agreement of this Deed or any other right under the Loan Documents, and (ii) to
pursue any other remedy available to it, all as Lender shall determine most
effectual for such purposes.

         2.07 Purchase by Lender. Upon any foreclosure sale or sales of all or
any portion of the Premises under the power herein granted, Lender may bid and
purchase at such sale or sales and shall be entitled to apply all or any part of
the Indebtedness as a credit to the purchase price.

         2.08 Application of Proceeds of Sale. In the event of a foreclosure or
a sale of all or any portion of the Premises under the power herein granted, the
proceeds of said sale shall be applied, in whatever order Lender in its sole
discretion may decide, to the expenses of such sale and of all proceedings in
connection therewith, including reasonable attorney's fees, to insurance
premiums, liens, assessments, taxes and charges including utility charges
advanced by Lender, to costs incurred by Lender in connection with any
environmental surveys and testing of the Premises, to all other advances made by
Lender pursuant to this Deed, to payment of the outstanding principal balance of
the Indebtedness, and to the accrued interest on all of the foregoing; and the
remainder, if any, shall be paid to Borrower, or to the person or entity
lawfully entitled thereto.

                                       17
<PAGE>   18

         2.09 Borrower as Tenant Holding Over. In the event of any such
foreclosure sale or sales under the power herein granted, Borrower shall be
deemed a tenant holding over and shall forthwith deliver possession to the
purchaser or purchasers at such sale or be summarily dispossessed according to
provisions of law applicable to tenants holding over.

         2.10 Waiver of Appraisement, Valuation, Etc. Borrower agrees to the
full extent permitted by law, that in case of a default on the part of Borrower
hereunder and after expiration of any applicable cure period, if any, neither
Borrower nor anyone claiming through or under Borrower shall or will set up,
claim or seek to take advantage of any moratorium, reinstatement, forbearance,
appraisement, valuation, stay, extension, homestead, exemption or redemption
laws now or hereafter in force, in order to prevent or hinder the enforcement or
foreclosure of this Deed, or the absolute sale of the Premises, or the delivery
of possession thereof immediately after such sale to the purchaser at such sale,
and Borrower, for itself and all who may at any time claim through or under it,
hereby waives to the full extent that it may lawfully so do, the benefit of all
such laws, and any and all right to have the assets subject to the security
interest of this Deed marshaled upon any foreclosure or sale under the power
herein granted.

         2.11 Waiver of Homestead. Borrower hereby waives and renounces all
homestead and exemption rights provided for by the Constitution and the laws of
the United States and of any state, in and to the Premises as against the
collection of the Indebtedness, or any part thereof.

         2.12 Leases. Lender, at its option, is authorized to foreclose this
Deed subject to the rights of any tenants of the Premises, and the failure to
make any such tenants parties to any such foreclosure proceedings and to
foreclose their rights will not be, nor be asserted to be by Borrower, a defense
to any proceedings instituted by Lender to collect the Indebtedness.

         2.13 Discontinuance of Proceedings. In case Lender shall have proceeded
to enforce any right, power or remedy under this Deed by foreclosure, entry or
otherwise or in the event Lender commences advertising of the intended exercise
of power of sale, entry or otherwise, and such proceeding or advertisement shall
have been withdrawn, discontinued or abandoned for any reason, or shall have
been determined adversely to Lender, then and in every such case (i) Borrower
and Lender shall be restored to their former positions and rights, (ii) all
rights, powers and remedies of Lender shall continue as if no such proceeding
had been taken, (iii) each and every Event of Default declared or occurring
prior or subsequent to such withdrawal, discontinuance or abandonment and not
cured shall be a continuing Event of Default, and (iv) neither this Deed, nor
the Note, nor the Indebtedness, nor any other instrument concerned therewith,
shall be or shall be deemed to have been reinstated or otherwise affected by
such withdrawal, discontinuance or abandonment; and Borrower hereby expressly
waives the benefit of any statute or rule of law now provided, or which may
hereafter be provided, which would produce a result contrary to or in conflict
with the above.

                                       18
<PAGE>   19

         2.14 Remedies Cumulative. No right, power or remedy conferred upon or
reserved to Lender by this Deed is intended to be exclusive of any other right,
power or remedy, but each and every such right, power and remedy shall be
cumulative and concurrent and shall be in addition to any other right, power and
remedy given hereunder or now or hereafter existing at law or in equity or by
statute.

         2.15 Waiver.

         (a) No delay or omission of Lender or of any holder of the Note to
exercise any right, power or remedy accruing upon any breach or Event of Default
shall exhaust or impair any such right, power or remedy or shall be construed to
be a waiver of any such breach or Event of Default, or acquiescence therein; and
every right, power and remedy given by this Deed to Lender may be exercised from
time to time and as often as may be deemed expedient by Lender. No consent or
waiver, expressed or implied, by Lender to or of any breach or default by
Borrower in the performance of the obligations thereof hereunder shall be deemed
or construed to be a consent or waiver to or of any other breach or default in
the performance of the same or any other obligations of Borrower hereunder.
Failure on the part of Lender to complain of any act or failure to act or to
declare an Event of Default, irrespective of how long such failure continues,
shall not constitute a waiver by Lender of its rights hereunder or impair any
rights, powers or remedies of Lender hereunder, except as expressly provided in
any of the Loan Documents or in any instrument or instruments executed by
Lender. Acceptance by Lender or by any holder of the Note of any sum or payment
from or on behalf of Borrower that is less than the then currently outstanding
amount due under the Note or any of the other Loan Documents, including, but not
limited to, late charges, default interest, additional interest charges, accrued
interest, escrow delinquencies, or payments on principal, or any combination
thereof, shall not be construed to be a waiver of any of Lender's or such
holder's rights, powers or remedies under any of the Loan Documents to collect
or to enforce payment of any such delinquent amount which remains due and owing
after application of such lesser amount to the then current balance as provided
in the Loan Documents.

         (b) No act or omission by Lender shall release, discharge, modify,
change or affect the original liability under the Note, this Deed or any other
obligation of Borrower or any subsequent purchaser of the Premises or any part
thereof, or any maker, co-signer, endorser, surety or guarantor, or preclude
Lender from exercising any right, power or privilege herein granted or intended
to be granted in the event of any Event of Default then made or of any
subsequent Event of Default, or alter the security title, security interest or
lien of this Deed except as expressly provided in an instrument or instruments
executed by Lender. Without limiting the generality of the foregoing, Lender may
(i) grant forbearance or an extension of time for the payment of all or any
portion of the Indebtedness; (ii) take other or additional security for the
payment of the Indebtedness; (iii) waive or fail to exercise any right granted
herein or in the Note; (iv) release any part of the Premises from the security
interest or lien of this Deed or otherwise agree with Borrower to change any of
the terms, covenants, conditions or agreements of the Note or this Deed; (v)
consent to the filing of any map, plat or replat affecting the Premises; (vi)
consent to the granting by Borrower of any easement or other right affecting the
Premises; (vii) make or consent to any agreement subordinating the security
title, security interest or lien hereof; or (viii)

                                       19
<PAGE>   20

take or omit to take any action whatsoever with respect to the Note, this Deed,
the Premises or any document or instrument evidencing, securing or in any way
relating to the Indebtedness; all without releasing, discharging, modifying,
changing or affecting any such liability, or precluding Lender from exercising
any such right, power or privilege or affecting the security title, security
interest or lien of this Deed except as expressly provided in any of the Loan
Documents or in any instrument or instruments executed by Lender. In the event
of the sale or transfer by operation of law or otherwise of all or any part of
the Premises, Lender, without notice, is hereby authorized and empowered to deal
with any such vendee or transferee with reference to the Premises or the
Indebtedness, or with reference to any of the terms, covenants, conditions or
agreements hereof, as fully and to the same extent as it might deal with the
original parties hereto and without in any way releasing and/or discharging any
liabilities, obligations or undertakings.

         2.16 Suits to Protect the Premises. Lender shall have power to
institute and maintain such suits and proceedings as it may deem expedient (i)
to prevent any impairment of the Premises by any acts which may be unlawful or
constitute an Event of Default under this Deed, (ii) to preserve or protect its
interest in the Premises and in the income, rents, issues, profits and revenues
arising therefrom, and (iii) to restrain the enforcement of or compliance with
any legislation or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid, if the enforcement of or compliance with
such enactment, rule or order would impair the security hereunder or be
prejudicial to the interest of Lender.

         2.17 Proofs of Claim. In the case of any receivership, insolvency,
bankruptcy, reorganization, arrangement, adjustment, composition or other
proceedings affecting Borrower, its creditors, its property, or any endorser or
guarantor of the Note, Lender, to the extent permitted by law, shall be entitled
to file such proofs of claim and other documents as may be necessary or
advisable in order to have the claims of Lender allowed in such proceedings for
the entire amount of the Indebtedness at the date of the institution of such
proceedings and for any additional amount which may become due and payable by
Borrower hereunder after such date.

         2.18 WAIVER OF BORROWER'S RIGHTS. BY EXECUTION OF THIS DEED, BORROWER
EXPRESSLY: (A) ACKNOWLEDGES THE RIGHT OF LENDER TO ACCELERATE THE INDEBTEDNESS
EVIDENCED BY THE NOTE AND ANY OTHER INDEBTEDNESS AND THE POWER OF ATTORNEY GIVEN
HEREIN TO LENDER TO SELL THE PREMISES BY NONJUDICIAL FORECLOSURE UPON DEFAULT BY
BORROWER WITHOUT ANY JUDICIAL HEARING AND WITHOUT ANY NOTICE OTHER THAN SUCH
NOTICE (IF ANY) AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER THE PROVISIONS OF
THIS DEED; (B) WAIVES ANY AND ALL RIGHTS WHICH BORROWER MAY HAVE UNDER THE
CONSTITUTION OF THE UNITED STATES (INCLUDING, WITHOUT LIMITATION, THE FIFTH AND
FOURTEENTH AMENDMENTS THEREOF), THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR
THE SEVERAL STATES, OR BY REASON OF ANY OTHER APPLICABLE LAW, (1) TO NOTICE AND
TO JUDICIAL HEARING PRIOR TO THE EXERCISE BY LENDER OF ANY RIGHT OR REMEDY
HEREIN PROVIDED TO LENDER, EXCEPT SUCH NOTICE (IF ANY) AS IS SPECIFICALLY
REQUIRED TO BE GIVEN UNDER THE PROVISIONS OF THIS DEED AND (2) CONCERNING THE
APPLICATION, RIGHTS OR BENEFITS OF

                                       20
<PAGE>   21

ANY STATUTE OF LIMITATION OR ANY MORATORIUM, REINSTATEMENT, MARSHALING,
FORBEARANCE, APPRAISEMENT, VALUATION, STAY, EXTENSION, HOMESTEAD, EXEMPTION OR
REDEMPTION LAWS; (C) ACKNOWLEDGES THAT BORROWER HAS READ THIS DEED AND ANY AND
ALL QUESTIONS REGARDING THE LEGAL EFFECT OF THIS DEED AND ITS PROVISIONS HAVE
BEEN EXPLAINED FULLY TO BORROWER AND BORROWER HAS CONSULTED WITH COUNSEL OF
BORROWER'S CHOICE PRIOR TO EXECUTING THIS DEED; AND (D) ACKNOWLEDGES THAT ALL
WAIVERS OF THE AFORESAID RIGHTS OF BORROWER HAVE BEEN MADE KNOWINGLY,
INTENTIONALLY AND WILLINGLY BY BORROWER AS PART OF A BARGAINED FOR LOAN
TRANSACTION AND THAT THIS DEED IS VALID AND ENFORCEABLE BY LENDER AGAINST
BORROWER IN ACCORDANCE WITH ALL THE TERMS AND CONDITIONS HEREOF.

                                   ARTICLE III

         3.01 Successors and Assigns. This Deed shall inure to the benefit of
and be binding upon Borrower and Lender and their respective heirs, executors,
legal representatives, successors, successors-in-title and assigns. Whenever a
reference is made in this Deed to Borrower or Lender such reference shall be
deemed to include a reference to the heirs, executors, legal representatives,
successors, successors-in-title and assigns of Borrower and Lender, as the case
may be. The provisions of this Section 3.01 are subject to the restrictions on
transfer contained in Section 1.16 and 1.19 herein.

         3.02 Terminology. All personal pronouns used in this Deed, whether used
in the masculine, feminine or neuter gender, shall include all other genders;
the singular shall include the plural, and vice versa. Titles of articles and
sections are for convenience only and neither limit nor amplify the provisions
of this Deed, and all references herein to articles, sections, subsections,
paragraphs or subparagraphs thereof, shall refer to the corresponding articles,
sections, subsections, paragraphs or subparagraphs of this Deed unless specific
reference is made to articles, sections, subsections, paragraphs or
subparagraphs of another document or instrument.

         3.03 Severability. If any provisions of this Deed or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Deed and the application of such provisions to
other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.

         3.04 Applicable Law. Borrower acknowledges that this Deed and the other
Loan Documents were negotiated, executed and delivered by Borrower in the State
of Georgia, shall be executed by Lender in the State of Georgia, and shall be
governed by, interpreted and enforced in accordance with the laws of the State
of Georgia.

                                       21
<PAGE>   22

         3.05 Notices, Demands and Requests. Any and all notices, elections or
demands permitted or required to be made under this Deed shall be in writing,
signed by or on behalf of the party giving such notice, election or demand, and
shall be delivered personally, or sent by overnight commercial courier or by
registered or certified United States mail, postage prepaid, return receipt
requested, to the other party at the address set forth below, or to such other
party and at such other address within the continental United States of America
as may have theretofore been designated in writing. The date of personal
delivery, or one (1) day after deposit with an overnight commercial courier, if
sent by overnight commercial courier, or, if mailed, the date which is three (3)
days after postmark, shall be the effective date of such notice, election or
demand. Rejection or other refusal to accept or inability to deliver because of
a changed address of which no notice has been received by Lender shall
constitute receipt of the notice, election or demand sent. For the purposes of
this Deed:

The address of Borrower is:

                                    Roberts Properties Residential, L.P.
                                    c/o ROBERTS PROPERTIES, INC.
                                    8010 Roswell Road, Suite 120
                                    Atlanta, Georgia 30350
                                    Attn: Charles S. Roberts

With a copy to:

                                    Holt, Ney, Zatcoff & Wasserman
                                    100 Galleria Parkway, N.W. Suite 600
                                    Atlanta, Georgia 30339
                                    Attn: Sanford H. Zatcoff, Esq.

The address of Lender is:

                                    FIRST UNION NATIONAL BANK
                                    Atlanta Real Estate
                                    999 Peachtree Street, N.E.
                                    Ninth Floor
                                    Atlanta, Georgia  30309
                                    Real Estate Portfolio
                                    Mail Code 9068
                                    Attention: Mr. Greg Singleton

                                       22
<PAGE>   23

With a copy to:

                                    Smith, Gambrell & Russell
                                    Promenade II, Suite 3100
                                    1230 Peachtree Street, N.E.
                                    Suite 3100, Promenade II
                                    Atlanta, Georgia 30309-3592
                                    Attn:  John P. Bailey

         3.06 Replacement of Note. Upon receipt of evidence reasonably
satisfactory to Borrower of the loss, theft, destruction or mutilation of the
Note, and in the case of any such loss, theft or destruction, upon delivery of
an indemnity agreement, reasonably satisfactory to Borrower or in the case of
any such mutilation, upon surrender of the Note, Borrower will execute and
deliver, in lieu thereof, a replacement Note, identical in form and substance to
the Note and dated as of the date of the Note and upon such execution and
delivery all references in this Deed to the Note shall be deemed to refer to
such replacement Note.

         3.07 Assignment. This Deed is assignable by Lender, and any assignment
hereof by Lender shall operate to vest in the assignee all rights and powers
herein conferred upon and granted to Lender.

         3.08 Time of the Essence. Time is of the essence with respect to each
and every covenant, agreement and obligation of Borrower under this Deed, the
Note and any and all other instruments now or hereafter evidencing, securing or
otherwise relating to the Indebtedness.

         3.09 Consent to Jurisdiction. Borrower hereby (a) submits and consents
to personal jurisdiction in the State of Georgia for the enforcement of this
Deed, and (b) expressly waives any and all personal rights under the law of any
state to object to jurisdiction and/or venue within the State of Georgia for
purposes of litigation to enforce this Deed. In the event that such litigation
is commenced, Borrower agrees that service of process may be made, and personal
jurisdiction obtained, by the serving of a copy of the summons and complaint
upon Borrower's appointed agent for service of process in the state of Georgia,
whose name and address is as follows:

                           Mr. Charles S. Roberts
                           8010 Roswell Road, Suite 120
                           Atlanta, Georgia 30350

Borrower agrees that it may be validly served with any legal process in
connection with the foregoing by the mailing of a copy thereof by registered or
certified mail to said agent.

                                       23
<PAGE>   24

                                   ARTICLE IV

         4.01 Scope of Article. The provisions contained in this Article IV are
additional covenants, terms and provisions applicable to Borrower and Lender.

         4.02 Notices to Lender. Borrower further covenants and agrees with
Lender that the Borrower will furnish Lender with notice of (i) any change in
ownership of the Premises, (ii) any change in the Borrower's name or identity,
or (iii) the establishment by Borrower of a place of business in Georgia in a
county other than Fulton County, Georgia. Any such notice shall be delivered to
Lender within thirty (30) days of the effective date of any such change or
within thirty (30) days of the establishment of such place of business. Further,
Borrower will promptly execute any and all additional financing statements,
security agreements or other instruments deemed necessary by Lender in order to
prevent any filed Financing Statement filed in connection herewith from becoming
seriously misleading or losing its perfected status.

         4.03 Waiver. Borrower hereby represents and warrants to Lender that it
has no defenses, set-off, or counterclaim of any kind or nature whatsoever
against Lender with respect to the Loan Documents, or any action previously
taken or not taken by Lender with respect thereto or with respect to any
security interest, encumbrance, lien, or collateral in connection therewith to
secure the Indebtedness.

         4.04 Contest of Taxes. Notwithstanding the provisions of Section 1.02
of this Deed, Borrower may in good faith and at its own expense contest the
amount of any tax bill, assessment or similar charge or the validity thereof by
appropriate legal proceedings which shall operate to prevent the collection
thereof or other realization thereon and the sale or forfeiture of the Premises
or any part thereof to satisfy same; provided that during such contest Borrower
shall, at the option of Lender, provide security satisfactory to Lender,
assuring the discharge of Borrower's obligations hereunder and of any additional
charge, penalty or expense arising from or incurred as a result of such contest;
and provided further, that if at any time payment of any obligation imposed upon
Borrower by Section 1.02 shall become necessary to prevent the delivery of a tax
deed conveying the Premises (or any portion thereof) or other material detriment
to Lender's security because of non-payment, then Borrower shall pay same in
sufficient time to prevent the delivery of such tax deed.

         4.05 Notice of Default. Notwithstanding any provisions of the Note,
this Deed or any other document executed in connection with the Indebtedness to
the contrary, Lender agrees that upon the occurrence of an Event of Default
under the provisions of sections 2.01(b), (c), (d), (g) or (h) of this Deed,
prior to accelerating the Indebtedness secured hereby and instituting
nonjudicial foreclosure proceedings, Lender will (i) provide written notice to
Borrower of the occurrence of such Event of Default, and (ii) allow Borrower to
cure such Event of Default at any time within thirty (30) days from the date of
such notice; provided, that in connection with the curing of such Event of
Default, Borrower pays or reimburses Lender for all expenses actually incurred
by Lender as a result of the occurrence of such Event of Default. Borrower
agrees that nothing contained in this Section 4.05 shall be construed to require
Lender (x) to delay in exercising any remedy other than the acceleration of the
Indebtedness and the institution of

                                       24
<PAGE>   25

nonjudicial foreclosure proceedings as the result of any Event of Default; (y)
in the event of multiple defaults or Events of Default under one or more of the
documents executed in connection with the Indebtedness, any notice or cure
periods allowed in this Section 4.05 shall run concurrently and not
consecutively. Except as specifically set forth in this Section 4.05, Borrower
shall not be entitled to receive any notice of or time to cure a default or
Event of Default under the provisions of this Deed.

         4.06 Attorney's Fees. Any time there is a provision in this Deed or any
of the Loan Documents requiring or referring to the payment by Borrower to
Lender of reasonable attorneys' fees or words of like import, such words shall
mean the payment by Borrower to Lender of reasonable attorneys' fees actually
incurred, based upon the attorneys' normal hourly billing rates and the actual
time expended, and not the statutory attorneys' fees specified in O.C.G.A. ss.
13-1-11.

                                    ARTICLE V

         5.1 Covenants, Representations and Warranties. Borrower hereby
unconditionally covenants, warrants and represents to Lender as follows:

         (a)      Borrower is a duly organized, validly existing limited
partnership, and is in good standing under the laws of the State of Georgia.
Borrower has the power and authority to execute, deliver and perform the
Obligations, to borrow hereunder and execute and perform the Note, the Security
Deed and the other Loan Documents. Borrower's execution, delivery and
performance hereunder shall not constitute a breach of any agreement to which
Borrower is a party.

         (b)      All financial statements submitted by Borrower to Lender are
and shall be true, correct and complete, do and when submitted shall accurately
present the financial conditions of Borrower.

         (c)      Borrower is not in default in the performance, observance or
fulfillment of any of its obligations, covenants or conditions contained in any
agreement to which it is a party.

         (d)      Borrower shall not use or permit the use of the Property for
any illegal activity which would subject the Property to any forfeiture
proceedings under any state or federal laws.

         (e)      Borrower does not have a defined benefit pension plan under
the Employee Retirement Income Security Act of 1974, as amended from time to
time, the unfunded liabilities of which upon termination could be held to be a
liability of Borrower by the Pension Benefit Guaranty Corporation.

         (f)      Borrower has not directly or indirectly conveyed, assigned or
otherwise disposed of or transferred (or agreed to do so) any development
rights, air rights or other similar rights, privileges or attributes with
respect to the Property, including those arising under and zoning or land use
ordinance or other law or governmental requirement.

                                       25
<PAGE>   26

         (g)      Borrower shall notify Lender of (i) any conditions that would
constitute an Event of Default; (ii) any litigation or proceedings that is
brought against Borrower or the Property; and (iii) any material adverse change
in the business, properties or conditions (financial or otherwise) of Borrower.

         (h)      Borrower shall, within one hundred eighty (180) days after the
date of this Deed, deliver to Lender evidence that (i) the Property is, or will
be, separately assessed for tax purposes, (ii) information as to tax parcel
identification numbers, tax rates and estimated tax values, and (iii) the
identities of the taxing authorities.

         (i)      Borrower shall pay to Lender a non-refundable commitment fee
in the amount of Seven Thousand Five Hundred and No/100 dollars ($7,500.0),
which was earned upon issuance and acceptance of the Loan Commitment and which
is due and payable whether or not any disbursements are made thereunder or
hereunder.

         (j)      Borrower has not dealt with any person, firm or corporation
who is or may be entitled to any finder's fee, brokerage commission, loan
commission or other sum in connection with the execution of the Loan Documents,
the consummation of the transactions contemplated hereby or the making of the
Loan by Lender to Borrower, and Borrower does hereby indemnify and agree to hold
Lender harmless from and against any and all loss, liability or expense,
including court costs and reasonable attorneys' fees and expenses, which Lender
may suffer or sustain should such warranty or representation prove inaccurate in
whole or part.

                                   ARTICLE VI

         6.1 Arbitration. Upon demand of any party hereto, whether made before
or after institution of any judicial proceeding, any claim or controversy
arising out of, or relating to the Loan Documents between the parties hereto (a
"Dispute") shall be resolved by binding arbitration conducted under and governed
by the Commercial Financial Disputes Arbitration Rules (the "Arbitration Rules")
of the American Arbitration Association (the "AAA") and the Federal Arbitration
Act. Disputes may include, without limitation, tort claims, counterclaims,
disputes as to whether a matter is subject to arbitration, claims brought as
class actions, or claims arising from documents executed in the future. A
judgment upon the award may be entered in any court having jurisdiction.
Notwithstanding the foregoing, this arbitration provision does not apply to
disputes under or related to swap agreements.

         6.2 Special Rules. All arbitration hearing shall be conducted in the
city in which the office of the Bank first stated above is located. A hearing
shall begin within ninety (90) days of demand for arbitration and all hearing
shall be concluded within one hundred twenty (120) days of demand for
arbitration. These time limitations may not be extended unless a party shows
cause for extension and then for no more than a total of sixty (60) days. The
expedited procedures set forth in Rule 51 et. seq. of the Arbitration Rules
shall be applicable to claims of less than $1,000,000. Arbitrators shall be
licensed attorneys selected from the Commercial Financial Dispute Arbitration
Panel of the AAA. The parties do not waive applicable Federal or state
substantive law except as provided herein.

                                       26
<PAGE>   27

         6.3 Preservation and Limitation of Remedies. Notwithstanding the
preceding binding arbitration provisions, the parties agree to preserve, without
diminution, certain remedies that any party may exercise before or after an
arbitration proceeding is brought. The parties shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (i) all rights to foreclose against any real
or personal property or other security by exercising a power of sale or under
applicable law by judicial foreclosure including a proceeding to confirm the
sale; (ii) all rights of self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful possession of personal
property; (iii) obtaining provisional or ancillary remedies including injunctive
relief, sequestration, garnishment, attachment, appointment of a receiver and
filing an involuntary bankruptcy proceeding; and (iv) when applicable, a
judgment by confession of judgment. Any claim or controversy with regard to any
party's entitlement to such remedies is a Dispute. Each party agrees that it
shall not have a remedy of punitive or exemplary damages the other in any
Dispute and hereby waive any right or claim to punitive or exemplary damages
they have now or which may arise in the future in connection with any Dispute
whether the Dispute is resolved by arbitration or judicially.

         6.4 Waiver of Jury Trial. The parties acknowledge that by agreeing to
binding arbitration they have irrevocably waived any right they may have to a
jury trial with regard to a Dispute.

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

Signed, sealed and delivered in the          Borrower:
presence of:

                                             ROBERTS PROPERTIES RESIDENTIAL,
/s/ Charles R Elliot                         L.P., a Georgia limited partnership
----------------------------------
Official Witness

/s/ Joanne M. Roberts                        By: Roberts Realty Investors, Inc.,
----------------------------------               a Georgia corporation,
Notary Public                                    its sole general partner

[NOTARIAL SEAL]                              By: /s/
                                                --------------------------------
                                             Name:
                                                  ------------------------------
                                             Title:
                                                   -----------------------------

                                                               (CORPORATE SEAL)

                                       27
<PAGE>   28

                                    EXHIBIT A

ALL THAT TRACT of land in Land Lots 230, 231, 234 and 235 of the lst District,
1st Section, Fulton County, Georgia, described as follows:

TO FIND THE TRUE POINT OF BEGINNING, commence at the intersection of the
northeast right-of-way line of Abbotts Bridge Road (also known as State Route
120) (right-of-way varies) with the southeast right-of-way line of Jones Bridge
Road (right-of-way varies); running thence along the southeast right-of-way line
of Jones Bridge Road, the following courses and distances: (1) North 50 degrees
43 minutes 59 seconds East 330.30 feet to a 1/2-inch rebar found, (2) along the
arc of a curve to the left (which arc is subtended by a chord having a bearing
and distance of North 51 degrees 09 minutes 42 seconds East 140.86 feet and a
radius of 12,180.58 feet) 140.86 feet to a 1/2-inch rebar set, (3) along the arc
of a curve to the left (which arc is subtended by a chord having a bearing and
distance of North 50 degrees 33 minutes 43 seconds East 114.03 feet and a radius
of 12,180.58 feet) 114.03 feet to a 1/2-inch rebar set, (4) North 51 degrees 00
minutes 17 seconds East 454.79 feet to a point, and (5) North 49 degrees 24
minutes 30 seconds East 222.77 feet to a 1/2-inch rebar set and the TRUE POINT
OF BEGINNING; from the TRUE POINT OF BEGINNING as thus establishing, continuing
thence along the southeast right-of-way line of Jones Bridge Road the following
courses and distances: (1) North 49 degrees 24 minutes 30 seconds East 269.76
feet to a point, (2) along the arc of a curve to the right (which arc is
subtended by a chord having a bearing and distance of North 49 degrees 12
minutes 38 seconds East 374.91 feet and a radius of 4217.21 feet) 375.03 feet
to a point, and (3) North 50 degrees 41 minutes 25 seconds East 284.85 feet to a
1/2-inch rebar set; thence leaving said right-of-way line and running along the
southwest boundary of The Forest Unit I, The Forest Unit II and The Forest Unit
IV, the following courses and distances: (1) South 43 degrees 17 minutes 02
seconds East 241.60 feet to a 1/2-inch rebar set, (2) South 31 degrees 12
minutes 02 seconds East 269.95 feet to a 1/2-inch rebar found, (3) South 43
degrees 12 minutes 02 seconds East 169.97 feet to a 1/2-inch rebar set, (4)
South 35 degrees 12 minutes 02 seconds East 199.96 feet to a 1/2 inch rebar
found, (5) South 35 degrees 06 minutes 54 seconds East 125.15 feet to a 1/2-inch
rebar set, (6) South 22 degrees 26 minutes 33 seconds East 160.21 feet to a
1/2-inch rebar set, (7) South 29 degrees 19 minutes 38 seconds East 149.93 feet
to a 1/2-inch rebar found, (8) South 37 degrees 41 minutes 40 seconds East
154.92 feet to a 1/2-inch rebar found, and (9) South 47 degrees 58 minutes 48
seconds East 164.89 feet to a 1/2-inch rebar found; thence along the north
boundary of Abbotts Cove Subdivision and the north boundary of Addison Place -
Phase One, the following courses and distances: (1) South 71 degrees 07 minutes
02 seconds West 134.90 feet to a 1/2-inch rebar set, (2) South 86 degrees 52
minutes 02 seconds West 299.77 feet to a 1/2-inch rebar set, (3) South 79
degrees 37 minutes 02 seconds West 124.91 feet to a 1/2-inch rebar found, (4)
North 73 degrees 51 minutes 50 seconds West 173.42 feet to a point, (5) South 87
degrees 15 minutes 00 seconds West 300.00 feet to a point, (6) South 75 degrees
00 minutes 00 seconds West 190.00 feet to a point in a lake, and (7) North 65
degrees 22 minutes 41 seconds West 207.50 feet to a 1/2-inch rebar found; thence
North 51 degrees 09 minutes 57 seconds East 296.24 feet to a 1/2-inch rebar
found on the land lot line common to said Land Lots 230 and 231; thence along
said common land lot line North 88 degrees 50 minutes 38 seconds West 389.96
feet to a 1/2-inch rebar set; thence leaving said common land lot line, North 13
degrees 49

<PAGE>   29

minutes 17 seconds East 307.12 feet to a 1/2-inch rebar set; thence North 40
degrees 49 minutes 28 seconds West 299.85 feet to the TRUE POINT OF BEGINNING,
said tract containing approximately 29.440 acres as shown on plat of ALTA/ACSM
Land Title Survey for Roberts Properties Residential, L.P., First Union National
Bank and Fidelity National Title Insurance Company of New York, prepared by
Rochester & Associates, Inc., bearing the seal and certification of James C.
Jones, Georgia Registered Land Surveyor No. 2298 dated October 5, 1999.

TOGETHER WITH a non-exclusive right, title and interest in and to the easements
appurtenant to the above-described tract created in that certain Declaration of
Easements by Roberts Properties Residential, L.P. dated October 19, 1999, filed
for record October 21, 1999, and recorded in Deed Book 27850, page 040, Fulton
County, Georgia records.

<PAGE>   30

                                    EXHIBIT B

1.       Taxes and assessments for the year 2000 and subsequent years, a lien
         not yet due and payable.

2.       The following matters which are disclosed on that certain Survey for
         Roberts Properties Residential, L.P., Fidelity National Title Insurance
         Company and First Union National Bank, prepared by James C. Jones,
         Georgia Registered Land Surveyor No. 2298 of Rochester & Associates,
         Inc., dated October 5, 1999:

         a)       25-foot building lines located along the southerly,
                  northeasterly and southwesterly boundary lines of subject
                  property;

         b)       50-foot building line located along the northwesterly boundary
                  line of subject property;

         c)       portion of lake traverses the southerly boundary line of
                  subject property;

         d)       encroachment of wooden foot bridge onto subject property
                  across the northeasterly boundary line of subject property
                  which bridge is located southwest of Lot 25, The Forest, Unit
                  I;

         e)       encroachment of wooden foot bridge onto subject property
                  across the northeasterly boundary line of subject property
                  which bridge is located southwest of Lot 26, The Forest, Unit
                  I;

         f)       encroachment of wooden foot bridge onto subject property
                  across the northeasterly boundary line of subject property
                  which bridge is located southwest of Lot 65, The Forest, Unit
                  IV;

         g)       encroachment of wooden foot bridge onto subject property
                  across the southerly boundary line of subject property which
                  bridge is located north of Lot 19, Abbotts Cove Subdivision;

         h)       encroachment of bridge onto the subject property across the
                  northeasterly boundary line of subject property which bridge
                  is located southwest of Lot 29, The Forest, Unit I;

         i)       encroachment of block retaining wall onto the subject property
                  across the northeasterly boundary line of subject property
                  which wall is located southwest of Lot 44, The Forest, Unit
                  II;

         j)       encroachment of 6-foot wooden fence onto the subject property
                  across the northeasterly boundary line of subject property
                  which fence is located southwest of Lots 42 and 43, The
                  Forest, Unit II;

         k)       encroachment of playhouse onto the subject property across the
                  northeasterly boundary line of subject property which
                  playhouse is located southwest of Lot 28, The Forest, Unit I;
         l)       encroachment of treehouse onto the subject property across the
                  northeasterly boundary line of subject property which
                  playhouse is located southwest of Lot 28, The Forest, Unit I;

         m)       encroachment of 5-foot concrete sidewalk onto the subject
                  property across the northwesterly and northeasterly boundary
                  lines of subject property;

<PAGE>   31

         n)       power and telephone line located along the northwesterly
                  boundary line of subject property.

3.       Right-of-Way Easement from R.C. Vaughan to Sawnee Electric Membership
         Corporation, dated March 15, 1963, filed for record March 26, 1963, and
         recorded in Deed Book 4032, page 244, aforesaid records.

4.       Right-of-Way Easement from Benton A. Wood to Sawnee Electric Membership
         Corporation, dated June 4, 1964, filed for record June 26, 1964, and
         recorded in Deed Book 4256, page 561, aforesaid records.

5.       Right-of-Way Easement from Wallace T. Hale to Sawnee Electric
         Membership Corporation, dated September 11, 1974, filed for record
         October 31, 1974, and recorded in Deed Book 6164, page 173, aforesaid
         records.

6.       Right-of-Way Easement from Jeffrey R. Novak and Stacy G. Novak to
         Sawnee Electric Membership Corporation, dated August 23, 1983, filed
         for record September 26, 1983, and recorded in Deed Book 8661, page
         201, aforesaid records.

7.       Flood Plain Indemnification from Roberts Properties Residential, L.P.
         in favor of Fulton County, dated August 18, 1998, filed August 19,
         1998, recorded in Deed Book 24983, page 330, aforesaid records.

8.       Declaration of Easements by Roberts Properties Residential, L.P., dated
         October 19, 1999, recorded in Deed Book 27850, page 040, aforesaid
         records.

9.       Right-of-Way Easement from Roberts Properties Residential, L.P. to
         Sawnee Electric Membership Corporation, dated February 5, 1999, filed
         April 26, 1999, recorded in Deed Book 26823, page 85, aforesaid
         records. (Affects Appurtenant Easement only).

10.      Easement contained in that certain Right-of-Way Deed from Roberts
         Properties Residential, L.P. to Fulton County, dated August 18, 1998,
         filed September 21, 1998, recorded in Deed Book 25219, page 141,
         aforesaid records. (Affects Appurtenant Easement only).

11.      Rights of tenants in possession of individual apartment units under
         unrecorded leases, as tenants only. (Affects Appurtenant Easement
         only).

12.      All matters shown on Plat of Survey for Roberts Properties Residential,
         L.P., Fidelity National Title Insurance Company and The Prudential
         Insurance Company of America by Jordan Jones & Goulding, bearing the
         seal and certification of Charles H. Jackson, Georgia Registered
         Professional Land Surveyor No. 2351, dated September 23, 1999, last
         revised October 19, 1999. (Affects Appurtenant Easement only).

<PAGE>   32

13.      Rights of upper and lower riparian owners in and to the waters of
         lakes, rivers, creeks or branches crossing or adjoining the subject
         property, and the natural flow thereof, free from diminution or
         pollution.

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